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As filed with the Securities and Exchange Commission on August 23, 2019

Registration No. 333-              

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



Ping Identity Holding Corp.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  7372
(Primary Standard Industrial
Classification Code Number)
  81-2933383
(I.R.S. Employer
Identification No.)

1001 17th Street, Suite 100
Denver, Colorado 80202
Telephone: (303) 468-2900

(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)



Andre Durand
Chief Executive Officer
1001 17th Street, Suite 100
Denver, Colorado 80202
Telephone: (303) 468-2900
(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies of all communications, including communications sent to agent for service, should be sent to:

Robert M. Hayward, P.C.
Robert E. Goedert, P.C.
Michael P. Keeley
Kirkland & Ellis LLP
300 North LaSalle
Chicago, Illinois 60654
(312) 862-2000

 

Eric C. Jensen
Matthew P. Dubofsky
Michael L. Platt
Cooley LLP
380 Interlocken Crescent
Suite 900
Broomfield, Colorado 80021
(720) 566-4000

Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.



             If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box:    o

             If this Form is filed to registered additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

             If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities act registration statement number of the earlier effective registration statement for the same offering.    o

             If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

             Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý   Smaller reporting company o

Emerging growth company ý

             If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. o

 

Title of Each Class of Securities
to be Registered

  Proposed Maximum
Aggregate Offering
Price(1)(2)
  Amount of
Registration Fee
 

Common Stock, par value $0.001 per share

  $100,000,000   $12,120

 

(1)
Includes the aggregate offering price of shares of common stock subject to the underwriters' option to purchase additional shares.

(2)
Estimated solely for purposes of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

             The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

   


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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion. Dated August 23, 2019.

Shares

LOGO

Common Stock



          This is an initial public offering of shares of common stock of Ping Identity Holding Corp.

          Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $              and $             . We have applied to list our common stock on the NASDAQ Global Select Market under the symbol "PING".

          We are an "emerging growth company" as defined under the federal securities laws, and as such, we have elected to comply with certain reduced reporting requirements for this prospectus and may elect to do so in future filings.

          See "Risk Factors" beginning on page 15 to read about factors you should consider before buying shares of our common stock.

          Immediately after this offering, assuming an offering size as set forth above, funds controlled by our equity sponsor, Vista Equity Partners, will own approximately         % of our outstanding common stock (or         % of our outstanding common stock if the underwriters' option to purchase additional shares is exercised in full). As a result, we expect to be a "controlled company" within the meaning of the corporate governance standards of the NASDAQ Global Select Market. See "Management — Corporate Governance — Controlled Company Status".



          Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.



  Per Share   Total
 

Initial public offering price

  $            $           

Underwriting discount(1)

  $            $           

Proceeds, before expenses, to Ping Identity Holding Corp. 

  $            $           

(1)
See "Underwriting" for a description of compensation payable to the underwriters.

          To the extent that the underwriters sell more than                          shares of common stock, the underwriters have the option to purchase up to an additional                          shares of our common stock at the initial public offering price less the underwriting discount.

          The underwriters expect to deliver the shares of common stock against payment in New York, New York on                          , 2019.



Goldman Sachs & Co. LLC   BofA Merrill Lynch   RBC Capital Markets   Citigroup

 

Barclays   Credit Suisse   Deutsche Bank Securities   Wells Fargo Securities

 

Raymond James   Stifel   William Blair   Mizuho Securities   Oppenheimer & Co.

   

Prospectus dated                          , 2019


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TABLE OF CONTENTS

    Page
 

Prospectus Summary

    1  

Risk Factors

    15  

Forward-Looking Statements

    57  

Market and Industry Data

    60  

Use of Proceeds

    61  

Dividend Policy

    63  

Capitalization

    64  

Dilution

    66  

Selected Consolidated Financial Data

    68  

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

    73  

Business

    107  

Management

    124  

Executive Compensation

    131  

Principal Shareholders

    137  

Certain Relationships and Related Party Transactions

    139  

Description of Certain Indebtedness

    143  

Description of Capital Stock

    146  

Shares Eligible for Future Sale

    153  

Material U.S. Federal Income Tax Consequences to Non-U.S. Holders

    155  

Underwriting

    160  

Legal Matters

    166  

Experts

    166  

Where You Can Find More Information

    167  

Index to Consolidated Financial Statements

    F-1  



          You should rely only on the information contained in this prospectus or contained in any free writing prospectus filed with the Securities and Exchange Commission, or SEC. Neither we nor any of the underwriters have authorized anyone to provide any information or make any representations other than those contained in this prospectus or in any free writing prospectus filed with the SEC. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common stock. Our business, financial condition, results of operations, and prospects may have changed since such date.

          For investors outside of the United States, neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about, and to observe any restrictions relating to, this offering and the distribution of this prospectus outside of the United States.

          Through and including                           , 2019 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.


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PROSPECTUS SUMMARY

          This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our common stock. For a more complete understanding of us and this offering, you should read and carefully consider the entire prospectus, including the more detailed information set forth under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes. Some of the statements in this prospectus are forward-looking statements. See "Forward-Looking Statements".

          Unless the context otherwise requires, the terms "Ping", the "Company", "our company", "we", "us" and "our" in this prospectus refer to Ping Identity Holding Corp. and, where appropriate, its consolidated subsidiaries. The term "Vista" or "our Sponsor" refers to Vista Equity Partners, our equity sponsor, and the term "Vista Funds" refers to Vista Equity Partners Fund VI, L.P., Vista Equity Partners Fund VI-A, L.P. and VEPF VI FAF, L.P.


Our Mission

          Our mission is to secure the digital world through Intelligent Identity.


Overview

          Ping is pioneering Intelligent Identity. We enable secure access to any service, application or API from any device. Our Intelligent Identity Platform can leverage artificial intelligence and machine learning to analyze device, network, application and user behavior data to make real-time authentication and security control decisions, enhancing the user experience. Our platform is designed to detect anomalies and automatically insert additional security measures, such as multi-factor authentication, only when necessary. We built our platform to meet the requirements of the most demanding enterprises. Our platform can be deployed across cloud, hybrid and on-premise infrastructures, offers a comprehensive suite of turnkey integrations and is able to scale to millions of identities and thousands of cloud and on-premise applications in a single deployment. As of June 30, 2019, our platform secures over two billion identities globally across our customer base.

          Enterprises are undergoing digital transformation as they seek to create new revenue streams, transition business models and increase customer engagement. Concurrently, enterprises are becoming more distributed as the adoption of cloud, mobile and the Internet of Things, or IoT, moves data, applications and access requirements beyond the traditional network perimeter. These enterprises must contend with an evolving cyber-threat landscape, new privacy directives and stringent regulatory requirements. As a result, enterprises require Intelligent Identity solutions that proactively ensure the right user has authorized access to resources at the appropriate time.

          Our Intelligent Identity Platform can secure all primary use cases, including customer, employee, partner and IoT. For example, enterprises can use our platform to enhance their customers' user experience by creating a single ID and login across web and mobile properties. For the year ended December 31, 2018, 44% of our subscription revenue was derived from the customer use case. Enterprises can also use our platform to provide their employees and commercial partners with secure, seamless access from any device to the applications, data and application programming interfaces, or APIs, they need to be productive. Enterprises are increasingly using our platform to manage and authenticate IoT devices, such as connected vehicles and consumer devices.

          Our Intelligent Identity Platform is comprised of six solutions that can be purchased individually or as a set of integrated offerings for the customer, employee, partner or IoT use case:

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We have spent over a decade building a comprehensive suite of turnkey integrations designed to ensure that enterprises can use our platform to secure their applications wall-to-wall, facilitating easier deployment and rapid time-to-value.

          We sell our solutions via a subscription model through a direct sales force, with increasing influence from our channel partners. Our SSO, Access Security and Directory solutions typically replace legacy and homegrown systems. We also have significant greenfield opportunities with our MFA, Data Governance and API Intelligence solutions and, increasingly, the IoT use case.

          Our "land and expand" strategy targets enterprises with a specific solution and use case and then seeks to grow our footprint with additional solutions, use cases and identities. The success of our strategy is validated by our strong dollar-based net retention rates and our growing number of large customers. Our dollar-based net retention rates were 123%, 116% and 115% at December 31, 2017 and 2018 and June 30, 2019, respectively, and our dollar-based net retention rates have exceeded 115% for each of the past eight fiscal quarters. Our customers with annual recurring revenue, or ARR, over $250,000 increased from 144 at December 31, 2017 to 202 at December 31, 2018, representing a growth rate of 40%. Our total customers increased from 1,264 at December 31, 2017 to 1,284 at December 31, 2018. The gross increase in total customers for the 2018 fiscal year was partially offset by customer churn, primarily consisting of low contract value churn of customers with ARR below $25,000. The increase of 58 net customers with ARR greater than $250,000 for the 2018 fiscal year is comprised of 16 new customers and 42 existing customers that had ARR grow to exceed $250,000 in 2018. Additionally, at December 31, 2018, we had 25 customers with greater than $1,000,000 in ARR. An increasing number of our customers are deploying a combination of our solutions across multiple business units, functions and use cases in their initial purchase. For definitions of ARR and dollar-based net retention rate and descriptions of how we calculate these metrics, see "Management's Discussion and Analysis of Financial Condition and Results of Operations".

          Our customers include many of the world's largest enterprises, including over 50% of the Fortune 100. These customers are security-focused, and typically operate in regulated industries, have hybrid IT infrastructures, require turnkey integrations and have demanding scalability requirements. Our solutions secure 12 of the 12 largest U.S. banks (measured by assets), 8 of the 10 largest bio-pharmaceutical companies (measured by revenue), 4 of the 5 largest healthcare plans (measured by revenue) and 5 of the 7 largest U.S. retailers (measured by revenue).

          Since our inception, we have been an innovator in identity. We pioneered the concept of Intelligent Identity, which leverages artificial intelligence, or AI, and machine learning, or ML, to analyze device, network, application and user behavior data to secure access and enhance the user experience. We contributed to or co-authored many of the open identity standards such as SAML, OAuth, SCIM and OpenID Connect, which form the foundation of our industry. We have consistently been recognized as a leader in the Identity and Access Management, or IAM, industry by Gartner and KuppingerCole.

          We sell our solutions via a subscription model typically billed annually in advance. Our ARR was $147.0 million and $183.6 million at December 31, 2017 and 2018, respectively, representing year-over-year growth of 25%. Our ARR was $159.6 million and $198.0 million at June 30, 2018 and

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2019, respectively, representing period-over-period growth of 24%. We have grown revenue from $172.5 million for the year ended December 31, 2017 to $201.6 million for the year ended December 31, 2018, representing year-over-year growth of 17%. We have grown revenue from $99.5 million for the six months ended June 30, 2018 to $112.9 million for the six months ended June 30, 2019, representing period-over-period growth of 14%. Our net income was $19.0 million for the year ended December 31, 2017. Our net loss was $13.4 million for the year ended December 31, 2018. We had net losses of $5.8 million and $3.1 million for the six months ended June 30, 2018 and 2019, respectively. Our cash provided by operations was $3.4 million and $22.9 million for the years ended December 31, 2017 and 2018, respectively. Our cash provided by operations was $13.0 million and $8.1 million for the six months ended June 30, 2018 and 2019, respectively. Our Free Cash Flow was $(2.5) million and $13.1 million for the years ended December 31, 2017 and 2018, respectively. Our Free Cash Flow was $8.9 million and $1.2 million for the six months ended June 30, 2018 and 2019, respectively. Free Cash Flow is a supplemental measure that is not calculated and presented in accordance with generally accepted accounting principles in the United States, or GAAP. See "Selected Consolidated Financial Data—Non-GAAP Financial Measures" for a definition of Free Cash Flow and a reconciliation to its most directly comparable GAAP financial measure.


Industry Background

          IAM is the foundation for maximizing security and enhancing user experience in a distributed and highly-connected digital world, where the traditional network perimeter has dissolved and the attack surface has expanded. In this digital world, legacy IAM solutions are proving ill-suited to address cloud, mobile, IoT and API requirements. Similarly, cloud-only IAM vendors are unable to meet the requirements of large enterprises that have hybrid IT infrastructures.

Enterprises are Undergoing Digital Transformations and Embracing Technology Trends

          Digital Transformation is Critical to Driving Competitive Differentiation.    Enterprises are investing in technology to grow their digital presence, create new revenue streams, transition business models and increase customer engagement. In order to accomplish this, enterprises must engage with their customers across digital channels. As consumers have become accustomed to seamless access and high-quality experiences from companies such as Amazon, Google and Netflix, all enterprises are under pressure to meet rising expectations or risk being disrupted by competitors.

          Enterprises are Embracing Cloud Computing, SaaS and Mobility.    Enterprises are transitioning a portion of their IT budgets to invest in cloud computing to build new services, shorten time-to-value and drive cost efficiency. The adoption of Software-as-a-Service, or SaaS, applications and mobility is empowering business users and partners to increase productivity, facilitate collaboration, reengineer business processes and drive new opportunities for growth. The consumerization of IT and shift towards a distributed workforce has caused employees and partners to demand seamless access to cloud and on-premise applications from any device.

          APIs and IoT Devices are Dramatically Expanding the Number of New Connections.    APIs have become critical to software development and act as gateways to other digital services by facilitating the connection and data sharing between heterogeneous systems and applications. APIs have become the building blocks of the web and will help drive the future of software by powering new applications, enabling communications and automating business processes.

          Enterprises are also deploying IoT devices embedded with software and sensors to connect with their customers, collect streaming data and analyze endpoint performance. According to IDC,

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the worldwide installed base of IoT devices is expected to grow from 23 billion in 2018 to more than 41 billion in 2025, representing a CAGR of 9%.

Digital Transformation Initiatives have Created Challenges and Complexity for Enterprises

          Cloud, Mobile and IoT Have Expanded the Attack Surface.    The rapid adoption of cloud-based offerings and the proliferation of mobile and IoT devices have expanded the attack surface for cyber threats, moving users, devices, applications and data outside the traditional network perimeter. As a result of this shift, identity has become the most common vulnerability that hackers seek to exploit. According to a 2017 Verizon report, 81% of hacking-related breaches leveraged stolen and/or weak passwords.

          New Technology Adoption has Created Complex Hybrid and Multi-Cloud IT Challenges.    Enterprises are increasingly reliant on both cloud and on-premise applications, which is creating complex hybrid IT infrastructures. According to IDC, public cloud spending is projected to grow from 33% of worldwide IT infrastructure spend in 2018 to 38% in 2023. A significant portion of IT budgets, however, will continue to be allocated to on-premise IT infrastructure. As a result, enterprises increasingly require solutions capable of spanning both cloud and on-premise infrastructures to support their hybrid realities. As the adoption of cloud matures, enterprises are focused on optimizing for performance, cost and security while also maintaining flexibility to operate across multiple clouds. IDC expects more than 90% of enterprise IT organizations will commit to multi-cloud architectures by 2020.

          The Rise of APIs has Created New Security Vulnerabilities.    The rapid proliferation of APIs has created new security vulnerabilities due to their connectivity with critical systems and access to data. Breaches associated with API gateways can remain undetected for extended periods of time because of a lack of visibility into API traffic and an inability to monitor anomalies or abuse.

The Identity Landscape is Large and Evolving

          Identity is a vast landscape, comprised of three distinct established markets that each require different solutions. Our Intelligent Identity Platform focuses on the largest of these markets, IAM. We partner with leading companies in the adjacent markets, Privileged Access Management, or PAM, and Identity Governance and Administration, or IGA. The objectives, workflows and interfaces of these three markets remain distinct and have little overlap.

Existing IAM Solutions are Limited

          Legacy IAM solutions generally do not meet enterprises' evolving requirements because of these inherent limitations: not being designed for cloud environments, mobile and IoT devices or

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APIs; being cumbersome and expensive to deploy; having a tendency to experience stability problems; and being at or near end of life.

          Cloud-only IAM solutions generally do not meet enterprises' evolving requirements because of these inherent limitations: lacking in-depth enterprise features and robust integrations across on-premise applications; primarily being focused on the employee use case; having an unproven ability to scale; and only meeting minimal security requirements.

Intelligent Identity is Needed Now More than Ever

          Enterprises are under pressure to innovate faster, improve productivity and deliver exceptional user experiences through digitalization, all while maximizing security. The question "Who are you?" must be asked and satisfactorily answered as a precondition to every digital interaction. Intelligent Identity asks and answers the question by leveraging AI and ML to analyze device, network, application and user behavior data to make real-time authentication and security control decisions. Additional security measures, which impose friction on the user experience, are only utilized if anomalies in behavior or data are detected or in high-value transactions. This optimizes the balance between securing access and providing an enhanced user experience.


Our Market Opportunity

          According to IDC, the worldwide market for IAM is expected to grow from $6.6 billion in 2018 to $9.0 billion in 2023, representing a CAGR of approximately 6%. Based on management's internal analysis, we estimate that our market opportunity is greater than $25 billion across our use cases. For a more detailed description of how we calculate our market opportunity, see "Business — Our Market Opportunity". We believe our market opportunity has the potential to expand in the future as the proliferation of IoT and APIs increases connections, complexity and the number of identities in the enterprise.

          Our market includes opportunities for both greenfield expansion and replacement of legacy and homegrown solutions. We believe security budgets are shifting from network-centric to identity-centric solutions because the adoption of cloud, mobile and IoT has led to a disappearing network perimeter. We believe the focus of cybersecurity will continue to shift to the user as targeted attacks against users and their credentials increase. As a result, we believe that IAM will represent a larger portion of future security budgets, which we are well positioned to capture.


Our Growth Strategy

          The key elements of our growth strategy include:

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Our Intelligent Identity Platform

          Our Intelligent Identity Platform is comprised of six solutions (SSO, MFA, Access Security, Directory, Data Governance and API Intelligence) and supports all primary use cases and deployment options. Our Intelligent Identity Platform provides the following key benefits:

Our Intelligent Identity Platform Supports All Primary Use Cases

Deployment Flexibility

          We have designed our solutions for flexible deployment because every enterprise has different customization, control, security and privacy needs. Our deployment flexibility provides the optionality to adopt cloud-based offerings for rapid deployment, remain on-premise for maximum control or to comply with industry regulations or deploy in a hybrid manner. Our deployment options include:

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Risks Associated with Our Business

          There are a number of risks related to our business, this offering and our common stock that you should consider before you decide to participate in this offering. You should carefully consider all the information presented in the section entitled "Risk Factors" in this prospectus. Some of the principal risks related to our business include the following:

          These and other risks are more fully described in the section entitled "Risk Factors" in this prospectus. If any of these risks actually occurs, our business, financial condition, results of operations, cash flows and prospects could be materially and adversely affected. As a result, you could lose all or part of your investment in our common stock.


Our Sponsor

          We have a valuable relationship with our equity sponsor, Vista. In May 2016, Vista formed our company for the purpose of acquiring all of the capital stock of Ping Identity Corporation. We refer to this transaction as the "Vista Acquisition".

          Vista is a U.S.-based investment firm with offices in Austin, San Francisco, Chicago, New York and Oakland with more than $50 billion in cumulative capital commitments. Vista exclusively invests in software, data and technology-enabled organizations led by world-class management teams. As a value-added investor with a long-term perspective, Vista contributes professional expertise and multi-level support towards companies to realize their potential. Vista's investment approach is anchored by a sizable long-term capital base, experience in structuring technology-oriented transactions and proven management techniques that yield flexibility and opportunity.


General Corporate Information

          We were incorporated in 2016 as Roaring Fork Holding, Inc., a Delaware corporation, in connection with the Vista Acquisition. Effective August 22, 2019, the name of our company was changed to Ping Identity Holding Corp. Our principal executive offices are located at 1001 17th Street, Suite 100, Denver, Colorado 80202. Our telephone number is (303) 468-2900. Our

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website address is www.pingidentity.com. The information contained on, or that can be accessed through, our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common stock. We are a holding company and all of our business operations are conducted through our subsidiaries.

          This prospectus includes our trademarks and service marks such as "Ping Identity," "Ping Intelligent Identity" "Ping Intelligent Identity Platform" and "Identiverse", which are protected under applicable intellectual property laws and are the property of us or our subsidiaries. This prospectus also contains trademarks, service marks, trade names and copyrights of other companies, such as "Amazon", "Google", and "Microsoft" which are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names.


Implications of Being an Emerging Growth Company

          We qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year following the fifth anniversary of the completion of this offering, (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion, (3) the date on which we are deemed to be a large accelerated filer (this means the market value of common that is held by non-affiliates exceeds $700.0 million as of the end of the second quarter of that fiscal year) or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

          An emerging growth company may take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:

          We have elected to take advantage of certain of the reduced disclosure obligations regarding financial statements (such as not being required to provide audited financial statements for the year ended December 31, 2016 or five years of Selected Consolidated Financial Data) in this prospectus and executive compensation in this prospectus and expect to elect to take advantage of other reduced burdens in future filings. As a result, the information that we provide to our shareholders may be different than you might receive from other public reporting companies in which you hold equity interests.

          The JOBS Act also permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to "opt-in" to this extended transition period for complying with new or revised accounting standards and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that comply with such new or revised accounting standards on a non-delayed basis.

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THE OFFERING

Common stock offered

               shares.

Option to purchase additional shares

 

             shares.

Common stock to be outstanding after this offering

 

             shares (or             shares if the underwriters' option to purchase additional shares is exercised in full).

Use of proceeds

 

We estimate that our net proceeds from this offering will be approximately $             million, or approximately $             million if the underwriters' option to purchase additional shares is exercised in full, assuming an initial public offering price of $             per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us.

 

The principal purposes of this offering are to increase our capitalization and financial flexibility, create a public market for our common stock and enable access to the public equity markets for us and our shareholders. We expect to use approximately $              million of the net proceeds of this offering (or $              million of the net proceeds of this offering if the underwriters exercise their option to purchase additional shares in full) to repay outstanding borrowings under our Term Loan Facility (as defined herein) and the remainder of such net proceeds will be used for general corporate purposes. At this time, other than repayment of indebtedness under our Term Loan Facility, we have not specifically identified a large single use for which we intend to use the net proceeds and, accordingly, we are not able to allocate the net proceeds among any of these potential uses in light of the variety of factors that will impact how such net proceeds are ultimately utilized by us. See "Use of Proceeds" for additional information.

Controlled company

 

After this offering, assuming an offering size as set forth in this section, the Vista Funds will own approximately         % of our common stock (or         % of our common stock if the underwriters' option to purchase additional shares is exercised in full). As a result, we expect to be a controlled company within the meaning of the corporate governance standards of the NASDAQ Global Select Market, or NASDAQ. See "Management — Corporate Governance — Controlled Company Status".

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Directed share program

 

At our request, the underwriters have reserved up to             shares of common stock, or         % of the shares of common stock to be offered by this prospectus for sale, at the initial public offering price, to directors, officers, and their friends and family members through a directed share program. If purchased by these persons, these shares will not be subject to a lock-up restriction, except in the case of shares purchased by any director or officer. The number of shares of common stock available for sale to the general public will be reduced to the extent these individuals or entities purchase such reserved shares. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered by this prospectus.

Risk factors

 

Investing in our common stock involves a high degree of risk. See "Risk Factors" elsewhere in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock.

Proposed trading symbol

 

"PING".

          The number of shares of common stock to be outstanding following this offering is based on                    shares of common stock outstanding as of June 30, 2019, and excludes:

          Unless otherwise indicated, all information in this prospectus assumes:

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Summary Consolidated Financial Data

          The following tables summarize our consolidated financial data. The summary consolidated statements of operations data and summary consolidated statements of cash flows data for the years ended December 31, 2017 and 2018 and the summary consolidated balance sheets data as of December 31, 2017 and 2018 are derived from our audited consolidated financial statements that are included elsewhere in this prospectus. The summary consolidated statements of operations data and the summary consolidated statements of cash flows data for the six months ended June 30, 2018 and 2019 and the summary consolidated balance sheet data as of June 30, 2019 are derived from our unaudited interim consolidated financial statements that are included elsewhere in this prospectus. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, that are necessary for the fair statement of our unaudited interim consolidated financial statements.

          Our historical results are not necessarily indicative of the results that may be expected in the future. You should read the summary historical financial data below in conjunction with the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and related notes included elsewhere in this prospectus.

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    Year Ended
December 31,
    Six Months
Ended June 30,
 

    2017     2018     2018     2019
 

    (in thousands, except share and
per share amounts)
 

Consolidated Statements of Operations Data:

                         

Revenue:

                         

Subscription

  $ 160,219   $ 184,991   $ 90,576   $ 103,892  

Professional services and other

    12,320     16,571     8,874     9,006  

Total revenue

    172,539     201,562     99,450     112,898  

Cost of revenue:

                         

Subscription (exclusive of amortization shown below)

    14,054     17,512     8,259     10,833  

Professional service and other (exclusive of amortization shown below)

    9,155     12,703     5,837     6,916  

Amortization expense

    12,626     14,396     7,064     7,822  

Total cost of revenue

    35,835     44,611     21,160     25,571  

Gross profit

    136,704     156,951     78,290     87,327  

Operating Expenses:

                         

Sales and marketing(1)

    49,481     60,140     28,121     37,334  

Research and development(1)

    26,215     36,229     16,393     22,311  

General and administrative(1)

    20,202     28,355     13,079     15,748  

Depreciation and amortization

    16,526     16,341     8,356     8,274  

Total operating expenses

    112,424     141,065     65,949     83,667  

Income from operations

    24,280     15,886     12,341     3,660  

Other Income (Expense):

                         

Interest expense

    (19,277 )   (15,837 )   (7,791 )   (8,249 )

Loss on extinguishment of debt

        (9,785 )   (9,785 )    

Other income (expense), net

    773     (335 )   (912 )   225  

Total other income (expense)

    (18,504 )   (25,957 )   (18,488 )   (8,024 )

Income (loss) before income taxes           

    5,776     (10,071 )   (6,147 )   (4,364 )

Benefit (provision) for income taxes

    13,185     (3,375 )   391     1,241  

Net income (loss)

  $ 18,961   $ (13,446 ) $ (5,756 ) $ (3,123 )

Per Share Data(2):

                         

Net income (loss) per share:

                         

Basic

  $ 49.60   $ (35.17 ) $ (15.05 ) $ (8.17 )

Diluted

  $ 49.60   $ (35.17 ) $ (15.05 ) $ (8.17 )

Weighted-average shares used in computing net income (loss) per share:

                         

Basic

    382,258     382,365     382,364     382,425  

Diluted

    382,297     382,365     382,364     382,425  

Pro forma net income (loss) per share(3):

                         

Basic

        $                       $                

Diluted

        $                       $                

Weighted-average shares used in computing pro forma net income (loss) per share(3):

                         

Basic

                         

Diluted

                         

Consolidated Statements of Cash Flows Data:

                         

Net cash provided by operating activities

  $ 3,423   $ 22,886   $ 13,015   $ 8,064  

Net cash used in investing activities

  $ (5,961 ) $ (26,661 ) $ (21,566 ) $ (6,822 )

Net cash provided by (used in) financing activities

  $ 101   $ 67,102   $ 68,921   $ (1,951 )

Non-GAAP Financial Data (unaudited):

                         

Free Cash Flow(4)

  $ (2,538 ) $ 13,139   $ 8,863   $ 1,242  

Non-GAAP Gross Profit(5)

  $ 149,330   $ 171,347   $ 85,354   $ 95,149  

Adjusted EBITDA(6)

  $ 55,956   $ 56,137   $ 32,216   $ 24,132  

Other Data:

                         

ARR as of the period ended(7)

  $ 146,969   $ 183,579   $ 159,563   $ 197,990  

Dollar-based net retention rate for the trailing twelve months ended(8)

    123%     116%     118%     115%  

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(1)
Includes stock-based compensation as follows:

    Year Ended
December 31,
    Six Months
Ended
June 30,
 

    2017     2018     2018     2019
 

    (in thousands)  

Sales and marketing

  $ 626   $ 726   $ 351   $ 410  

Research and development

    297     342     108     433  

General and administrative

    1,601     1,780     821     1,256  

Total

  $ 2,524   $ 2,848   $ 1,280   $ 2,099  
(2)
See Note 13 to our consolidated financial statements appearing elsewhere in this prospectus for an explanation of the method used to calculate our basic and diluted net income (loss) per share and the weighted-average number of shares used in the computation of the per share amounts.

(3)
Pro forma basic and diluted net income (loss) per share and pro forma weighted-average common shares outstanding have been computed to give effect to the issuance by us of shares of common stock in this offering and the application of the net proceeds from this offering to repay $              million of outstanding borrowings under our Term Loan Facility as set forth under "Use of Proceeds," assuming an initial public offering price of $             per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us. This pro forma data is presented for informational purposes only and does not purport to represent what our net income (loss) or net income (loss) per share actually would have been had the offering and use of proceeds therefrom occurred on January 1, 2018 or to project our net income (loss) or net income (loss) per share for any future period.

(4)
We define Free Cash Flow as net cash provided by (used in) operating activities less cash used for purchases of property and equipment and capitalized software development costs. For a reconciliation of Free Cash Flow to net cash flow provided by (used in) operations, the most directly comparable measure calculated and presented in accordance with GAAP, see "Selected Consolidated Financial Data — Non-GAAP Financial Measures".

(5)
We define Non-GAAP Gross Profit as gross profit adjusted for certain amortization expense of acquired intangible assets and software developed for internal use. For a reconciliation of Non-GAAP Gross Profit to gross profit, the most directly comparable measure calculated and presented in accordance with GAAP, see "Selected Consolidated Financial Data — Non-GAAP Financial Measures".

(6)
We define Adjusted EBITDA as net income (loss) adjusted for interest expense, loss on extinguishment of debt, benefit for income taxes, depreciation and amortization, stock-based compensation expense, acquisition related expense and other (income) expense, net. For a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable measure calculated and presented in accordance with GAAP, see "Selected Consolidated Financial Data — Non-GAAP Financial Measures".

(7)
See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Business Metrics" for more information with respect to ARR.

(8)
See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Business Metrics" for more information with respect to our dollar-based net retention rate.

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    June 30, 2019
 

    Actual     Pro Forma(1)(2)
 

    (in thousands)  

Consolidated Balance Sheets Data:

             

Cash and cash equivalents

  $ 83,000        

Working capital(3)

    142,805        

Total assets

    849,437        

Deferred revenue, current and noncurrent

    35,490        

Long-term debt, including current portion(4)

    242,725        

Total stockholders' equity

    509,374        

(1)
Gives effect to the issuance by us of                  shares of common stock in this offering and the application of the net proceeds from this offering to repay $              million of outstanding borrowings under our Term Loan Facility as set forth under "Use of Proceeds," assuming an initial public offering price of $             per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us.

(2)
A $1.00 increase or decrease in the assumed initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease each of cash and cash equivalents, working capital, total assets and total stockholders' equity on a pro forma basis by approximately $              million, assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discount and estimated offering expenses payable by us.

(3)
We define working capital as current assets less current liabilities.

(4)
Net of debt issuance costs of $4.8 million as of June 30, 2019.

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RISK FACTORS

          This offering and an investment in our common stock involve a high degree of risk. You should carefully consider the risks described below, together with the financial and other information contained in this prospectus, before you decide to purchase shares of our common stock. If any of the following risks actually occurs, our business, financial condition, results of operations, cash flows and prospects could be materially and adversely affected. As a result, the trading price of our common stock could decline and you could lose all or part of your investment in our common stock.


Risks Relating to Our Business

If we fail to adapt to rapid technological change, evolving industry standards and changing customer needs, requirements or preferences, our ability to remain competitive could be impaired.

          The IAM market is characterized by rapid technological change, evolving industry standards and changing regulations, as well as changing customer needs, requirements and preferences. The success of our business will depend, in part, on our ability to anticipate, adapt and respond effectively to these changes on a timely and cost-effective basis. In addition, as our customers' technologies and business plans grow more complex, we expect them to face new and increasing challenges. Our customers require that our platform effectively identify and respond to these challenges without disrupting the performance of our customers' IT systems or interrupting their business operations. As a result, we must continually modify and improve our offerings in response to changes in our customers' IT infrastructures and operational needs or end-user preferences. The success of any enhancement to our existing offerings or the deployment of new offerings depends on several factors, including the timely completion and market acceptance of our enhancements or new offerings. Any enhancement to our existing offerings or new offerings that we develop and introduce involves significant commitment of time and resources and is subject to a number of risks and challenges including:

          If we are not successful in managing these risks and challenges, or if our new solutions, solution upgrades and services are not technologically competitive or do not achieve market acceptance, our business, results of operations and financial condition could be adversely affected.

If we are unable to enhance and deploy our cloud-based offerings while continuing to effectively offer our on-premise offerings, our business and operating results could be adversely affected.

          Historically, our revenue has been driven predominately by our on-premise offerings. For the year ended December 31, 2017, $122.1 million, or 71%, of our total revenue was from subscription

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term-based licenses, whereas $38.1 million, or 22%, of our total revenue was from subscription SaaS and support and maintenance. For the year ended December 31, 2018, $133.7 million, or 66%, of our total revenue was from subscription term-based licenses whereas $51.3 million, or 25%, of our total revenue was from subscription SaaS and support and maintenance. For the six months ended June 30, 2019, $73.5 million, or 65%, of our total revenue was from subscription term-based licenses whereas $30.4 million, or 27%, of our total revenue was from subscription SaaS and support and maintenance. The remainder of our revenue, or $12.3 million, $16.6 million and $9.0 million for the years ended December 31, 2017 and 2018 and the six months ended June 30, 2019, respectively, was attributable to professional services and other. All of our revenue from support and maintenance and a portion of our revenue from professional services is associated with our on-premise offerings. As a result, for the periods presented, the percentage of our total revenue from all revenue sources associated with on-premise offerings was significantly higher than the percentage of our total revenue based solely on subscription term-based licenses and we expect this to remain true for the foreseeable future. We have responded to the increasing market shift toward cloud-based services by developing and introducing additional cloud-based IAM offerings to our customers. While our customers are increasingly adopting our cloud-based offerings, we expect our customers to continue to require substantial on-premise and hybrid offerings. To support hybrid deployment of our offerings, our developers and support team must be trained on and learn multiple environments in which our platform is deployed, which is more expensive than supporting a cloud-only offering. Moreover, we must engineer our software for on-premise, cloud and hybrid deployments, which we expect will cause us additional research and development expense that may impact our operating results. Furthermore, we cannot assure you that the market for cloud-based offerings will develop at a rate or in the manner we expect or that our cloud-based offerings will be competitive with those of more established cloud-based providers or other new market entrants. We are directing a significant portion of our financial and operating resources to implement a robust and secure cloud-based offering for our customers, but even if we continue to make these investments, we may be unsuccessful in growing or implementing our cloud-based offerings in a way that competes successfully against our current and future competitors and in such event our business, results of operations and financial condition could be harmed. Customers may require features and capabilities that our current solutions do not have and that we may be unable to develop. If we are unable to develop and deploy cloud-based offerings alongside on-premise offerings that satisfy customer preferences in a timely and cost-effective manner, it may harm our ability to renew subscriptions with existing customers and to create or increase demand for our solutions with new customers, and may adversely impact our financial condition and results of operations.

We face intense competition, especially from larger, well-established companies, and we may lack sufficient financial or other resources to maintain or improve our competitive position.

          The IAM market is intensely competitive, and we expect competition to increase in the future from established competitors and new market entrants. We face competition from (1) legacy providers, (2) cloud-only providers and (3) homegrown solutions. Legacy providers include CA Technologies, IBM and Oracle, among others. We also compete with cloud-only providers, such as Okta and OneLogin that primarily focus on the employee use case. Microsoft also competes in our market and has tied its identity services to both its Azure and Office365 offerings. With the recent increase in large merger and acquisition transactions in the technology industry, particularly transactions involving cloud-based technologies, there is a greater likelihood that we will compete with other large technology companies in the future. For example, Amazon or Google could acquire or develop an IAM or identity security platform that competes directly with our solutions. These companies have significant name recognition, considerable resources and existing IT infrastructures and powerful economies of scale and scope, which allow them to rapidly develop and deploy new

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solutions. Many of our existing competitors have, and some of our potential competitors could have, substantial competitive advantages such as greater name recognition and longer operating histories, larger sales and marketing budgets and resources, broader distribution and established relationships with channel partners and customers, greater customer support resources, greater resources to make acquisitions, lower labor and development costs, larger and more mature intellectual property portfolios and substantially greater financial, technical and other resources.

          In addition, some of our larger competitors have substantially broader product offerings and leverage their relationships based on other products they offer or incorporate functionality into existing products to gain business in a manner that discourages users from purchasing our solutions, including through selling at zero or negative margins, product bundling or closed technology platforms. Potential customers may also prefer to purchase from their existing suppliers rather than a new supplier regardless of product performance or features. Our larger competitors often have broader product lines and market focus and are less susceptible to downturns in a particular market. Our competitors may also seek to repurpose their existing offerings to provide identity solutions with subscription models. Additionally, start-up companies that innovate and large competitors that are making significant investments in research and development may invent similar or superior products and technologies that compete with our solutions.

          Consolidation in the markets in which we compete may affect our competitive position. This is particularly true in circumstances where customers are seeking to obtain a broader set of solutions and services than we are currently able to provide. In addition, some of our competitors may enter into new alliances with each other or may establish or strengthen cooperative relationships with system integrators, third-party consulting firms or other parties. Any such consolidation, acquisition, alliance or cooperative relationship could lead to pricing pressure and loss of market share and could result in a competitor with greater financial, technical, marketing, service and other resources, all of which could harm our ability to compete. Furthermore, organizations may be more willing to incrementally add solutions to their existing infrastructure from competitors than to replace their existing infrastructure with our solutions. These competitive pressures in our market or our failure to compete effectively may result in fewer orders and reduced revenue and gross margins. Any failure to meet and address these factors could adversely affect our business, results of operations and financial condition.

A network or data security incident may allow unauthorized access to our network or data or our customers' data, harm our reputation, create additional liability and adversely impact our financial results.

          Increasingly, companies are subject to a wide variety of attacks on their networks and systems. In addition to threats from traditional computer hackers, malicious code (such as malware, viruses, worms and ransomware), employee theft or misuse, password spraying, phishing and distributed denial-of-service, or DDOS, attacks, we now also face threats from sophisticated nation-state and nation-state supported actors who engage in attacks (including advanced persistent threat intrusions) that add to the risks to our internal networks, our platform, our third-party service providers and our customers' systems and the information that they store and process. Despite significant efforts to create security barriers to safeguard against such threats, it is virtually impossible for us to entirely mitigate these risks. As a well-known provider of IAM solutions, we pose an attractive target for such attacks. The security measures we have integrated into our internal networks and platform, which are designed to detect unauthorized activity and prevent or minimize security breaches, may not function as expected or may not be sufficient to protect our internal networks and platform against certain attacks. In addition, techniques used to sabotage or obtain unauthorized access to networks in which data is stored or through which data is transmitted change frequently and generally are not recognized until launched against a target. As a result, we

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may be unable to anticipate these techniques or implement adequate preventative measures to prevent an electronic intrusion into our networks.

          If a breach of customer data security or unauthorized access to customer systems through our platform were to occur, as a result of third-party action, employee error, malfeasance or otherwise, and the confidentiality, integrity or availability of our customers' data or systems was disrupted, we could incur significant liability to our customers and to individuals or businesses whose information we process, and our platform may be perceived as less desirable, which could negatively affect our business and damage our reputation. Our ability to retain existing customers, expand solution and use case penetration with existing customers and acquire new customers is dependent upon our reputation as a trusted intelligent security provider. The importance of our reputation in retaining existing business and acquiring new business is heightened by our focus on enterprise customers. In addition, we have a number of customers that operate in highly-regulated industries where our customers' data is particularly sensitive, such as financial services and healthcare. A network or security breach could damage our relationships with customers, result in the loss of customers across one or more use case or solution and make it more challenging to acquire new customers and such damage would likely be heightened in the event a network or security breach occurred in the highly-regulated industries we serve. Because techniques used to obtain unauthorized access to, or sabotage, systems change frequently and may not be recognized until launched against a target, we and our customers may be unable to anticipate these techniques or implement adequate preventive measures.

          In addition, security incidents impacting our platform or the systems of our third-party service providers could result in a risk of loss or unauthorized access to or disclosure of the information we process on behalf of our customers. This, in turn, could require notification under applicable data privacy regulations, and could lead to litigation, governmental audits and investigations and possible liability, damage our relationships with our existing customers, trigger indemnification and other contractual obligations, cause us to incur investigation, mitigation and remediation expenses, and have a negative impact on our ability to attract and retain new customers. Furthermore, any such incident, including a breach of our customers' systems, could compromise our networks or networks secured by our solutions, creating system disruptions or slowdowns and exploiting security vulnerabilities of our or our customers' networks, and the information stored on our or our customers' systems could be accessed or disclosed without authorization, altered, lost or stolen, which could subject us to liability and cause us financial harm. An actual or perceived breach of our networks, our customers' networks or other networks secured by our solutions, whether or not due to a vulnerability in our platform, may also undermine confidence in our platform or our industry and result in expenditure of significant resources in efforts to analyze, correct, eliminate or work around errors or defects, delayed or lost revenue, delay in the development or release of new solutions or services, an increase in collection cycles for accounts receivable, damage to our brand and reputation, negative publicity, loss of channel partners, customers and sales, increased costs to remedy any problem, increased insurance expense and costly litigation. In addition, if a high profile security incident occurs with respect to another IAM solution provider, our customers and potential customers may lose trust in the value of the IAM solution business model generally, including the security of our solutions, which could adversely impact our ability to retain existing customers or attract new ones, potentially causing a negative impact on our business. Any of these negative outcomes could adversely impact market acceptance of our solutions and could adversely affect our business, results of operations and financial condition.

          Third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as user names, passwords or other information or otherwise compromise the security of our internal networks, electronic systems and/or physical facilities or those of our third-party service providers, in order to gain access to our data or our customers' data, which

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could result in significant legal and financial exposure, a loss of confidence in the security of our platform, interruptions or malfunctions in our operations, and, ultimately, harm to our future business prospects and revenue. We may be required to expend significant capital and financial resources to protect against such threats or to alleviate problems caused by breaches in security.

Our future revenue and operating results will be harmed if we are unable to acquire new customers, if our customers do not renew their arrangements with us, or if we are unable to expand sales to our existing customers or develop new solutions that achieve market acceptance.

          To continue to grow our business, it is important that we continue to acquire new customers. Our success in adding new customers depends on numerous factors, including our ability to (1) offer a compelling Intelligent Identity Platform and effective solutions, (2) execute our sales and marketing strategy, (3) attract, effectively train and retain new sales, marketing, professional services and support personnel in the markets we pursue, (4) develop or expand relationships with channel partners, system integrators and technology partners (5) expand into new geographies and vertical markets, (6) deploy our platform and solutions for new customers and (7) provide quality customer support once deployed.

          It is important to our continued growth that our customers renew their arrangements when existing contract terms expire. Our customers have no obligation to renew their subscription agreements, and our customers may decide not to renew these agreements with a similar contract period, at the same prices and terms or with the same or a greater number of identities, or at all. Our customer retention and expansion rates may decline or fluctuate as a result of a number of factors, including our customers' satisfaction with our solutions, our customer support and professional services, our prices and pricing plans, the competitiveness of other IAM solutions and services, reductions in our customers' spending levels, user adoption of our solutions, deployment success, utilization rates by our customers, new releases and changes to our solutions. Additionally, new consolidations, acquisitions, alliances or cooperative relationships involving one or more of our customers may lead such customers not to renew their existing subscriptions with us.

          Our ability to increase revenue also depends in part on our ability to increase the number of identities managed by our platform and sell more solutions and use cases to our existing and new customers. Our ability to increase sales to existing customers depends on several factors, including their experience with implementing our solutions and using our platform and the existing solutions they have implemented, their ability to integrate our solutions with existing technologies and our pricing model. As we expand our market reach, we may experience difficulties in gaining traction and raising awareness among potential customers regarding the critical role that our solutions play in securing their businesses and we may face more competitive pressure in such markets.

          If our new solutions do not achieve adequate acceptance in the market or if we fail to effectively incorporate features and capabilities that our customers expect, our competitive position could be impaired, and our potential to generate new revenue or to retain existing revenue could be diminished. The adverse effect on our financial results may be particularly acute because of the significant research, development, marketing, sales and other expenses we will have incurred in connection with the new solutions and our ability to introduce compelling new solutions that address the requirements of our customers in light of the dynamic IAM market in which we operate.

          If we are unable to successfully acquire new customers, retain our existing customers, expand sales to existing customers or introduce new solutions, our business, financial condition and operating results could be adversely affected.

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If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service and customer satisfaction or adequately address competitive challenges.

          We have experienced, and may continue to experience, rapid growth and organizational change, which has placed, and may continue to place, significant demands on our management and our operational and financial resources. Additionally, our organizational structure may become more complex as we improve our operational, financial and management controls, as well as our reporting systems and procedures. We may require significant capital expenditures and the allocation of valuable management resources to grow and change in these areas. If we fail to effectively manage our anticipated growth and change, the quality of our platform may suffer, which could negatively affect our brand and reputation and harm our ability to retain and attract customers and employees.

          We currently have international operations in the United Kingdom, Canada, Australia, France, Germany, India, Israel, Netherlands and Switzerland, and we may continue to expand our international operations in these jurisdictions and/or other countries in the future. Our expansion has placed, and our expected future growth will continue to place, a significant strain on our managerial, customer operations, research and development, sales and marketing, administrative, financial and other resources. If we are unable to manage our continued growth successfully, our business and results of operations could suffer.

          In addition, as we expand our business, it is important that we continue to maintain a high level of customer service and satisfaction. As our customer base continues to grow, we will need to expand our account management, customer service and other personnel, and our network of channel partners and system integrators, to provide personalized account management and customer service. If we are not able to continue to provide high levels of customer service, our reputation, as well as our business, results of operations and financial condition, could be adversely affected.

We depend on our senior management team and other key employees, and the loss of one or more of these employees or an inability to attract and retain other highly skilled employees could harm our business.

          Our success depends largely upon the continued services of our senior management team and other key employees. We rely on our leadership team in the areas of research and development, operations, security, marketing, sales, customer support, general and administrative functions and on individual contributors in our research and development and operations functions. From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, which could disrupt our business. We do not have employment agreements with our executive officers or other key personnel that require them to continue to work for us for any specified period and, therefore, they could terminate their employment with us at any time. The loss of one or more the members of our senior management team, or other key employees could harm our business. In particular, the loss of services of our founder and Chief Executive Officer, Andre Durand, could significantly delay or prevent the achievement of our strategic objectives. Changes in our executive management team may also cause disruptions in, and harm to, our business.

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Failure to effectively develop and expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our solutions.

          Our ability to increase our customer base and achieve broader market acceptance of our solutions will depend on our ability to expand our sales and marketing operations. Our business will be harmed if our business development efforts do not generate a corresponding increase in revenue. We may not achieve anticipated revenue growth from expanding our direct sales force if we are unable to hire and develop talented direct sales personnel, if our new direct sales personnel are unable to achieve desired productivity levels in a reasonable period of time, or if we are unable to retain our existing direct sales personnel. There is significant competition for sales personnel with the advanced sales skills and technical knowledge we need. Selling our solution to sophisticated enterprise customers requires particularly talented sales personnel with the ability to communicate the transformative potential of our platform.

We must attract and retain highly qualified personnel in order to execute our growth plan.

          Competition for highly qualified personnel is intense, especially for engineers experienced in designing and developing software and SaaS offerings and experienced sales professionals. In recent years, recruiting, hiring and retaining employees with expertise in our industry has become increasingly difficult as the demand for cybersecurity and identity professionals has increased as a result of the recent cybersecurity attacks on global corporations and governments. We have, from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications. Many of the companies with which we compete for experienced personnel have greater resources than we have. If we hire employees from competitors or other companies, their former employers may attempt to assert that these employees or we have breached certain legal obligations, resulting in a diversion of our time and resources. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be harmed.

If there are interruptions or performance problems associated with our technology or infrastructure, our existing customers may experience service outages, and our new customers may experience delays in the deployment of our platform.

          Our continued growth depends on the ability of our existing and potential customers to access our platform 24 hours a day, seven days a week, without interruption or degradation of performance. We have in the past and may in the future experience disruptions, outages and other performance problems with our infrastructure due to a variety of factors, including infrastructure changes, introductions of new functionality, human or software errors, capacity constraints, DDOS attacks or other security-related incidents. In some instances, we may not be able to identify the cause or causes of these performance problems immediately or in short order. We may not be able to maintain the level of service uptime and performance required by our customers, especially during peak usage times and as our solutions become more complex and our user traffic increases. If our platform is unavailable or if our customers are unable to access our solutions or deploy them within a reasonable amount of time, or at all, our business would be harmed. The adverse effects of any service interruptions on our reputation and financial condition may be disproportionately heightened due to the nature of our business and the fact that our customers expect continuous and uninterrupted access to our solutions and have a low tolerance for interruptions of any duration. Since our customers rely on our solutions to provide and secure access to their IT infrastructures and to support customer-facing applications, any outage on our platform would impair the ability of our customers to operate their businesses, which would negatively impact our brand, reputation and customer satisfaction.

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          Moreover, we depend on services from various third parties to maintain our cloud infrastructure and deploy our solutions, such as Amazon Web Services, or AWS, cloud infrastructure services, which hosts our platform. If a service provider fails to provide sufficient capacity to support our platform or otherwise experiences service outages, such failure could interrupt our customers' access to our services, which could adversely affect their perception of our platform's reliability and our revenue. Any disruptions in these services, including as a result of actions outside of our control, would significantly impact the continued performance of our solutions. In the future, these services may not be available to us on commercially reasonable terms, or at all. Any loss of the right to use any of these services could result in decreased functionality of our solutions until equivalent technology is either developed by us or, if available from another provider, is identified, obtained and integrated into our infrastructure. If we do not accurately predict our infrastructure capacity requirements, our customers could experience service shortfalls. We may also be unable to effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology.

          Our platform is accessed by a large number of customers, often at the same time. As we continue to expand the number of our customers and solutions available to our customers, we may not be able to scale our technology to accommodate the increased capacity requirements, which may result in interruptions or delays in service. In addition, the failure of third-party cloud infrastructure providers, third-party internet service providers or other third-party service providers whose services are integrated with our platform to meet our capacity requirements could result in interruptions or delays in access to our platform or impede our ability to scale our operations. In the event that our service agreements are terminated with our cloud infrastructure providers, or there is a lapse of service, interruption of internet service provider connectivity or damage to such providers' facilities, we could experience interruptions in access to our platform as well as delays and additional expense in arranging new facilities and services.

          Any of the above circumstances or events may harm our reputation, cause customers to terminate their agreements with us, impair our ability to obtain subscription renewals from existing customers, impair our ability to grow our customer base, result in the expenditure of significant financial, technical and engineering resources, subject us to financial penalties and liabilities under our service level agreements, and otherwise could adversely affect our business, results of operations and financial condition.

The delivery of our platform depends on AWS cloud infrastructure services.

          Our SaaS offerings are hosted solely in AWS and our other offerings utilize the cloud infrastructure offered by AWS. Our operations depend on maintaining the configuration, architecture and interconnection specifications required by AWS. Although we have disaster recovery plans that utilize multiple AWS infrastructure locations, any incident affecting this infrastructure that may be caused by fire, flood, severe storm, earthquake, power loss, telecommunications failures, unauthorized intrusion, computer viruses and disabling devices, natural disasters, war, criminal act, military actions, terrorist attacks and other similar events beyond our control could negatively affect our platform. A prolonged AWS service disruption affecting our platform for any of the foregoing reasons could damage our reputation with current and potential customers, expose us to liability, cause us to lose customers or otherwise harm our business. In addition, since all of our cloud-based offerings utilize AWS cloud infrastructure services, in the event of a prolonged AWS services disruption we may not be able to find an alternative provider on commercially reasonable terms or in a timely manner, if at all. We may also incur significant costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the AWS services we use.

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          AWS enables us to order and reserve server capacity in varying amounts and sizes distributed across multiple regions. AWS provides us with computing and storage capacity pursuant to an agreement that continues until terminated by either party. AWS may terminate the agreement by providing 30 days prior written notice and may, in some cases, terminate the agreement immediately for cause upon notice. If AWS terminates its agreement with us, we may be unable to deploy certain of our solutions and our business, results of operations and financial condition may be adversely affected.

          In addition, since all of our cloud-based offerings utilize AWS cloud infrastructure resources, our customers' satisfaction with our cloud-based offerings is dependent in part upon their perceptions and satisfaction with AWS cloud infrastructure services. Dissatisfaction with AWS cloud infrastructure services could damage our relationships with customers and/or result in the loss of customers across one or more use case or solution.

Data privacy concerns, evolving regulations of cloud computing, cross-border data transfer restrictions and other domestic and foreign laws and regulations may limit the use and adoption of, or require modification of, our solutions and services, which could adversely affect our business.

          Laws and regulations related to the provision of services on the Internet are increasing, as federal, state and foreign governments continue to adopt new laws and regulations addressing data privacy and the collection, processing, storage and use of personal information. Internationally, many of the jurisdictions in which we operate have established their own data security and privacy legal frameworks with which we, or our customers, must comply. We have implemented various features and processes intended to enable our customers to better comply with applicable privacy and security requirements, but these features and processes do not guarantee compliance and may not guard against all potential privacy concerns.

          For example, the European Union, or the EU, adopted the General Data Protection Regime, or the GDPR, which became effective and enforceable across all 28 EU member states on May 25, 2018. The GDPR applies to any company established in the EU as well as to those outside the EU if they collect and use personal data in connection with the offering of goods or services to individuals in the EU or the monitoring of their behavior. The GDPR enhances data protection obligations for processors and controllers of personal data, including requiring additional disclosures about how personal information is to be used, and imposing limitations on retention of information, mandatory data breach notification requirements and onerous new obligations on services providers. Under the GDPR, fines of up to €20 million or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, may be imposed. Given the breadth and depth of changes in data protection obligations, complying with its requirements has caused us to expend significant resources and such expenditures are likely to continue into the near future as we respond to new interpretations, additional guidance and potential enforcement actions, and as we continue to negotiate data processing agreements with our customers and business partners.

          In the United States, California enacted the California Consumer Privacy Act, or the CCPA, on June 28, 2018, which takes effect on January 1, 2020. The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. The CCPA may increase our compliance costs and potential liability. Some observers have noted that the CCPA could mark the

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beginning of a trend toward more stringent privacy legislation in the U.S., which could increase our potential liability and adversely affect our business.

          Privacy and data protections laws and regulations are subject to new and differing interpretations and there may be significant inconsistency in laws and regulations among the jurisdictions in which we operate or provide our SaaS offerings. Legal and other regulatory requirements could restrict our ability to store and process data as part of our SaaS offerings, or, in some cases, impact our ability to provide our SaaS offerings in certain jurisdictions. Our inability to provide our offerings in certain jurisdictions, particularly China and Russia, as a result of their local data privacy frameworks may result in the loss of business opportunities from customers operating in, or seeking to expand into, those jurisdictions. In addition, we may seek to engage third party support providers in certain jurisdictions in order to comply with our customers' data privacy concerns and such engagements may be costly.

          Privacy and data protection laws and regulations may also impact our customers' ability to deploy certain of our solutions globally, to the extent they utilize our solutions for storing personal information that they process. Additionally, if third parties that we work with violate applicable laws or our policies, such violations may also put our customers' information at risk and could in turn have an adverse effect on our business. The costs of compliance with, and other burdens imposed by, data privacy laws, regulations and standards may require resources to create new solutions or modify existing solutions, could lead to us being subject to significant fines, penalties or liabilities for noncompliance, could lead to complex and protracted contract negotiations with respect to privacy and data protection terms, and may slow the pace at which we close sales transactions, any of which could harm our business.

          The data protection landscape is rapidly evolving, and we expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security. We cannot yet determine the impact that such future laws, regulations and standards may have on our business. Such laws and regulations are often subject to differing interpretations and may be inconsistent among jurisdictions. Any failure or perceived failure by us to comply with federal, state or foreign laws or regulations, industry standards, contractual obligations or other legal obligations, with respect to any security incident, whether or not resulting in unauthorized access to, or acquisition, release or transfer of personal data or other data, may result in governmental enforcement actions and prosecutions, private litigation, fines and penalties, friction in our customer relationships or adverse publicity, and could cause our customers to lose trust in us, which could have an adverse effect on our reputation and business.

          Around the world, there are numerous lawsuits in process against various technology companies that process personal data. If those lawsuits are successful, it could increase the likelihood that we may be exposed to liability for our own policies and practices concerning the processing of personal data and could hurt our business. Furthermore, the costs of compliance with, and other burdens imposed by, laws, regulations and policies concerning privacy and data security that are applicable to the businesses of our customers may limit the use and adoption of our platform and reduce overall demand for it.

          In addition, if our platform is perceived to cause, or is otherwise unfavorably associated with, violations of privacy or data security requirements, it may subject us or our customers to public criticism and potential legal liability. Existing and potential laws and regulations concerning privacy and data security and increasing sensitivity of consumers to unauthorized processing of personal data may create negative public reactions to technologies, solutions and services such as ours. Public concerns regarding personal data processing, privacy and security may cause some of our customers' end users to be less likely to visit their websites or otherwise interact with them. If enough end users choose not to visit our customers' websites or otherwise interact with them, our customers could stop using our platform. This, in turn, may reduce the value of our service and slow or eliminate the growth of our business.

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Our quarterly operating results and other metrics are likely to vary significantly and be unpredictable, which could cause the trading price of our stock to decline.

          Our operating results and other metrics have historically varied from period to period, and we expect that they will continue to do so as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including:

          Any one of the factors above or the cumulative effect of some of the factors referred to above may result in significant fluctuations in our financial and other operating results, including fluctuations in our key metrics. This variability and unpredictability could result in our failing to meet the expectations of securities analysts or investors for any period. If we fail to meet or exceed such expectations for these or any other reasons, the market price of our shares could fall substantially and we could face costly lawsuits, including securities class action suits. In addition, a significant percentage of our operating expenses are fixed in nature and based on forecasted revenue and

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cash flow trends. Accordingly, in the event of revenue shortfalls, we are generally unable to mitigate the negative impact on margins or other operating results in the short term.

          We may fail to meet or exceed the expectations of securities analysts and investors, and the market price for our common stock could decline. If one or more of the securities analysts who cover us change their recommendation regarding our stock adversely, the market price for our common stock could decline. Additionally, our stock price may be based on expectations, estimates or forecasts of our future performance that may be unrealistic or may not be achieved. Further, our stock price may be affected by financial media, including press reports and blogs.

Our revenue recognition policy and other factors may distort our financial results in any given period and make them difficult to predict.

          Under accounting standards update No. 2014-09 (Topic 606), Revenue from Contracts with Customers, or ASC 606, we recognize revenue when our customer obtains control of goods or services in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. Our subscription revenue includes subscription term-based license revenue, which is recognized when we transfer control of the term-based license to the customer, and subscription SaaS and support and maintenance revenue, which is recognized ratably over the contract period. Because subscription term-based license revenue is recognized upfront, a single, large license in a given period may distort our operating results for that period. In contrast, the impact of agreements that are recognized ratably may take years to be fully reflected in our financial statements. Consequently, a significant increase or decline in our subscription SaaS and support and maintenance contracts in any one quarter will not be fully reflected in the results for that quarter, but will affect our revenue in future quarters. This also makes it challenging to forecast our revenue for future periods, as both the mix of solutions and services we will sell in a given period, as well as the size of contracts, is difficult to predict.

          Furthermore, the presentation of our financial results requires us to make estimates and assumptions that may affect revenue recognition. In some instances, we could reasonably use different estimates and assumptions, and changes in estimates are likely to occur from period to period. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Revenue Recognition".

          Given the foregoing factors, our actual results could differ significantly from our estimates, comparing our revenue and operating results on a period-to-period basis may not be meaningful, and our past results may not be indicative of our future performance.

If we fail to enhance our brand cost-effectively, our ability to expand our customer base will be impaired and our business, results of operations and financial condition may be adversely affected.

          We believe that developing and maintaining awareness of our brand in a cost-effective manner is critical to achieving widespread acceptance of our existing and future solutions and is an important element in attracting new customers. We believe that the importance of brand recognition will increase as competition in our market increases. Successful promotion of our brand will depend largely on the effectiveness of our marketing efforts and on our ability to develop and deploy high-quality, reliable and differentiated solutions to customers. In the past, our efforts to build our brand have involved significant expense. Brand promotion activities may not yield increased revenue, and even if they do, any increased revenue may not offset the expense we incur in building our brand. If we fail to successfully promote and maintain our brand, or incur substantial expense in an unsuccessful attempt to promote and maintain our brand, we may fail to attract new customers or retain our existing customers to the extent necessary to realize a sufficient return on

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our brand-building efforts, and our business, results of operations and financial condition could be adversely affected.

We are subject to anti-corruption, anti-bribery and similar laws, and non-compliance with such laws can subject us to criminal penalties or significant fines and harm our business and reputation.

          We are subject to anti-corruption and anti-bribery and similar laws, such as the U.S. Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, the U.K. Bribery Act 2010 and other anti-corruption, anti-bribery and anti-money laundering laws in countries in which we conduct activities. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly and prohibit companies and their employees and agents from promising, authorizing, making, offering, soliciting, or accepting, directly or indirectly, improper payments or other improper benefits to or from any person whether in the public or private sector. As we increase our international sales and business, our risks under these laws may increase. Noncompliance with these laws could subject us to investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, adverse media coverage and other consequences. Any investigations, actions or sanctions could adversely affect our business, results of operations and financial condition.

We are subject to governmental export and import controls and economic sanctions laws that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws.

          Our business activities are subject to various restrictions under U.S. export and import controls and trade and economic sanctions laws, including the U.S. Commerce Department's Export Administration Regulations, U.S. Customs regulations and various economic and trade sanctions regulations maintained by the U.S. Treasury Department's Office of Foreign Assets Control. U.S. export control laws and U.S. economic sanctions laws include prohibitions on the sale or supply of certain products and services to U.S. embargoed or sanctioned countries, governments, persons and entities. Changes in our solutions or services or changes in applicable export or import regulations may create delays in the introduction and sale of our solutions in international markets, prevent our customers with international operations from deploying our solutions or, in some cases, prevent the export or import of our solutions to certain countries, governments, or persons altogether. Any decreased use of our solutions or limitation on our ability to export or sell our solutions would likely adversely affect our business.

          Furthermore, we incorporate encryption technology into certain of our solutions. U.S. export control laws require authorization for the export of encryption items. In addition, various countries regulate the import of certain encryption technology, including through import permitting and licensing requirements, and have enacted laws that could limit our ability to deploy our solutions and services or could limit our customers' ability to implement our offerings and services in those countries. Obtaining the necessary authorizations, including any required license, for a particular transaction may be time-consuming, is not guaranteed, and may result in the delay or loss of sales opportunities.

          Although we take precautions to prevent our solutions from being provided in violation of U.S. export control and economic sanctions laws, our solutions may have been in the past, and could in the future be, provided inadvertently in violation of such laws. If we fail to comply with U.S. export control and economic sanctions laws and regulations, we and certain of our employees could be subject to civil or criminal penalties, including the possible loss of export privileges and

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monetary penalties. In addition, violations of such laws could result in negative consequences to us, including government investigations, penalties and harm to our reputation.

We function as a HIPAA "business associate" for certain of our customers and, as such, are subject to strict privacy and data security requirements. If we fail to comply with any of these requirements, we could be subject to significant liability, all of which can adversely affect our business as well as our ability to attract and retain new customers.

          The Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their respective implementing regulations, or HIPAA, imposes specified requirements relating to the privacy, security and transmission of individually identifiable health information. Among other things, HITECH makes HIPAA's security standards directly applicable to "business associates". We function as a business associate for certain of our customers that are HIPAA covered entities and service providers, and in that context we are regulated as a business associate for the purposes of HIPAA. If we are unable to comply with our obligations as a HIPAA business associate, we could face substantial civil and even criminal liability. HITECH imposes four tiers of civil monetary penalties and gives state attorneys general authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys' fees and costs associated with pursuing federal civil actions. In addition, many state laws govern the privacy and security of health information in certain circumstances, many of which differ from HIPAA and each other in significant ways and may not have the same effect.

          As a business associate, we are required by HIPAA to maintain HIPAA-compliant business associate agreements with our customers that are HIPAA covered entities and service providers, as well as our subcontractors that access, maintain, create or transmit individually identifiable health information on our behalf for the rendering of services to our HIPAA covered entity and service provider customers. These agreements impose stringent data security and other obligations on us. If we or our subcontractors are unable to meet the requirements of any of these business associate agreements, we could face contractual liability under the applicable business associate agreement as well as possible civil and criminal liability under HIPAA, all of which can have an adverse impact on our business and generate negative publicity, which, in turn, can have an adverse impact on our ability to attract and retain customers.

We may be the subject of various legal proceedings which could have a material adverse effect on our business, financial condition or results of operations.

          In the ordinary course of business, we may be involved in various litigation matters, including but not limited to commercial disputes, employee claims and class actions, and from time to time may be involved in governmental or regulatory investigations or similar matters arising out of our current or future business. Any claims asserted against us, regardless of merit or eventual outcome, could harm our reputation and have an adverse impact on our relationship with our customers and other third parties and could lead to additional related claims. Certain claims may seek injunctive relief, which could disrupt the ordinary conduct of our business and operations or increase our cost of doing business. Our insurance or indemnities may not cover all claims that may be asserted against us, and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation and cause us to expend resources in our defense. Furthermore, there is no guarantee that we will be successful in defending ourselves in future litigation or similar matters under various laws. Should the ultimate judgments or settlements in any future litigation or investigation significantly exceed our insurance coverage, they could adversely affect our business, results of operations and financial condition.

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Our sales cycle is frequently long and unpredictable, and our sales efforts require considerable time and expense.

          Since we primarily focus on selling our solutions to enterprises, the timing of our sales can be difficult to predict. We and our channel partners are often required to spend significant time and resources to better educate and familiarize potential customers with the value proposition of our platform and solutions. Customers often view the purchase of our solutions as a strategic decision and significant investment and, as a result, frequently require considerable time to evaluate, test and qualify our platform and solutions prior to purchasing our solutions. In particular, for customers in highly-regulated industries, the selection of a security solution provider is a critical business decision due to the sensitive nature of these customers' data, which results in particularly extensive evaluation prior to the selection of information security vendors. During the sales cycle, we expend significant time and money on sales and marketing and contract negotiation activities, which may not result in a sale. Additional factors that may influence the length and variability of our sales cycle include:

          If our efforts in pursuing sales and customers are unsuccessful, or if our sales cycles lengthen, our revenue could be lower than expected, which would adversely affect our business, results of operations or financial condition.

Our growth strategy includes the acquisition of other businesses or technologies, and we may not be able to identify suitable acquisition targets or otherwise successfully implement our growth strategy.

          In order to expand our business, we have made several acquisitions of businesses, products and technologies and expect to continue making similar acquisitions and possibly larger acquisitions as part of our growth strategy. The success of our future growth strategy will depend in part on our ability to identify, negotiate, complete and integrate the acquisition of businesses or technologies and, if necessary, to obtain satisfactory debt or equity financing to fund those acquisitions. We expect to continue evaluating potential strategic acquisitions of businesses, assets and technologies. However, we may not be able to identify suitable candidates, negotiate appropriate or favorable acquisition terms, obtain financing that may be needed to consummate such transactions or complete proposed acquisitions. Further, there is significant competition for acquisition and expansion opportunities in the IAM industry.

          Acquisitions are inherently risky, and any acquisitions we complete may not be successful. Our past acquisitions and any acquisitions that we may undertake in the future involve numerous risks, including, but not limited to, the following:

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          We regularly evaluate potential acquisition candidates and engage in discussions and negotiations regarding potential acquisitions; however, even if we execute a definitive agreement for an acquisition, there can be no assurance that we will consummate the transaction within the anticipated closing timeframe, or at all. Further, acquisitions typically involve the payment of a premium over book- and market-values and, therefore, some dilution of our tangible book value and earnings per common share may occur in connection with any future transaction.

          Inherent in any future acquisition is the risk of transitioning company cultures and facilities. The failure to efficiently and effectively achieve such transitions could increase our costs and

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decrease our profitability. Although we expect that the realization of efficiencies related to the integration of any acquired businesses will offset incremental transaction and acquisition-related costs over time, anticipated financial benefits may not be achieved in the near term, or at all.

          Additionally, acquisitions or asset purchases made entirely or partially for cash may reduce our cash reserves or require us to incur additional debt under our credit agreements or otherwise. We may seek to obtain additional cash to fund an acquisition by selling equity or debt securities. We may be unable to secure the equity or debt funding necessary to finance future acquisitions on terms that are acceptable to us. If we finance acquisitions by issuing equity or convertible debt securities, our existing shareholders will experience ownership dilution.

          The occurrence of any of these risks could have a material adverse effect on our business, results of operations or financial condition.

We may need to change our pricing models to compete successfully.

          The intense competition we face in the sales of our solutions and services and general economic and business conditions can put pressure on us to change our prices. If our competitors offer deep discounts on certain solutions or services or develop solutions that the marketplace considers more valuable than ours, we may need to lower prices or offer other favorable terms in order to compete successfully. Any such changes may reduce margins and could adversely affect operating results. Additionally, the increasing prevalence of cloud and SaaS delivery models offered by us and our competitors may unfavorably impact pricing for both our on-premise and cloud-based offerings, as well as overall demand for our on-premise software and service offerings, which could reduce our revenues and profitability. Our competitors may offer lower pricing on their support offerings, which could put pressure on us to further discount our offering or support pricing. We also must determine the appropriate price of our offerings and services to enable us to compete effectively internationally.

          Any broad-based change to our prices and pricing policies could cause our revenue to decline or be delayed as our sales force implements and our customers adjust to new pricing policies. We or our competitors may bundle solutions for promotional purposes or as a long-term go-to-market or pricing strategy or provide guarantees of prices and solution implementations. These practices could, over time, significantly constrain the prices that we can charge for certain of our solutions. If we do not adapt our pricing models to reflect changes in customer use of our solutions or changes in customer demand, our revenue could decrease.

Our failure to meet certain of our service level commitments could harm our business, results of operations and financial condition.

          Our customer agreements contain service level commitments, under which we guarantee specified availability and error resolution times with respect to our solutions. Any failure of or disruption to our infrastructure could make our solutions unavailable to our customers. If we are unable to meet the stated service level commitments to our customers or suffer extended periods of unavailability of our SaaS offerings, we may be contractually obligated to provide affected customers with service credits, or customers could elect to terminate and receive refunds for prepaid amounts related to unused subscriptions. Our revenue, other results of operations and financial condition could be harmed if we suffer unscheduled downtime that exceeds the service level commitments under our agreements with our customers, and any extended service outages could adversely affect our business and reputation as customers may elect not to renew.

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If we fail to offer high-quality customer support, our business and reputation will suffer.

          Once our solutions are deployed, our customers rely on our support services to resolve any issues that may arise. High-quality customer education and customer support is important for the successful marketing and sale of our solutions and for the renewal of existing customers. We must successfully assist our customers in deploying our solutions, resolving performance issues and addressing interoperability challenges with a customer's existing network and security infrastructure. Many enterprises, particularly large enterprises, have complex networks and require high levels of focused support, including premium support offerings, to fully realize the benefits of our solutions. Any failure by us to maintain the expected level of support could reduce customer satisfaction and hurt our customer retention, particularly with respect to our large enterprise customers. To the extent that we are unsuccessful in hiring, training and retaining adequate support resources, our ability to provide adequate and timely support to our customers will be negatively impacted, and our customers' satisfaction with our solutions could be adversely affected. Given our growth, we may in the future engage third parties to provide support services to our customers. Any failure to properly train or oversee such contractors could result in a poor customer experience, which could have an adverse impact on our reputation and ability to renew subscriptions or engage new customers. In addition, most of our contracts with our larger customers require consent in the event we subcontract the services we provide thereunder. The process of obtaining consent to subcontract support services with these customers could be lengthy and there can be no assurance such consent would be provided.

          Furthermore, as we sell our solutions internationally, our support organization faces additional challenges, including those associated with delivering support, training and documentation in languages other than English. Any failure to maintain high-quality customer support, or a market perception that we do not maintain high-quality support, could materially harm our reputation, business, financial condition and results of operations, and adversely affect our ability to sell our solutions to existing and prospective customers. The importance of high-quality customer support will increase as we expand our business and pursue new customers.

Our growth is substantially dependent on the success of our strategic relationships with channel partners and other third parties.

          As part of our business development efforts, we anticipate that we will continue to depend on relationships with third parties, such as our channel partners and system integrators, to sell, market and deploy our solutions. Identifying partners, and negotiating and documenting relationships with them, requires significant time and resources. Our competitors may be effective in providing incentives to channel partners and other third parties to favor their solutions or services over subscriptions to our platform and a substantial number of our agreements with channel partners are non-exclusive such that those channel partners may offer customers the solutions of several different companies, including solutions that compete with ours. Our channel partners may cease marketing or reselling our platform with limited or no notice and without penalty. If our channel partners do not effectively sell, market or deploy our solutions, choose to promote our competitors' solutions or otherwise fail to meet the needs of our customers, our ability to grow our business and sell our solutions may be adversely affected. In addition, acquisitions of such partners by our competitors could result in a decrease in the number of our current and potential customers, as these partners may no longer facilitate the adoption of our applications by potential customers. Further, some of our partners are or may become competitive with certain of our solutions and may elect to no longer integrate with our platform. If we are unsuccessful in establishing or maintaining our relationships with third parties, our ability to compete in the marketplace or to grow our revenue could be impaired, and our results of operations may suffer. Even if we are successful, we cannot

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assure you that these relationships will result in increased customer usage of our solutions or increased revenue.

Adverse general and industry-specific economic and market conditions and reductions in IT and identity spending may reduce demand for our solutions, which could harm our results of operations.

          Our revenue, results of operations and cash flows depend on the overall demand for our solutions. Concerns about the systemic impact of a potential widespread recession (in the United States or internationally), geopolitical issues or the availability and cost of credit could lead to increased market volatility, decreased consumer confidence and diminished growth expectations in the U.S. economy and abroad, which in turn could result in reductions in IT, IAM and identity security spending by our existing and prospective customers. For the six months ended June 30, 2019, 30% of our revenue was derived from the financial services industry, including banking. Negative economic conditions, including in the financial services industry, may cause customers to reduce their IT spending. Prolonged economic slowdowns may result in customers delaying or canceling IT projects, choosing to focus on in-house development efforts or seeking to lower their costs by requesting us to renegotiate existing contracts on less advantageous terms or defaulting on payments due on existing contracts or not renewing at the end of the contract term.

          Our customers may merge with other entities who use alternative IAM solutions and, during weak economic times, there is an increased risk that one or more of our customers will file for bankruptcy protection, either of which may harm our revenue, profitability and results of operations. We also face risk from international customers that file for bankruptcy protection in foreign jurisdictions, particularly given that the application of foreign bankruptcy laws may be more difficult to predict. In addition, we may determine that the cost of pursuing any claim may outweigh the recovery potential of such claim. As a result, broadening or protracted extension of an economic downturn could harm our business, revenue, results of operations and cash flows.

If our platform and solutions do not effectively interoperate with our customers' existing or future IT infrastructures, our business would be harmed.

          Our success depends on the interoperability of our platform and solutions with our customers' IT infrastructures, including third-party operating systems, applications, data and devices that we have not developed and do not control. Any changes in such infrastructure, operating systems, applications, data or devices that degrade the functionality of our platform or solutions or give preferential treatment to competitive solutions could adversely affect the adoption and usage of our platform. We may not be successful in quickly or cost effectively adapting our platform or solutions to operate effectively with these operating systems, applications, data or devices. If it is difficult for our customers to access and use our platform or solutions, or if our platform or solutions cannot connect a broadening range of applications, data and devices, then our customer growth and retention may be harmed, and our business, results of operations and financial condition could be adversely affected. We rely on open standards for many integrations between our solutions and third-party applications that our customers utilize, and in other instances on such third parties making available the necessary tools for us to create interoperability with their applications. If application providers were to move away from open standards, or if a critical, widely-utilized application provider were to adopt proprietary integration standards and not make them available for the purposes of facilitating interoperability with our platform, the utility of our solutions for our customers would be decreased.

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Our ability to introduce new solutions and features is dependent on adequate research and development resources and our ability to successfully complete acquisitions. If we do not adequately fund our research and development efforts or complete acquisitions successfully, we may not be able to compete effectively and our business and results of operations may be harmed.

          To remain competitive, we must continue to offer new solutions and enhancements to our platform. This is particularly true as we further expand and diversify our capabilities. Maintaining adequate research and development resources, such as the appropriate personnel and development technology, to meet the demands of the market is essential. If we elect not to or are unable to develop solutions internally due to certain constraints, such as high employee turnover, lack of management ability or a lack of other research and development resources, we may choose to expand into a certain market or strategy via an acquisition for which we could potentially pay too much or fail to successfully integrate into our operations. Further, many of our competitors expend a considerably greater amount of funds on their respective research and development programs, and those that do not may be acquired by larger companies that would allocate greater resources to our competitors' research and development programs. Our failure to maintain adequate research and development resources or to compete effectively with the research and development programs of our competitors would give an advantage to such competitors and our business, results of operations and financial condition could be adversely affected. Moreover, there is no assurance that our research and development or acquisition efforts will successfully anticipate market needs and result in significant new marketable solutions or enhancements to our solutions, design improvements, cost savings, revenues or other expected benefits. If we are unable to generate an adequate return on such investments, we may not be able to compete effectively and our business and results of operations may be materially and adversely affected.

Our success depends, in part, on the integrity and scalability of our systems and infrastructures. System interruption and the lack of integration, redundancy and scalability in these systems and infrastructures may result in our business, results of operations and financial condition being adversely affected.

          Our success depends, in part, on our ability to maintain the integrity of our systems and infrastructure, including websites, information and related systems. System interruption and a lack of integration and redundancy in our information systems and infrastructure may adversely affect our ability to operate websites, process and fulfill transactions, respond to customer inquiries and generally maintain cost-efficient operations. We may experience occasional system interruptions that make some or all systems or data unavailable or prevent us from efficiently providing access to our platform. Fire, flood, power loss, telecommunications failure, hurricanes, tornadoes, earthquakes, other natural disasters, acts of war or terrorism and similar events or disruptions may damage or interrupt computer, broadband or other communications systems and infrastructure at any time. Any of these events could cause system interruption, delays and loss of critical data, and could prevent us from providing access to our platform.

          While we have backup systems for certain aspects of our operations, disaster recovery planning by its nature cannot be sufficient for all eventualities. In addition, we may not have adequate insurance coverage to compensate for losses from a major interruption. If any of these events were to occur, our business, results of operations and financial condition could be adversely affected.

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We rely on software and services from other parties. Defects in or the loss of access to software or services from third parties could increase our costs and adversely affect the quality of our solutions.

          We rely on third-party computer systems, broadband and other communications systems and service providers in providing access to our platform. Any interruptions, outages or delays in our systems and infrastructure, our business and/or third parties, or deterioration in the performance of these systems and infrastructure, could impair our ability to provide access to our platform. Our business would be disrupted if any of the third-party software or services we utilize, particularly with respect to third-party software or services embedded in our solutions, or functional equivalents thereof, were unavailable due to extended outages or interruptions or because they are no longer available on commercially reasonable terms or prices or at all.

          In each case, we would be required to either seek licenses to software or services from other parties and redesign our solutions to function with such software or services or develop these components ourselves, which would result in increased costs and could result in delays in our solution launches and the release of new solution offerings until equivalent technology can be identified, licensed or developed, and integrated into our solutions. Furthermore, we might be forced to limit the features available in our current or future solutions. If these delays and feature limitations occur, our business, results of operations and financial condition could be adversely affected.

Real or perceived errors, failures, vulnerabilities or bugs in our solutions, including deployment complexity, could harm our business and results of operations.

          Errors, failures, vulnerabilities or bugs may occur in our solutions, especially when updates are deployed or new solutions are rolled out. Our platform is often used in connection with large-scale computing environments with different operating systems, system management software, equipment and networking configurations, which may cause errors or failures of solutions. In addition, deployment of our solutions into complicated, large-scale computing environments may expose errors, failures, vulnerabilities or bugs in our solutions. Any such errors, failures, vulnerabilities or bugs may not be found until after they are deployed to our customers. Real or perceived errors, failures, vulnerabilities or bugs in our solutions could result in negative publicity, loss of customer data, loss of or delay in market acceptance of our solutions, loss of competitive position, or claims by customers for losses sustained by them, all of which could adversely affect our business, results of operations and financial condition.

If we fail to adequately protect our proprietary rights, our competitive position could be impaired and we may lose valuable assets, generate less revenue and incur costly litigation to protect our rights.

          Our success is dependent, in part, upon protecting our proprietary information and technology. We rely on a combination of patents, copyrights, trademarks, service marks, trade secret laws and contractual restrictions to establish and protect our proprietary rights. However, the steps we take to protect our intellectual property may be inadequate. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. Despite our precautions, it may be possible for unauthorized third parties to copy our solutions and use information that we regard as proprietary to create solutions that compete with ours. Some license provisions protecting against unauthorized use, copying, transfer and disclosure of our solutions may be unenforceable under the laws of certain jurisdictions and foreign countries. Further, the laws of some countries do not protect proprietary rights to the same extent as the laws of the United States, and mechanisms for enforcement of intellectual property rights in some foreign countries may be inadequate. To the extent we expand our

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international activities, our exposure to unauthorized copying and use of our solutions and proprietary information may increase. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our technology and intellectual property.

          We rely in part on trade secrets, proprietary know-how and other confidential information to maintain our competitive position. Although we enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with the parties with whom we have strategic relationships and business alliances, no assurance can be given that these agreements will be effective in controlling access to and distribution of our solutions and proprietary information. Further, these agreements do not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our solutions.

          To protect our intellectual property rights, we may be required to spend significant resources to monitor and protect these rights. Litigation may be necessary in the future to enforce our intellectual property rights and to protect our trade secrets. Such litigation could be costly, time consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management's attention and resources, could delay further sales or the implementation of our solutions, impair the functionality of our solutions, delay introductions of new solutions, result in our substituting inferior or more costly technologies into our solutions, or injure our reputation. In addition, we may be required to license additional technology from third parties to develop and market new solutions, and we cannot assure you that we could license that technology on commercially reasonable terms or at all, and our inability to license this technology could harm our ability to compete.

Our results of operations may be harmed if we are subject to an infringement claim or a claim that results in a significant damage award.

          Other companies have claimed in the past, and may claim in the future, that we infringe upon their intellectual property rights. A claim may also be made relating to technology that we acquire or license from third parties. Because of constant technological change in the segments in which we compete, the extensive patent coverage of existing technologies, and the rapid rate of issuance of new patents, it is possible that the number of these claims may grow. If we were subject to a claim of infringement, regardless of the merit of the claim or our defenses, the claim could:

Any one or more of the above could adversely affect our business, results of operations and financial condition.

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Our use of open source software in our offerings could negatively affect our ability to sell our solutions and subject us to possible litigation.

          We use software modules licensed to us by third-party authors under "open source" licenses in our offerings. Some open source licenses require that users of the applicable software make available source code for modifications or derivative works created using that open source software. If we were to combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release or otherwise make available the source code of our proprietary software to the public. This would allow our competitors to create similar products with lower development effort and time and ultimately could result in a loss of sales for us.

          Although we monitor our compliance with open source licenses and attempt to protect our proprietary source code from the effects stated above, we may inadvertently use open source software in a manner we do not intend and that could expose us to claims for breach of contract and intellectual property infringement. In addition, the terms of many open source licenses have not been interpreted by United States courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our solutions. If we are held to have breached the terms of an open source software license, we could be required to seek licenses from third parties to continue providing our offerings on terms that are not economically feasible, to re-engineer our offerings, to discontinue the sale of our offerings if re-engineering cannot be accomplished on a timely basis, or to make generally available, in source code form, a portion of our proprietary code, any of which could adversely affect our business, results of operations and financial condition. In addition to the risks described above, usage of open source software typically exposes us to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or assurance of title or controls on the functionality or origin of the software. Many of the risks associated with usage of open source software, such as the lack of warranties or assurances of title, cannot be eliminated, and could, if not properly addressed, negatively affect our business. We have established processes to help alleviate these risks, including a review process for screening requests from our development organizations for the use of open source software, but we cannot be sure that our processes for controlling our use of open source software in our offerings will be effective. Use of open source software may also present additional security risks because the public availability of such software may make it easier for hackers and other third parties to determine how to compromise our offerings.

We rely on SaaS vendors to operate certain functions of our business and any failure of such vendors to provide services to us could adversely impact our business and operations.

          We rely on third-party SaaS vendors to operate certain critical functions of our business, including financial management, human resource management and customer relationship management. If these services become unavailable due to extended outages or interruptions or because they are no longer available on commercially reasonable terms or prices, our expenses could increase, our ability to manage our finances could be interrupted and our processes for managing sales of our solutions and supporting our customers could be impaired until equivalent services, if available, are identified, obtained and integrated, all of which could harm our business.

Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.

          Our agreements with customers and other third parties may include indemnification or other provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement, damage caused by us to property or persons, or other

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liabilities relating to or arising from the use of our platform or other acts or omissions. The term of these contractual provisions often survives termination or expiration of the applicable agreement. As we continue to grow, the possibility of infringement claims and other intellectual property rights claims against us may increase. For any intellectual property rights indemnification claim against us or our customers, we may incur significant legal expenses and may have to pay damages, settlement fees, license fees and/or stop using technology found to be in violation of the third-party's rights. Large indemnity payments could harm our business, results of operations and financial condition. We may also have to seek a license for the infringing or allegedly infringing technology. Such license may not be available on reasonable terms, if at all, and may significantly increase our operating expenses or may require us to restrict our business activities and limit our ability to deploy certain offerings. As a result, we may also be required to develop alternative non-infringing technology, which could require significant effort and expense and/or cause us to alter our platform or solutions, which could negatively affect our business. In addition, we may be subject to increased risk of infringement claims as a result of our use of open source software given that our agreements with our customers generally do not exclude open source software from the intellectual property indemnity we contractually agree to provide for our offerings.

          From time to time, customers require us to indemnify them for breach of confidentiality, violation of applicable law or failure to implement adequate security measures with respect to their data stored, transmitted, or accessed using our platform. Although we normally contractually limit our liability with respect to such obligations, the existence of such a dispute may have adverse effects on our customer relationship and reputation and we may still incur substantial liability related to them.

          Any assertions by a third party, whether or not successful, with respect to such indemnification obligations could subject us to costly and time-consuming litigation, expensive remediation and licenses, divert management attention and financial resources, harm our relationship with that customer and other current and prospective customers, reduce demand for our platform and result in our brand, business, results of operations and financial condition being adversely affected.

We may be subject to liability claims if we breach our contracts and our insurance may be inadequate to cover our losses.

          We are subject to numerous obligations in our contracts with our customers and strategic partners. Despite the procedures, systems and internal controls we have implemented to comply with our contracts, we may breach these commitments, whether through a weakness in these procedures, systems and internal controls, negligence or the willful act of an employee or contractor.

          Our insurance policies, including our errors and omissions insurance, may be inadequate to compensate us for the potentially significant losses that may result from claims arising from breaches of our contracts, disruptions in our services, including those caused by cybersecurity incidents, failures or disruptions to our infrastructure, catastrophic events and disasters or otherwise. In addition, such insurance may not be available to us in the future on economically reasonable terms, or at all. Further, our insurance may not cover all claims made against us and defending a suit, regardless of its merit, could be costly and divert management's attention.

Our customers may fail to pay us in accordance with the terms of their agreements, necessitating action by us to compel payment.

          If customers fail to pay us under the terms of our agreements, we may be adversely affected both from the inability to collect amounts due and the cost of enforcing the terms of our contracts, including related litigation. Furthermore, some of our customers may seek bankruptcy protection or

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other similar relief and fail to pay amounts due to us, or pay those amounts more slowly, either of which could adversely affect our business, results of operations and financial condition.

Because our long-term success depends, in part, on our ability to expand the sales of our solutions to customers located outside of the United States, our business will be susceptible to risks associated with international operations.

          We currently have international operations in the United Kingdom, Canada, Australia, France, Germany, India, Israel, Netherlands and Switzerland. In 2018, our international revenue was 23% of our total revenue. Any efforts that we may undertake to increase our international revenue may not be successful. In addition, continuing to expand our international footprint with our solutions subjects us to new risks, some of which we have not generally faced in the United States. These risks include, among other things:

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          Additionally, operating in international markets also requires significant management attention and financial resources. We cannot be certain that the investment and additional resources required in establishing operations in other countries will produce desired levels of revenue or profitability.

          In addition, some of our business functions, such as research and development, may be siloed geographically, which may adversely affect the integration of our operations on a global scale.

          We have limited experience in marketing, selling and supporting our platform abroad. Our limited experience in operating our business internationally increases the risk that any potential future expansion efforts that we may undertake will not be successful. If we invest substantial time and resources to increase our international revenue and are unable to do so successfully and in a timely manner, our business and results of operations will suffer.

We may face exposure to foreign currency exchange rate fluctuations.

          Today, our international contracts are usually denominated in local currencies and the majority of our international costs are denominated in local currencies. Over time, an increasing portion of our international contracts may be denominated in local currencies. Therefore, fluctuations in the value of the U.S. dollar and foreign currencies may affect our results of operations when translated into U.S. dollars. We do not currently engage in currency hedging activities to limit the risk of exchange rate fluctuations. However, in the future, we may use derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates. The use of such hedging activities may not offset any or more than a portion of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place. Moreover, the use of hedging instruments may introduce additional risks if we are unable to structure effective hedges with such instruments.

Exposure to political developments in the United Kingdom, including the outcome of the U.K. referendum on membership in the EU, could harm us.

          In June 2016, a referendum was held on the United Kingdom's membership in the EU, the outcome of which was a vote in favor of leaving the EU. The United Kingdom's vote to leave the EU creates an uncertain political and economic environment in the United Kingdom and potentially across other EU member states, which may last for a number of months or years.

          The result of the referendum means that the long-term nature of the United Kingdom's relationship with the EU is unclear and that there is considerable uncertainty as to when any such relationship will be agreed and implemented. The political and economic instability created by the United Kingdom's vote to leave the EU has caused and may continue to cause significant volatility in global financial markets and the value of the British Pound or other currencies, including the Euro. Depending on the terms reached regarding any exit from the EU, it is possible that there may be adverse practical or operational implications on our business.

Our international operations may give rise to potentially adverse tax consequences.

          Our corporate structure and associated transfer pricing policies anticipate future growth into the international markets. The amount of taxes we pay in different jurisdictions may depend on the application of the tax laws of the various jurisdictions, including the United States, to our international business activities, changes in tax rates, new or revised tax laws or interpretations of existing tax laws and policies and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements. The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for pricing intercompany transactions, which are generally required to be computed on an arm's-length basis pursuant to intercompany arrangements or disagree with our determinations as to the income and expenses attributable to

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specific jurisdictions. If such a challenge or disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations. Our financial statements could fail to reflect adequate reserves to cover such a contingency.

Changes in tax laws or regulations in the various tax jurisdictions we are subject to that are applied adversely to us or our customers could increase the costs of our solutions and harm our business.

          New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time. Those enactments could harm our domestic and international business operations, and our business and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. These events could require us or our customers to pay additional tax amounts on a prospective or retroactive basis, as well as require us or our customers to pay fines and/or penalties and interest for past amounts deemed to be due. If we raise our prices to offset the costs of these changes, existing and potential future customers may elect not to purchase our solutions in the future. Additionally, new, changed, modified or newly interpreted or applied tax laws could increase our customers' and our compliance, operating and other costs, as well as the costs of our solutions. Further, these events could decrease the capital we have available to operate our business. Any or all of these events could harm our business and financial performance.

Comprehensive tax reform legislation could adversely affect our business and financial condition.

          On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act of 2017, or the Tax Act, that significantly reforms the Internal Revenue Code of 1986, as amended, or the Code. The Tax Act, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of interest and net operating loss carryforwards, allows for the expensing of capital expenditures, and puts into effect the migration from a "worldwide" system of taxation to a territorial system. While we have reflected the expected impact of the Tax Act in our financial statements in accordance with our understanding of the Tax Act and available guidance, the ultimate effects of the Tax Act remain uncertain. The U.S. Department of Treasury may issue regulations and guidance that may significantly impact how the Tax Act applies to us and resulting changes may have an adverse impact on our results of operations, cash flows and financial condition.

If we cannot maintain our corporate culture as we grow, our business may be harmed.

          We believe that our corporate culture has been a critical component to our success and that our culture creates an environment that drives and perpetuates our overall business strategy. We have invested substantial time and resources in building our team and we expect to continue to hire aggressively as we expand, including with respect to our international operations. As we grow and mature as a public company and grow internationally, we may find it difficult to maintain our corporate culture. Any failure to preserve our culture could negatively affect our future success, including our ability to recruit and retain personnel and effectively focus on and pursue our business strategy.

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We have identified a material weakness in our internal control over financial reporting and, if we are unable to remediate this material weakness, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock.

          A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company's annual or interim financial statements will not be prevented or detected on a timely basis. During the course of preparing for this offering, we identified a material weakness in our internal control over financial reporting as we did not design and maintain effective controls related to the quarterly accounting for income taxes. Specifically, we did not design and maintain effective controls related to the preparation, analysis and review of the interim income tax provision and significant income tax balance sheet accounts required to assess the accuracy and completeness of the income tax amounts reported within the consolidated financial statements at period end. This material weakness resulted in the restatement of the interim financial statements as of and for the nine months ended September 30, 2018, as well as the financial information for each of the quarters within 2018.

          The control deficiency could result in a misstatement of these accounts or disclosures that would result in a material misstatement of our interim consolidated financial statements that would not be prevented or detected, and accordingly, we determined that the control deficiency constitutes a material weakness.

          We are working to remediate this material weakness through the development and implementation of processes and controls over the preparation of the interim tax provision and related tax assets and liabilities. Specifically:

          While new controls have been designed and implemented, they have not operated for a sufficient period of time to demonstrate the material weakness has been remediated. We cannot assure you that the measures we have taken to date will be sufficient to remediate the material weakness we identified or avoid the identification of additional material weaknesses in the future. Although we plan to complete this remediation process soon, if the steps we take do not remediate the material weakness in a timely manner, there could continue to be a reasonable possibility that this control deficiency or others could result in a material misstatement of our annual or interim financial statements that would not be prevented or detected on a timely basis.

As a result of becoming a public company, we will be obligated to develop and maintain proper and effective internal control over financial reporting in order to comply with Section 404 of the Sarbanes-Oxley Act. We may not complete our analysis of our internal control over financial reporting in a timely manner, or these internal controls may not be determined to be effective, which may adversely affect investor confidence in us and, as a result, the value of our common stock.

          Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. We are in the very early stages of the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404 of the Sarbanes-Oxley Act. We may not be able to

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complete our evaluation, testing and any required remediation prior to becoming a public company or in a timely manner thereafter. See "— We have identified a material weakness in our internal control over financial reporting and, if we are unable to remediate this material weakness, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock." If we are unable to assert that our internal control over financial reporting is effective, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common stock to decline, and we may be subject to investigation or sanctions by the SEC.

          We will be required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting as of the end of the fiscal year that coincides with the filing of our second annual report on Form 10-K. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. We will also be required to disclose changes made in our internal control and procedures on a quarterly basis. However, our independent registered public accounting firm will not be required to report on the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until the later of the year following our first annual report required to be filed with the SEC, or the date we are no longer an "emerging growth company" as defined in the JOBS Act if we take advantage of the exemptions contained in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.

          Additionally, the existence of any material weakness, including our existing material weakness regarding accounting for quarterly income taxes, or significant deficiency would require management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner. The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations and cause shareholders to lose confidence in our reported financial information, all of which could materially and adversely affect our business and stock price. To comply with the requirements of being a public company, we may need to undertake various costly and time-consuming actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff, which may adversely affect our business, financial condition and results of operations.

Our management team has limited experience managing a public company.

          Most members of our management team have limited experience managing a publicly-traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage us as a public company that is subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, results of operations and financial condition.

We face risks associated with having operations and employees located in Israel.

          We have an office and employees located in Israel. As a result, political, economic, and military conditions in Israel directly affect our operations. The future of peace efforts between Israel

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and its Arab neighbors remains uncertain. There has been a significant increase in hostilities and political unrest between Hamas and Israel in the past few years. The effects of these hostilities and violence on the Israeli economy and our operations in Israel are unclear, and we cannot predict the effect on us of further increases in these hostilities or future armed conflict, political instability or violence in the region. Current or future tensions and conflicts in the Middle East could adversely affect our business, operating results, financial condition and cash flows.

          In addition, many of our employees in Israel are obligated to perform annual reserve duty in the Israeli military and are subject to being called for active duty under emergency circumstances. We cannot predict the full impact of these conditions on us in the future, particularly if emergency circumstances or an escalation in the political situation occurs. If many of our employees in Israel are called for active duty for a significant period of time, our operations and our business could be disrupted and may not be able to function at full capacity. Any disruption in our operations in Israel could adversely affect our business.

A portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and risks, such as increased competitive pressures, administrative delays and additional approval requirements.

          A portion of our revenue is generated by sales to U.S. and foreign federal, state and local governmental agency customers, and we may in the future increase sales to government entities. Selling to government entities can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense without any assurance that we will complete a sale or imposing terms of sale which are less favorable than the prevailing market terms. Government demand and payment for our solutions and services may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our solutions. Governments routinely investigate and audit government contractors' administrative processes and any unfavorable audit could result in fines, civil or criminal liability, further investigations, damage to our reputation and debarment from further government business.

Catastrophic events may disrupt our business.

          Natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce and the global economy, and thus could harm our business. In the event of a major earthquake, hurricane or catastrophic event such as fire, power loss, telecommunications failure, cyberattack, war or terrorist attack, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our application development, lengthy interruptions in our solutions, breaches of data security and loss of critical data, all of which could adversely affect our business, results of operations and financial condition. In addition, the insurance we maintain may not be adequate to cover our losses resulting from disasters or other business interruptions.

Certain estimates of market opportunity and forecasts of market growth included in this prospectus may prove to be inaccurate.

          This prospectus includes our internal estimates of the addressable market for identity solutions. Market opportunity estimates and growth forecasts, whether obtained from third-party sources or developed internally, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The estimates and forecasts in this prospectus relating to the size and expected growth of our target market, market demand and adoption, capacity to address this demand and pricing may prove to be inaccurate. In particular, our estimates regarding our current and projected market opportunity is difficult to predict. In

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addition, our internal estimates of the addressable market for IAM solutions reflects the opportunity available from all participants and potential participants in the market. The addressable market we estimate may not materialize for many years, if ever, and even if the markets in which we compete meet the size estimates and growth forecasted in this prospectus, our business could fail to grow at similar rates, if at all.


Risks Relating to Our Indebtedness

Our existing indebtedness could adversely affect our business and growth prospects.

          As of June 30, 2019, we had total current and long-term indebtedness outstanding of $248.2 million, including (i) $247.5 million outstanding under our term loan facility, or our Term Loan Facility, (ii) no borrowings outstanding under our revolving credit facility, or our Revolving Credit Facility, and together with the Term Loan Facility, our Credit Facilities and (iii) $0.7 million of outstanding letters of credit. In addition, as of June 30, 2019, we had $25.0 million of additional borrowing capacity under our Revolving Credit Facility. All obligations under the Credit Agreement are secured by first-priority perfected security interests in substantially all of our assets and the assets of our subsidiaries, subject to permitted liens and other exceptions. Our indebtedness, or any additional indebtedness we may incur, could require us to divert funds identified for other purposes for debt service and impair our liquidity position. If we cannot generate sufficient cash flow from operations to service our debt, we may need to refinance our debt, dispose of assets or issue equity to obtain necessary funds. We do not know whether we will be able to take any of these actions on a timely basis, on terms satisfactory to us or at all.

          Our indebtedness, the cash flow needed to satisfy our debt and the covenants contained in our Credit Facilities have important consequences, including:

          Our level of indebtedness may place us at a competitive disadvantage to our competitors that are not as highly leveraged. Fluctuations in interest rates can increase borrowing costs. Increases in interest rates may directly impact the amount of interest we are required to pay and reduce earnings accordingly. In addition, developments in tax policy, such as the disallowance of tax deductions for interest paid on outstanding indebtedness, could have an adverse effect on our liquidity and our business, financial conditions and results of operations. Further, our Credit Facilities contain customary affirmative and negative covenants and certain restrictions on operations that could impose operating and financial limitations and restrictions on us, including restrictions on our ability to enter into particular transactions and to engage in other actions that we may believe are advisable or necessary for our business. Our Term Loan Facility is also subject to mandatory prepayments in certain circumstances and requires a prepayment of a certain percentage of our excess cash flow. This excess cash flow payment, and future required prepayments, will reduce our cash available for investment in our business.

          We expect to use cash flow from operations to meet current and future financial obligations, including funding our operations, debt service requirements and capital expenditures. The ability to make these payments depends on our financial and operating performance, which is subject to

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prevailing economic, industry and competitive conditions and to certain financial, business, economic and other factors beyond our control.

Despite current indebtedness levels and restrictive covenants, we may still be able to incur substantially more indebtedness or make certain restricted payments, which could further exacerbate the risks associated with our substantial indebtedness.

          We may be able to incur significant additional indebtedness in the future. Although the financing documents governing our Credit Facilities contain restrictions on the incurrence of additional indebtedness and liens, these restrictions are subject to a number of important qualifications and exceptions, and the additional indebtedness and liens incurred in compliance with these restrictions could be substantial.

          The financing documents governing our Credit Facilities permit us to incur certain additional indebtedness, including liabilities that do not constitute indebtedness as defined in the financing documents. We may also consider investments in joint ventures or acquisitions, which may increase our indebtedness. In addition, financing documents governing our Credit Facilities do not restrict our Sponsor from creating new holding companies that may be able to incur indebtedness without regard to the restrictions set forth in the financing documents governing our Credit Facilities. If new debt is added to our currently anticipated indebtedness levels, the related risks that we face could intensify.

We may not be able to generate sufficient cash flow to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under such indebtedness, which may not be successful.

          Our ability to make scheduled payments or to refinance outstanding debt obligations depends on our financial and operating performance, which will be affected by prevailing economic, industry and competitive conditions and by financial, business and other factors beyond our control. We may not be able to maintain a sufficient level of cash flow from operating activities to permit us to pay the principal, premium, if any, and interest on the our indebtedness. Any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which would also harm our ability to incur additional indebtedness.

          If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or seek to restructure or refinance our indebtedness. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. In the absence of such cash flows and resources, we could face substantial liquidity problems and might be required to sell material assets or operations to attempt to meet our debt service obligations. The financing documents governing our Credit Facilities restrict our ability to conduct asset sales and/or use the proceeds from asset sales. We may not be able to consummate these asset sales to raise capital or sell assets at prices and on terms that we believe are fair and any proceeds that we do receive may not be adequate to meet any debt service obligations then due. If we cannot meet our debt service obligations, the holders of our indebtedness may accelerate such indebtedness and, to the extent such indebtedness is secured, foreclose on our assets. In such an event, we may not have sufficient assets to repay all of our indebtedness.

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The terms of the financing documents governing our Credit Facilities restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.

          The financing documents governing our Credit Facilities contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests, including restrictions on our ability to:

You should read the discussion under the heading "Description of Certain Indebtedness" for further information about these covenants.

          The restrictive covenants in the financing documents governing our Credit Facilities require us to maintain specified financial ratios and satisfy other financial condition tests to the extent applicable. Our ability to meet those financial ratios and tests can be affected by events beyond our control.

          A breach of the covenants or restrictions under the financing documents governing our Credit Facilities could result in an event of default under such documents. Such a default may allow the creditors to accelerate the related debt, which may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In the event the holders of our indebtedness accelerate the repayment, we may not have sufficient assets to repay that indebtedness or be able to borrow sufficient funds to refinance it. Even if we are able to obtain new financing, it may not be on commercially reasonable terms or on terms acceptable to us. As a result of these restrictions, we may be:

          These restrictions, along with restrictions that may be contained in agreements evidencing or governing other future indebtedness, may affect our ability to grow in accordance with our growth strategy.

We may be unable to refinance our indebtedness.

          We may need to refinance all or a portion of our indebtedness before maturity. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. There can be no assurance that we will be able to obtain sufficient funds to enable us to repay or refinance our debt obligations on commercially reasonable terms, or at all.

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A lowering or withdrawal of the ratings assigned to our debt securities by rating agencies may increase our future borrowing costs and reduce our access to capital.

          Our debt currently has a non-investment grade rating, and any rating assigned could be lowered or withdrawn entirely by a rating agency if, in that rating agency's judgment, future circumstances relating to the basis of the rating, such as adverse changes, so warrant. Any future lowering of our ratings likely would make it more difficult or more expensive for us to obtain additional debt financing

Our failure to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies in the future could reduce our ability to compete successfully and harm our results of operations.

          We may need to raise additional funds, and we may not be able to obtain additional debt or equity financing on favorable terms or at all. If we raise additional equity financing, our security holders may experience significant dilution of their ownership interests. If we engage in additional debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, force us to maintain specified liquidity or other ratios or restrict our ability to pay dividends or make acquisitions. If we need additional capital and cannot raise it on acceptable terms, or at all, we may not be able to, among other things:

          In addition, our Credit Facilities also limit our ability to incur additional debt and therefore we likely would have to amend our Credit Facilities or issue additional equity to raise capital. If we issue additional equity, your interest in us will be diluted.


Risks Relating to Our Common Stock and This Offering

Vista controls us, and its interests may conflict with ours or yours in the future.

          Immediately following this offering, Vista will beneficially own approximately         % of our common stock, or         % if the underwriters exercise in full their option to purchase additional shares, which means that, based on its percentage voting power held after the offering, Vista will control the vote of all matters submitted to a vote of our board of directors, or our Board, or shareholders, which will enable it to control the election of the members of the Board and all other corporate decisions. Even when Vista ceases to own shares of our stock representing a majority of the total voting power, for so long as Vista continues to own a significant percentage of our stock, Vista will still be able to significantly influence the composition of our Board and the approval of actions requiring shareholder approval. Accordingly, for such period of time, Vista will have significant influence with respect to our management, business plans and policies, including the appointment and removal of our officers, decisions on whether to raise future capital and amending our charter and bylaws, which govern the rights attached to our common stock. In particular, for so long as Vista continues to own a significant percentage of our stock, Vista will be able to cause or prevent a change of control of us or a change in the composition of our Board and could preclude any unsolicited acquisition of us. The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of us and ultimately might affect the market price of our common stock.

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          In addition, in connection with this offering, we will enter into a Director Nomination Agreement with Vista that provides Vista the right to designate: (i) all of the nominees for election to our Board for so long as Vista beneficially owns 40% or more of the total number of shares of our common stock it owns as of the date of this offering; (ii) a number of directors (rounded up to the nearest whole number) equal to 40% of the total directors for so long as Vista beneficially owns at least 30% and less than 40% of the total number of shares of our common stock it owns as of the date of this offering; (iii) a number of directors (rounded up to the nearest whole number) equal to 30% of the total directors for so long as Vista beneficially owns at least 20% and less than 30% of the total number of shares of our common stock it owns as of the date of this offering; (iv) a number of directors (rounded up to the nearest whole number) equal to 20% of the total directors for so long as Vista beneficially owns at least 10% and less than 20% of the total number of shares of our common stock it owns as of the date of this offering; and (v) one director for so long as Vista beneficially owns at least 5% and less than 10% of the total number of shares of our common stock it owns as of the date of this offering. The Director Nomination Agreement will also provide that Vista may assign such right to a Vista affiliate. The Director Nomination Agreement will prohibit us from increasing or decreasing the size of our Board without the prior written consent of Vista. See "Certain Relationships and Related Party Transactions — Related Party Transactions — Director Nomination Agreement" for more details with respect to the Director Nomination Agreement.

          Vista and its affiliates engage in a broad spectrum of activities, including investments in the information and business services industry generally. In the ordinary course of their business activities, Vista and its affiliates may engage in activities where their interests conflict with our interests or those of our other shareholders, such as investing in or advising businesses that directly or indirectly compete with certain portions of our business or are suppliers or customers of ours. Our certificate of incorporation to be effective in connection with the closing of this offering will provide that none of Vista, any of its affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or its affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. Vista also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. In addition, Vista may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to you.

Upon listing of our shares on NASDAQ, we will be a "controlled company" within the meaning of the rules of NASDAQ and, as a result, we will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections as those afforded to stockholders of companies that are subject to such governance requirements.

          After completion of this offering, the Vista Funds will continue to control a majority of the voting power of our outstanding common stock. As a result, we will be a "controlled company" within the meaning of the corporate governance standards of NASDAQ. Under these rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company is a "controlled company" and may elect not to comply with certain corporate governance requirements, including:

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          Following this offering, we intend to utilize these exemptions. As a result, we may not have a majority of independent directors on our Board, our Compensation and Nominating Committee may not consist entirely of independent directors and our Compensation and Nominating Committee may not be subject to annual performance evaluations. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of NASDAQ.

We are an "emerging growth company" and we expect to elect to comply with reduced public company reporting requirements, which could make our common stock less attractive to investors.

          We are an "emerging growth company", as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we are eligible for certain exemptions from various public company reporting requirements. These exemptions include, but are not limited to, (i) not being required to comply with the auditor attestation requirements of Section 404 of Sarbanes-Oxley, (ii) reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements, (iii) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved and (iv) not being required to provide audited financial statements for the year ended December 31, 2016, or five years of Selected Consolidated Financial Data, in this prospectus. We could be an emerging growth company for up to five years after the first sale of our common stock pursuant to an effective registration statement under the Securities Act, which fifth anniversary will occur in 2024. However, if certain events occur prior to the end of such five-year period, including if we become a "large accelerated filer", our annual gross revenue exceeds $1.07 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we would cease to be an emerging growth company prior to the end of such five-year period. We have made certain elections with regard to the reduced disclosure obligations regarding executive compensation in this prospectus and may elect to take advantage of other reduced disclosure obligations in future filings. As a result, the information that we provide to holders of our common stock may be different than you might receive from other public reporting companies in which you hold equity interests. We cannot predict if investors will find our common stock less attractive as a result of our reliance on these exemptions. If some investors find our common stock less attractive as a result of any choice we make to reduce disclosure, there may be a less active trading market for our common stock and the market price for our common stock may be more volatile.

          Under the JOBS Act, emerging growth companies may also elect to delay adoption of new or revised accounting standards until such time as those standards apply to private companies. We have elected to "opt-in" to this extended transition period for complying with new or revised accounting standards and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that comply with such new or revised accounting standards on a non-delayed basis.

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The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business, particularly after we are no longer an "emerging growth company".

          As a public company, we will incur legal, accounting and other expenses that we did not previously incur. We will become subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the Sarbanes-Oxley Act, the listing requirements of NASDAQ and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an "emerging growth company". The Exchange Act requires that we file annual, quarterly and current reports with respect to our business, financial condition and results of operations. The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal controls and procedures for financial reporting. Furthermore, the need to establish the corporate infrastructure demanded of a public company may divert our management's attention from implementing our growth strategy, which could prevent us from improving our business, financial condition and results of operations. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a public company. However, the measures we take may not be sufficient to satisfy our obligations as a public company. In addition, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to incur substantial costs to maintain the same or similar coverage. These additional obligations could have a material adverse effect on our business, financial condition and results of operations.

          In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of our management's time and attention from sales-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and could have a material adversely effect on our business, financial condition and results of operations.

Provisions of our corporate governance documents could make an acquisition of us more difficult and may prevent attempts by our shareholders to replace or remove our current management, even if beneficial to our shareholders.

          In addition to Vista's beneficial ownership of         % of our common stock after this offering (or         %, if the underwriters exercise in full their option to purchase additional shares), our certificate of incorporation and bylaws to be effective in connection with the closing of this offering and the Delaware General Corporation Law, or the DGCL, contain provisions that could make it more

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difficult for a third party to acquire us, even if doing so might be beneficial to our shareholders. Among other things:

          Our certificate of incorporation to be effective in connection with the closing of this offering will contain a provision that provides us with protections similar to Section 203 of the DGCL, and will prevent us from engaging in a business combination with a person (excluding Vista and any of its direct or indirect transferees and any group as to which such persons are a party) who acquires at least 15% of our common stock for a period of three years from the date such person acquired such common stock, unless board or shareholder approval is obtained prior to the acquisition. See "Description of Capital Stock — Anti-Takeover Effects of Our Certificate of Incorporation and Our Bylaws". These provisions could discourage, delay or prevent a transaction involving a change in control of our company. These provisions could also discourage proxy contests and make it more difficult for you and other shareholders to elect directors of your choosing and cause us to take other corporate actions you desire, including actions that you may deem advantageous, or negatively affect the trading price of our common stock. In addition, because our Board is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our shareholders to replace current members of our management team.

          These and other provisions in our certificate of incorporation, bylaws and Delaware law could make it more difficult for shareholders or potential acquirers to obtain control of our Board or initiate actions that are opposed by our then-current Board, including delay or impede a merger, tender

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offer or proxy contest involving our company. The existence of these provisions could negatively affect the price of our common stock and limit opportunities for you to realize value in a corporate transaction.

          For information regarding these and other provisions, see "Description of Capital Stock".

Our certificate of incorporation will designate the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our shareholders, which could limit our shareholders' ability to obtain a favorable judicial forum for disputes with us.

          Pursuant to our certificate of incorporation to be effective in connection with the closing of this offering, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our shareholders, (3) any action asserting a claim against us arising pursuant to any provision of the DGCL, our certificate of incorporation or our bylaws or (4) any other action asserting a claim against us that is governed by the internal affairs doctrine; provided that for the avoidance of doubt, the forum selection provision that identifies the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation, including any "derivative action", will not apply to suits to enforce a duty or liability created by Securities Act, the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Our certificate of incorporation will further provide that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have notice of and consented to the provisions of our certificate of incorporation described above. See "Description of Capital Stock — Exclusive Forum". The forum selection clause in our certificate of incorporation may have the effect of discouraging lawsuits against us or our directors and officers and may limit our shareholders' ability to obtain a favorable judicial forum for disputes with us.

If you purchase shares of common stock in this offering, you will suffer immediate and substantial dilution of your investment.

          The initial public offering price of our common stock is substantially higher than the pro forma net tangible book value per share of our common stock. Therefore, if you purchase shares of our common stock in this offering, you will pay a price per share that substantially exceeds our pro forma net tangible book value per share after this offering. Based on an assumed initial public offering price of $             per share, the mid-point of the price range set forth on the cover page of this prospectus, you will experience immediate dilution of $             per share, representing the difference between our pro forma net tangible book value per share after giving effect to this offering and the initial public offering price. In addition, purchasers of common stock in this offering will have contributed         % of the aggregate price paid by all purchasers of our common stock but will own only approximately         % of our common stock outstanding after this offering. See "Dilution" for more detail.

An active, liquid trading market for our common stock may not develop, which may limit your ability to sell your shares.

          Prior to this offering, there was no public market for our common stock. Although we have applied to list our common stock on NASDAQ under the symbol "PING", an active trading market for our shares may never develop or be sustained following this offering. The initial public offering price will be determined by negotiations between us and the underwriters and may not be indicative of market prices of our common stock that will prevail in the open market after the offering. A public trading market having the desirable characteristics of depth, liquidity and orderliness depends upon the existence of willing buyers and sellers at any given time, such

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existence being dependent upon the individual decisions of buyers and sellers over which neither we nor any market maker has control. The failure of an active and liquid trading market to develop and continue would likely have a material adverse effect on the value of our common stock. The market price of our common stock may decline below the initial public offering price, and you may not be able to sell your shares of our common stock at or above the price you paid in this offering, or at all. An inactive market may also impair our ability to raise capital to continue to fund operations by issuing shares and may impair our ability to acquire other companies or technologies by using our shares as consideration.

Our operating results and stock price may be volatile, and the market price of our common stock after this offering may drop below the price you pay.

          Our quarterly operating results are likely to fluctuate in the future. In addition, securities markets worldwide have experienced, and are likely to continue to experience, significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could subject the market price of our shares to wide price fluctuations regardless of our operating performance. Our operating results and the trading price of our shares may fluctuate in response to various factors, including:

          These and other factors, many of which are beyond our control, may cause our operating results and the market price and demand for our shares to fluctuate substantially. Fluctuations in our quarterly operating results could limit or prevent investors from readily selling their shares and may otherwise negatively affect the market price and liquidity of our shares. In addition, in the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the company that issued the stock. If any of our shareholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management from our business, which could significantly harm our profitability and reputation.

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A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our common stock to drop significantly, even if our business is doing well.

          Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. After this offering, we will have             outstanding shares of common stock based on the number of shares outstanding as of June 30, 2019. This includes shares that we are selling in this offering, which may be resold in the public market immediately. Following the consummation of this offering, shares that are not being sold in this offering will be subject to a 180-day lock-up period provided under lock-up agreements executed in connection with this offering described in "Underwriting" and restricted from immediate resale under the federal securities laws as described in "Shares Eligible for Future Sale". All of these shares will, however, be able to be resold after the expiration of the lock-up period, as well as pursuant to customary exceptions thereto or upon the waiver of the lock-up agreement by Goldman Sachs & Co. LLC on behalf of the underwriters. We also intend to register shares of common stock that we may issue under our equity compensation plans. Once we register these shares, they can be freely sold in the public market upon issuance, subject to the lock-up agreements. As restrictions on resale end, the market price of our stock could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.

Because we have no current plans to pay regular cash dividends on our common stock following this offering, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.

          We do not anticipate paying any regular cash dividends on our common stock following this offering. Any decision to declare and pay dividends in the future will be made at the discretion of our Board and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our Board may deem relevant. In addition, our ability to pay dividends is, and may be, limited by covenants of existing and any future outstanding indebtedness we or our subsidiaries incur, including under our Credit Facilities. Therefore, any return on investment in our common stock is solely dependent upon the appreciation of the price of our common stock on the open market, which may not occur. See "Dividend Policy" for more detail.

If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our shares or if our results of operations do not meet their expectations, our stock price and trading volume could decline.

          The trading market for our shares will be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover us downgrade our stock, or if our results of operations do not meet their expectations, our stock price could decline.

We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our common stock, which could depress the price of our common stock.

          Our certificate of incorporation will authorize us to issue one or more series of preferred stock. Our Board will have the authority to determine the preferences, limitations and relative rights of the

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shares of preferred stock and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by our shareholders. Our preferred stock could be issued with voting, liquidation, dividend and other rights superior to the rights of our common stock. The potential issuance of preferred stock may delay or prevent a change in control of us, discouraging bids for our common stock at a premium to the market price, and materially adversely affect the market price and the voting and other rights of the holders of our common stock.

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FORWARD-LOOKING STATEMENTS

          This prospectus contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this prospectus are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate", "estimate", "expect", "project", "plan", "intend", "believe", "may", "will", "should", "can have", "likely" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected costs, expenditures, cash flows, growth rates and financial results or our plans and objectives for future operations, growth initiatives, or strategies are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:

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          We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this prospectus. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this prospectus in the context of these risks and uncertainties.

          We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this prospectus are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

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MARKET AND INDUSTRY DATA

          Unless otherwise indicated, information in this prospectus concerning economic conditions, our industry, our markets and our competitive position is based on a variety of sources, including information from independent industry analysts and publications, as well as our own estimates and research. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While we believe the information presented in this prospectus is generally reliable, forecasts, assumptions, expectations, beliefs, estimates and projects involve risk and uncertainties and are subject to change based on various factors, including those described under "Forward-Looking Statements" and "Risk Factors".

          Certain information in the text of this prospectus is contained in independent industry publications. The sources of these independent industry publications are provided below:

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USE OF PROCEEDS

          We estimate that our net proceeds from this offering will be approximately $              million (or approximately $              million if the underwriters' option to purchase additional shares is exercised in full), assuming an initial public offering price of $             per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting the underwriting discount and estimated offering expenses payable by us.

          The principal purposes of this offering are to increase our capitalization and financial flexibility, create a public market for our common stock and enable access to the public equity markets for us and our shareholders. We expect to use approximately $                   million of the net proceeds of this offering (or $             million of the net proceeds of this offering if the underwriters exercise their option to purchase additional shares in full) to repay outstanding borrowings under our Term Loan Facility and the remainder of such net proceeds will be used for general corporate purposes. At this time, other than repayment of indebtedness under our Term Loan Facility, we have not specifically identified a large single use for which we intend to use the net proceeds and, accordingly, we are not able to allocate the net proceeds among any of these potential uses in light of the variety of factors that will impact how such net proceeds are ultimately utilized by us. Pending use of the proceeds from this offering, we intend to invest the proceeds in a variety of capital preservation investments, including short-term, investment-grade and interest-bearing instruments.

          We may also use a portion of our net proceeds to acquire or invest in complementary businesses, products, services or technologies. However, we do not have agreements or commitments for any acquisitions or investments at this time.

          Each $1.00 increase or decrease in the assumed initial public offering price of $             per share, which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, would increase or decrease the net proceeds to us from this offering by approximately $              million, assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discount and estimated offering expenses payable by us.

          Each 1,000,000 increase or decrease in the number of shares offered would increase or decrease the net proceeds to us from this offering by approximately $              million, assuming that the assumed initial public offering price per share for the offering remains at $             , which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us.

          On January 25, 2018, we entered into our $275.0 million Credit Agreement with a syndicate of lenders, comprised of the $25.0 million Revolving Credit Facility and the $250.0 million Term Loan Facility. As of June 30, 2019, we had $247.5 million and no borrowings outstanding under our Term Loan Facility and Revolving Credit Facility, respectively. As of June 30, 2019, the interest rate on our Term Loan Facility and Revolving Credit Facility was approximately 6.19% and 0.25%, respectively.

          Borrowings under the Credit Agreement bear interest at a rate per annum, at our option, equal to an applicable margin, plus, (a) for alternative base rate borrowings, the highest of (i) the prime rate as determined by the administrative agent in effect on such day, (ii) the Federal Funds Rate in effect on such day plus 1/2 of 1.00% and (iii) the Adjusted LIBO Rate (for a one-month interest period and taking into account a 1.00% floor with respect to term loans) plus 1.00% and (b) for eurocurrency borrowings, the Adjusted LIBO Rate determined by the greater of (i) the LIBO rate for the relevant interest period divided by 1 minus the statutory reserves (if any) and (ii) with respect to term loans only, 1.00%.

          The applicable margin for borrowings under the Credit Agreement is (a) with respect to term loan borrowings, 2.75% for alternate base rate borrowings and 3.75% for eurocurrency borrowings,

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and (b) with respect to both revolving and swingline loan borrowings, 2.75% for alternate base rate borrowings and 3.75% for eurocurrency borrowings when our first lien leverage ratio is greater than 5.00 to 1.00, with step downs to (i) 2.50% for alternate base rate borrowings and 3.50% for eurocurrency borrowings when our first lien leverage ratio is less than or equal to 5.00 to 1.00 but greater than 4.50 to 1.00 and (ii) 2.25% for alternate base rate borrowings and 3.25% for eurocurrency when our first lien leverage ratio is less than or equal to 4.50 to 1.00. Our first lien leverage ratio is determined in accordance with the terms of the Credit Agreement.

          An affiliate of Goldman Sachs & Co. LLC serves as administrative agent, collateral agent, swingline lender, and issuing bank under the Credit Agreement. As a result, such affiliate will receive a portion of the net proceeds of this offering in connection with the repayment of our Term Loan Facility. Based upon our estimated receipt of net proceeds from this offering of approximately $             million (or $             million if the underwriters exercise their option to purchase additional shares in full) as described above, we expect that such affiliate will receive $              million of the total $              million (or $              million of the total $              million if the underwriters exercise their option to purchase additional shares in full) of such net proceeds used to repay outstanding borrowings under our Term Loan Facility.

          In connection with our entry into the Term Loan Facility on January 25, 2018, affiliates of Vista collectively acquired $35.0 million of term loans under our Term Loan Facility and as of June 30, 2019, affiliates of Vista collectively owned $34.7 million of our Term Loan Facility. As a result, Vista will receive a portion of the net proceeds of this offering in connection with the repayment of our Term Loan Facility. Based upon our estimated receipt of net proceeds from this offering of approximately $              million (or $              million if the underwriters exercise their option to purchase additional shares in full) as described above, we expect that Vista will receive $              million of the total $              million (or $              million of the total $              million if the underwriters exercise their option to purchase additional shares in full) of such net proceeds used to repay outstanding borrowings under our Term Loan Facility.

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DIVIDEND POLICY

          We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and to repay indebtedness and, therefore, we do not anticipate paying any cash dividends in the foreseeable future. Additionally, our ability to pay dividends on our common stock is limited by restrictions on the ability of our subsidiaries to pay dividends or make distributions to us. Any future determination to pay dividends will be at the discretion of our Board, subject to compliance with covenants in current and future agreements governing our and our subsidiaries' indebtedness, and will depend on our results of operations, financial condition, capital requirements and other factors that our Board may deem relevant.

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CAPITALIZATION

          The following table describes our cash and cash equivalents and capitalization as of June 30, 2019, as follows:

          The pro forma information set forth in the table below is illustrative only and will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. You should read this table in conjunction with our consolidated financial statements and the related notes, "Use of Proceeds" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus.

    As of
June 30,
2019
 

    Actual     Pro Forma
 

    (dollars in thousands)  

Cash and cash equivalents

  $ 83,000   $                     

Long term Debt, Including Current Portions:

             

Senior credit facilities:

             

Revolving Credit Facility

  $   $    

Term Loan Facility

    242,725        

Total long-term debt(1)(2)

    242,725        

Equity:

             

Preferred stock, $0.001 par value, 200,000 shares authorized and no shares issued and outstanding, actual;             shares authorized, no shares issued and outstanding, pro forma

         

Common stock, $0.001 par value, 500,000 shares authorized, 383,185 shares issued and outstanding, actual,             shares authorized,               shares issued and outstanding, pro forma

           

Additional paid-in capital

    519,121        

Accumulated other comprehensive income (loss)

    (472 )      

Retained earnings (accumulated deficit)

    (9,275 )      

Total stockholders' equity

    509,374        

Total capitalization

  $ 752,099   $    

(1)
Net of debt issuance costs of $4.8 million.

(2)
We expect to use approximately $              million of the net proceeds of this offering (or $              million if the underwriters exercise their option to purchase additional shares in full) to repay outstanding borrowings under our Term Loan Facility.

          A $1.00 increase or decrease in the assumed initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would

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increase or decrease each of cash and cash equivalents, additional paid-in capital, total stockholders' equity and total capitalization on a pro forma basis by approximately $              million, assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discount and estimated offering expenses payable by us.

          Each 1,000,000 increase or decrease in the number of shares of common stock offered in this offering would increase or decrease each of cash and cash equivalents, additional paid-in capital, total stockholders' equity (deficit) and total capitalization on a pro forma basis by approximately $              million, based on an assumed initial public offering price of $             per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us.

          Except as otherwise indicated, the above discussion and table are based on                          shares of our common stock outstanding as of June 30, 2019 and excludes:

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DILUTION

          If you invest in our common stock in this offering, your interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock in this offering and the pro forma net tangible book value per share of our common stock immediately after this offering.

          As of June 30, 2019, we had a net tangible book value of $              million, or $             per share of common stock. Net tangible book value per share is equal to our total tangible assets, less total liabilities, divided by the number of outstanding shares of our common stock.

          After giving effect to the sale of shares of common stock in this offering, after deducting the underwriting discount and estimated offering expenses payable by us, and the application of the net proceeds of this offering to repay $             million of outstanding borrowings under our Term Loan Facility as set forth under "Use of Proceeds," at an assumed initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover of this prospectus, our pro forma net tangible book value as of June 30, 2019 would have been $              million, or $             per share of common stock. This represents an immediate increase in net tangible book value of $             per share to our existing shareholders and an immediate dilution in net tangible book value of $             per share to investors participating in this offering at the assumed initial public offering price. The following table illustrates this per share dilution:

Assumed initial public offering price per share

        $                

Historical net tangible book value per share as of June 30, 2019

  $                      

Increase in net tangible book value per share attributable to the investors in this offering

             

Pro forma net tangible book value per share after giving effect to this offering

             

Dilution in net tangible book value per share to the investors in this offering

        $                

          A $1.00 increase or decrease in the assumed initial public offering price of $             per share, which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, would increase or decrease our pro forma net tangible book value per share after this offering by $             , and would increase or decrease the dilution per share to the investors in this offering by $             , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discount and estimated offering expenses payable by us. Similarly, each increase or decrease of one million shares in the number of shares of common stock offered by us would increase or decrease our pro forma net tangible book value per share after this offering by $             and would increase or decrease dilution per share to investors in this offering by $             , assuming the assumed initial public offering price, which is the midpoint of the price range set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us.

          If the underwriters exercise their option to purchase additional shares in full, the pro forma net tangible book value per share after this offering would be $             , and the dilution in pro forma net tangible book value per share to new investors in this offering would be $             .

          The following table presents, on a pro forma basis as described above, as of June 30, 2019, the differences between our existing shareholders and the investors purchasing shares of our common stock in this offering, with respect to the number of shares purchased, the total consideration paid to us, and the average price per share paid by our existing shareholders or to be paid to us by investors purchasing shares in this offering at an assumed offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this

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prospectus, before deducting the underwriting discount and estimated offering expenses payable by us.

                          Average  

  Shares Purchased     Total Consideration     Price per
 

  Number     Percentage     Amount     Percentage     Share
 

Existing shareholders

                % $                           % $                

New investors

                             

Total

        100 % $       100 %      

          A $1.00 increase or in the assumed initial public offering price of $             per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease the total consideration paid by new investors by $              million and increase or decrease the percent of total consideration paid by new investors by          %, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and before deducting the underwriting discount and estimated offering expenses payable by us.

          Except as otherwise indicated, the above discussion and tables assume no exercise of the underwriters' option to purchase additional shares. After giving effect to sales of shares in this offering, assuming the underwriters' option to purchase additional shares is exercised in full, our existing shareholders would own         % and our new investors would own         % of the total number of shares of our common stock outstanding after this offering.

          In addition, to the extent we issue any additional stock options or any stock options are exercised, or we issue any other securities or convertible debt in the future, investors participating in this offering may experience further dilution.

          Except as otherwise indicated, the above discussion and tables are based on                    shares of our common stock outstanding as of June 30, 2019 and exclude:

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SELECTED CONSOLIDATED FINANCIAL DATA

          The following tables present our selected consolidated financial data. The selected consolidated statements of operations data for the years ended December 31, 2017 and 2018 and the selected consolidated balance sheets data as of December 31, 2017 and 2018 are derived from our audited consolidated financial statements that are included elsewhere in this prospectus. The selected consolidated statements of operations data for the six months ended June 30, 2018 and 2019 and the selected consolidated balance sheet data as of June 30, 2019 are derived from our unaudited interim consolidated financial statements that are included elsewhere in this prospectus. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, that are necessary for the fair statement of our unaudited interim consolidated financial statements.

          Our historical results are not necessarily indicative of the results that may be expected in the future. You should read the selected historical financial data below in conjunction with the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and related notes included elsewhere in this prospectus.

 
  Year Ended
December 31,
  Six Months Ended
June 30,
 
 
  2017   2018   2018   2019  
 
  (in thousands, except share and
per share amounts)

 

Consolidated Statements of Operations Data:

                         

Revenue:

                         

Subscription

  $ 160,219   $ 184,991   $ 90,576   $ 103,892  

Professional services and other

    12,320     16,571     8,874     9,006  

Total revenue

    172,539     201,562     99,450     112,898  

Cost of revenue:

                         

Subscription (exclusive of amortization shown below)

    14,054     17,512     8,259     10,833  

Professional service and other (exclusive of amortization shown below)          

    9,155     12,703     5,837     6,916  

Amortization expense

    12,626     14,396     7,064     7,822  

Total cost of revenue

    35,835     44,611     21,160     25,571  

Gross profit

    136,704     156,951     78,290     87,327  

Operating Expenses:

                         

Sales and marketing(1)

    49,481     60,140     28,121     37,334  

Research and development(1)

    26,215     36,229     16,393     22,311  

General and administrative(1)

    20,202     28,355     13,079     15,748  

Depreciation and amortization

    16,526     16,341     8,356     8,274  

Total operating expenses

    112,424     141,065     65,949     83,667  

Income from operations

    24,280     15,886     12,341     3,660  

Other Income (Expense):

                         

Interest expense

    (19,277 )   (15,837 )   (7,791 )   (8,249 )

Loss on extinguishment of debt

        (9,785 )   (9,785 )    

Other income (expense), net

    773     (335 )   (912 )   225  

Total other income (expense)

    (18,504 )   (25,957 )   (18,488 )   (8,024 )

Income (loss) before income taxes

    5,776     (10,071 )   (6,147 )   (4,364 )

Benefit (provision) for income taxes

    13,185     (3,375 )   391     1,241  

Net income (loss)

  $ 18,961   $ (13,446 ) $ (5,756 ) $ (3,123 )

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  Year Ended
December 31,
  Six Months Ended
June 30,
 
 
  2017   2018   2018   2019  
 
  (in thousands, except share and
per share amounts)

 

Per Share Data(2):

                         

Net income (loss) per share:

                         

Basic

  $ 49.60   $ (35.17 ) $ (15.05 ) $ (8.17 )

Diluted

  $ 49.60   $ (35.17 ) $ (15.05 ) $ (8.17 )

Weighted-average shares used in computing net income (loss) per share:          

                         

Basic

    382,258     382,365     382,364     382,425  

Diluted

    382,297     382,365     382,364     382,425  

(1)
Includes stock-based compensation as follows:
 
  Year Ended
December 31,
  Six Months
Ended
June 30,
 
 
  2017   2018   2018   2019  
 
  (in thousands)
 

Sales and marketing

  $ 626   $ 726   $ 351   $ 410  

Research and development

    297     342     108     433  

General and administrative

    1,601     1,780     821     1,256  

Total

  $ 2,524   $ 2,848   $ 1,280   $ 2,099  
(2)
See Note 13 to our consolidated financial statements appearing elsewhere in this prospectus for an explanation of the method used to calculate our basic and diluted net income (loss) per share and the weighted-average number of shares used in the computation of the per share amounts.
 
  December 31,    
 
 
  June 30,
2019
 
 
  2017   2018  
 
  (in thousands)
 

Consolidated Balance Sheets Data:

                   

Cash and cash equivalents

  $ 20,969   $ 83,499   $ 83,000  

Working capital(1)

  $ 69,487   $ 139,373     142,805  

Total assets

  $ 776,223   $ 857,023     849,437  

Deferred revenue, current and noncurrent

  $ 33,810   $ 35,367     35,490  

Long-term debt, including current portion(2)

  $ 165,206   $ 243,551     242,725  

Total stockholders' equity

  $ 520,680   $ 509,105     509,374  

(1)
We define working capital as current assets less current liabilities.

(2)
Net of debt issuance costs of $4.8 million, $5.2 million and $4.8 million as of December 31, 2017 and 2018 and June 30, 2019, respectively.


Non-GAAP Financial Measures

          In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measures are useful in evaluating our operating performance. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides

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consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. The non-GAAP financial information is presented for supplemental informational purposes only, and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.

Free Cash Flow

          Free Cash Flow is a supplemental measure of liquidity that is not made under GAAP and that does not represent, and should not be considered as, an alternative to cash flow from operations, as determined by GAAP. We define Free Cash Flow as net cash provided by (used in) operating activities less cash used for purchases of property and equipment and capitalized software development costs.

          We use Free Cash Flow as one measure of the liquidity of our business. We believe that Free Cash Flow is a useful indicator of liquidity that provides information to management and investors about the amount of cash generated from our core operations that, after the purchases of property and equipment and capitalized software development costs, can be used for strategic initiatives, including investing in our business and selectively pursuing acquisitions and strategic investments. We further believe that historical and future trends in Free Cash Flow, even if negative, provide useful information about the amount of cash generated (or consumed) by our operating activities that is available (or is not available) to be used for strategic initiatives. For example, if Free Cash Flow is negative, we may need to access cash reserves or other sources of capital to invest in strategic initiatives. We also believe that the use of Free Cash Flow enables us to more effectively evaluate our liquidity period-over-period and relative to our competitors.

          A reconciliation of Free Cash Flow to net cash flow provided by (used in) operations, the most directly comparable GAAP measure, is as follows:

 
  Year Ended
December 31,
  Six Months
Ended
June 30,
 
 
  2017   2018   2018   2019  
 
  (in thousands)
 

Net cash provided by operating activities

  $ 3,423   $ 22,886   $ 13,015   $ 8,064  

Less:

                         

Purchases of property and equipment

    (2,519 )   (3,437 )   (1,362 )   (2,330 )

Capitalized software development costs

    (3,442 )   (6,310 )   (2,790 )   (4,492 )

Free Cash Flow

  $ (2,538 ) $ 13,139   $ 8,863   $ 1,242  

Net cash used in investing activities

 
$

(5,961

)

$

(26,661

)

$

(21,566

)

$

(6,822

)

Net cash provided by (used in) financing activities

  $ 101   $ 67,102   $ 68,921   $ (1,951 )

Cash paid for interest

  $ 20,758   $ 13,598   $ 5,960   $ 7,739  

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          Free Cash Flow has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. For example, Free Cash Flow does not represent the total increase or decrease in our cash balance for a given period. Because of these limitations, Free Cash Flow should not be considered as a replacement for cash flow from operations, as determined by GAAP, or as a measure of our profitability. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP measures only for supplemental purposes.

Non-GAAP Gross Profit

          Non-GAAP Gross Profit is a supplemental measure of operating performance that is not made under GAAP and that does not represent, and should not be considered as, an alternative to gross profit, as determined by GAAP. We define Non-GAAP Gross Profit as gross profit, adjusted for certain amortization expense of acquired intangible assets and software developed for internal use.

          We use Non-GAAP Gross Profit to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short-term and long-term operating plans. We believe that Non-GAAP Gross Profit is a useful measure to us and to our investors because it provides consistency and comparability with our past financial performance and between fiscal periods, as the metric generally eliminates the effects of the variability of amortization of acquired intangibles and internal-use software from period to period, which may fluctuate for reasons unrelated to overall operating performance. We believe that the use of this measure enables us to more effectively evaluate our performance period-over-period and relative to our competitors.

          A reconciliation of Non-GAAP Gross Profit to gross profit, the most directly comparable GAAP measure, is as follows:

 
  Year Ended
December 31,
  Six Months
Ended
June 30,
 
 
  2017   2018   2018   2019  
 
  (in thousands)
 

Gross profit

  $ 136,704   $ 156,951   $ 78,290   $ 87,327  

Amortization expense

    12,626     14,396     7,064     7,822  

Non-GAAP Gross Profit

  $ 149,330   $ 171,347   $ 85,354   $ 95,149  

          Non-GAAP Gross Profit has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Because of these limitations, non-GAAP Gross Profit should not be considered as a replacement for gross profit, as determined by GAAP, or as a measure of our profitability. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP measures only for supplemental purposes.

Adjusted EBITDA

          Adjusted EBITDA is a supplemental measure of operating performance that is not made under GAAP and that does not represent, and should not be considered as, an alternative to net income (loss), as determined by GAAP. We define Adjusted EBITDA as net income (loss), adjusted for interest expense, loss on extinguishment of debt, benefit for income taxes, depreciation and amortization, stock-based compensation expense, acquisition related expense and other (income) expense.

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          We use Adjusted EBITDA to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short-term and long-term operating plans. We believe that Adjusted EBITDA facilitates comparison of our operating performance on a consistent basis between periods, and when viewed in combination with our results prepared in accordance with GAAP, helps provide a broader picture of factors and trends affecting our results of operations.

          A reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP measure, is as follows:

 
  Year Ended
December 31,
  Six Months Ended
June 30,
 
 
  2017   2018   2018   2019  
 
  (in thousands)
 

Net income (loss)

  $ 18,961   $ (13,446 ) $ (5,756 ) $ (3,123 )

Interest expense(1)

    19,277     15,837     7,791     8,249  

Loss on extinguishment of debt

        9,785     9,785      

(Benefit) provision for income taxes

    (13,185 )   3,375     (391 )   (1,241 )

Depreciation and amortization

    29,152     30,737     15,420     16,096  

Stock-based compensation expense

    2,524     2,848     1,280     2,099  

Acquisition related expense(2)

        6,666     3,175     2,277  

Other (income) expense, net(3)

    (773 )   335     912     (225 )

Adjusted EBITDA

  $ 55,956   $ 56,137   $ 32,216   $ 24,132  

(1)
Includes amortization of debt issuance costs.

(2)
Acquisition related expense for the year ended December 31, 2018 and the six months ended June 30, 2018 and 2019, respectively, included $5.2 million, $1.7 million and $2.3 million of contingent compensation and retention expense related to the acquisition of Elastic Beam, Inc. or Elastic Beam. For more information related to our acquisition of Elastic Beam and the payment of contingent compensation, please refer to Note 5 of our consolidated financial statements appearing elsewhere in this prospectus.

(3)
See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the components of other (income) expense.

          Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Because of these limitations, Adjusted EBITDA should not be considered as a replacement for net income (loss), as determined by GAAP, or as a measure of our profitability. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP measures only for supplemental purposes.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

          The following discussion and analysis summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of our company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes thereto included elsewhere in this prospectus. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this prospectus, particularly in the sections entitled "Risk Factors" and "Forward-Looking Statements".


Overview

          Ping is pioneering Intelligent Identity. We enable secure access to any service, application or API from any device. Our Intelligent Identity Platform can leverage AI and ML to analyze device, network, application and user behavior data to make real-time authentication and security control decisions, enhancing the user experience. Our platform is designed to detect anomalies and automatically insert additional security measures, such as multi-factor authentication, only when necessary. We built our platform to meet the requirements of the most demanding enterprises. Our platform can be deployed across cloud, hybrid and on-premise infrastructures, and offers a comprehensive suite of turnkey integrations and is able to scale to millions of identities and thousands of cloud and on-premise applications. As of June 30, 2019, our platform secures over two billion identities globally across our customer base.

          Our Intelligent Identify Platform can secure all primary use cases, including customer, employee, partner and IoT. For example, enterprises can use our platform to enhance their customers' user experience by creating a single ID and login across web and mobile properties. For the year ended December 31, 2018, 44% of our subscription revenue was derived from the customer use case. Enterprises can also use our platform to provide their employees and commercial partners with secure, seamless access from any device to the applications, data and APIs they need to be productive. Enterprises are increasingly using our platform to manage and authenticate identities in a variety of IoT devices, such as connected vehicles and consumer devices.

          We were born in the enterprise when we launched our SSO solution in 2003 with our first customer, a Fortune 100 financial services firm, to help it address its customer identity use case by delivering a unified, personalized and consistent log-in experience. Since then, we built our platform to meet the most demanding enterprise requirements, expanded our solutions and pioneered Intelligent Identity, as evidenced by the following key milestones.

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          As of December 31, 2018, we had over 1,275 customers, including over 50% of the Fortune 100. Because our solutions were designed for enterprises, we primarily target customers with annual revenues in excess of $500 million. We define a customer as a separate legal entity with an individual subscription agreement and include in our customer count entities to which we have sold directly and entities that purchased one or more of our solutions from a reseller.

          Our platform is comprised of six solutions (SSO, MFA, Access Security, Directory, Data Governance and API Intelligence) that can be purchased individually or as a set of integrated offerings. Our platform can be deployed across cloud, hybrid and on-premise infrastructures. Our offerings are predominately priced based on the number of identities, solutions and use cases.

          We sell our platform through subscription-based contracts, primarily with either a 1-year or 3-year term, making the average contract term approximately 2 years. Substantially all of our customers pay annually in advance. We sell our solutions primarily through direct sales, which are enhanced by collaboration with our channel partners, resellers, system integrators and technology partners. Sixty percent of our new business for the year ended December 31, 2018 was channel-influenced, which includes sourcing new leads, aiding in pre-sale processes such as proof of concepts, demos or requests for proposals and reselling our solutions to customers. We also leverage a number of our channel partners and system integrators to provide the implementation services for some of our larger and more complex deployments, significantly increasing the time-to-value for our customers and maximizing the efficiency of our go-to-market efforts.

          We focus our selling efforts on executives such as CIOs and CISOs who are often making strategic top-down decisions to purchase our platform. CIOs purchase our solutions as part of their digitalization initiatives to provide their customers with a more secure, unified, personalized and seamless end user experience across their digital services. CISOs purchase our solutions for an identity-centric security strategy as more applications, data, devices and users reside outside of the traditional network perimeter due to the adoption of cloud, mobile and IoT. We recently extended our cloud-based offering to target developers who represent a new addressable customer base for us.

          The success of our strategy is validated by our strong dollar based net retention rates and our growing number of large customers. Our dollar-based net retention rates were 123%, 116% and 115% at December 31, 2017 and 2018 and June 30, 2019, respectively, and our dollar-based net retention rates have exceeded 115% for each of the past eight fiscal quarters. Our customers with ARR over $250,000 increased from 144 at December 31, 2017 to 202 at December 31, 2018, representing a growth rate of 40%. Our total customers increased from 1,264 at December 31, 2017 to 1,284 at December 31, 2018. The gross increase in total customers for the 2018 fiscal year was partially offset by customer churn, primarily consisting of low contract value churn of customers with ARR below $25,000. The increase of 58 net customers with ARR greater than $250,000 for the 2018 fiscal year is comprised of 16 new customers and 42 existing customers that had ARR grow to exceed $250,000 in 2018. Additionally, at December 31, 2018, we had 25 customers with greater than $1,000,000 in ARR. For definitions of dollar-based net retention rate and ARR and a description of how we calculate these metrics, see "— Key Business Metrics".

          At June 30, 2019, our top 15 customers accounted for 15% of total ARR, while our top 10 customers accounted for 11% of total ARR. Our customers come from a variety of industries, with customers in financial services accounting for 30% of our revenue for the six months ended

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June 30, 2019. Our customer base is diversified, with no one customer or reseller accounting for more than 5% of our total revenue for the six months ended June 30, 2019.

          Our ARR was $147.0 million and $183.6 million at December 31, 2017 and 2018, respectively, representing year-over-year growth of 25%. Our ARR was $159.6 million and $198.0 million at June 30, 2018 and 2019, respectively, representing period-over-period growth of 24%. We have grown revenue from $172.5 million for the year ended December 31, 2017 to $201.6 million for the year ended December 31, 2018, representing year-over-year growth of 17%. We have grown revenue from $99.5 million for the six months ended June 30, 2018 to $112.9 million for the six months ended June 30, 2019, representing period-over-period growth of 14%. Our net income was $19.0 million for the year ended December 31, 2017. Our net loss was $13.4 million for the year ended December 31 2018. We had net losses of $5.8 million and $3.1 million for the six months ended June 30, 2018 and 2019, respectively. Our cash provided by operations was $3.4 million and $22.9 million for the year ended December 31, 2017 and 2018, respectively. Our cash provided by operations was $13.0 million and $8.1 million for the six months ended June 30, 2018 and 2019, respectively. Our Free Cash Flow was $(2.5) million and $13.1 million, for the year ended December 31, 2017 and 2018, respectively. Our Free Cash Flow was $8.9 million and $1.2 million for the six months ended June 30, 2018 and 2019, respectively. Free Cash Flow is a supplemental measure that is not calculated and presented in accordance with GAAP. See "Selected Consolidated Financial Data — Non-GAAP Financial Measures" for a definition Free Cash Flow and a reconciliation to its most directly comparable GAAP financial measure.


Key Factors Affecting Our Performance

          We believe that our future performance will depend on many factors, including the following:

Generate Additional Sales to Existing Customers

          As part of our land and expand strategy, a customer journey often begins with the purchase of one of our solutions for one use case. Once customers realize the value of that solution, their spend with us expands by (i) adopting another identity use case, (ii) deploying additional solutions and/or (iii) adding more identities over time. As of June 30, 2019, our top 25 customers by ARR have increased their ARR on average by more than 25 times following their initial purchase.

          As of December 31, 2018, only 13% of our customers had purchased three or more of our six solutions, providing a significant opportunity to drive incremental sales to our existing customers. Our future revenue growth is dependent upon our ability to continue to expand our customers' use of our platform. Our ability to increase sales to existing customers will depend on a number of factors, including satisfaction or dissatisfaction with our solutions, competition, pricing, economic conditions and spending by customers on our solutions. We have adopted a customer success strategy and implemented processes across our customer base to drive revenue retention and expansion.

Increase the Size of our Customer Base

          We believe there is significant opportunity to increase market adoption of our platform by new customers. Our SSO, Access Security and Directory solutions often replace legacy and homegrown systems. We also have significant greenfield opportunities with our MFA, Data Governance and API Intelligence solutions and, increasingly, the IoT use case. To increase our customer base, we plan to expand our sales force and channel partner network, both domestically and internationally, enhance our marketing efforts and target new buyers. For example, we have extended our cloud-based offering to target developers, who represent a new potential buyer for us. Over time, we believe sales to developers could increase the size of our customer base.

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Maintain our Technology Differentiation and Product Leadership

          Our Intelligent Identity Platform is designed for large enterprises with complex, hybrid IT requirements. We have spent over a decade building a standards-based platform with turnkey integrations designed to ensure that large enterprises can easily and rapidly deploy our platform within their complex infrastructures. We intend to continue making investments in research and development to extend our platform and technology capabilities while also expanding our solutions to address new use cases. For example, we recently released our API Intelligence solution that is designed to dynamically discover APIs that are inadvertently exposed and automatically detect and block attacks.

Invest for Growth

          We believe that our market opportunity is large, and we plan to invest in order to continue to support further growth. This includes investing in our sales force and expanding our network of channel partners, resellers, system integrators and technology partners with which we partner to sell our Intelligent Identity Platform, both domestically and internationally. We have a large and growing international presence and intend to grow our customer base in various international regions by making investments in our sales team globally. In 2018, our international revenue was 23% of our total revenue. We expect international sales to be a meaningful revenue contributor in future periods.

          During 2018, we made a decision with our board of directors to accelerate investments in our business to take advantage of our large market opportunity. Specifically, we invested in enhancing our salesforce globally to increase our selling capacity and capitalize on our large market opportunity. In addition, we have invested in new cloud-based offerings to broaden our Intelligent Identity Platform and the scope of our solutions to cover new identity security threats, such as APIs. We also invested in deploying our platform as a single tenant cloud-based offering, managed by us, to help extend the reach of our solutions within our customers' infrastructures, while providing them with the level of control and configuration they require. We have seen progress with these investments and expect to continue to invest heavily in these areas in the near future. However, we are not expecting these investments to provide our business with meaningful increases to ARR growth in the immediate term as we expect natural purchasing cycles will affect the speed of market adoption.

Seasonality

          Given the purchasing patterns of our enterprise customers, we typically experience seasonality in terms of when we receive orders from our customers. Our customers often time their purchases and renewals of our solutions to coincide with their fiscal year end, which is typically June 30 or December 31. Because of these purchasing patterns, a greater percentage of our annual subscription revenue from term-based licenses, the revenue from which is recognized up front at the later of delivery or commencement of the license term, has come from our second and fourth quarters than from other quarters. For the year ended December 31, 2018, 25% and 30% of our annual revenue was in our second and fourth quarter, respectively. We believe this seasonality will continue to affect our quarterly results and may become more pronounced.


Key Business Metrics

          In addition to our GAAP financial information, we review a number of operating and financial metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions.

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Annual Recurring Revenue

          ARR represents the annualized value of all subscription contracts as of the end of the period. ARR mitigates fluctuations due to seasonality, contract term and the sales mix of subscriptions for term-based licenses and SaaS. ARR only includes the annualized value of subscription contracts. ARR does not have any standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.

          Our ARR was $147.0 million and $183.6 million at December 31, 2017 and 2018, respectively, representing year-over-year growth of 25%. Our ARR was $159.6 million and $198.0 million at June 30, 2018 and 2019, respectively, representing period-over-period growth of 24%.

          The table below sets forth our ARR as of the end of our last ten fiscal quarters.

 
  As of  
 
  March 31,
2017
  June 30,
2017
  September 30,
2017
  December 31,
2017
  March 31,
2018
  June 30,
2018
  September 30,
2018
  December 31,
2018
  March 31,
2019
  June 30,
2019
 

    (in thousands)  

ARR

  $ 115,320   $ 124,558   $ 132,439   $ 146,969   $ 151,729   $ 159,563   $ 167,659   $ 183,579   $ 190,476   $ 197,990  

Dollar-Based Net Retention Rate

          To further illustrate the land and expand economics of our customer relationships, we examine the rate at which our customers increase their subscriptions for our solutions. Our dollar-based net retention rate measures our ability to increase revenue across our existing customer base through expanded use of our platform, offset by customers whose subscription contracts with us are not renewed or renew at a lower amount.

          We calculate our dollar-based net retention rate as of the end of a reporting period as follows:

          The quotient obtained from this calculation is our dollar-based net retention rate. Our dollar-based net retention rates were 123%, 116% and 115% at December 31, 2017 and 2018 and June 30, 2019, respectively. We believe our ability to cross-sell our new solutions to our installed base, particularly MFA and API Intelligence, will continue to support our high dollar-based net retention rates.

Large Customers

          We believe that our ability to increase the number of customers on our platform, particularly the number of customers with greater than ARR of $250,000, demonstrates our focus on the large enterprise market and our penetration within those enterprises. Increasing awareness of our platform, further developing our sales and marketing expertise and channel partner ecosystem, and continuing to build solutions that address the unique identity needs of large enterprises have increased our number of large customers across industries. We believe there are significant upsell and cross-sell opportunities within our customer base by expanding the number of use cases, adding additional identities and selling new solutions.

          Our customers with ARR over $250,000 increased from 144 at December 31, 2017 to 202 at December 31, 2018, representing a growth rate of 40%. Our total customers increased from 1,264

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at December 31, 2017 to 1,284 at December 31, 2018. The gross increase in total customers for the 2018 fiscal year was partially offset by customer churn, primarily consisting of low contract value churn of customers with ARR below $25,000. Additionally, at December 31, 2018, we had 25 customers with greater than $1,000,000 in ARR.


Components of Results of Operations

Revenue

          We recognize revenue under ASC 606. Under ASC 606, we recognize revenue when our customer obtains control of goods or services in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. See "Critical Accounting Policies — Revenue Recognition".

          We derive revenue primarily from sales of subscriptions for our solutions to new and existing customers and, to a lesser extent, sales of professional services.

          Subscription.    Subscription revenue includes subscription term-based license revenue for solutions deployed on-premise within the customer's IT infrastructure, subscription support and maintenance revenue from our on-premise deployments, and SaaS subscriptions, which give customers the right to access our cloud-hosted software solutions. We typically invoice subscription fees annually in advance, though certain contracts require invoicing for the entire subscription in advance. Subscription term-based license revenue is recognized upon transfer of control of the software, which occurs at delivery or when the license term commences, if later. All of our support and maintenance revenue and revenue from SaaS subscriptions is recognized ratably over the term of the applicable agreement.

          For the years ended December 31, 2017 and 2018, 71% and 66%, respectively, of our revenue was from subscription term-based licenses. For the six months ended June 30, 2018 and 2019, 66% and 65%, respectively, of our revenue was from subscription term-based licenses. We expect that a majority of our revenue will be from subscription term-based licenses for the foreseeable future. Changes in period-over-period subscription revenue growth are primarily impacted by the following factors:

          While the number of new and increased subscriptions during a period impacts our subscription revenue growth, the type and duration of those subscriptions has a significantly greater impact on the amount and timing of revenue recognized in a period. Subscription revenue from term-based licenses is recognized at the beginning of the subscription term, while subscription revenue from SaaS and support and maintenance is recognized ratably over the subscription term. As a result, our revenue may fluctuate due to the timing of term-based licensing transactions. In addition, keeping other factors constant, when the percentage of subscription term-based licenses to total subscriptions sold or renewed in a period increases relative to the prior period, revenue growth will increase. Conversely, when the percentage of subscription SaaS and support and maintenance to total subscriptions sold or renewed in a period increases, revenue growth will generally decrease. A multi-year subscription term-based license will generally result in greater revenue recognition up-front relative to a one-year subscription term-based license. Therefore, keeping other factors constant, revenue growth will also trend higher in a period where the percentage of multi-year subscription term-based licenses to total subscription term-based licenses increases.

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          Professional Services and Other.    Professional services and other revenue consists primarily of fees from professional services provided to our customers and partners to configure and optimize the use of our solutions, as well as training services related to the configuration and operation of our solutions. Our professional services are generally priced on a time and materials basis, which is generally invoiced monthly and for which revenue is recognized as the services are performed. Revenue from our training services and sponsorship fees is recognized on the date the services are complete. Over time, we expect our professional services revenue to remain relatively stable as a percentage of total revenue.

Cost of Revenue

          Subscription.    Subscription cost of revenue consists primarily of employee compensation costs for employees associated with supporting our subscription arrangements and certain third-party expenses. Employee compensation and related costs include cash compensation and benefits to employees, costs of third-party contractors and associated overhead costs. Third-party expenses consist of cloud infrastructure costs and other expenses directly associated with our customer support. We expect our subscription cost of revenue to increase in absolute dollars to the extent our subscription revenue increases.

          Professional Services and Other.    Professional services and other cost of revenue consists primarily of employee compensation costs directly associated with delivery of professional services and training, costs of third-party contractors and facility rental charges and other associated overhead costs. We expect our professional services and other cost of revenue to increase in absolute dollars relative to the growth of our business.

          Amortization Expense.    Amortization expense consists of amortization of developed technology and internal-use software.

Gross Profit and Gross Margin

          Gross profit, or revenue less cost of revenue, and gross margin, or gross profit as a percentage of revenue, have been and will continue to be affected by various factors, including the timing of our acquisition of new customers and our renewal of and follow-on sales to existing customers, the mix of subscriptions for term-based licenses and SaaS subscriptions that we sell, the costs associated with operating our platform, the extent to which we expand our customer support team and the extent to which we can increase the efficiency of our technology and infrastructure through technological improvements. We expect our gross profit to increase in absolute dollars but our gross margin to remain consistent because we expect cost of subscription revenue to increase consistently with the growth in our subscription revenue, although our gross margin could fluctuate from period to period depending on the interplay of all of these factors.

Operating Expenses

          Our operating expenses consist of sales and marketing, research and development and general and administrative expenses as well as depreciation and amortization. Personnel costs are the most significant component of operating expenses and consist of salaries, benefits, bonuses, payroll taxes and stock-based compensation expense.

          Sales and Marketing.    Sales and marketing expenses consist primarily of employee compensation costs, sales commissions, costs of general marketing and promotional activities, travel-related expenses and allocated overhead. Certain sales commissions earned by our sales force on subscription contracts are deferred and amortized over the period of benefit, which is generally four years. We expect to continue to invest in our sales force domestically and

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internationally, as well as in our channel relationships. We expect our sales and marketing expenses to increase on an absolute dollar basis and continue to be our largest operating expense category for the foreseeable future.

          Research and Development.    Research and development expenses consist primarily of employee compensation costs, allocated overhead and software and maintenance expenses. We will continue to invest in innovation and offer our customers new solutions to enhance our existing platform. See the section "Business — Research and Development" for more information. We expect such investment to increase on an absolute dollar basis as our business grows.

          General and Administrative.    General and administrative expenses consist primarily of employee compensation costs for corporate personnel, such as those in our executive, human resource, legal, facilities, accounting and finance, information security and information technology departments. In addition, general and administrative expenses include third-party professional fees, as well as all other supporting corporate expenses not allocated to other departments. General and administrative expense also includes acquisition related expenses, which primarily consist of third-party expenses related to business acquisitions, such as professional services and legal fees.

          We expect our general and administrative expenses to increase on an absolute dollar basis as our business grows. Also, following the completion of this offering, we expect to incur additional general and administrative expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, and increased expenses for insurance, investor relations and professional services.

          Depreciation and Amortization.    Depreciation and amortization expense consists primarily of depreciation of our fixed assets and amortization of definite lived acquired intangible assets such as customer relationships, trade names and non-compete agreements.

Other Income (Expense)

          Interest Expense.    Interest expense consists primarily of interest payments on our outstanding borrowings under our Credit Facilities as well as the amortization of associated deferred financing costs. See "— Liquidity and Capital Resources — Senior Secured Credit Facility".

          Other Income (Expense), Net.    Other income (expense), net primarily consists of gains and losses from transactions denominated in a currency other than the functional currency, interest income and other income (expense). As we have expanded our international operations, our exposure to fluctuations in foreign currencies has increased, and we expect this to continue.

Provision for Income Taxes

          Provision for income taxes consists primarily of income taxes related to U.S. federal and state income taxes and income taxes in foreign jurisdictions in which we conduct business.

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Results of Operations

          The following table sets forth our consolidated statements of operations data for the periods indicated:

    Year Ended     Six Months Ended  

    December 31,     June 30,
 

    2017     2018     2018     2019
 

    (in thousands)  

Revenue:

                         

Subscription

  $ 160,219   $ 184,991   $ 90,576   $ 103,892  

Professional services and other

    12,320     16,571     8,874     9,006  

Total revenue

    172,539     201,562     99,450     112,898  

Cost of revenue:

                         

Subscription (exclusive of amortization shown below)

    14,054     17,512     8,259     10,833  

Professional service and other (exclusive of amortization shown below)

    9,155     12,703     5,837     6,916  

Amortization expense

    12,626     14,396     7,064     7,822  

Total cost of revenue

    35,835     44,611     21,160     25,571  

Gross profit

    136,704     156,951     78,290     87,327  

Operating Expenses:

                         

Sales and marketing(1)

    49,481     60,140     28,121     37,334  

Research and development(1)

    26,215     36,229     16,393     22,311  

General and administrative(1)

    20,202     28,355     13,079     15,748  

Depreciation and amortization

    16,526     16,341     8,356     8,274  

Total operating expenses

    112,424     141,065     65,949     83,667  

Income from operations

    24,280     15,886     12,341     3,660  

Other Income (Expense):

                         

Interest expense

    (19,277 )   (15,837 )   (7,791 )   (8,249 )

Loss on extinguishment of debt

        (9,785 )   (9,785 )    

Other income (expense), net

    773     (335 )   (912 )   225  

Total other income (expense)

    (18,504 )   (25,957 )   (18,488 )   (8,024 )

Income (loss) before income taxes

    5,776     (10,071 )   (6,147 )   (4,364 )

Benefit (provision) for income taxes

    13,185     (3,375 )   391     1,241  

Net income (loss)

  $ 18,961   $ (13,446 ) $ (5,756 ) $ (3,123 )

(1)
Includes stock-based compensation as follows:

    Year Ended     Six Months
Ended
 

    December 31,     June 30,
 

    2017     2018     2018     2019
 

    (in thousands)  

Sales and marketing

  $ 626   $ 726   $ 351   $ 410  

Research and development

    297     342     108     433  

General and administrative

    1,601     1,780     821     1,256  

Total

  $ 2,524   $ 2,848   $ 1,280   $ 2,099  

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          The following table sets forth our consolidated statements of operations data expressed as a percentage of total revenue for the periods indicated:

    Year Ended     Six Months
Ended
 

    December 31,     June 30,
 

    2017     2018     2018     2019
 

Revenue:

                         

Subscription

    93 %   92 %   91 %   92 %

Professional services and other

    7     8     9     8  

Total revenue

    100     100     100     100  

Cost of Revenue:

                         

Subscription (exclusive of amortization shown below)

    8     9     8     10  

Professional services and other (exclusive of amortization shown below)

    5     6     6     6  

Amortization expense

    7     7     7     7  

Total cost of revenue

    20     22     21     23  

Gross profit

    80     78     79     77  

Operating Expenses:

                         

Sales and marketing

    29     30     28     33  

Research and development

    15     18     16     20  

General and administrative

    12     14     13     14  

Depreciation and amortization

    10     8     8     7  

Total operating expenses

    66     70     65     74  

Income from operations

    14     8     14     3  

Other Income (Expense):

                         

Interest expense

    (11 )   (8 )   (8 )   (7 )

Loss on extinguishment of debt

        (5 )   (10 )    

Other income (expense), net

            (1 )    

Total other income (expense)

    (11 )   (13 )   (19 )   (7 )

Income (loss) before income taxes

    3     (5 )   (5 )   (4 )

Benefit (provision) for income taxes

    8     (2 )       1  

Net income (loss)

    11 %   (7 )%   (5 )%   (3 )%


Comparison of the Six Months Ended June 30, 2018 and 2019

Revenue

    Six Months Ended
June 30,
             

    2018     2019     $ Change     % Change
 

    (in thousands)  

Revenue:

                         

Subscription

  $ 90,576   $ 103,892   $ 13,316     15 %

Professional services and other

    8,874     9,006     132     1 %

Total revenue

  $ 99,450   $ 112,898   $ 13,448     14 %

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          Total revenue increased by $13.4 million, or 14%, for the six months ended June 30, 2019 compared to the six months ended June 30, 2018. 99% of the increase in total revenue was due to an increase in subscription revenue of $13.3 million.

          The table below sets forth the components of subscription revenue for the six months ended June 30, 2018 and 2019.

    Six Months Ended
June 30,
             

    2018     2019     $ Change     % Change
 

    (in thousands)  

Subscription term-based licenses:

                         

Multi-year subscription term-based licenses

  $ 44,510   $ 52,425   $ 7,915        

1-year subscription term-based licenses

    21,445     21,082     (363 )      

Total subscription term-based licenses

    65,955     73,507     7,552        

Subscription SaaS and support and maintenance

    24,621     30,385     5,764        

Total subscription revenue

  $ 90,576   $ 103,892   $ 13,316     15 %

          Subscription revenue increased 15%, or $13.3 million, in the six months ended June 30, 2019 compared to the six months ended June 30, 2018.

          The change in subscription revenue was primarily due to the following:

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Cost of Revenue and Gross Margin

    Six Months
Ended June 30,
             

    2018     2019     $ Change     % Change
 

    (in thousands)  

Cost of revenue:

                         

Subscription (exclusive of amortization shown below)

  $ 8,259   $ 10,833   $ 2,574     31 %

Professional services and other (exclusive of amortization shown below)

    5,837     6,916     1,079     18  

Amortization expense

    7,064     7,822     758     11  

Total cost of revenue

  $ 21,160   $ 25,571   $ 4,411     21 %

Gross margin:

                         

Subscription (exclusive of amortization)

    91 %   90 %            

Professional services and other (exclusive of amortization)

    34 %   22 %            

Total gross margin

    79 %   77 %            

          Subscription cost of revenue increased by $2.6 million, or 31%, for the six months ended June 30, 2019 compared to the six months ended June 30, 2018. $1.3 million of the increase was compensation-related and primarily attributable to an increase in headcount to support the growth of our subscription SaaS offerings and ongoing maintenance for our expanding customer base. $0.8 million of the increase was attributable to our increased cloud-based hosting costs largely associated with the increased adoption of our solutions. Substantially all of the remaining increase in subscription cost of revenue was due to an increase in allocated overhead.

          Professional services and other cost of revenue increased by $1.1 million, or 18%, for the six months ended June 30, 2019 compared to the six months ended June 30, 2018. $1.9 million of the increase was compensation related and primarily attributable to an increase in headcount to support growth of our business. This was partially offset by a decrease in consulting costs of $0.9 million. The remaining portion of the increase was primarily attributable to travel costs as well as allocated overhead.

          Amortization expense increased by $0.8 million, or 11%, for the six months ended June 30, 2019 compared to the six months ended June 30, 2018. The increase was attributable primarily to an increase in the amortization of our capitalized software.

          Gross Margin.    Subscription gross margin was 91% and 90% for the six months ended June 30, 2018 and 2019, respectively as our cost of subscription revenue increased relatively consistently with the growth in our subscription revenue.

          Professional services and other gross margin decreased to 22% for the six months ended June 30, 2019 compared to 34% for the six months ended June 30, 2018. The decrease was attributable primarily to an increase in headcount as we continue to grow our professional services team.

          Total gross margin was 79% and 77% for the six months ended June 30, 2018 and 2019, respectively as our total costs of revenue increased at a greater rate year-over-year as compared to our total revenue due to our increased headcount.

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Operating Expenses

    Six Months
Ended June 30,
             

    2018     2019     $ Change     % Change
 

    (in thousands)  

Sales and marketing

  $ 28,121   $ 37,334   $ 9,213     33 %

Research and development

    16,393     22,311     5,918     36  

General and administrative

    13,079     15,748     2,669     20  

Depreciation and amortization

    8,356     8,274     (82 )   (1 )

Total operating expenses

  $ 65,949   $ 83,667   $ 17,718     27 %

          Sales and Marketing.    Sales and marketing expenses increased by $9.2 million, or 33%, for the six months ended June 30, 2019 compared to the six months ended June 30, 2018. $6.5 million of the increase was the result of increased commissions related to the increase in revenue, the increase in our sales force domestically and internationally and continued investment in our channel relationships. As our headcount increased, we also experienced a related increase in travel costs of $0.4 million as well as increased promotional expenses of $1.1 million primarily related to tradeshows and event sponsorships for the six months ended June 30, 2019 compared to the six months ended June 30, 2018. Substantially all of the remaining increase in sales and marketing expenses was the result of increased partner commissions and consulting costs, as well as allocated overhead.

          Research and Development.    Research and development expenses increased by $5.9 million, or 36%, for the six months ended June 30, 2019 compared to the six months ended June 30, 2018. $4.4 million of the increase was compensation-related and primarily the result of an increase in headcount to enhance and expand our solutions. Additionally, $0.5 million of the increase related to contingent compensation and retention expense for Elastic Beam, which we acquired in April 2018 (as further discussed in Note 5 of our consolidated financial statements appearing elsewhere in this prospectus). An additional $0.7 million was related to an increase in consulting costs. Substantially all of the remaining increase in research and development expenses was the result of increased software and maintenance expenses, primarily cloud-based hosting costs to support our development efforts for our SaaS offerings, and allocated overhead.

          General and Administrative.    General and administrative expenses increased by $2.7 million, or 20%, for the six months ended June 30, 2019 compared to the six months ended June 30, 2018. $4.1 million of the increase was the result of an increase in corporate headcount to support the growth and scale of the business. This was partially offset by a decrease in acquisition costs of $1.4 million, $0.6 million of which related to our acquisition of Elastic Beam in April 2018. The remaining increase in general and administrative expenses related to increased accounting and legal fees driven by our preparation for becoming a public company.

          Depreciation and Amortization.    Depreciation and amortization expense remained substantially the same for the six months ended June 30, 2019 compared to the six months ended June 30, 2018 as no major changes were made to our property and equipment or to certain acquired intangible assets from June 30, 2018 to June 30, 2019.

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Other Income (Expense)

    Six Months
Ended June 30,
             

    2018     2019     $ Change     % Change
 

    (in thousands)  

Interest expense

  $ (7,791 ) $ (8,249 ) $ (458 )   6 %

Loss on extinguishment of debt

    (9,785 )       9,785     (100 )

Other income (expense), net

    (912 )   225     1,137     (125 )

Total other income (expense)

  $ (18,488 ) $ (8,024 ) $ 10,464     (57 )%

          Interest Expense.    Interest expense increased by $0.5 million, or 6%, for the six months ended June 30, 2019 compared to the six months ended June 30, 2018. The increase was attributable primarily to an increase in interest rates, from a weighted average interest rate of 5.5% for the six months ended June 30, 2018 to 6.2% for the six months ended June 30, 2019, resulting in increased interest expense for the six months ended June 30, 2019.

          Loss on Extinguishment of Debt.    In conjunction with the refinancing of our debt in January 2018, we recorded a loss on extinguishment of debt for the six months ended June 30, 2018 of $9.8 million. There was no similar loss during the six months ended June 30, 2019.

          Other Income (Expense), Net.    Other income (expense), net increased by $1.1 million, from other expense of $0.9 million for the six months ended June 30, 2018 to other income of $0.2 million for the six months ended June 30, 2019. The change was attributable primarily to a change in the amount of foreign currency gains and losses, from a loss of $1.2 million in the six months ended June 30, 2018 compared to a loss of $0.5 million in the six months ended June 30, 2019. The foreign currency losses in each period were partially offset by interest income of $0.3 million and $0.7 million for the six months ended June 30, 2018 and 2019, respectively.

Benefit (Provision) for Income Taxes

    Six Months
Ended June 30,
             

    2018     2019     $ Change     % Change
 

    (in thousands)  

Benefit (provision) for income taxes

  $ 391   $ 1,241   $ 850     217 %

          For the six months ended June 30, 2018 and 2019, we recorded a benefit for income taxes of $0.4 million and $1.2 million, respectively. Our quarterly tax benefit (provision), and estimate of our annual effective tax rate, is subject to variation due to several factors, including variability in pretax income (or loss), the mix of jurisdictions to which such income relates, changes in how we do business, and tax law developments. Our tax benefit (provision) for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each quarter, we update our estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, we make a cumulative adjustment in such period. Our effective tax rates for the six months ended June 30, 2018 and 2019 were (6)% and (28)%, respectively. The difference in the effective tax rates is primarily due to larger non-deductible items in the six months ended June 30, 2018 as compared to the six months ended June 30, 2019.

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Comparison of the Year Ended December 31, 2017 and 2018

Revenue

    Year Ended
December 31,
             

    2017     2018     $ Change     % Change
 

    (in thousands)  

Revenue:

                         

Subscription

  $ 160,219   $ 184,991   $ 24,772     15 %

Professional services and other

    12,320     16,571     4,251     35 %

Total revenue

  $ 172,539   $ 201,562   $ 29,023     17 %

          Total revenue increased by $29.0 million, or 17%, for the year ended December 31, 2018 compared to the year ended December 31, 2017. 85% of the increase in total revenue was due to an increase in subscription revenue of $24.8 million. The remaining $4.3 million of revenue growth was attributable to an increase in professional services and other revenue.

          The table below sets forth the components of subscription revenue for the years ended December 31, 2017 and 2018.

    Year Ended
December 31,
             

    2017     2018     $ Change     % Change
 

    (in thousands)  

Subscription term-based licenses:

                         

Multi-year subscription term-based licenses

  $ 86,421   $ 88,925   $ 2,504           

1-year subscription term-based licenses          

    35,678     44,743     9,065           

Total subscription term-based licenses          

    122,099     133,668     11,569           

Subscription SaaS and support and maintenance

    38,120     51,323     13,203           

Total subscription revenue

  $ 160,219   $ 184,991   $ 24,772     15 %

          Subscription revenue increased 15%, or $24.8 million, in the year ended December 31, 2018 compared to the year ended December 31, 2017.

          The change in subscription revenue was primarily due to the following:

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Cost of Revenue and Gross Margin

    Year Ended
December 31,
             

    2017     2018     $ Change     % Change
 

    (in thousands)  

Cost of revenue:

                         

Subscription (exclusive of amortization shown below)

  $ 14,054   $ 17,512   $ 3,458     25 %

Professional services and other (exclusive of amortization shown below)

    9,155     12,703     3,548     39  

Amortization expense

    12,626     14,396     1,770     14  

Total cost of revenue

  $ 35,835   $ 44,611   $ 8,776     24 %

Gross margin:

                         

Subscription (exclusive of amortization)          

    91 %   91 %            

Professional services and other (exclusive of amortization)

    26 %   23 %            

Total gross margin

    79 %   78 %            

          Subscription cost of revenue increased by $3.5 million, or 25%, for the year ended December 31, 2018 compared to the year ended December 31, 2017. $1.8 million of the increase was compensation-related and primarily attributable to an increase in headcount to support the growth of our subscription SaaS offerings and ongoing maintenance for our expanding customer base. $1.0 million of the increase was attributable to our increased cloud-based hosting costs largely associated with the increased adoption of our solutions. Substantially all of the remaining increase in subscription cost of revenue was due to an increase in travel costs and allocated overhead.

          Professional services and other cost of revenue increased by $3.5 million, or 39%, for the year ended December 31, 2018 compared to the year ended December 31, 2017. $2.8 million of the increase was compensation related and primarily attributable to an increase in headcount to support growth of our business. $0.5 million of the increase related to consulting costs. The remaining portion of the increase was primarily attributable to travel costs as well as allocated overhead.

          Amortization expense increased by $1.8 million, or 14%, for the year ended December 31, 2018 compared to the year ended December 31, 2017. The increase was attributable primarily to an increase in the amortization of our capitalized software.

          Gross Margin.    Subscription gross margin was 91% for the years ended December 31, 2017 and 2018 as our cost of subscription revenue increased consistently with the growth in our subscription revenue.

          Professional services and other gross margin decreased to 23% for the year ended December 31, 2018 compared to 26% for the year ended December 31, 2017. The decrease was attributable primarily to an increase in headcount as we continue to grow our professional services team.

          Total gross margin was 79% and 78% for the years ended December 31, 2017 and 2018, respectively, as our total costs of revenue marginally increased year-over-year as compared to our total revenue due to our increased headcount.

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Operating Expenses

    Year Ended
December 31,
             

    2017     2018     $ Change     % Change
 

    (in thousands)  

Sales and marketing

  $ 49,481   $ 60,140   $ 10,659     22 %

Research and development

    26,215     36,229     10,014     38  

General and administrative

    20,202     28,355     8,153     40  

Depreciation and amortization

    16,526     16,341     (185 )   (1 )

Total operating expenses

  $ 112,424   $ 141,065   $ 28,641     25 %

          Sales and Marketing.    Sales and marketing expenses increased by $10.7 million, or 22%, for the year ended December 31, 2018 compared to the year ended December 31, 2017. $6.0 million of the increase was the result of increased commissions related to the increase in revenue, the increase in our sales force domestically and internationally and continued investment in our channel relationships. As our headcount increased, we also experienced a related increase in travel costs of $1.2 million and increased promotional expenses of $1.5 million primarily related to tradeshows and event sponsorships for the year ended December 31, 2018 compared to the year ended December 31, 2017. Substantially all of the remaining increase in sales and marketing expenses was the result of increased partner commissions and consulting costs, as well as allocated overhead.

          Research and Development.    Research and development expenses increased by $10.0 million, or 38%, for the year ended December 31, 2018 compared to the year ended December 31, 2017. $4.0 million of the increase was compensation-related and primarily the result of an increase in headcount to enhance and expand our solutions. Additionally, $5.2 million of the increase related to contingent compensation and retention expense that was payable on the first anniversary of our acquisition of Elastic Beam, which we acquired in April 2018 (as further discussed in Note 5 of our consolidated financial statements appearing elsewhere in this prospectus). Substantially all of the remaining increase in research and development expenses was the result of increased software and maintenance expenses, primarily cloud-based hosting costs to support our development efforts for our SaaS offerings, consulting costs and allocated overhead.

          General and Administrative.    General and administrative expenses increased by $8.2 million, or 40%, for the year ended December 31, 2018 compared to the year ended December 31, 2017. $3.9 million of the increase was the result of an increase in corporate headcount to support the growth and scale of the business. An additional $1.3 million of the increase resulted from an increase in consulting costs, driven primarily by the implementation of new accounting standards and our preparation for becoming a public company. General and administrative expenses for the year ended December 31, 2018 also included $0.6 million of acquisition-related expenses related to our acquisition of Elastic Beam. Substantially all of the remaining increase in general and administrative expenses related to increased accounting and legal fees driven by our preparation for becoming a public company.

          Depreciation and Amortization.    Depreciation and amortization expense remained substantially the same for the year ended December 31, 2018 compared to the year ended December 31, 2017 as no major changes were made to our property and equipment or to certain acquired intangible assets from December 31, 2017 to December 31, 2018.

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Other Income (Expense)

    Year Ended
December 31,
             

    2017     2018     $ Change     % Change
 

    (in thousands)  

Interest expense

  $ (19,277 ) $ (15,837 ) $ 3,440     (18 )%

Loss on extinguishment of debt

        (9,785 )   (9,785 )   NM  

Other income (expense), net

    773     (335 )   (1,108 )   (143 )

Total other income (expense)

  $ (18,504 ) $ (25,957 ) $ (7,453 )   40 %

          Interest Expense.    Interest expense decreased by $3.4 million, or 18%, for the year ended December 31, 2018 compared to the year ended December 31, 2017. The decrease was attributable primarily to the refinancing of our debt in January 2018, through which we increased our borrowings of long-term debt from a principal amount of $170.0 million to $250.0 million but were able to obtain more favorable interest rates, from a weighted average interest rate of 10.4% for the year ended December 31, 2017 to 5.8% for the year ended December 31, 2018, resulting in reduced interest expense for the year ended December 31, 2018.

          Loss on Extinguishment of Debt.    In conjunction with the refinancing of our debt in January 2018, we recorded a loss on extinguishment of debt for the year ended December 31, 2018 of $9.8 million. There was no similar loss during the year ended December 31, 2017.

          Other Income (Expense), Net.    Other income (expense), net decreased by $1.1 million, or 143%, for the year ended December 31, 2018 compared to the year ended December 31, 2017. The decrease was attributable primarily to a change in the amount of foreign currency gains and losses, from a gain of $0.7 million in the year ended December 31, 2017 compared to a loss of $2.0 million in the year ended December 31, 2018.

Benefit (Provision) for Income Taxes

    Year Ended
December 31,
             

    2017     2018     $ Change     % Change
 

    (in thousands)  

Benefit (provision) for income taxes

  $ 13,185   $ (3,375 ) $ (16,560 )   (126 )%

          For the year ended December 31, 2017, we recorded a benefit for income taxes of $13.2 million. For the year ended December 31, 2018, we recorded a provision for income taxes of $3.4 million. Our effective tax rates for the years ended December 31, 2017 and 2018 were (228.2)% and (33.5)%, respectively. The increase in our effective tax rate for 2018 compared to 2017 was primarily driven by the enactment of the Tax Act in 2017. As a result of the Tax Act, we remeasured our deferred tax assets and liabilities at the lower U.S. federal tax rate, which resulted in a one-time tax benefit during the year ended December 31, 2017 of $17.0 million. This one-time tax benefit was partially offset by the one-time transition tax expense on certain unremitted earnings of our foreign subsidiaries during the year ended December 31, 2017 of $1.2 million. Additionally, there were changes to our state tax rates which resulted in tax expense of $1.9 million and $4.2 million during the years ended December 31, 2017 and December 31, 2018, respectively. During the year ended December 31, 2018, we recorded tax expense of $1.0 million for contingent deal consideration related to the Elastic Beam acquisition (as further discussed in Note 5 of our consolidated financial statements included elsewhere in this prospectus).

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Quarterly Results of Operations and Other Data

          The following tables set forth selected unaudited consolidated quarterly statements of operations data for each of the ten fiscal quarters ended June 30, 2019, as well as the percentage of revenue that each line item represents for each quarter. The information for each of these quarters has been prepared on the same basis as the audited annual consolidated financial statements included elsewhere in this prospectus and, in the opinion of management, includes all adjustments, which consist only of normal recurring adjustments, necessary for the fair statement of the results of operations for these periods. This data should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this prospectus. These quarterly results are not necessarily indicative of our results of operations to be expected for any future period.

    Three Months Ended
 

    March 31,
2017
    June 30,
2017
    September 30,
2017
    December 31,
2017
    March 31,
2018
    June 30,
2018
    September 30,
2018
    December 31,
2018
    March 31,
2019
    June 30,
2019
 

    (in thousands)  

Revenue:

                                                             

Subscription

  $ 30,706   $ 39,404   $ 31,089   $ 59,020   $ 46,173   $ 44,403   $ 38,481   $ 55,934   $ 47,620   $ 56,272  

Professional services and other

    3,406     3,671     2,337     2,906     3,774     5,100     4,138     3,559     2,818     6,188  

Total revenue

    34,112     43,075     33,426     61,926     49,947     49,503     42,619     59,493     50,438     62,460  

Cost of Revenue:

                                                             

Subscription (exclusive of amortization shown below)

    3,177     3,236     3,567     4,074     3,918     4,341     4,526     4,727     5,181     5,652  

Professional services and other (exclusive of amortization shown below)

    1,682     2,099     2,580     2,794     3,151     2,686     3,347     3,519     3,241     3,675  

Amortization expense

    2,969     3,106     3,199     3,352     3,478     3,586     3,549     3,783     3,866     3,956  

Total cost of revenue

    7,828     8,441     9,346     10,220     10,547     10,613     11,422     12,029     12,288     13,283  

Gross profit

    26,284     34,634     24,080     51,706     39,400     38,890     31,197     47,464     38,150     49,177  

Operating Expenses:

                                                             

Sales and marketing(2)

    11,055     13,011     11,287     14,128     12,623     15,498     13,690     18,329     17,308     20,026  

Research and development(2)

    6,143     6,148     6,588     7,336     7,026     9,367     9,634     10,202     11,454     10,857  

General and administrative(2)

    5,121     4,821     4,864     5,396     7,380     5,699     6,411     8,865     7,084     8,664  

Depreciation and amortization

    4,136     4,115     4,129     4,146     4,174     4,182     3,976     4,009     4,121     4,153  

Total operating expenses

    26,455     28,095     26,868     31,006     31,203     34,746     33,711     41,405     39,967     43,700  

Income (loss) from operations                   

    (171 )   6,539     (2,788 )   20,700     8,197     4,144     (2,514 )   6,059     (1,817 )   5,477  

Other Income (Expense):

                                                             

Interest expense

    (4,694 )   (4,754 )   (4,909 )   (4,920 )   (3,956 )   (3,835 )   (3,959 )   (4,087 )   (4,116 )   (4,133 )

Loss on extinguishment of debt

                    (9,785 )                    

Other income (expense), net

    41     403     282     47     396     (1,308 )   (131 )   708     (9 )   234  

Total other income (expense)                   

    (4,653 )   (4,351 )   (4,627 )   (4,873 )   (13,345 )   (5,143 )   (4,090 )   (3,379 )   (4,125 )   (3,899 )

Income (loss) before income taxes

    (4,824 )   2,188     (7,415 )   15,827     (5,148 )   (999 )   (6,604 )   2,680     (5,942 )   1,578  

Benefit (provision) for income taxes

    1,522     (691 )   2,216     10,138     1,086     (695 )   983     (4,749 )   1,063     178  

Net income (loss)

  $ (3,302 ) $ 1,497   $ (5,199 ) $ 25,965   $ (4,062 ) $ (1,694 ) $ (5,621 ) $ (2,069 ) $ (4,879 ) $ 1,756  

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(2)
Includes stock-based compensation as follows:

    Three Months Ended
 

    March 31,
2017
    June 30,
2017
    September 30,
2017
    December 31,
2017
    March 31,
2018
    June 30,
2018
    September 30,
2018
    December 31,
2018
    March 31,
2019
    June 30,
2019
 

    (in thousands)  

Sales and marketing

  $ 125   $ 171   $ 150   $ 180   $ 169   $ 182   $ 184   $ 191   $ 222   $ 188  

Research and development

    65     72     88     72     71     37     76     158     215     218  

General and administrative

    327     435     393     446     386     435     444     515     622     634  

Total

  $ 517   $ 678   $ 631   $ 698   $ 626   $ 654   $ 704   $ 864   $ 1,059   $ 1,040  

 

    Three Months Ended
 

    March 31,
2017
    June 30,
2017
    September 30,
2017
    December 31,
2017
    March 31,
2018
    June 30,
2018
    September 30,
2018
    December 31,
2018
    March 31,
2019
    June 30,
2019
 

Revenue:

                                                             

Subscription

    90 %   91 %   93 %   95 %   92 %   90 %   90 %   94 %   94 %   90 %

Professional services and other

    10     9     7     5     8     10     10     6     6     10  

Total revenue

    100     100     100     100     100     100     100     100     100     100  

Cost of Revenue:

                                                             

Subscription (exclusive of amortization shown below)

    9     8     11     7     8     9     11     8     10     9  

Professional services and other (exclusive of amortization shown below)

    5     5     8     5     6     5     8     6     6     6  

Amortization expense

    9     7     10     5     7     7     8     6     8     6  

Total cost of revenue

    23     20     29     17     21     21     27     20     24     21  

Gross profit

    77     80     71     83     79     79     73     80     76     79  

Operating Expenses:

                                                             

Sales and marketing

    32     30     34     23     25     31     32     31     34     32  

Research and development

    18     14     20     12     14     19     23     17     23     17  

General and administrative

    15     11     15     9     15     12     15     15     14     14  

Depreciation and amortization

    12     10     12     7     8     8     9     7     8     7  

Total operating expenses

    77     65     81     51     62     70     79     70     79     70  

Income (loss) from operations

        15     (10 )   32     17     9     (6 )   10     (3 )   9  

Other Income (Expense):

                                                             

Interest expense

    (14 )   (11 )   (15 )   (8 )   (8 )   (8 )   (9 )   (7 )   (8 )   (7 )

Loss on extinguishment of debt

                    (20 )                    

Other income (expense), net

        1     1         1     (3 )       1         0  

Total other income (expense)

    (14 )   (10 )   (14 )   (8 )   (27 )   (11 )   (9 )   (6 )   (8 )   (6 )

Income (loss) before income taxes

    (14 )   5     (24 )   24     (10 )   (2 )   (15 )   5     (11 )   3  

Benefit (provision) for income taxes

    4     (2 )   7     16     2     (1 )   2     (8 )   2     0  

Net income (loss)

    (10 )%   3 %   (17 )%   40 %   (8 )%   (3 )%   (13 )%   (3 )%   (9 )%   3 %

Quarterly Revenue Trends

          Except for the three months ended December 31, 2018, our quarterly revenue increased in each of the periods presented when compared to the results of the same quarter in the prior year due primarily to increases in the number of new customers as well as retention within existing customers and sales of new products year-over-year. Revenue decreased in the three months ended December 31, 2018 compared to the three months ended December 31, 2017 because multi-year subscription term-based license revenue as a percentage of total subscription term-based license revenue decreased to 70% from 81%, respectively. We typically experience seasonality in terms of when we receive orders from our customers. We generally receive a greater number of orders from new customers, as well as renewal or upsell orders from existing customers, in our second and fourth quarter because of purchasing patterns of our enterprise customers. Our customers often time their purchases and renewals of our solutions to coincide with their fiscal year end, which is typically June 30 or December 31. Our subscription term-based license revenue is recognized up front at the later of delivery or commencement of the license term, thus creating fluctuations in subscription revenue quarter-over-quarter depending on the number and size of term-based licenses sold each quarter. Conversely, our subscription SaaS and support and maintenance revenue is recognized on a straight-line basis over the contract term. For our subscription SaaS and support and maintenance revenue, a portion of the revenue that we report in each period may be attributable to the recognition of deferred revenue recorded in prior periods. As such, increases or decreases in new sales or renewals in any one period may not be immediately reflected in our revenue for that period and may instead affect future periods.

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Quarterly Operating Expense Trends

          Our operating expenses have generally increased sequentially due to our growth and are primarily related to increases in personnel-related costs and related overhead in order to support our expanding operations and our continued investments in our solutions and service capabilities.


Liquidity and Capital Resources

General

          As of June 30, 2019, our principal sources of liquidity were cash and cash equivalents totaling $83.0 million, which was held for working capital purposes, as well as the available balance of our Term Loan Facility and Revolving Credit Facility, described further below. As of June 30, 2019, our cash equivalents were comprised of money market funds. During the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019, our positive cash flows from operations have enabled us to make continued investments in supporting the growth of our business. Following the completion of this offering, we expect that our operating cash flows, in addition to our cash and cash equivalents, will enable us to continue to make such investments in the future. We expect our operating cash flows to further improve as we increase our operational efficiency and experience economies of scale.

          We have financed our operations primarily through cash received from operations and debt financing. We believe our existing cash and cash equivalents, our Term Loan Facility and Revolving Credit Facility and cash provided by sales of our solutions and services will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. Our future capital requirements will depend on several factors, including but not limited to our subscription growth rate, subscription renewal activity, billing frequency, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced solutions and the continuing market adoption of our platform. In the future, we may enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property rights.

          We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies, this could reduce our ability to compete successfully and harm our results of operations.

          A majority of our customers pay in advance for annual subscriptions, a portion of which is recorded as deferred revenue. Deferred revenue consists of the unearned portion of billed fees for our subscriptions, which is later recognized as revenue in accordance with our revenue recognition policy. As of June 30, 2019, we had deferred revenue of $35.5 million, of which $33.3 million was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other revenue recognition criteria have been met.

Senior Secured Credit Facilities

          On January 25, 2018, we entered into our $275.0 million Credit Agreement with a syndicate of lenders, comprised of the $25.0 million Revolving Credit Facility and the $250.0 million Term Loan Facility. A portion of the proceeds from borrowing under the Credit Agreement were used to repay our then existing credit facilities, together with accrued interest and related prepayment penalties and expenses. As of June 30, 2019, we had $247.5 million and no borrowings outstanding under our Term Loan Facility and Revolving Credit Facility, respectively. As of June 30, 2019, the interest rate on our Term Loan Facility and Revolving Credit Facility was approximately 6.19% and 0.25%, respectively.

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          Borrowings under the Credit Agreement bear interest at a rate per annum, at our option, equal to an applicable margin, plus, (a) for alternative base rate borrowings, the highest of (i) the prime rate as determined by the administrative agent in effect on such day, (ii) the Federal Funds Rate in effect on such day plus 1/2 of 1.00% and (iii) the Adjusted LIBO Rate (for a one-month interest period and taking into account a 1.00% floor with respect to term loans) plus 1.00% and (b) for eurocurrency borrowings, the Adjusted LIBO Rate determined by the greater of (i) the LIBO rate for the relevant interest period divided by 1 minus the statutory reserves (if any) and (ii) with respect to term loans only, 1.00%.

          The applicable margin for borrowings under the Credit Agreement is (a) with respect to term loan borrowings, 2.75% for alternate base rate borrowings and 3.75% for eurocurrency borrowings, and (b) with respect to both revolving and swingline loan borrowings, 2.75% for alternate base rate borrowings and 3.75% for eurocurrency borrowings when our first lien leverage ratio is greater than 5.00 to 1.00, with step downs to (i) 2.50% for alternate base rate borrowings and 3.50% for eurocurrency borrowings when our first lien leverage ratio is less than or equal to 5.00 to 1.00 but greater than 4.50 to 1.00 and (ii) 2.25% for alternate base rate borrowings and 3.25% for eurocurrency when our first lien leverage ratio is less than or equal to 4.50 to 1.00. Our first lien leverage ratio is determined in accordance with the terms of the Credit Agreement.

          The Credit Agreement contains customary representations and warranties, affirmative covenants, reporting obligations, negative covenants and events of default. See "Description of Certain Indebtedness".

Cash Flows

          The following table presents a summary of our consolidated cash flows from operating, investing and financing activities for the periods indicated.

    Year Ended
December 31,
    Six Months
Ended June 30,
 

    2017     2018     2018     2019
 

    (in thousands)  

Net cash provided by operating activities

  $ 3,423   $ 22,886   $ 13,015   $ 8,064  

Net cash used in investing activities

    (5,961 )   (26,661 )   (21,566 )   (6,822 )

Net cash provided by (used in) financing activities

    101     67,102     68,921     (1,951 )

Effect of exchange rates on cash and cash equivalents and restricted cash

    274     (653 )   (408 )   220  

Net (decrease) increase in cash and cash equivalents and restricted cash

  $ (2,163 ) $ 62,674   $ 59,962   $ (489 )

Cash and cash equivalents and restricted cash at beginning of period

    23,632     21,469     21,469     84,143  

Cash and cash equivalents and restricted cash at end of period

  $ 21,469   $ 84,143   $ 81,431   $ 83,654  

Operating Activities

          Our largest source of operating cash is cash collections from our customers for subscriptions and professional services. Our primary uses of cash from operating activities are for employee-related expenditures, marketing expenses and third-party hosting costs.

          For the six months ended June 30, 2018, net cash provided by operating activities was $13.0 million, reflecting our net loss of $5.8 million, adjusted for non-cash charges of $28.1 million

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and net cash outflows of $9.3 million provided by changes in our operating assets and liabilities. Non-cash charges primarily consisted of stock-based compensation, amortization of deferred commissions, depreciation and amortization of property and equipment and intangible assets, loss on extinguishment of debt and deferred income taxes. The primary drivers of the changes in operating assets and liabilities related to a $3.8 million increase in contract assets and a $2.7 million increase in deferred commissions, as well as a $2.8 million decrease in deferred revenue and a $2.3 million decrease in accrued expenses and other due to the timing of cash disbursements, partially offset by a $2.5 million decrease in accounts receivable due to the timing of receipt of payment from our customers and a $1.0 million increase in accounts payable.

          During the six months ended June 30, 2019, net cash provided by operating activities was $8.1 million due to our net loss of $3.1 million that was adjusted for non-cash charges of $20.0 million and net cash outflows of $8.8 million provided by changes in our operating assets and liabilities. Non-cash charges primarily consisted of stock-based compensation, amortization of deferred commissions, depreciation and amortization of property and equipment and intangible assets and deferred income taxes. The primary drivers of the changes in operating assets and liabilities related to an $8.2 million increase in contract assets, a $3.6 million increase in deferred commissions, a $4.6 million decrease in accrued compensation and a $1.5 million decrease in accrued expenses and other due to the timing of payments, partially offset by a $6.0 million decrease in accounts receivable due to the timing of receipt of payment from our customers and a $3.1 million decrease in prepaid expenses and other current assets due to the timing of cash disbursements.

          For the year ended December 31, 2017, net cash provided by operating activities was $3.4 million, reflecting our net income of $19.0 million, adjusted for non-cash charges of $23.3 million and net cash outflows of $38.8 million provided by changes in our operating assets and liabilities. Non-cash charges primarily consisted of stock-based compensation, amortization of deferred commissions, depreciation and amortization of property and equipment and intangible assets and deferred income taxes. The primary drivers of the changes in operating assets and liabilities related to a $22.2 million increase in contract assets, a $7.7 million increase in deferred commissions and a $6.2 million increase in deferred revenue, primarily driven by the increase in subscription sales in the fourth quarter of 2017 and the associated recognition of revenue, as well as a $10.0 million increase in accounts receivable due to the timing of receipt of payment from our customers and a $3.8 million decrease in accrued compensation due to the timing of cash disbursements.

          During the year ended December 31, 2018, net cash provided by operating activities was $22.9 million due to our net loss of $13.4 million that was adjusted for non-cash charges of $52.2 million and net cash outflows of $15.9 million provided by changes in our operating assets and liabilities. Non-cash charges primarily consisted of stock-based compensation, amortization of deferred commissions, depreciation and amortization of property and equipment and intangible assets, loss on extinguishment of debt and deferred income taxes. The primary drivers of the changes in operating assets and liabilities related to a $6.8 million increase in contract assets, a $10.0 million increase in deferred commissions and a $5.8 million increase in prepaid expenses and other current assets due to the timing of payments, and a $1.5 million increase in accounts receivable due to the timing of receipt of payment from our customers, offset by a $1.4 million increase in deferred revenue resulting from the timing of when we recognize revenue, as well as a $6.1 million increase in accrued compensation and a $1.1 million increase in accrued expenses and other due to the timing of payments.

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Investing Activities

          Net cash used in investing activities was $21.6 million and $6.8 million during the six months ended June 30, 2018 and 2019, respectively, a decrease of $14.8 million. The net decrease is primarily attributable to the acquisition of Elastic Beam for $17.4 million in cash during the six months ended June 30, 2018, partially offset by an increase in the capitalization of internal-use software costs of $1.7 million associated with the development of additional features and functionality of our hosted platform.

          Net cash used in investing activities was $6.0 million and $26.7 million during the years ended December 31, 2017 and 2018, respectively, an increase of $20.7 million. The net increase is primarily attributable to the acquisition of Elastic Beam for $17.4 million in cash as well as an increase in the capitalization of internal-use software costs of $2.9 million associated with the development of additional features and functionality of our hosted platform.

Financing Activities

          Net cash provided by financing activities was $68.9 million during the six months ended June 30, 2018. Net cash used in financing activities was $2.0 million during the six months ended June 30, 2019. The net change primarily relates to the receipt of proceeds from our new term loan of $250.0 million, partially offset by issuance costs of $6.0 million and the repayment of our previous term loan and revolving credit facility and payment of the associated debt extinguishment costs of $170.0 million and $5.1 million, respectively, all of which occurred during the six months ended June 30, 2018. This is partially offset by $1.3 million related to quarterly principal payments on our Term Loan Facility as well as payment of Elastic Beam consideration and holdbacks of $1.1 million, payment of deferred offering costs of $0.5 million and receipt of $1.0 million from stock options exercises, all of which occurred during the six months ended June 30, 2019.

          Net cash provided by financing activities was $0.1 million and $67.1 million during the years ended December 31, 2017 and 2018, respectively, an increase of $67.0 million. The net increase primarily relates to the receipt of proceeds from our new term loan of $250.0 million, partially offset by issuance costs of $6.0 million and the repayment of our previous term loan and revolving credit facility and payment of the associated debt extinguishment costs of $170.0 million and $5.1 million, respectively. This is offset by an additional $1.3 million related to quarterly principal payments on our Term Loan Facility that began in September 2018.

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Contractual Obligations and Commitments

          Our principal commitments consist of obligations under operating leases for office space and repayments of long-term debt.

          The following table summarizes our contractual obligations as of December 31, 2018:

    Payments Due by Period
 

    Total     Less than
1 Year
    1 - 3 years     3 - 5 Years     More than
5 years
 

    (in thousands)  

Operating lease obligations

  $ 17,480   $ 2,515   $ 5,370   $ 4,653   $ 4,942  

Long-term debt — principal

    248,750     2,500     5,000     5,000     236,250  

Long-term debt — interest(1)

    90,630     15,313     30,204     29,544     15,569  

Other obligations(2)

    2,810     2,810              

Total

  $ 359,670   $ 23,138   $ 40,574   $ 39,197   $ 256,761  

(1)
Interest payments that relate to long-term debt are calculated and estimated for the periods presented based on the expected principal balance for each period and the interest rate at December 31, 2018 of 6.09%, given that our debt is at floating interest rates. Excluded from these payments is the amortization of debt issuance costs related to our indebtedness.

(2)
Other obligations represents a non-cancelable minimum annual commitment with AWS of $5.6 million for hosting services to be provided during the year ended December 31, 2019, of which 50% was paid upfront in December 2018.

          The contractual commitment amounts in the table above are associated with agreements that are enforceable and legally binding. Obligations under contracts that we can cancel without a significant penalty are not included in the table above. Purchase orders issued in the ordinary course of business are not included in the table above, as our purchase orders represent authorizations to purchase rather than binding agreements.


Indemnification Agreements

          In the ordinary course of business, we enter into agreements of varying scope and terms pursuant to which we agree to indemnify customers, vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, services to be provided by us or from intellectual property infringement claims made by third parties. In addition, in connection with the completion of this offering we intend to enter into indemnification agreements with our directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No demands have been made upon us to provide indemnification under such agreements and there are no claims that we are aware of that could have a material effect on our consolidated balance sheets, consolidated statements of operations and comprehensive loss, or consolidated statements of cash flows.


Off-Balance Sheet Arrangements

          As of June 30, 2019, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structure finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or for other contractually narrow or limited purposes.

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JOBS Act Accounting Election

          We qualify as an emerging growth company pursuant to the provisions of the JOBS Act. For as long as we are an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding advisory "say-on-pay" votes on executive compensation and shareholder advisory votes on golden parachute compensation.

          The JOBS Act also permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to use the extended transition period until we are no longer an emerging growth company or until we choose to affirmatively and irrevocably opt out of the extended transition period. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements applicable to public companies. See "Risk Factors — Risks Relating to Our Common Stock and This Offering — We are an 'emerging growth company' and we expect to elect to comply with reduced public company reporting requirements, which could make our common stock less attractive to investors".


Critical Accounting Policies

          The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenue and expenses and related disclosures of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions, impacting our reported results of operations and financial condition.

          Certain accounting policies involve significant judgments and assumptions by management, which have a material impact on the carrying value of assets and liabilities and the recognition of income and expenses. Management considers these accounting policies to be critical accounting policies. The estimates and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances. The significant accounting policies which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described below. Refer to "Note 2 — Summary of Significant Accounting Policies" to the consolidated financial statements included elsewhere in this prospectus for more detailed information regarding our critical accounting policies.

Revenue Recognition

          We recognize revenue under ASC 606. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration that we expected to be entitled to receive in exchange for those goods or services. To adhere to the requirements of the new standard, we determine revenue recognition through the following steps:

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          Channel Partner Sales.    We generate sales directly through our sales team as well as through our channel partners. Where channel partners are involved, we have determined that we are generally the principal in these arrangements. Sales to channel partners are generally made at a discount, and revenues are recorded at the discounted price once the revenue recognition criteria above have been met. In certain instances, we pay referral fees to our partners, which we have determined to be commensurate with our internal sales commissions, so we record these payments as sales commissions. Channel partners generally receive an order from an end customer prior to placing an order with us, and payment from channel partners is not contingent on the partner's collection from end customers.

Deferred Revenue

          Deferred revenue consists of customer billings in advance of revenue being recognized. We primarily invoice customers for subscription arrangements annually in advance, though certain contracts require invoicing for the entire subscription in advance. Amounts anticipated to be recognized within one year of the balance sheet date are recorded as deferred revenue, current; the remaining portion is recorded as deferred revenue, noncurrent in the consolidated balance sheets.

Deferred Commissions

          Sales commissions earned by our internal and external sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for new revenue contracts and additional sales to existing customers are deferred and recorded in deferred commissions, current and noncurrent in the consolidated balance sheets. Deferred commissions are amortized over the period of benefit, which we have determined to be generally four years. We determined the period of benefit by taking into consideration our customer contracts, technology, and other factors. Deferred commissions are amortized consistent with the pattern of revenue recognition for each performance obligation for contracts for which the commissions paid were earned. We include amortization of deferred commissions in sales and marketing expense in the consolidated statements of operations. We periodically review the carrying amount of deferred commissions to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred costs.

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Accounts Receivable and Allowance for Doubtful Accounts

          Our accounts receivable represents amounts owed to us by our customers that are recorded at the invoiced amount. We report accounts receivable net of allowance for doubtful accounts. Management makes judgments and estimates of the probable loss related to uncollectible accounts receivable considering a number of factors including collection trends, prevailing and anticipated economic conditions and specific customer credit risk. Unanticipated events and circumstances may occur that could affect the accuracy of management's estimates, which may result in changes to our estimates. Probable losses are recorded in general and administrative expense in the accompanying consolidated statements of operations and comprehensive loss included elsewhere in this prospectus. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Capitalized Software Costs

          For software products sold to customers, we expense costs for the development of new software products and substantial enhancements to existing software products as incurred until technological feasibility has been established. Once technological feasibility has been established, we capitalize certain costs during the application development stage as part of intangible assets. Maintenance and training costs, however, are expensed as incurred.

          For software used internally, we capitalize qualifying costs during the application development stage and amortize those costs on a straight-line basis over the software's estimated useful life, which is generally three to four years. Costs related to preliminary project activities and post implementation activities, however, are expensed as incurred.

Acquisitions, Goodwill and Identifiable Intangible Assets

          We account for acquired businesses using the acquisition method of accounting, which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values. The fair value of identifiable intangible assets is based on significant judgments and estimates made by management. We typically engage third-party valuation appraisal firms to assist in determining the fair values and useful lives of the assets acquired. Such valuations and useful life determinations require us to make significant estimates and assumptions. These estimates and assumptions are based on historical experience and information obtained from the management of the acquired companies, and also include, but are not limited to, future expected cash flows earned from the product-related technology and discount rates applied in determining the present value of those cash flows. Unanticipated events and circumstances may occur that could affect the accuracy or validity of such assumptions, estimates or actual results.

          Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations using the acquisition method of accounting, which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values. We evaluate goodwill for impairment at least annually in the fourth quarter of each year, and as events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Our test for goodwill impairment starts with a qualitative assessment to determine whether it is necessary to perform a quantitative goodwill impairment test. If qualitative factors indicate that the fair value of the reporting unit is more likely than not less than its carrying amount, then a quantitative goodwill impairment test is performed. Under the quantitative impairment test, if the carrying amount of the reporting unit exceeds its fair value, then an impairment loss is recognized in an amount equal to that excess, not to exceed the total amount of goodwill.

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          We record acquired in-process research and development as indefinite-lived intangible assets. Purchased intangible assets with indefinite lives are not amortized but assessed for potential impairment annually and when events or circumstances indicate that their carrying amounts might be impaired.

          We review long-lived assets, including property and equipment and finite-lived intangible assets, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Such events and changes may include significant changes in performance relative to expected operating results, significant changes in asset use, significant negative industry or economic trends and changes in our business strategy. An impairment loss is recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount.

Stock-Based Compensation

          We recognize stock-based compensation expense in accordance with the provisions of Accounting Standards Codification 718, Compensation — Stock Compensation, or ASC 718. ASC 718 requires compensation expense for all stock-based compensation awards made to employees and directors to be measured and recognized based on the grant date fair value of the awards. Stock-based compensation expense for time-based awards is determined based on the grant-date fair value and is recognized on a straight-line basis over the requisite service period of the award, which is typically the vesting term of the award. Stock-based compensation expense for awards subject to market and performance conditions is determined based on the grant-date fair value and is recognized on a graded vesting basis over the term of the award once it is probable that the performance conditions will be met.

          Stock-based compensation expense is recognized net of forfeitures. On January 1, 2018, we elected to adopt Accounting Standards Update No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, or ASU 2016-09. Prior to the adoption of ASU 2016-09, we estimated forfeiture rates annually using our historical experience of forfeited awards and subsequently adjusted for actual forfeitures at each vesting date. After the adoption of ASU 2016-09, we recognize forfeitures as they occur. Adoption of this provision on January 1, 2018 resulted in a cumulative-effect adjustment to retained earnings of $38 thousand.

          To estimate the grant date fair value of our time-based awards, we utilize the Black-Scholes option pricing model. For awards subject to performance and market conditions, we use a Monte Carlo simulation model, which utilizes multiple inputs to estimate the probability that market conditions will be achieved. Both models involve inherent uncertainties and require the following highly subjective assumptions as inputs:

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          The following assumptions were used for the time-based options that we granted during the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019:

  Year Ended
December 31,
  Six Months Ended
June 30,

  2017   2018   2018   2019

Risk-free rate

  2.0% - 2.2%   2.6% - 3.0%   2.7%   —%

Expected life

  6.1 years   6.1 years   6.1 years   — years

Dividend yield

  —%   —%   —%   —%

Volatility

  38% - 42%   38% - 42%   39%   —%

Weighted-average granted date fair value of options granted during period

  $583.36   $822.02   $614.08   $—

          The following assumptions were used for the awards subject to performance and market conditions that we granted during the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019:

  Year Ended
December 31,
  Six Months Ended
June 30,

  2017   2018   2018   2019

Risk-free rate

  1.5% - 1.9%   2.5% - 2.8%   2.5%   —%

Expected life

  3.8 - 4.5 years   1.7 - 3.3 years   3.3 years   — years

Dividend yield

      —%   —%

Volatility

  57% - 62%   45% - 55%   55%   —%

Weighted-average granted date fair value of options granted during period

  $388.74   $388.63   $478.03   $—

          For our RSUs we calculate the fair value of each unit based on the estimated fair value of our common stock (as discussed below in "Common Stock Valuation") on the date of grant and subsequently record compensation expense over the vesting period using a straight-line method. Prior to the adoption of ASU 2016-09, we factored an estimated forfeiture rate in calculating compensation expense on RSUs and adjusted for actual forfeitures upon the vesting of each tranche of RSUs. After the adoption of ASU 2016-09, we account for forfeitures as they occur.

Common Stock Valuation

          Because our common stock is not yet publicly traded, our Board establishes the fair value of the shares of common stock underlying our stock options. These estimates are based in part upon valuations provided by third-party valuation firms.

          As there is no public market for our common stock, our Board exercises reasonable judgment and considers numerous objective and subjective factors to determine the best estimate of the fair

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value of our common stock in accordance with the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held Company Equity Securities Issued as Compensation, or the AICPA Guide. The factors considered by our Board in estimating the fair value of our common stock include the following:

          In valuing our common stock, our Board determines the value using both the income and the market approach valuation methods. The income approach estimates value based on the expectation of future cash flows that a company will generate. These future cash flows are discounted to their present values using a discount rate based on our weighted average cost of capital, or WACC. To derive our WACC, a cost of equity was developed using the Capital Asset Pricing Model and comparable company betas, and a cost of debt was determined based on our estimated cost of borrowing. The costs of debt and equity were then weighted based on our actual capital structure. The market approach estimates value based on a comparison of our company to comparable public companies in a similar line of business. From the comparable companies, a representative market multiple is determined and subsequently applied to our financial results to estimate our enterprise value.

          Application of these approaches involves the use of estimates, judgment and assumptions that are highly complex and subjective, including those regarding our future expected revenue, expenses, cash flows, discount rates, market multiples, the selection of comparable public companies and the probability of future events. Changes in any or all of these estimates and assumptions impact our valuations at each valuation date and may have a material impact on the valuation of our common stock.

          Following this offering, it will not be necessary to determine the fair value of our common stock, as the shares will be traded in the public market.

          Based on the assumed initial public offering price per share of $             , which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, the aggregate intrinsic value of our outstanding stock options as of June 30, 2019 was $              million, with $              million related to vested stock options.

Income Taxes

          We account for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for temporary differences between the financial statement basis and the income tax basis of assets and liabilities that will result in taxable or deductible amounts in the future. Our temporary differences result primarily from net operating losses, stock-based compensation, deferred revenue, intangible assets and accrued expenses.

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Deferred income tax asset and liability computations are based on enacted tax laws and rates anticipated to be in effect when these differences reverse. We then assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that it is more likely than not that all or a portion of the deferred tax assets will not be realized, we establish a valuation allowance to reduce deferred income tax assets to the amounts expected to be realized.

          We evaluate our tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are more likely than not of being sustained by the applicable tax authority. Tax positions not deemed to meet the more likely than not threshold would not be recorded as a tax benefit or expense in the current period. We include interest and penalties related to income tax liabilities in our benefit (provision) for income taxes.


Recent Accounting Pronouncements

          For a description of our recently adopted accounting pronouncements and recently issued accounting standards not yet adopted, see Note 2 to our consolidated financial statements: "Summary of Significant Accounting Policies — Recent Accounting Pronouncements" appearing elsewhere in this prospectus.


Quantitative and Qualitative Disclosures About Market Risk

          Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. As we have operations in the United States and internationally, our market risk exposure is primarily a result of exposure due to potential changes in inflation or interest rates. We do not hold financial instruments for trading purposes.

Foreign Currency Exchange Risk

          Our revenues and expenses are primarily denominated in U.S. dollars. For the years ended December 31, 2017 and 2018, we recorded a gain of $0.7 million and a loss of $2.0 million on foreign exchange transactions, respectively. For the six months ended June 30, 2018 and 2019, we recorded losses of $1.2 million and $0.5 million, respectively, on foreign exchange transactions. To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments, but we may do so in the future if our exposure to foreign currency should become more significant. For business conducted outside of the United States, we may have both revenue and costs incurred in the local currency of the subsidiary, creating a partial natural hedge. Changes to exchange rates therefore have not had a significant impact on the business to date. However, we will continue to reassess our foreign exchange exposure as we continue to grow our business globally. During the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019, a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have had a material impact on our consolidated financial statements.

Interest Rate Risk

          Our primary market risk exposure is changing LIBO-based interest rates. Interest rate risk is highly sensitive due to many factors, including U.S. monetary and tax policies, U.S. and international economic factors and other factors beyond our control. Our Term Loan Facility bears interest at a floating rate equal to our option of a rate per annum equal to (a) an Adjusted LIBO Rate (with a floor of 1.0% per annum) plus an applicable margin of 3.75%, or (b) the Alternate Base Rate (with a floor of 2.0% per annum) plus an applicable margin of 2.75%. At June 30, 2019, we had total outstanding debt of $247.5 million and $0 million under our Term Loan Facility and

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Revolving Credit Facility, respectively. Based on the amounts outstanding, a 100-basis point increase or decrease in market interest rates over a twelve-month period would result in a change to interest expense of $2.5 million.

Inflation Risk

          Based on our analysis of the periods presented, we believe that inflation has not had a material effect on our operating results. There can be no assurance that future inflation will not have an adverse impact on our operating results and financial condition.

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BUSINESS

Our Mission

          Our mission is to secure the digital world through Intelligent Identity.


Overview

          Ping is pioneering Intelligent Identity. We enable secure access to any service, application or API from any device. Our Intelligent Identity Platform can leverage AI and ML to analyze device, network, application and user behavior data to make real-time authentication and security control decisions, enhancing the user experience. Our platform is designed to detect anomalies and automatically insert additional security measures, such as multi-factor authentication, only when necessary. We built our platform to meet the requirements of the most demanding enterprises. Our platform can be deployed across cloud, hybrid and on-premise infrastructures, offers a comprehensive suite of turnkey integrations and is able to scale to millions of identities and thousands of cloud and on-premise applications in a single deployment. As of June 30, 2019, our platform secures over two billion identities globally across our customer base.

          Enterprises are undergoing digital transformation as they seek to create new revenue streams, transition business models and increase customer engagement. Concurrently, enterprises are becoming more distributed as the adoption of cloud, mobile and IoT, moves data, applications and access requirements beyond the traditional network perimeter. These enterprises must contend with an evolving cyber-threat landscape, new privacy directives and stringent regulatory requirements. As a result, enterprises require Intelligent Identity solutions that proactively ensure the right user has authorized access to resources at the appropriate time.

          Our Intelligent Identify Platform can secure all primary use cases, including customer, employee, partner and IoT. For example, enterprises can use our platform to enhance their customers' user experience by creating a single ID and login across web and mobile properties. For the year ended December 31, 2018, 44% of our subscription revenue was derived from the customer use case. Enterprises can also use our platform to provide their employees and commercial partners with secure, seamless access from any device to the applications, data and APIs they need to be productive. Enterprises are increasingly using our platform to manage and authenticate IoT devices, such as connected vehicles and consumer devices.

          Our Intelligent Identity Platform is comprised of six solutions that can be purchased individually or as a set of integrated offerings for the customer, employee, partner or IoT use case:

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GRAPHIC

          We have spent over a decade building a comprehensive suite of turnkey integrations designed to ensure that enterprises can use our platform to secure their applications wall-to-wall, facilitating easier deployment and rapid time-to-value.

          We sell our solutions via a subscription model through a direct sales force, with increasing influence from our channel partners. We also utilize channel partners and system integrators to assist our customers in the implementation process. Our SSO, Access Security and Directory solutions typically replace legacy and homegrown systems. We also have significant greenfield opportunities with our MFA, Data Governance and API Intelligence solutions and, increasingly, the IoT use case.

          Our land and expand strategy targets enterprises with a specific solution and use case and then seeks to grow our footprint with additional solutions, use cases and identities. The success of our strategy is validated by our strong dollar-based net retention rates and our growing number of large customers. Our dollar-based net retention rates were 123%, 116% and 115% at December 31, 2017 and 2018 and June 30, 2019, respectively, and our dollar-based net retention rates have exceeded 115% for each of the past eight fiscal quarters. Our customers with ARR over $250,000 increased from 144 at December 31, 2017 to 202 at December 31, 2018, representing a growth rate of 40%. Our total customers increased from 1,264 at December 31, 2017 to 1,284 at December 31, 2018. The gross increase in total customers for the 2018 fiscal year was partially offset by customer churn, primarily consisting of low contract value churn of customers with ARR below $25,000. The increase of 58 net customers with ARR greater than $250,000 for the 2018 fiscal year is comprised of 16 new customers and 42 existing customers that had ARR grow to exceed $250,000 in 2018. Additionally, at December 31, 2018, we had 25 customers with greater than $1,000,000 in ARR. An

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increasing number of our customers are deploying a combination of our solutions across multiple business units, functions and use cases in their initial purchase. We have seen strong market demand for our cloud-based offerings and from enterprises deploying our solutions across the customer use case. Over the past 18 months, our ARR growth rates in those two areas significantly exceeded the ARR growth rate of the overall business. For definitions of ARR and dollar-based net retention rate and descriptions of how we calculate these metrics, see "Management's Discussion and Analysis of Financial Condition and Results of Operations".

          Our customers include many of the world's largest enterprises, including over 50% of the Fortune 100. These customers are security-focused, and typically operate in regulated industries, have hybrid IT infrastructures, require turnkey integrations and have demanding scalability requirements. Our solutions secure 12 of the 12 largest U.S. banks (measured by assets), 8 of the 10 largest bio-pharmaceutical companies (measured by revenue), 4 of the 5 largest healthcare plans (measured by revenue) and 5 of the 7 largest U.S. retailers (measured by revenue). Our customer base is diversified, with no one customer or reseller accounting for more than 5% of our total revenue for the six months ended June 30, 2019.

          Since our inception, we have been an innovator in identity. We pioneered the concept of Intelligent Identity, which leverages AI and ML to analyze device, network, application and user behavior data to secure access and enhance the user experience. We founded Ping with the vision of enabling enterprise security in a highly-connected world, replacing legacy security controls such as web gateways, virtual private networks, or VPNs, and firewalls. We contributed to or co-authored many of the open identity standards such as SAML, OAuth, SCIM and OpenID Connect, which form the foundation of our industry. We have consistently been recognized as a leader in the IAM industry by Gartner and KuppingerCole. We founded Identiverse, the leading identity industry conference, which brought together more than 1,500 thought leaders in 2018.

          We sell our solutions via a subscription model typically billed annually in advance. We have grown revenue from $172.5 million for the year ended December 31, 2017 to $201.6 million for the year ended December 31, 2018, representing year-over-year growth of 17%. Our ARR was $147.0 million and $183.6 million at December 31, 2017 and 2018, respectively, representing year-over-year growth of 25%. Our ARR was $159.6 million and $198.0 million at June 30, 2018 and 2019, respectively, representing period-over-period growth of 24%. We have grown revenue from $99.5 million for the six months ended June 30, 2018 to $112.9 million for the six months ended June 30, 2019, representing period-over-period growth of 14%. Our net income was $19.0 million for the year ended December 31, 2017. Our net loss was $13.4 million for the year ended December 31, 2018. We had net losses of $5.8 million and $3.1 million for the six months ended June 30, 2018 and 2019, respectively. Our cash provided by operations was $3.4 million and $22.9 million for the years ended December 31, 2017 and 2018, respectively. Our cash provided by operations was $13.0 million and $8.1 million for the six months ended June 30, 2018 and 2019, respectively. Our Free Cash Flow was $(2.5) million and $13.1 million for the years ended December 31, 2017 and 2018, respectively. Our Free Cash Flow was $8.9 million and $1.2 million for the six months ended June 30, 2018 and 2019, respectively. Free Cash Flow is a supplemental measures that is not calculated and presented in accordance with GAAP. See "Selected Consolidated Financial Data—Non-GAAP Financial Measures" for a definition of Free Cash Flow and a reconciliation to its most directly comparable GAAP financial measure.


Industry Background

          IAM is the foundation for maximizing security and enhancing user experience in a distributed and highly-connected digital world, where the traditional network perimeter has dissolved and the attack surface has expanded. In this digital world, legacy IAM solutions are proving ill-suited to

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address cloud, mobile, IoT and API requirements. Similarly, cloud-only IAM vendors are unable to meet the requirements of large enterprises that have hybrid IT infrastructures.

Enterprises are Undergoing Digital Transformations and Embracing Technology Trends

          Digital Transformation is Critical to Driving Competitive Differentiation.    Enterprises are investing in technology to grow their digital presence, create new revenue streams, transition business models and increase customer engagement. In order to accomplish this, enterprises must engage with their customers across digital channels. As consumers have become accustomed to seamless access and high-quality experiences from companies such as Amazon, Google and Netflix, all enterprises are under pressure to meet rising expectations or risk being disrupted by competitors.

          Enterprises are Embracing Cloud Computing, SaaS and Mobility.    Enterprises are transitioning a portion of their IT budgets to invest in cloud computing to build new services, shorten time-to-value and drive cost efficiency. The adoption of SaaS applications and mobility is empowering business users and partners to increase productivity, facilitate collaboration, reengineer business processes and drive new opportunities for growth. The consumerization of IT and shift towards a distributed workforce has caused employees and partners to demand seamless access to cloud and on-premise applications from any device.

          APIs and IoT Devices are Dramatically Expanding the Number of New Connections.    APIs have become critical to software development and act as gateways to other digital services by facilitating the connection and data sharing between heterogeneous systems and applications. APIs have become the building blocks of the web and will help drive the future of software by powering new applications, enabling communications and automating business processes.

          Enterprises are also deploying IoT devices embedded with software and sensors to connect with their customers, collect streaming data and analyze endpoint performance. According to IDC, the worldwide installed base of IoT devices will grow from 23 billion in 2018 to more than 41 billion in 2025, representing a CAGR of 9%. APIs and IoT will continue drive innovation for enterprises, creating a myriad of new digital channels, connections and identities.

Digital Transformation Initiatives have Created Challenges and Complexity for Enterprises

          Cloud, Mobile and IoT Have Expanded the Attack Surface.    The rapid adoption of cloud-based offerings and the proliferation of mobile and IoT devices have expanded the attack surface for cyber threats, moving users, devices, applications and data outside the traditional network perimeter. As a result of this shift, identity has become the most common vulnerability that hackers seek to exploit. According to a 2017 Verizon report, 81% of hacking-related breaches leveraged stolen and/or weak passwords. Once cyber attackers have gained access to an enterprise's systems, they have the ability to move laterally for months, even years, escalating access privileges, performing recognizance and stealing sensitive data while going undetected.

          New Technology Adoption has Created Complex Hybrid and Multi-Cloud IT Challenges.    Enterprises are increasingly reliant on both cloud and on-premise applications, which is creating complex hybrid IT infrastructures. According to IDC, public cloud spending is projected to grow from 33% of worldwide IT infrastructure spend in 2018 to 38% in 2023. A significant portion of IT budgets, however, will continue to be allocated to on-premise IT infrastructure. As a result, enterprises increasingly require solutions capable of spanning both cloud and on-premise infrastructures to support their hybrid realities.

          As the adoption of cloud matures, enterprises are focused on optimizing for performance, cost and security while also maintaining flexibility to operate across multiple clouds. IDC expects more

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than 90% of enterprise IT organizations will commit to multi-cloud architectures by 2020. Enterprises facing this complexity and fragmentation need independent and vendor-agnostic solutions capable of scaling across multi-cloud environments.

          The Rise of APIs has Created New Security Vulnerabilities.    The rapid proliferation of APIs has created new security vulnerabilities due to their connectivity with critical systems and access to data. Breaches associated with API gateways can remain undetected for extended periods of time because of a lack of visibility into API traffic and an inability to monitor anomalies or abuse.

The Identity Landscape is Large and Evolving

          Identity is a vast landscape, comprised of three distinct established markets that each require different solutions. Our Intelligent Identity Platform focuses on the largest of these markets, IAM. We partner with leading companies in the adjacent markets, PAM and IGA. The objectives, workflows and interfaces of these three markets remain distinct and have little overlap.

Existing IAM Solutions are Limited

          Legacy Providers.    Legacy IAM solutions generally do not meet enterprises' evolving requirements because of these inherent limitations:

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          Cloud-Only Vendors.    Cloud-only IAM solutions generally do not meet enterprises' evolving requirements because of these inherent limitations:

Intelligent Identity is Needed Now More than Ever

          Enterprises are under pressure to innovate faster, improve productivity and deliver exceptional user experiences through digitalization, all while maximizing security. The question "Who are you?" must be asked and satisfactorily answered as a precondition to every digital interaction. Intelligent Identity asks and answers the question by leveraging AI and ML to analyze device, network, application and user behavior data to make real-time authentication and security control decisions. Additional security measures, which impose friction on the user experience, are only utilized if anomalies in behavior or data are detected or in high-value transactions. This optimizes the balance between securing access and providing an enhanced user experience.


Our Market Opportunity

          According to IDC, the worldwide market for IAM is expected to grow from $6.6 billion in 2018 to $9.0 billion in 2023, representing a CAGR of approximately 6%. Based on management's internal analysis, we estimate that our market opportunity is greater than $25 billion across our use cases. We quantify this opportunity by identifying the total number of global companies above $500 million in annual revenue as identified by D&B Hoovers as of June 30, 2019, which was 19,900 companies, and segmenting these companies into four revenue bands. We then multiply the number of companies within each revenue band by our internal ARR data for that revenue band, assuming deployment of all our solutions and use cases.

          We believe our market opportunity has the potential to expand in the future as the proliferation of IoT and APIs increases connections, complexity and the number of identities, in the enterprise. According to IDC, the worldwide installed base of IoT devices will grow from 23 billion in 2018 to more than 41 billion in 2025, representing a CAGR of 9%. Our Intelligent Identity Platform is built to address the scale and complexity that will arise from IoT and API proliferation.

          Our market includes opportunities for both greenfield expansion and replacement of legacy and homegrown solutions. We believe security budgets are shifting from network-centric to identity-centric solutions because the adoption of cloud, mobile and IoT has led to a disappearing network perimeter. We believe the focus of cybersecurity will continue to shift to the user as targeted attacks against users and their credentials increase. As a result, we believe that IAM will represent a larger portion of future security budgets, which we are well positioned to capture.

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Our Growth Strategy

          The key elements of our growth strategy include:


Our Intelligent Identity Platform

          We enable secure access to any service, application or API from any device. Our Intelligent Identity Platform can leverage AI and ML to analyze device, network, and user behavior data to make real-time authentication and security control decisions, enhancing the user experience. Our platform is designed to detect anomalies and automatically insert additional security measures, such as MFA, only when necessary. Our Intelligent Identity Platform provides the following key benefits:

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Our Intelligent Identity Platform Supports All Primary Use Cases

Deployment Flexibility

          We have designed our solutions for flexible deployment because every enterprise has different customization, control, security and privacy needs. Our deployment flexibility provides the optionality to adopt cloud-based offerings for rapid deployment, remain on-premise for maximum control or to comply with industry regulations, or deploy in a hybrid manner. Our deployment options include:


Our Solutions

          Our Intelligent Identity Platform is comprised of six solutions (SSO, MFA, Access Security, Directory, Data Governance and API Intelligence) that can be purchased individually or as a set of integrated offerings for the customer, employee, partner or IoT use case. Our modular design allows customers to easily integrate with existing applications and infrastructures and does not require an all-or-nothing rip and replace. All of our solutions use open standards for maximum interoperability and extensibility.

          Single Sign-On.    Our SSO solution allows users to sign on using one set of secure credentials, giving them one-click access to their applications and resources regardless of location. Our SSO solution provides turnkey integrations for a wide range of applications, cloud services, IT infrastructures and directory solutions, including third party directories, as well as our Directory solution. Within our SSO solution, our adaptive authentication policies enable organizations to predictively authenticate users in real-time based on device, network, application and user behavior data. Our advanced SSO features include:

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          Multi-Factor Authentication.    Our adaptive MFA solution helps optimize the balance between security and user experience by enforcing additional authentication factors as necessary when accessing sensitive resources, conducting high-value transactions and engaging in other elevated risk scenarios. Adaptive MFA allows users to conduct low-value transactions from trusted devices without interruption, while prompting MFA during high-value transactions, activity from untrusted devices and networks or in response to anomalous behavior. Our MFA solution works across use cases with personal or corporate-owned mobile devices and integrates with enterprise mobility management and mobile device management solutions. Our advanced MFA features include:

          Access Security.    Our Access Security solution allows enterprises to apply a greater depth of security control over their web applications and APIs in any domain for users on any device. We offer a comprehensive policy engine down to the URL level that is designed to ensure only an authorized user can access resources. Our solution evaluates access decisions in real-time based on network, browser and authentication attributes, while continuously validating the risk profile of the user or device. Our advanced Access Security features include:

          Directory.    Our Directory solution securely stores and manages sensitive identity and device data at scale. It includes real-time, bidirectional synchronization capabilities to migrate or sync data

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from multiple sources into a secure, scalable and unified profile. This single source of data is designed to provide a consistent experience across digital business interactions, no matter where the applications and services are deployed. Our advanced Directory features include:

          Data Governance.    Our Data Governance solution provides centralized, fine-grained control over access to sensitive identity and device data across use cases. This enables organizations to restrict internal and external applications from accessing specific identity attributes such as social security numbers, credit card numbers, billing addresses or the entire user profile. Data access policies can evaluate attributes and preferences of the profile being requested, data from other repositories and information about the application and user making the request. Our Data Governance solution enables enterprises to comply with a broad range of regulatory requirements, such as GDPR, by restricting data that a user has not consented to share and denying access to personal information that applications and users do not need to perform their tasks. Our advanced Data Governance features include:

          API Intelligence.    Our API Intelligence solution can apply AI and ML to continuously inspect, report and act on all API activity. Our solution is purpose-built to recognize and respond to attacks that are designed to exploit the unique vulnerabilities of individual APIs. These attacks often go undetected by traditional security tools, such as application firewalls and API gateways. Our advanced API Intelligence features include:

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Our Technology

          Our technology has been developed to the highest standards for security, performance, scale and interoperability. Our platform is built on the following core tenets:

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Sales and Marketing

Sales

          We sell our solutions primarily through direct sales. We have a stratified direct sales organization that is organized by customer size and the type of solution and deployment. Within our sales organization, our strategic account executives focus on the largest and most complex enterprises that typically purchase multiple products or deployment options. In addition, we have account executives that target less complex enterprise customers that typically purchase a single solution or deployment option initially. Finally, our inside sellers focus on our cloud-based offerings and more common use cases.

          Our direct sales are enhanced by collaboration with our channel partners, system integrators and technology partners. For the year ended December 31, 2018, 60% of our new business was influenced by our channel partners, which includes sourcing new leads, aiding in pre-sale processes such as proof of concepts, demos or requests for proposals and reselling our solutions to customers. For the year ended December 31, 2018, our channel partners included more than 50 resellers, 35 systems integrators and ten managed service providers. We also leverage a number of our channel partners and system integrators to provide the implementation services for some of our larger and more complex deployments, significantly increasing the time-to-value for our customers and maximizing the efficiency of our go-to-market efforts.

Marketing

          We focus our marketing strategy on building brand recognition through thought leadership and differentiated messaging that communicates the business value of our platform. Our efforts include content marketing, social media, SEO, events and public and analyst relations. We convert this brand awareness into our pipeline through campaigns that integrate digital, social, web and field marketing tactics aimed at adding new customers and cross-marketing our solutions into our existing customer base. We host user conferences in select cities around the globe to tap into the power of our passionate customer base and our broader ecosystem. We also founded and host the leading identity industry conference called Identiverse. Identiverse is held annually and attendees include architects, IAM professionals, IT administrators, developers, security professionals and CISOs, as well as technology vendors, system integrators, industry analysts and thought leaders.

Operational Efficiency

          Since 2016, we have enacted a series of strategic transformation projects through our "Ping Next" initiative focused on operational improvements to accelerate revenue generation and improve profitability. Ping Next capitalizes on key efficiency opportunities in nearly all areas of the business, including sales, marketing, customer success, technical support, professional services and general and administrative functions. The adoption of several key best practices by our sales and marketing organizations is contributing to revenue acceleration. Examples of these best practices include:

          Customer and Prospect Database.    Our implementation of algorithm-based customer and prospect targeting has delivered improved win-rates and larger average deal sizes and has allowed us to prioritize deployment of our sales and marketing resources where we believe they have the highest likelihood of success.

          Marketing Optimization.    We track the return on investment of our marketing tactics, which allows us to allocate marketing resources to the highest yielding activities.

          Customer Success Best Practices.    We employ a stratified customer success strategy across our customer base to drive revenue retention while minimizing the requirement for additional

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investment. Our customer success platform allows us to tier and standardize customer retention activities while maximizing upsell opportunities.


Our Customers

          As of December 31, 2018, we had over 1,275 customers. Our customer base is comprised of over 50% of the Fortune 100. As of June 30, 2019, our customer base included 12 of the 12 largest U.S. banks (measured by assets), 8 of the 10 largest bio-pharmaceutical companies (measured by revenue), 4 of the 5 largest healthcare plans (measured by revenue) and 5 of the 7 largest U.S. retailers (measured by revenue). Our customer base is diversified, with no one customer or reseller accounting for more than 5% of our total revenue for the six months ended June 30, 2019. We have a highly satisfied customer base, as evidenced by our Net Promoter Score of 62 in 2018.


Customer Case Studies

          The following case studies are representative examples of how our customers have benefited from, and expanded their use of, our platform.

A Leading European Financial Institution

          The Challenge.    A leading European financial institution had IAM capabilities that were isolated, proprietary, offered limited extensibility, or were out of support. The bank needed a secure IAM solution that could be deployed across all of its use cases and provide a streamlined user experience. At the same time, the bank needed to enable access to its APIs and implement strong customer authentication to prepare for the digital business regulatory requirements of the PSD2 and Open Banking directives.

          The Solution.    The institution chose the Ping Intelligent Identity Platform because of Ping's commitment to open standards and its ability to bridge on-premise and cloud environments. In Ping, the institution found the single solution it needed for secure identity and access management so it could move away from proprietary systems and custom-written solutions. Ping's solutions provided the technology platform required to support both internal employees and external customers. Ping's SSO solution allows the institution to give its users convenient SSO, while Ping's Access Security solution helps ensure secure access to all applications and APIs in any domain or location. Ping's Directory and Data Governance solutions enable the institution to securely store user identity data and maintain fine-grained control and governance over access to that data. These capabilities, combined with open standards support, provide the institution with financial-grade security and access for 10 million customers and 100,000 employees.

HP, Inc.

          The Challenge.    HP, Inc., or HP, one of the world's largest printer and personal computer manufacturers, had a fragmented user base with more than a dozen separate legacy IAM systems. Siloed data created a disjointed customer experience, and systems integration complexity increased management burden and costs. Additionally, HP had regional requirements in different countries that restricted how data could be stored or how it could be moved in and out of systems around the world. To address these complexities, HP undertook its largest identity initiative to date, in which over 100 applications, including HP Shopping, HP Partner First Portal, Instant Ink and more needed to be migrated to new IAM solutions. Because of the large number of concurrent work streams and dependencies, any delay or misstep in implementation of the new solutions could have adverse consequences across HP.

          The Solution.    The HP and Ping teams worked in close partnership to implement Ping's Directory and Data Governance solutions with fully automated, multi-region deployment in AWS.

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The new solutions provide applications with easy access to user data when they need it and offer the necessary infrastructure to provide segregation of data by country or regional requirements. Before HP's Ping deployment, more than a dozen legacy IAM systems were in use across the enterprise. Today, HP has a single IAM platform deployed across the entire organization—providing a unified experience for more than 160 million customers while reducing complexity, optimizing spend and enabling new business as HP evolves.

BlueCross BlueShield of Tennessee

          The Challenge.    BlueCross BlueShield of Tennessee, or BCBST, Tennessee's largest health benefits plan serving more than 3.5 million individuals, sought to improve its online member experience. Achieving this goal required an IAM solution that accommodated BCBST's members' unique qualities, while also providing a member data directory that synchronized data across systems and appropriately governed access to data.

          The Solution.    Ping has improved BCBST's member experience by providing members with a secure authentication through Ping's SSO, Access Security and MFA solutions. These technologies help ensure a consistent and user-friendly experience for members across BCBST's digital properties. BCBST also uses Ping's Directory solution for a centralized source of member data with improved flexibility, administration, security and data integrity and accuracy. BCBST also leveraged Ping's Data Governance solution to provide fine-grained control over member identity attributes. BCBST's information security leadership has commended Ping on the quick and simple installation of its technology and the technology's ability to quicken BCBST's reactions to business needs and requirements. Through Ping, BCBST has been able to cut the complexity and cost of multi-vendor identity management by leveraging these solutions to support BCBST's business needs.

A Leading Global Airline

          The Challenge.    One of the world's largest global airlines helps more than 180 million travelers get to the places they want to go to each year. The airline's internal authentication experience was too cumbersome, with security issues ranging from inconsistent user names, ineffective security questions, and an excessive amount of sign-in prompts. In addition, user access to key applications was slow, with inefficient manual steps and over-reliance on internal IT support. The airline was in need of an access solution to establish a secure authentication framework for its business.

          The Solution.    Ping addressed these needs with Ping's SSO and Access Security solutions. The airline ultimately chose Ping based on its open standards, broad protocol suite, and responsiveness around both support and enhancements. As part of the transformation, the airline migrated over 350 applications to Ping's SSO solution. In addition, the airline federated IBM's mainframe access tool with Ping's SSO solution. This allowed the airline to utilize Ping's SSO solution to create a seamless single sign-on experience from the airline's distributed system to the critical mainframe-based crew bidding and crew scheduling applications. Ultimately this reduced the number of sign-in attempts for the airline's indispensable frontline employees—pilots and flight attendants—enabling them to better serve the customer expeditiously.


Partnerships and Strategic Relationships

          The PingPartner Network is comprised of key partnerships across our solution provider and technology alliance programs. This global network delivers expertise, value-added services and technology that are critical to the success of our customers.

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Solution Provider Program

          We have built strong relationships with channel partners, system integrators and technology partners that have allowed us to generate new business opportunities and enhance existing practices such as strategic planning, program management, architecture, design, implementation, ongoing change management and support.

Technology Alliance

          We have built a broad ecosystem of over 100 technology partners. Our Technology Alliance Partner ecosystem spans the landscape of IAM and related technologies, giving our customers access to comprehensive, cross-application, integrated solutions. Our technology partners expand and extend the value of their solutions, and our solutions, by integrating their technology with our Intelligent Identity Platform. Additionally, our partners provide us with complementary technology and sales and marketing collateral that help us to more effectively sell together.

          We partner with Microsoft, and this partnership has led to key product integrations. Through our collaboration, customers can leverage our platform to connect to the Microsoft Azure or Office365 services and enjoy rapid deployments via our integrations. We also enable non-Microsoft applications and environments to be easily integrated into the Microsoft ecosystem. Lastly, our MFA solution works directly with Microsoft ADFS and AzureAD to provide enterprise-grade adaptive authentication to Microsoft's cloud-based offerings.

          We also partner with AWS to provide provisioning and deployment of our solutions to our customers through this collaboration. We offer AWS single sign-on integration for a leading enterprise cloud experience. We also offer a hybrid deployment that can scale across AWS for enterprise applications.


Professional Services and Customer Support

Professional Services

          Our professional services organization helps customers architect, deploy, configure, extend and integrate our platform into their IT environments. We offer a variety of packaged and configured offerings and expert guidance that leverage our best practices and experience, all of which are available for our robust partner community to use or resell. We complement our professional services with formal instructor-led and web-based on-demand training courses.

Customer Support

          We offer three tiers of support, each building on the previous tier to most closely align with a customer's requirements. Support is included for our cloud and on-premise offerings during the term of a customer's subscription. All support tiers offer maintenance releases, patches and access to our support services and portal. Our support portal offers customers documentation, how-to guides, videos and a community where they can ask questions and find answers. Our customer support organization includes experienced, trained personnel and engineering resources located around the world to provide 24x7x365 support for critical issues.


Research and Development

          Innovation is at the core of what we do. Approximately one-third of our employees are devoted to research and development. Our research and development efforts are focused on building industry leading solutions, addressing all primary use cases, enhancing deployment flexibility and providing seamless integration across cloud and on-premise applications. We believe that the ongoing and timely development of new solutions and features is imperative to maintaining

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our competitive position. We continue to invest in our solutions across our development centers in: Denver, Colorado; Austin, Texas; Tel Aviv, Israel; Vancouver, Canada; and Bangalore, India.


Intellectual Property

          Our success depends in part on our ability to protect our intellectual property. We rely on copyrights and trade secret laws, confidentiality procedures, employment agreements and proprietary information and invention assignment agreements, trademarks and patents to protect our intellectual property rights.

          We control access to, and use of, our solutions and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers and partners, and our software is protected by U.S. and international copyright and trade secret laws. Despite our efforts to protect our trade secrets and proprietary rights through intellectual property rights, licenses and confidentiality agreements, unauthorized parties may still copy or otherwise obtain and use our software and technology.

          As of June 30, 2019, we have 15 issued patents and 9 patent applications pending in the United States relating to certain aspects of our technology. Our issued patents expire between December 14, 2031 and May 4, 2035. We cannot assure you whether any of our patent applications will result in the issuance of a patent or whether the examination process will require us to narrow our claims. Any of our existing patents and any that are issued in the future may be contested, circumvented, found unenforceable or invalidated, and we may not be able to prevent third parties from infringing them. In addition, we have international operations and intend to continue to expand these operations, and effective patent, copyright, trademark and trade secret protection may not be available or may be limited in foreign countries.


Competition

          We face competition from (1) legacy providers, (2) cloud-only providers and (3) homegrown solutions.

          Legacy providers include CA Technologies, IBM and Oracle, among others. These providers generally designed their solutions when enterprise applications were monolithic and on-premise. Their solutions utilize proprietary architectures, which require customized features and integrations to scale. Today, these solutions have the reputation of being complex, costly and increasingly fragile. Thus, legacy providers often struggle to offer a single comprehensive solution that spans all IT environments, including cloud and on-premise.

          We also compete with cloud-only providers, such as Okta and OneLogin that primarily focus on the employee use case. These providers have solutions that are generally geared towards small and medium-sized businesses that have IT infrastructures hosted entirely in the cloud. Large enterprises typically do not have cloud-only infrastructures, and while many are moving components of their IT environments to the cloud, we believe the majority of applications and workloads will continue to reside on-premise. Thus, a cloud-only IAM solution cannot deliver a single comprehensive solution to enterprises that provides wall-to-wall coverage across their complex hybrid IT environments.

          Microsoft also competes in our market and has tied its identity services to both Azure and its Office365 offerings. However, we partner with Microsoft to provide SSO, security control and adaptive MFA where non-Microsoft environments require integration or independence is preferred. Microsoft's integration and interoperability with our solutions benefits enterprises while providing optionality and choice.

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          We believe the principal competitive factors in the IAM market include: (1) the ability to address all primary use cases from one platform; (2) the ability to deploy in large, complex hybrid IT environments; (3) the ability to integrate easily with all applications (cloud and on-premise); (4) technology uptime, reliability, scalability and performance; (5) the ability to support open standards; and (6) customer, technology and platform support. We believe we compete favorably on these factors.


Employees

          As of June 30, 2019, we had a total of 897 full time employees, of which approximately one-third were in research and development. We have a strong corporate culture, high employee engagement and are consistently ranked by third parties as one of the best places to work.


Facilities

          Our corporate headquarters are in Denver, Colorado, where we lease 108,761 square feet of office space as of June 30, 2019. We also have domestic offices in Boston, Massachusetts, Austin, Texas and San Francisco, California and international offices in the United Kingdom, Australia, Canada, India, Israel, France and Switzerland.

          We lease all of our facilities. We believe that our facilities are adequate for our current needs and anticipate that suitable additional space will be readily available to accommodate any foreseeable expansion of our operations.


Legal Proceedings

          We are not currently a party to any material legal proceedings.

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MANAGEMENT

Our Executive Officers and Directors

          Below is a list of the names, ages, positions and a brief account of the business experience of the individuals who serve as our executive officers and directors.

Name
  Age    Position  

Andre Durand

    51   Chief Executive Officer and Director

Raj Dani

    49   Chief Financial Officer

B. Kristian Nagel

    52   Chief Operating Officer

Lauren Romer

    43   Chief Legal Officer and Secretary

Bernard Harguindeguy

    61   Chief Technology Officer

Rod Aliabadi

    34   Director

David A. Breach

    52   Director

Clifford K. Chiu

    60   Director

Michael Fosnaugh

    41   Director

Lisa Hook

    61   Director

John McCormack

    60   Director

Brian N. Sheth

    43   Director

Yancey L. Spruill

    52   Director

          Andre Durand has served as our Chief Executive Officer since founding Ping Identity Corporation in 2001. Prior to founding Ping Identity Corporation, Mr. Durand founded Jabber, Inc., an instant messaging open source platform used by businesses globally, in 2000. Mr. Durand earned a bachelor's degree in biology and economics from the University of California at Santa Barbara. We believe Mr. Durand is qualified to serve on our Board because of his extensive knowledge of our business and strategy, as well as his experience in the technology industry and leadership role with us as our Chief Executive Officer.

          Raj Dani has served as our Chief Financial Officer since 2016. Before joining Ping Identity Corporation, Mr. Dani served as chief financial officer of AVI-SPL, Inc., a systems integration firm from 2014 to 2016. Prior to that, Mr. Dani held senior positions within technology services companies and began his career with PricewaterhouseCoopers LLP, serving in its audit and transaction advisory practices. Mr. Dani earned a master's degree in accounting from the University of Florida and a bachelor's degree in business administration from Emory University. Mr. Dani is an actively licensed certified public accountant.

          B. Kristian Nagel has served as our Chief Operating Officer since December 2018. Before serving in this role, Mr. Nagel was chief executive officer for Vindicia, Inc. from 2016 to 2018 and was responsible for all of its strategic and daily operations. Prior to that, Mr. Nagel was special vice president — field operations for Vindicia, Inc. from 2008 to 2016. Prior to that, Mr. Nagel held a number of senior leadership positions in both venture-backed and public companies. Mr. Nagel began his career with Apple Inc. after earning a master's of business administration from San Jose State University and a bachelor's degree in Management Information Systems at Pennsylvania State University.

          Lauren Romer has served as our Chief Legal Officer since 2018, after initially joining Ping Identity Corporation as our Director of Legal Affairs in 2010. Before joining Ping Identity Corporation, Ms. Romer served as corporate counsel at Collective Intellect, Inc. from 2009 to 2010. Prior to that, Ms. Romer also worked as a corporate associate at Cooley LLP from 2005 to 2009. Ms. Romer earned a bachelor's degree in public policy studies from Duke University, a master's degree in higher education administration from Florida State University and a juris doctorate from the University of Denver's Sturm College of Law.

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          Bernard Harguindeguy has served as our Chief Technology Officer since 2018, by way of our acquisition of Elastic Beam, where Mr. Harguindeguy served as chief executive officer after founding it in 2014. Prior to that, Mr. Harguindeguy served as chairman, president and chief executive officer at Atlantis Computing from 2009 to 2014. Prior to that, Mr. Harguindeguy served as the chairman of a number of technology companies. Mr. Harguindeguy earned a bachelor's degree in electrical engineering from the University of California Irvine, where he was inducted into the Engineering Hall of Fame, and a master's degree in engineering management from Stanford University.

          Rod Aliabadi has served on our Board since June 2016. Mr. Aliabadi is a Senior Vice President at Vista. Prior to joining Vista in 2008, Mr. Aliabadi worked at the Stanford Genome Technology Center, focusing on the development of nanotechnology-driven diagnostics. Mr. Aliabadi currently serves on the board of several of Vista's private portfolio companies, including EAB Global Inc., Integral Ad Science Inc. and Market Track, LLC. Mr. Aliabadi received a bachelor of engineering in biomedical engineering from Vanderbilt University. Mr. Aliabadi's extensive experience in the areas of corporate strategy, technology, finance and engineering, as well as his experience on the boards of other technology and software companies, make him a valuable member of our Board.

          David Breach has served on our Board since March 2019. Mr. Breach is the Chief Operating Officer and Chief Legal Officer at Vista. Prior to joining Vista in 2014, Mr. Breach worked as a Senior Corporate Partner at Kirkland & Ellis LLP, where his practice focused on representation of private equity funds in all aspects of their business. Mr. Breach was a founding partner of Kirkland & Ellis's San Francisco office, and received numerous professional accolades while at Kirkland & Ellis. Mr. Breach is also a Principal of Vista and sits on Vista's Private Equity Funds' Investment Committees. Mr. Breach also sits on the boards of Vista portfolio companies Solera Holdings Inc., Mediaocean LLC, and Vertafore, Inc. Mr. Breach received a bachelor of business administration in marketing from Eastern Michigan University and received a juris doctorate from the University of Michigan, magna cum laude, Order of the Coif. Mr. Breach is currently a member of the State Bars of California, Illinois and Michigan. Mr. Breach's extensive experience in the areas of corporate strategy, private equity and firm governance, as well as his experience on the boards of other companies, make him a valuable member of our Board.

          Clifford K. Chiu has served on our Board since January 2017. Mr. Chiu is a corporate director and private investment firm senior advisor, as well as a board or committee appointee to government bodies and non-governmental organizations in the financial services, enterprise software, data and technology-enabled solutions, healthcare, education, social welfare and the arts sectors located in the United States and Hong Kong. Prior to that, Mr. Chiu was a partner at Kohlberg Kravis Roberts & Co., an investment firm that specializes in alternative assets, until his retirement in 2014. Over his 39-year career in the financial services industry, Mr. Chiu has held a number of public and private leadership positions. Mr. Chiu is currently a director of Finastra plc, TIBCO Software, Inc., Infoblox, Inc., Regulatory DataCorp., Inc., and was previously on the board of Cambium Learning Group, a formerly publicly-traded education company, and Hsin Chong Construction Group. Mr. Chiu received a master's of business administration from the University of Chicago and a bachelor's degree in economics from the University of Pennsylvania. Mr. Chiu's board experience, coupled with his extensive experience in the financial services industry and with technology companies, make him a valuable member of our Board.

          Michael Fosnaugh has served on our Board since June 2016. Mr. Fosnaugh is a principal at Vista. Mr. Fosnaugh is co-head of the Chicago office and sits on the Vista Flagship Funds' Investment Committee. Prior to joining Vista in 2005, Mr. Fosnaugh worked in the Technology, Media & Telecommunications group at SG Cowen & Co., where he focused on the software, services and financial technology sectors. While at SG Cowen, Mr. Fosnaugh advised clients on buy-side and sell-side transactions, public and private equity financings and other strategic advisory

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initiatives. Mr. Fosnaugh currently serves on the board of several of Vista's private portfolio companies, including Advicent Solutions Inc., Alegeus Technologies Holdings Corp., EAB Global Inc., Greenway Health, LLC, Integral Ad Science Inc, Jamf Software LLC and Mediaocean LLC. Mr. Fosnaugh received a bachelor's degree in economics from Harvard College. Mr. Fosnaugh's extensive experience in the areas of corporate strategy, technology, finance, marketing, business transactions and software investments, as well as his experience working with other technology and software companies, make him a valuable member of our Board.

          Lisa Hook has served on our board since August 2019. Ms. Hook served as president and chief executive officer of Neustar, Inc., a technology company, from October 2010 until July 2018 and as president and chief operating officer from January 2008 until 2010. She joined the Neustar board in 2010 and continued to serve in that capacity until July 2019. Previously, Ms. Hook served as president and chief executive officer of Sunrocket, Inc., held several executive-level posts at America Online, Inc., was a partner at Brera Capital Partners, a global private equity investment firm, managing director of Alpine Capital Group, LLC, an investment banking firm, held several executive positions at Time Warner, Inc., was legal advisor to the Chairman of the Federal Communications Commission, and was a senior attorney at Viacom International, Inc. Ms. Hook serves on the boards of Philip Morris International, a publicly-traded leading international tobacco company, Fidelity National Information Services Inc., a publicly-traded global leader in banking and payment solutions, Unisys Corporation, a publicly-traded global information technology company, CubeIQ, a private company in the location intelligence space, and is a senior advisor on the Advisory Board of Trilantic Capital Partners. Ms. Hook has previously served as Senior Independent Director of RELX PLC and RELX NV, providers of information solutions, Covad Communications, Time Warner Telecom, K-12 Inc. and National Geographic Ventures. She currently serves on the National Security Telecommunications Advisory Committee to which she was appointed in 2012 by President Obama. Ms. Hook received a juris doctorate from Dickinson School of Law at Pennsylvania State University and a bachelor's degree from Duke University. Ms. Hook's extensive board experience, her experience as an executive for both private and public companies and her experience in the identity, security and data privacy space make her a valuable member of our Board.

          John McCormack has served on our Board since June 2016. Mr. McCormack is an operating executive at Marlin Equity Partners, a global investment firm, and was the chairman and interim chief executive officer of Fidelis CyberSecurity, a cybersecurity firm that specializes in threat detection, from January 2017 to July 2018. Mr. McCormack also was an advisor to the board of Forcepoint LLC (formerly Raytheon -- Websense), a cyber security firm, from April 2016 to December 2016. From 2013 to 2016, Mr. McCormack was the chief executive officer of Forcepoint LLC and was the president prior to that. Mr. McCormack currently is chairman of the Board of AppRiver, a company that specializes in cloud-based cybersecurity, a position he has held since October 2017. Mr. McCormack received a master's degree in information management from The George Washington University and a bachelor's degree in computer science from the University of New Hampshire. Mr. McCormack's board and advisory experience, coupled with his senior management experience at technology companies, and his extensive experience and leadership at technology companies, make him a valuable member of our Board.

          Brian N. Sheth has served on our board since June 2016. Mr. Sheth co-founded Vista Equity Partners in 2000. Mr. Sheth is currently the president of Vista Equity Partners and the vice-chairman of the Vista Private Equity Funds' investment committees. Prior to founding Vista in 2000, Mr. Sheth worked at Bain Capital, where he focused on leveraged buyouts of technology companies, and also worked at Goldman, Sachs & Co. and Deutsche Morgan & Grenfell Group, where he advised clients in a variety of industries, including software, hardware, semiconductors and online media. Mr. Sheth currently serves on the board of several of Vista's private portfolio companies, including

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Infoblox, Tibco, Forcepoint and Datto. Mr. Sheth received a bachelor's degree in economics from the University of Pennsylvania. Mr. Sheth's board and advisory experience, coupled with his senior management experience as the President of Vista and his extensive experience in the areas of technology, finance, marketing, business transactions and mergers and acquisitions, make him a valuable member of our Board.

          Yancey L. Spruill has served on our board since March 2019. Mr. Spruill is currently the chief executive officer of DigitalOcean, Inc. Mr. Spruill was the chief operating officer and chief financial officer of SendGrid, Inc., a formerly publicly-traded provider of e-mail marketing services, where he served from June 2015 until its February 2019 sale to publicly-traded Twilio, Inc. Prior to joining SendGrid, Mr. Spruill served as chief financial officer at TwentyEighty, Inc., a provider of training and performance improvement solutions, from September 2014 to June 2015. From August 2004 to September 2014, Mr. Spruill served as executive vice president and chief financial officer at DigitalGlobe, Inc., a formerly publicly-traded provider of geospatial information products and services. Mr. Spruill also served on the board of directors for Rally Software Development Corp., a formerly publicly-traded provider of agile development software, from 2014 until its acquisition by CA, Inc. in 2015, and currently serves on the boards of Allscripts Healthcare Solutions, Inc., a publicly-traded electronic healthcare records technology company and Zayo Group Holdings, a publicly-traded provider of telecommunications infrastructure services. Mr. Spruill received a bachelor of electrical engineering from the Georgia Institute of Technology and a master's of business administration from the Amos Tuck School of Business at Dartmouth College. Mr. Spruill's extensive financial expertise, leadership experience, experience with serving on boards of other technology companies and significant experience in the technology industry and at other technology companies, make him a valuable member of our Board.


Family Relationships

          There are no family relationships between any of our executive officers or directors.


Corporate Governance

Board Composition and Director Independence

          Our business and affairs are managed under the direction of our Board. Following completion of this offering, our Board will be composed of nine directors. Our certificate of incorporation will provide that the authorized number of directors may be changed only by resolution of our Board. Our certificate of incorporation will also provide that our Board will be divided into three classes of directors, with the classes as nearly equal in number as possible. Subject to any earlier resignation or removal in accordance with the terms of our certificate of incorporation and bylaws, our Class I directors will be Messrs. Breach, Fosnaugh and Sheth and will serve until the first annual meeting of shareholders following the completion of this offering, our Class II directors will be Messrs. Aliabadi, Chiu and Durand and will serve until the second annual meeting of shareholders following the completion of this offering and our Class III directors will be Ms. Hook and Messrs. McCormack and Spruill and will serve until the third annual meeting of shareholders following the completion of this offering. Upon completion of this offering, we expect that each of our directors will serve in the classes as indicated above. In addition, our certificate of incorporation will provide that our directors may be removed with or without cause by the affirmative vote of at least a majority of the voting power of our outstanding shares of stock entitled to vote thereon, voting together as a single class for so long as Vista beneficially owns 40% or more of the total number of shares of our common stock then outstanding. If Vista's beneficial ownership falls below 40% of the total number of shares of our common stock outstanding, then our directors may be removed only for cause upon the affirmative vote of at least 662/3% of the voting power of our outstanding shares of stock entitled to vote thereon. Our bylaws will provide that Vista will have the

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right to designate the Chairman of the Board for so long as Vista beneficially owns at least 30% or more of the voting power of the then outstanding shares of our capital stock then entitled to vote generally in the election of directors. Following this offering, Mr. Sheth will be the Chairman of our Board.

          The listing standards of NASDAQ require that, subject to specified exceptions, each member of a listed company's audit, compensation and nominating and governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act.

          We anticipate that, prior to our completion of this offering, the Board will determine that Ms. Hook and Messrs. McCormack and Spruill meet the NASDAQ requirements to be independent directors. In making this determination, our Board considered the relationships that each such non-employee director has with the Company and all other facts and circumstances that our Board deemed relevant in determining their independence, including beneficial ownership of our common stock.

Controlled Company Status

          After completion of this offering, Vista Funds will continue to control a majority of our outstanding common stock. As a result, we will be a "controlled company". Under NASDAQ rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company is a "controlled company" and may elect not to comply with certain NASDAQ corporate governance requirements, including the requirements that, within one year of the date of the listing of our common stock:

          Following this offering, we intend to rely on this exemption. As a result, we may not have a majority of independent directors on our Board. In addition, our Compensation and Nominating Committee may not consist entirely of independent directors or be subject to annual performance evaluations. Accordingly, you may not have the same protections afforded to shareholders of companies that are subject to all of the NASDAQ corporate governance requirements.

Board Committees

          Upon completion of this offering, our Board will have an Audit Committee and a Compensation and Nominating Committee. The composition, duties and responsibilities of these committees will be as set forth below. In the future, our Board may establish other committees, as it deems appropriate, to assist it with its responsibilities.

Board Member   Audit Committee   Compensation and
Nominating Committee
Rod Aliabadi   X    
David A. Breach       X
Clifford K. Chiu        
Michael Fosnaugh       X (Chair)
Lisa Hook       X
John McCormack   X    
Brian N. Sheth       X
Yancey L. Spruill   X (Chair)    

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Audit Committee

          Following this offering, our Audit Committee will be composed of Messrs. Aliabadi, McCormack and Spruill, with Mr. Spruill serving as chairman of the committee. We intend to comply with the audit committee requirements of the SEC and NASDAQ, which require that the Audit Committee be composed of at least one independent director at the closing of this offering, a majority of independent directors within 90 days following this offering and all independent directors within one year following this offering. We anticipate that, prior to the completion of this offering, our Board will determine that Messrs. McCormack and Spruill meet the independence requirements of Rule 10A-3 under the Exchange Act and the applicable listing standards of NASDAQ. We anticipate that, prior to our completion of this offering, our Board will determine that Mr. Spruill is an "audit committee financial expert" within the meaning of SEC regulations and applicable listing standards of NASDAQ. The Audit Committee's responsibilities upon completion of this offering will include:


Compensation and Nominating Committee

          Following this offering, our Compensation and Nominating Committee will be composed of Ms. Hook and Messrs. Breach, Fosnaugh and Sheth, with Mr. Fosnaugh serving as chairman of the committee. The Compensation and Nominating Committee's responsibilities upon completion of this offering will include:

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Compensation Committee Interlocks and Insider Participation

          None of our executive officers currently serves, or in the past fiscal year has served, as a member of the Board or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation and Nominating Committee.


Code of Business Conduct and Ethics

          Prior to completion of this offering, we intend to adopt a code of business conduct and ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. Upon the closing of this offering, our code of business conduct and ethics will be available on our website. We intend to disclose any amendments to the code, or any waivers of its requirements, on our website.

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EXECUTIVE COMPENSATION

          Unless we state otherwise or the context otherwise requires, in this Executive Compensation section the terms "Ping Identity Corporation", "we", "us", "our" and the "Company" refer to Ping Identity Corporation, a wholly-owned subsidiary of Ping Identity Holding Corp., for the period up to this offering, and for all periods following this offering, to Ping Identity Holding Corp.

          This section discusses the material components of the executive compensation program for our Chief Executive Officer and our two other most highly compensated officers who we refer to as our "Named Executive Officers". As of the year ended December 31, 2018, our Named Executive Officers were as follows:

          This discussion may contain forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt in the future may differ materially from the currently planned programs summarized in this discussion.


Summary Compensation Table

Name and principal position

    Year     Salary     Option
awards(1)
    Nonequity
incentive plan
compensation(2)
    Total
 

Andre Durand, Chief Executive Officer(3)

    2018   $ 400,000       $ 309,653   $ 709,653  

B. Kristian Nagel, Chief Operating Officer

   
2018
 
$

21,875
 
$

2,051,397
 
$

17,500
 
$

2,090,722
 

Bernard Harguindeguy, Chief Technology Officer

   
2018
 
$

194,916
 
$

939,807
 
$

89,856
 
$

1,224,579
 

(1)
Amounts represent the grant date fair value of stock options granted to the Named Executive Officers as computed in accordance with FASB ASC 718. The assumptions used in calculating the grant-date fair value of the stock options are set forth in Notes 2 and 10 to the consolidated financial statements included elsewhere in this prospectus. The amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be received by the Named Executive Officers for the stock options.

(2)
Amounts represent the actual amount earned by each of our Named Executive Officers under the performance-based cash incentive bonus provided for in their letter agreements. See "— Employment, Severance and Change in Control Arrangements — Letter Agreements."

(3)
Mr. Durand serves on the Board, but is not paid additional compensation for such service.

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          The following table summarizes, for each of the Named Executive Officers, the number of shares of our common stock underlying outstanding stock options held as of December 31, 2018.


Outstanding Equity Awards at Fiscal Year End

    Option Awards(1)
 

Name

    Grant Date     Vesting
Commencement
Date
    Number of
securities
underlying
unexercised
options (#)
exercisable(2)
    Number of
securities
underlying
unexercised
options (#)
unexercisable
    Equity
incentive
plan
awards:
Number of
securities
underlying
unexercised
unearned
options (#)(3)
    Option
exercise
price
($)
    Option
expiration
date
 

Andre Durand

    6/30/2016     6/30/2016     5,333         2,667     1,333.33     6/29/2026  

    9/25/2017     9/30/2017     650         325     1,440.25     9/24/2027  

B. Kristian Nagel

    12/28/2018     12/10/2018     1,871         935     2,283.18     12/27/2028  

Bernard Harguindeguy

    9/26/2018     9/26/2018     1,000         500     2,003.71     9/25/2028  

(1)
Each stock option was granted pursuant to our 2016 Stock Option Plan.

(2)
The shares underlying the options will vest over a four-year period, with 25% of the shares to vest upon completion of one year of service measured from the vesting commencement date, and the balance to vest in 12 successive equal quarterly installments, subject to continuous service. The shares underlying the options will fully vest and will be fully exercised through a cashless net exercise automatically upon a change of control of the Company.

(3)
The shares underlying the options will vest and become exercisable when Vista's realized cash return on its investment in the Company equals or exceeds $1.491 billion.


Emerging Growth Company Status

          As an emerging growth company we will be exempt from certain requirements related to executive compensation, including the requirements to hold a nonbinding advisory vote on executive compensation and to provide information relating to the ratio of total compensation of our Chief Executive Officer to the median of the annual total compensation of all of our employees, each as required by the Investor Protection and Securities Reform Act of 2010, which is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.


Employment, Severance and Change in Control Arrangements

Letter Agreements

          We have letter agreements with each of our Named Executive Officers that provide for at-will employment and set forth each executive's annual base salary, target and maximum bonus opportunity and eligibility to participate in our benefit plans generally. Each Named Executive Officer is subject to our standard confidentiality, invention assignment, non-solicit, non-compete and arbitration agreement.

          Mr. Durand's current annual base salary is $435,000 and his target and maximum performance-based cash incentive annual bonus is equal to 65.0% and 84.5% of his base salary, respectively. Mr. Nagel's current annual base salary is $350,000 and his target and maximum performance-based cash incentive annual bonus is equal to 80.0% and 100.0% of his base salary, respectively. Mr. Harguindeguy's current annual base salary is $300,000 and his target and maximum performance-based cash incentive annual bonus is equal to 50.0% and 60.0% of his base salary, respectively. The performance-based cash incentive bonus for each of our Named Executive Officers provides incentive payments correlated to individual management by objectives and the attainment of pre-established objective financial goals.

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          The letter agreements provide that upon a termination by us for any reason other than for "cause" or resignation for "good reason", each as defined therein, subject to the execution and delivery of a fully effective release of claims in favor of the Company, Mr. Durand and Mr. Nagel will receive a lump sum cash payment equal to 12 months and six months of base salary, respectively, and Mr. Harguindeguy will receive a cash payment equal to one month of base salary per full year of service completed with the Company at the time of termination, up to a maximum of three months. Mr. Durand is also entitled to a monthly cash payments equal to our contribution toward health insurance for up to 12 months.


Non-Equity Incentive Compensation

          For 2018, our Named Executive Officers were eligible to receive an annual performance-based cash incentive award. Performance was assessed against goals and targets that were established for the fiscal year by our Board in the first quarter of 2018. Each performance goal was assigned a "target" level of performance and certain of the performance goals for 2018 included a "stretch" level at which the award opportunity was capped. Achievement of the target performance level would earn the target award, and achievement at or above the stretch performance level (where applicable) would earn a multiple of the target opportunity. Achievements falling below the target or between the target and stretch levels would result in a pro-rated payout. The performance goals used to determine cash incentive awards for 2018 were based on new ARR, Adjusted EBITDA, and customer churn rate, as well as the successful completion of various operational objectives.


Equity Incentives — 2016 Stock Option Plan

          Our 2016 Stock Option Plan, or the 2016 Plan, was originally adopted by our Board and approved by our shareholders in connection with the Vista Acquisition. Under the 2016 Plan, we have reserved for issuance an aggregate of 40,000 shares of our common stock. The number of shares of common stock reserved for issuance is subject to automatic adjustment in the event of a stock split, stock dividend or other change in our capitalization.

          The 2016 Plan permits the granting of (i) options to purchase common stock intended to qualify as incentive stock options under Section 422 of the Code and (ii) options that do not so qualify. The option exercise price of each option is determined by the administrator but may not be less than 100% of the fair market value of our common stock on the date of grant. The term of each option will be fixed by the administrator and may not exceed ten years from the date of grant.

          Our Board is the administrator of the 2016 Plan. The administrator has full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted, and to determine the specific terms and conditions of each award. The administrator is authorized to exercise its discretion to reduce the exercise price of outstanding stock options or effect the repricing of such awards through cancellation and re-grants without shareholder approval. Persons eligible to participate in the plan are those officers, employees, directors, consultants and other advisors (including prospective employees, but conditioned upon their employment) of the company and its subsidiaries as selected from time to time by the administrator in its discretion.

          The 2016 Plan provides that upon a change of control of the Company, the shares underlying the service-based options will fully vest and will be fully exercised through a cashless net exercise automatically upon such change of control.

          Our Board has determined not to make any further awards under the 2016 Plan following the completion of this offering.

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Equity and Cash Incentives — Summary of the 2019 Omnibus Incentive Plan

          Prior to the consummation of this offering, we anticipate that our Board will adopt, and our shareholders will approve, the 2019 Plan, pursuant to which employees, consultants and directors of our company and our affiliates performing services for us, including our executive officers, will be eligible to receive awards. We anticipate that the 2019 Plan will provide for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, bonus stock, dividend equivalents, other stock-based awards, substitute awards, annual incentive awards and performance awards intended to align the interests of participants with those of our shareholders. The following description of the 2019 Plan is based on the form we anticipate will be adopted, but since the 2019 Plan has not yet been adopted, the provisions remain subject to change. As a result, the following description is qualified in its entirety by reference to the final 2019 Plan once adopted, a copy of which in substantially final form has been filed as an exhibit to the registration statement of which this prospectus is a part.

Share Reserve

          In connection with its approval by the Board and adoption by our shareholders, we will reserve               shares of our common stock for issuance under the 2019 Plan. In addition, the following shares of our common stock will again be available for grant or issuance under the 2019 Plan:

Administration

          The 2019 Plan will be administered by our Compensation and Nominating Committee. The Compensation and Nominating Committee has the authority to construe and interpret the 2019 Plan, grant awards and make all other determinations necessary or advisable for the administration of the plan. Awards under the 2019 Plan may be made subject to "performance conditions" and other terms.

Eligibility

          Our employees, consultants and directors, and employees, consultants and directors of our affiliates, will be eligible to receive awards under the 2019 Plan. The Compensation and Nominating Committee will determine who will receive awards, and the terms and conditions associated with such award.

Term

          The 2019 Plan will terminate ten years from the date our Board approves the plan, unless it is terminated earlier by our Board.

Award Forms and Limitations

          The 2019 Plan authorizes the award of stock awards, performance awards and other cash-based awards. An aggregate of               shares will be available for issuance under awards granted pursuant to the 2019 Plan. For stock options that are intended to qualify as incentive stock options, or ISOs, under Section 422 of the Code, the maximum number of shares subject to ISO awards shall be               .

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Stock Options

          The 2019 Plan provides for the grant of ISOs only to our employees. All options other than ISOs may be granted to our employees, directors and consultants. The exercise price of each option to purchase stock must be at least equal to the fair market value of our common stock on the date of grant. The exercise price of ISOs granted to 10% or more shareholders must be at least equal to 110% of that value. Options granted under the 2019 Plan may be exercisable at such times and subject to such terms and conditions as the Compensation and Nominating Committee determines. The maximum term of options granted under the 2019 Plan is 10 years (five years in the case of ISOs granted to 10% or more shareholders).

Stock Appreciation Rights

          Stock appreciation rights provide for a payment, or payments, in cash or common stock, to the holder based upon the difference between the fair market value of our common stock on the date of exercise and the stated exercise price of the stock appreciation right. The exercise price must be at least equal to the fair market value of our common stock on the date the stock appreciation right is granted. Stock appreciation rights may vest based on time or achievement of performance conditions, as determined by the Compensation and Nominating Committee in its discretion.

Restricted Stock

          The Compensation and Nominating Committee may grant awards consisting of shares of our common stock subject to restrictions on sale and transfer. The price (if any) paid by a participant for a restricted stock award will be determined by the Compensation and Nominating Committee. Unless otherwise determined by the Compensation and Nominating Committee at the time of award, vesting will cease on the date the participant no longer provides services to us and unvested shares will be forfeited to or repurchased by us. The Compensation and Nominating Committee may condition the grant or vesting of shares of restricted stock on the achievement of performance conditions and/or the satisfaction of a time-based vesting schedule.

Performance Awards

          A performance award is an award that becomes payable upon the attainment of specific performance goals. A performance award may become payable in cash or in shares of our common stock. These awards are subject to forfeiture prior to settlement due to termination of a participant's employment or failure to achieve the performance conditions.

Other Cash-Based Awards

          The Compensation and Nominating Committee may grant other cash-based awards to participants in amounts and on terms and conditions determined by them in their discretion. Cash-based awards may be granted subject to vesting conditions or awarded without being subject to conditions or restrictions.

Additional Provisions

          Awards granted under the 2019 Plan may not be transferred in any manner other than by will or by the laws of descent and distribution, or as determined by the Compensation and Nominating Committee. Unless otherwise restricted by our Committee, awards that are non-ISOs or SARs may be exercised during the lifetime of the optionee only by the optionee, the optionee's guardian or legal representative or a family member of the optionee who has acquired the non-ISOs or SARs by

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a permitted transfer. Awards that are ISOs may be exercised during the lifetime of the optionee only by the optionee or the optionee's guardian or legal representative.

          In the event of a change of control (as defined in the 2019 Plan), the Compensation and Nominating Committee may, in its discretion, provide for any or all of the following actions: (i) awards may be continued, assumed or substituted with new rights, (ii) awards may be purchased for cash equal to the excess (if any) of the highest price per share of common stock paid in the change in control transaction over the aggregate exercise price of such awards, (iii) outstanding and unexercised stock options and stock appreciation rights may be terminated prior to the change in control (in which case holders of such unvested awards would be given notice and the opportunity to exercise such awards), or (iv) vesting or lapse of restrictions may be accelerated. All awards will be equitably adjusted in the case of the division of stock and similar transactions.


401(k) Plan

          We maintain a tax-qualified retirement plan that provides all regular U.S. employees with an opportunity to save for retirement on a tax-advantaged basis. Under our 401(k) plan, participants may elect to defer a portion of their compensation on a pre-tax basis and have it contributed to the plan subject to applicable annual limits under the Code. Pre-tax contributions are allocated to each participant's individual account and are then invested in selected investment alternatives according to the participants' directions. Employee elective deferrals are 100% vested at all times. As a U.S. tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan and all contributions are deductible by us when made.


Non-Employee Director Compensation

          The following table presents the total compensation for each person who served as a non-employee member of our Board during 2018. Other than as set forth in the table and described more fully below, we did not pay any compensation, reimburse any expense of, make any equity awards or non-equity awards to, or pay any other compensation to, any of the other non-employee members of our Board or representatives of Vista in 2018. Mr. Durand, our Chief Executive Officer, and representatives of Vista receive no compensation for service as directors and, consequently, are not included in this table. The compensation received by Mr. Durand as an employee of the Company is presented in "— Summary Compensation Table".

Name

    Fees earned
or paid
in cash
($)
    Stock
awards
($)(1)
    Total
($)
 

Clifford Chiu

    100,000         100,000  

John McCormack

    100,000         100,000  

(1)
Mr. McCormack and Mr. Chiu were each granted 125 RSUs upon joining our Board pursuant to our 2016 Stock Option Plan. Beginning August 31, 2016 and January 1, 2017 for RSUs owned by Mr. McCormack and Mr. Chiu, respectively, vesting began over a four-year period, with 25% of the RSUs vesting upon completion of one year of service, and an additional 25% of the RSUs to vest at the end of each full twelve month period thereafter, subject to continuous service. In July 2019, the Company fully accelerated the vesting of the RSUs.

Non-Employee Director Compensation Policy

          We do not currently have a formal policy with respect to compensating our non-employee directors for service as directors. Following the completion of this offering, we will implement a formal policy pursuant to which our non-employee directors will be eligible to receive compensation for service on our board of directors and committees of our board of directors.

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PRINCIPAL SHAREHOLDERS

          The following table sets forth information about the beneficial ownership of our common stock as of                  , 2019 and as adjusted to reflect the sale of the common stock in this offering, for

          Each shareholder's percentage ownership before the offering is based on common stock outstanding as of                  , 2019. Each shareholder's percentage ownership after the offering is based on common stock outstanding immediately after the completion of this offering. We have granted the underwriters an option to purchase up to           additional shares of common stock.

          Beneficial ownership for the purposes of the following table is determined in accordance with the rules and regulations of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting thereof, or to dispose or direct the disposition thereof or has the right to acquire such powers within 60 days. Common stock subject to options or RSUs that are currently exercisable or exercisable within 60 days of                  , 2019 are deemed to be outstanding and beneficially owned by the person holding the options or RSUs. These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as disclosed in the footnotes to this table and subject to applicable community property laws, we believe that each shareholder identified in the table possesses sole voting and investment power over all common stock shown as beneficially owned by the shareholder.

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          Unless otherwise noted below, the address of each beneficial owner listed on the table is c/o Ping Identity Corporation, 1001 17th St, Suite 100, Denver, CO 80202. Beneficial ownership representing less than 1% is denoted with an asterisk (*).

    Shares Beneficially     Shares Beneficially Owned After this
Offering
 

    Owned Prior to
this Offering
          No Exercise of
Underwriters'
    Full Exercise of
Underwriters'
 

    Number of           Number of     Option     Option
 

Name of Beneficial Owner

    shares     Percentage     shares     Percentage     Percentage
 

5% Stockholders:

   
 
   
 
   
 
   
 
   
 
 

Vista Funds(1)

            %           %     %

Directors and Named Executive Officers:

                               

Andre Durand(2)

                               

B. Kristian Nagel(3)

                               

Bernard Harguindeguy(4)

                               

Rod Aliabadi

                               

David A. Breach

                               

Clifford K. Chiu(5)

                               

Michael Fosnaugh

                               

Lisa Hook(6)

                               

John McCormack(7)

                               

Brian N. Sheth

                               

Yancey L. Spruill(8)

                               

Directors and executive officers as a group (13 individuals)

            %           %     %

(1)
Represents                      shares held directly by Vista Equity Partners Fund VI, L.P.,                      shares held directly by Vista Equity Partners Fund VI-A, L.P. and                      shares held directly by VEPF VI FAF, L.P. Vista Equity Partners Fund VI GP, L.P., or Fund VI GP, is the sole general partner of each of the Vista Funds. Fund VI GP's sole general partner is VEPF VI GP, Ltd., or Fund VI UGP. Robert F. Smith is the Sole Director of Fund VI UGP, as well as one of its 11 Members. VEPF Management, L.P., or Management Company, is the sole management company of each of the Vista Funds. The Management Company's sole general partner is VEP Group, LLC, or the VEP Group, and the Management Company's sole limited partner is Vista Equity Partners Management, LLC, or VEPM. VEP Group is the Senior Managing Member of the VEPM. Robert F. Smith is the sole Managing Member of VEP Group. Consequently, Mr. Smith, Fund VI UGP and VEP Group may be deemed the beneficial owners of the shares held by the Vista Funds. The principal business address of each of the Vista Funds, Fund VI UGP, the Management Company and the VEP Group is c/o Vista Equity Partners, 4 Embarcadero Center, 20th Fl., San Francisco, California 94111. The principal business address of Mr. Smith is c/o Vista Equity Partners, 401 Congress Drive, Suite 3100, Austin, Texas 78701.

(2)
Includes                      shares that may be acquired within 60 days upon the exercise of vested options.

(3)
Represents                      shares that may be acquired within 60 days upon the exercise of vested options.

(4)
Represents                      shares that may be acquired within 60 days upon the exercise of vested options.

(5)
Represents             shares that may be acquired within 60 days upon vesting and settlement of RSUs.

(6)
Represents             shares that may be acquired within 60 days upon vesting and settlement of RSUs.

(7)
Represents             shares that may be acquired within 60 days upon vesting and settlement of RSUs.

(8)
Represents             shares that may be acquired within 60 days upon vesting and settlement of RSUs.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Policies for Approval of Related Party Transactions

          Prior to completion of this offering, we intend to adopt a policy with respect to the review, approval and ratification of related party transactions. Under the policy, our Audit Committee is responsible for reviewing and approving related person transactions. In the course of its review and approval of related party transactions, our Audit Committee will consider the relevant facts and circumstances to decide whether to approve such transactions. In particular, our policy requires our Audit Committee to consider, among other factors it deems appropriate:

          The Audit Committee may only approve those transactions that are in, or are not inconsistent with, our best interests and those of our shareholders, as the Audit Committee determines in good faith.

          In addition, under our code of business conduct and ethics, which will be adopted prior to the consummation of this offering, our employees and directors will have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest.

          All of the transactions described below were entered into prior to the adoption of the Company's written related party transactions policy (which policy will be adopted prior to the consummation of this offering), but all were approved by our Board considering similar factors to those described above.


Related Party Transactions

          Other than compensation arrangements for our directors and named executive officers, which are described in the section entitled "Executive Compensation", below we describe transactions since January 1, 2016 to which we were a participant or will be a participant, in which:

Director Nomination Agreement

          In connection with this offering, we will enter into a Director Nomination Agreement with Vista that provides Vista the right to designate nominees for election to our Board for so long as Vista beneficially owns 5% or more of the total number of shares of our common stock that it owns as of

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the completion of this offering. Vista may also assign its designation rights under the Director Nomination Agreement to an affiliate.

          The Director Nomination Agreement will provide Vista the right to designate: (i) all of the nominees for election to our Board for so long as Vista beneficially owns 40% or more of the total number of shares of our common stock beneficially owned by Vista upon completion of this offering, as adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or similar changes in the Company's capitalization, or such amount of shares, as adjusted, the Original Amount; (ii) a number of directors (rounded up to the nearest whole number) equal to 40% of the total directors for so long as Vista beneficially owns at least 30% and less than 40% of the Original Amount; (iii) a number of directors (rounded up to the nearest whole number) equal to 30% of the total directors for so long as Vista beneficially owns at least 20% and less than 30% of the Original Amount; (iv) a number of directors (rounded up to the nearest whole number) equal to 20% of the total directors for so long as Vista beneficially owns at least 10% and less than 20% of the Original Amount; and (v) one director for so long as Vista beneficially owns at least 5% and less than 10% of the Original Amount. In each case, Vista's nominees must comply with applicable law and stock exchange rules. In addition, Vista shall be entitled to designate the replacement for any of its board designees whose board service terminates prior to the end of the director's term regardless of Vista's beneficial ownership at such time. Vista shall also have the right to have its designees participate on committees of our Board proportionate to its stock ownership, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement will also prohibit us from increasing or decreasing the size of our Board without the prior written consent of Vista. This agreement will terminate at such time as Vista owns less than 5% of the Original Amount.

Registration Rights Agreement

          In connection with this offering, we intend to enter into a registration rights agreement with Vista. Vista will be entitled to request that we register Vista's shares on a long-form or short-form registration statement on one or more occasions in the future, which registrations may be "shelf registrations". Vista will also be entitled to participate in certain of our registered offerings, subject to the restrictions in the registration rights agreement. We will pay Vista's expenses in connection with Vista's exercise of these rights. The registration rights described in this paragraph apply to (i) shares of our common stock held by Vista and its affiliates and (ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the common stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization, or certain other corporate transactions, or Registrable Securities. These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 of the Securities Act of 1933, as amended, or the Securities Act, or repurchased by us or our subsidiaries. In addition, with the consent of the company and holders of a majority of Registrable Securities, any Registrable Securities held by a person other than Vista and its affiliates will cease to be Registrable Securities if they can be sold without limitation under Rule 144 of the Securities Act.

Indemnification of Officers and Directors

          Upon completion of this offering, we intend to enter into indemnification agreements with each of our executive officers and directors. The indemnification agreements will provide the executive officers and directors with contractual rights to indemnification, expense advancement and reimbursement, to the fullest extent permitted under the DGCL. Additionally, we may enter into

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indemnification agreements with any new directors or officers that may be broader in scope than the specific indemnification provisions contained in Delaware law.

Management Agreement

          In connection with the Vista Acquisition, as amended and restated January in 2018, we entered into a management agreement with VEPM, pursuant to which VEPM was retained to provide us with certain management and consulting services. We agreed to indemnify VEPM against liabilities that may arise by reason of their service. We reimburse VEPM for any out-of-pocket costs and expenses, and have recorded expenses under the management agreement of $0.1 million, zero ($0) and $0.1 million for the years ended December 31, 2016, 2017 and 2018, respectively. The management agreement will terminate at no additional cost to us in connection with the completion of this offering.

Relationship with VCG

          Following the Vista Acquisition, we have utilized Vista Consulting Group, LLC, or VCG, the operating and consulting arm of Vista, for consulting services and executive recruitment, and have also reimbursed VCG for expenses related to participation by Ping employees in VCG sponsored events and for certain enterprise software licenses utilized by Ping, and also paid to VCG related fees and expenses. We recorded expenses to VCG of $0.6 million, $0.4 million, $0.9 million and $0.3 million for the years ended December 31, 2016, 2017 and 2018 and the six months ended June 30, 2019, respectively. Following this offering, we may continue to engage VCG from time to time, subject to compliance with our related party transactions policy.

Arrangements with Companies Controlled by Vista

          We have subscription arrangements for our solutions with companies controlled by Vista. We recognized revenue in connection with these agreements of $2.6 million, $0.8 million, $1.9 million and $0.2 million for the years ended December 31, 2016, 2017 and 2018 and the six months ended June 30, 2019, respectively. We also purchase services from companies controlled by Vista. We recognized expense of $0.1 million, $0.5 million, $0.3 million and $0.3 million for the years ended December 31, 2016, 2017 and 2018 and the six months ended June 30, 2019, respectively. We believe all of these arrangements are on comparable terms that are provided to unrelated third parties.

Term Loan Facility

          From time to time, Vista may acquire loans incurred by us either from us, in open market transactions or through loan syndications. In connection with our entry into the Term Loan Facility on January 25, 2018, affiliates of Vista collectively acquired $35.0 million of term loans under our Term Loan Facility and as of June 30, 2019, affiliates of Vista collectively owned $34.7 million of our Term Loan Facility. During the year ended December 31, 2018, the largest principal amount of debt under the Term Loan Facility held by affiliates of Vista was $35.0 million. During the year ended December 31, 2018 and the six months ended June 30, 2019, affiliates of Vista were paid $0.2 million and $0.1 million in principal, respectively and $1.9 million and $1.1 million, respectively, in interest on the portion of the Term Loan Facility held by them. As of June 30, 2019, the portion of the Term Loan Facility held by affiliates of Vista bears interest at 6.19%.

          Vista will receive a portion of the net proceeds of this offering in connection with the repayment of our Term Loan Facility. Based upon our estimated receipt of net proceeds from this offering of approximately $              million (or $              million if the underwriters exercise their option to purchase additional shares in full) as described above, we expect that Vista will receive

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$              million of the total $              million (or $              million of the total $              million if the underwriters exercise their option to purchase additional shares in full) of such net proceeds used to repay outstanding borrowings under our Term Loan Facility.

Elastic Beam Acquisition

          On April 5, 2018, we entered into a Securities Purchase Agreement, by and among Ping Identity Corporation, the sellers party thereto and Bernard Harguindeguy, pursuant to which we acquired 100% of the voting equity interest in Elastic Beam. $4.8 million and $4.2 million, respectively, of contingent compensation is payable on the first and second anniversary of the acquisition, contingent on certain individuals remaining employed as of those dates. During the six months ended June 30, 2019, we paid the first anniversary payment of $4.8 million. In connection with our acquisition of Elastic Beam, Mr. Harguindeguy, who became our Chief Technology Officer following the acquisition, received $5.8 million in consideration of his equity in Elastic Beam. On the first anniversary of the Elastic Beam Acquisition, Mr. Harguindeguy received (i) $2.4 million in earn-out consideration and (ii) $0.3 million in holdback consideration. In addition, Mr. Harguindeguy may receive up to $2.0 million in additional earn-out consideration, payable on the second anniversary of the Elastic Beam Acquisition.

Directed Share Program

          At our request, the underwriters have reserved up to                  shares of common stock, or             % of the shares of common stock to be offered by this prospectus for sale, at the initial public offering price, to directors, officers, and their friends and family members through a directed share program.

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DESCRIPTION OF CERTAIN INDEBTEDNESS

          Set forth below is a summary of the terms of the credit agreement governing certain of our outstanding indebtedness. This summary is not a complete description of all of the terms of the credit agreement. The credit agreement setting forth the terms and conditions of certain of our outstanding indebtedness is filed as an exhibit to the registration statement of which this prospectus forms a part.


Senior Secured Credit Facilities

          On January 25, 2018, Ping Identity Corporation and Roaring Fork Intermediate, LLC, or Holdings, each of which are wholly-owned subsidiaries of ours, entered into the $275.0 million Credit Agreement with a syndicate of lenders, comprised of the $25.0 million Revolving Credit Facility and the $250.0 million Term Loan Facility. The proceeds from borrowing under the Credit Agreement were used to repay our then existing credit facilities, together with accrued interest and related prepayment penalties and expenses. As of June 30, 2019, we had $247.5 million and no borrowings outstanding under our Term Loan Facility and Revolving Credit Facility, respectively. As of June 30, 2019, the interest rate on our Term Loan Facility and Revolving Credit Facility was 6.19% and 0.25%, respectively.

Interest Rates and Fees

          Borrowings under the Credit Agreement bear interest at a rate per annum, at Holdings' option, equal to an applicable margin, plus, (a) for alternative base rate borrowings, the highest of (i) the prime rate as determined by the administrative agent in effect on such day, (ii) the Federal Funds Rate in effect on such day plus 1/2 of 1.00% and (iii) the Adjusted LIBO Rate (for a one-month interest period and taking into account a 1.00% floor with respect to term loans) plus 1.00% and (b) for eurocurrency borrowings, the Adjusted LIBO Rate determined by the greater of (i) the LIBO Rate for the relevant interest period divided by 1 minus the statutory reserves (if any) and (ii) with respect to term loans only, 1.00%.

          The applicable margin for borrowings under the Credit Agreement is (a) with respect to term loan borrowings, 2.75% for alternate base rate borrowings and 3.75% for eurocurrency borrowings and (b) with respect to both revolving and swingline loan borrowings, 2.75% for alternate base rate borrowings and 3.75% for eurocurrency borrowings when Holdings' first lien leverage ratio is greater than 5.00 to 1.00, with step downs to (i) 2.50% for alternate base rate borrowings and 3.50% for eurocurrency borrowings when Holdings' first lien leverage ratio is less than or equal to 5.00 to 1.00 but greater than 4.50 to 1.00 and (ii) 2.25% for alternate base rate borrowings and 3.25% for eurocurrency when Holdings' first lien leverage ratio is less than or equal to 4.50 to 1.00. Our first lien leverage ratio is determined in accordance with the terms of the Credit Agreement.

          Additionally, Holdings is required to pay the following fees pursuant to the terms of the Credit Agreement: (a) a commitment fee on the average daily unused portion of the revolving credit commitments of 0.50% per annum when Holdings' first lien leverage ratio is greater than 3.50 to 1.00, with a step down to 0.375% when Holdings' first lien leverage ratio is greater than 5.00, with step downs to (i) 0.375% when Holdings' first lien leverage ratio is less than or equal to 5.00 to 1.00 but greater than 4.50 to 1.00 and (ii) 0.25% when Holdings' first lien leverage ratio is less than or equal to 4.50 to 1.00, (b) a customary administrative agent fee to the first lien administrative agent and (c) a fronting fee on the daily amount of letter of credit exposure of each letter of credit issued by each issuing bank at a rate equal to 3.75% when Holdings' first lien leverage ratio is greater than 5.00, with step downs to (i) 3.75% when Holdings' first lien leverage ratio is less than or equal to 5.00 to 1.00 but greater than 4.50 to 1.00 and (ii) 3.25% when Holdings' first lien leverage ratio is less than or equal to 4.50 to 1.00.

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Voluntary Prepayments

          Holdings may voluntarily prepay outstanding loans under the Credit Agreement without premium or penalty, subject to certain notice and priority requirements.

Mandatory Prepayments

          The Credit Agreement requires Holdings to prepay, subject to certain exceptions, the first lien term loans with:

Final Maturity and Amortization

          The Term Loan Facility will mature on January 25, 2025 and the Revolving Credit Facility will mature on January 25, 2023. The Term Loan Facility requires quarterly amortization payments equal to approximately 0.25% of the original principal amount. The Revolving Credit Facility does not amortize.

Guarantors

          All obligations under the Credit Agreement are unconditionally guaranteed by Holdings, and substantially all of its existing and future direct and indirect wholly-owned domestic subsidiaries, other than certain excluded subsidiaries.

Security

          All obligations under the Credit Agreement are secured, subject to permitted liens and other exceptions, by first-priority perfected security interests in substantially all of the borrower's and the guarantors' assets.

Certain Covenants, Representations and Warranties

          The Credit Agreement contains customary representations and warranties, affirmative covenants, reporting obligations and negative covenants. The negative covenants restrict Ping Identity Corporation and its subsidiaries' ability, among other things, to (subject to certain exceptions set forth in the Credit Agreement):

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Financial Covenant

          Additionally, the Revolving Credit Facility requires, in the event amounts utilized under the Revolving Credit Facility (borrowings plus the amount of outstanding letters of credit in excess of $2.5 million) exceed 35% of the aggregate revolving commitments, Ping Identity Corporation is to maintain a first lien leverage ratio, determined in accordance with the terms of the Credit Agreement, of no greater than 8.25:1.00.

          In the event that we fail to comply with the financial covenant, the parent guarantor has the option to issue equity or make certain equity contributions to the borrower in order to increase consolidated adjusted EBITDA for the purpose of calculating and determining compliance with such covenant, subject to certain other conditions and limitations.

Events of Default

          The lenders under the Credit Agreement are permitted to accelerate the loans and terminate commitments thereunder or exercise other remedies upon the occurrence of certain customary events of default, subject to certain grace periods and exceptions. These events of default include, among others, payment defaults, cross-defaults to certain material indebtedness, covenant defaults, material inaccuracy of representations and warranties, certain events of bankruptcy, material judgments, material defects with respect to lenders' perfection on the collateral, invalidity of subordination provisions of the subordinated debt and changes of control, none of which are expected to be triggered by this offering.

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DESCRIPTION OF CAPITAL STOCK

General

          Upon completion of this offering, our authorized capital stock will consist of             shares of common stock, par value $0.001 per share, and             shares of undesignated preferred stock, par value $0.001 per share. As of June 30, 2019, we had             shares of common stock outstanding held by ten shareholders of record and no shares of preferred stock outstanding,             shares of common stock issuable upon exercise of outstanding stock options and             shares of common stock issuable upon the vesting and settlement of outstanding RSUs. After consummation of this offering and the use of proceeds therefrom, we expect to have             shares of our common stock outstanding, assuming no exercise by the underwriters of their option to purchase additional shares, and expect to have no shares of preferred stock outstanding. The following description of our capital stock is intended as a summary only and is qualified in its entirety by reference to our certificate of incorporation and bylaws to be in effect at the closing of this offering, which are filed as exhibits to the registration statement of which this prospectus forms a part, and to the applicable provisions of the DGCL.


Common Stock

Dividend Rights

          Subject to preferences that may apply to shares of preferred stock outstanding at the time, holders of outstanding shares of common stock will be entitled to receive dividends out of assets legally available at the times and in the amounts as our Board may determine from time to time.

Voting Rights

          Each outstanding share of common stock will be entitled to one vote on all matters submitted to a vote of shareholders. Holders of shares of our common stock shall have no cumulative voting rights.

Preemptive Rights

          Our common stock will not be entitled to preemptive or other similar subscription rights to purchase any of our securities.

Conversion or Redemption Rights

          Our common stock will be neither convertible nor redeemable.

Liquidation Rights

          Upon our liquidation, the holders of our common stock will be entitled to receive pro rata our assets that are legally available for distribution, after payment of all debts and other liabilities and subject to the prior rights of any holders of preferred stock then outstanding.


Preferred Stock

          Our Board may, without further action by our shareholders, from time to time, direct the issuance of shares of preferred stock in series and may, at the time of issuance, determine the designations, powers, preferences, privileges, and relative participating, optional or special rights as well as the qualifications, limitations or restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights of the common stock. Satisfaction of any dividend preferences of

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outstanding shares of preferred stock would reduce the amount of funds available for the payment of dividends on shares of our common stock. Holders of shares of preferred stock may be entitled to receive a preference payment in the event of our liquidation before any payment is made to the holders of shares of our common stock. Under certain circumstances, the issuance of shares of preferred stock may render more difficult or tend to discourage a merger, tender offer or proxy contest, the assumption of control by a holder of a large block of our securities or the removal of incumbent management. Upon the affirmative vote of a majority of the total number of directors then in office, our Board, without shareholder approval, may issue shares of preferred stock with voting and conversion rights which could adversely affect the holders of shares of our common stock and the market value of our common stock.


Anti-Takeover Effects of Our Certificate of Incorporation and Our Bylaws

          Our certificate of incorporation, bylaws and the DGCL will contain provisions, which are summarized in the following paragraphs, that are intended to enhance the likelihood of continuity and stability in the composition of our Board. These provisions are intended to avoid costly takeover battles, reduce our vulnerability to a hostile change of control and enhance the ability of our Board to maximize shareholder value in connection with any unsolicited offer to acquire us. However, these provisions may have an anti-takeover effect and may delay, deter or prevent a merger or acquisition of the Company by means of a tender offer, a proxy contest or other takeover attempt that a shareholder might consider in its best interest, including those attempts that might result in a premium over the prevailing market price for the shares of common stock held by shareholders.

          These provisions include:

Classified Board

          Our certificate of incorporation will provide that our Board will be divided into three classes of directors, with the classes as nearly equal in number as possible, and with the directors serving three-year terms. As a result, approximately one-third of our Board will be elected each year. The classification of directors will have the effect of making it more difficult for shareholders to change the composition of our Board. Our certificate of incorporation will also provide that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors will be fixed exclusively pursuant to a resolution adopted by our Board. Upon completion of this offering, we expect that our Board will have nine members.

Shareholder Action by Written Consent

          Our certificate of incorporation will preclude shareholder action by written consent at any time when Vista beneficially owns, in the aggregate, less than 35% in voting power of the stock of the Company entitled to vote generally in the election of directors.

Special Meetings of Shareholders

          Our certificate of incorporation and bylaws will provide that, except as required by law, special meetings of our shareholders may be called at any time only by or at the direction of our Board or the chairman of our Board; provided, however, at any time when Vista beneficially owns, in the aggregate, at least 35% in voting power of the stock of the Company entitled to vote generally in the election of directors, special meetings of our shareholders shall also be called by our Board or the chairman of our Board at the request of Vista. Our bylaws will prohibit the conduct of any business at a special meeting other than as specified in the notice for such meeting. These

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provisions may have the effect of deferring, delaying or discouraging hostile takeovers, or changes in control or management of the Company.

Advance Notice Procedures

          Our bylaws will establish an advance notice procedure for shareholder proposals to be brought before an annual meeting of our shareholders, including proposed nominations of persons for election to our Board; provided, however, at any time when Vista beneficially owns, in the aggregate, at least 10% in voting power of the stock of the Company entitled to vote generally in the election of directors, such advance notice procedure will not apply to Vista. Shareholders at an annual meeting will only be able to consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of our Board or by a shareholder who was a shareholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given our Secretary timely written notice, in proper form, of the shareholder's intention to bring that business before the meeting. Although the bylaws will not give our Board the power to approve or disapprove shareholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting, the bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed or may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of the Company. These provisions do not apply to nominations by Vista pursuant to the Director Nomination Agreement. See "Certain Relationships and Related Party Transactions — Related Party Transactions — Director Nomination Agreement" for more details with respect to the Director Nomination Agreement.

Removal of Directors; Vacancies

          Our certificate of incorporation will provide that directors may be removed with or without cause upon the affirmative vote of a majority in voting power of all outstanding shares of stock entitled to vote thereon, voting together as a single class; provided, however, at any time when Vista beneficially owns, in the aggregate, less than 40% in voting power of the stock of the Company entitled to vote generally in the election of directors, directors may only be removed for cause, and only by the affirmative vote of holders of at least 662/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class. In addition, our certificate of incorporation will provide that, subject to the rights granted to one or more series of preferred stock then outstanding, any newly created directorship on our Board that results from an increase in the number of directors and any vacancies on our Board will be filled only by the affirmative vote of a majority of the remaining directors, even if less than a quorum, by a sole remaining director.

Supermajority Approval Requirements

          Our certificate of incorporation and bylaws will provide that our Board is expressly authorized to make, alter, amend, change, add to, rescind or repeal, in whole or in part, our bylaws without a shareholder vote in any matter not inconsistent with the laws of the State of Delaware and our certificate of incorporation. For as long as Vista beneficially owns, in the aggregate, at least 50% in voting power of the stock of the Company entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of our bylaws by our shareholders will require the affirmative vote of a majority in voting power of the outstanding shares of our stock entitled to vote on such amendment, alteration, change, addition, rescission or repeal. At any time when Vista beneficially owns, in the aggregate, less than 50% in voting power of all outstanding shares of the stock of the Company entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of our bylaws by our shareholders will require the affirmative vote of

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the holders of at least 662/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class.

          The DGCL provides generally that the affirmative vote of a majority of the outstanding shares entitled to vote thereon, voting together as a single class, is required to amend a corporation's certificate of incorporation, unless the certificate of incorporation requires a greater percentage.

          Our certificate of incorporation will provide that at any time when Vista beneficially owns, in the aggregate, less than 50% in voting power of the stock of the Company entitled to vote generally in the election of directors, the following provisions in our certificate of incorporation may be amended, altered, repealed or rescinded only by the affirmative vote of the holders of at least 662/3% (as opposed to a majority threshold that would apply if Vista beneficially owns, in the aggregate, 50% or more) in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class:

          The combination of the classification of our Board, the lack of cumulative voting and the supermajority voting requirements will make it more difficult for our existing shareholders to replace our Board as well as for another party to obtain control of us by replacing our Board. Because our Board has the power to retain and discharge our officers, these provisions could also make it more difficult for existing shareholders or another party to effect a change in management.

Authorized but Unissued Shares

          Our authorized but unissued shares of common stock and preferred stock will be available for future issuance without shareholder approval, subject to stock exchange rules. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. One of the effects of the existence of authorized but unissued common stock or preferred stock may be to enable our Board to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of the Company by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive our shareholders of opportunities to sell their shares of common stock at prices higher than prevailing market prices.

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Business Combinations

          Upon completion of this offering, we will not be subject to the provisions of Section 203 of the DGCL. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested shareholder" for a three-year period following the time that the person becomes an interested shareholder, unless the business combination is approved in a prescribed manner. A "business combination" includes, among other things, a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested shareholder. An "interested shareholder" is a person who, together with affiliates and associates, owns, or did own within three years prior to the determination of interested shareholder status, 15% or more of the corporation's voting stock.

          Under Section 203, a business combination between a corporation and an interested shareholder is prohibited unless it satisfies one of the following conditions: (1) before the shareholder became an interested shareholder, the board of directors approved either the business combination or the transaction which resulted in the shareholder becoming an interested shareholder; (2) upon consummation of the transaction which resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock plans, in some instances; or (3) at or after the time the shareholder became an interested shareholder, the business combination was approved by the board of directors and authorized at an annual or special meeting of the shareholders by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested shareholder.

          A Delaware corporation may "opt out" of these provisions with an express provision in its original certificate of incorporation or an express provision in its certificate of incorporation or bylaws resulting from a shareholders' amendment approved by at least a majority of the outstanding voting shares.

          We will opt out of Section 203; however, our certificate of incorporation will contain similar provisions providing that we may not engage in certain "business combinations" with any "interested shareholder" for a three-year period following the time that the shareholder became an interested shareholder, unless:

          Under certain circumstances, this provision will make it more difficult for a person who would be an "interested shareholder" to effect various business combinations with the Company for a three-year period. This provision may encourage companies interested in acquiring the Company to negotiate in advance with our Board because the shareholder approval requirement would be avoided if our Board approves either the business combination or the transaction which results in the shareholder becoming an interested shareholder. These provisions also may have the effect of preventing changes in our Board and may make it more difficult to accomplish transactions which shareholders may otherwise deem to be in their best interests.

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          Our certificate of incorporation will provide that Vista, and any of its direct or indirect transferees and any group as to which such persons are a party, do not constitute "interested shareholders" for purposes of this provision.


Dissenters' Rights of Appraisal and Payment

          Under the DGCL, with certain exceptions, our shareholders will have appraisal rights in connection with a merger or consolidation of us. Pursuant to the DGCL, shareholders who properly request and perfect appraisal rights in connection with such merger or consolidation will have the right to receive payment of the fair value of their shares as determined by the Delaware Court of Chancery.


Shareholders' Derivative Actions

          Under the DGCL, any of our shareholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the shareholder bringing the action is a holder of our shares at the time of the transaction to which the action relates or such shareholder's stock thereafter devolved by operation of law.


Exclusive Forum

          Our certificate of incorporation will provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the United States District Court for the District of Delaware) will be the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our shareholders, (3) any action asserting a claim against the Company or any director or officer of the Company arising pursuant to any provision of the DGCL, our certificate of incorporation or our bylaws or (4) any other action asserting a claim against the Company or any director or officer of the Company that is governed by the internal affairs doctrine; provided that for the avoidance of doubt, the forum selection provision that identifies the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation, including any "derivative action", will not apply to suits to enforce a duty or liability created by the Securities Act, the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and to have consented to the provisions of our certificate of incorporation described above. Although we believe these provisions benefit us by providing increased consistency in the application of Delaware law for the specified types of actions and proceedings, the provisions may have the effect of discouraging lawsuits against us or our directors and officers.


Conflicts of Interest

          Delaware law permits corporations to adopt provisions renouncing any interest or expectancy in certain opportunities that are presented to the corporation or its officers, directors or shareholders. Our certificate of incorporation will, to the maximum extent permitted from time to time by Delaware law, renounce any interest or expectancy that we have in, or right to be offered an opportunity to participate in, specified business opportunities that are from time to time presented to certain of our officers, directors or shareholders or their respective affiliates, other than those officers, directors, shareholders or affiliates who are our or our subsidiaries' employees. Our certificate of incorporation will provide that, to the fullest extent permitted by law, none of Vista or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or his or her affiliates will have any duty to refrain from (1) engaging in a corporate opportunity in the same or similar lines of business in

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which we or our affiliates now engage or propose to engage or (2) otherwise competing with us or our affiliates. In addition, to the fullest extent permitted by law, in the event that Vista or any non-employee director acquires knowledge of a potential transaction or other business opportunity which may be a corporate opportunity for itself or himself or its or his affiliates or for us or our affiliates, such person will have no duty to communicate or offer such transaction or business opportunity to us or any of our affiliates and they may take any such opportunity for themselves or offer it to another person or entity. Our certificate of incorporation will not renounce our interest in any business opportunity that is expressly offered to a non-employee director solely in his or her capacity as a director or officer of the Company. To the fullest extent permitted by law, no business opportunity will be deemed to be a potential corporate opportunity for us unless we would be permitted to undertake the opportunity under our certificate of incorporation, we have sufficient financial resources to undertake the opportunity, and the opportunity would be in line with our business.


Limitations on Liability and Indemnification of Officers and Directors

          The DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their shareholders for monetary damages for breaches of directors' fiduciary duties, subject to certain exceptions. Our certificate of incorporation will include a provision that eliminates the personal liability of directors for monetary damages for any breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL. The effect of these provisions will be to eliminate the rights of us and our shareholders, through shareholders' derivative suits on our behalf, to recover monetary damages from a director for breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior. However, exculpation will not apply to any director if the director has acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends or redemptions or derived an improper benefit from his or her actions as a director.

          Our bylaws will provide that we must indemnify and advance expenses to our directors and officers to the fullest extent authorized by the DGCL. We also will be expressly authorized to carry directors' and officers' liability insurance providing indemnification for our directors, officers and certain employees for some liabilities. We believe that these indemnification and advancement provisions and insurance will be useful to attract and retain qualified directors and officers.

          The limitation of liability, indemnification and advancement provisions that will be included in our certificate of incorporation and bylaws may discourage shareholders from bringing a lawsuit against directors for breaches of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our shareholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

          There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.


Transfer Agent and Registrar

          The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC. The transfer agent's address is 6201 15th Avenue, Brooklyn, NY 11219 and its phone number is (800) 937-5449.


Listing

          We have applied to list our common stock on NASDAQ under the symbol "PING".

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SHARES ELIGIBLE FOR FUTURE SALE

          Before this offering, there has been no public market for our common stock. As described below, only a limited number of shares currently outstanding will be available for sale immediately after this offering due to contractual and legal restrictions on resale. Nevertheless, future sales of substantial amounts of our common stock, including shares issued upon the exercise of outstanding options, in the public market after this offering, or the perception that those sales may occur, could cause the prevailing market price for our common stock to fall or impair our ability to raise capital through sales of our equity securities.

          Upon the closing of this offering, based on the number of shares of our common stock outstanding as of June 30, 2019, we will have             outstanding shares of our common stock, after giving effect to the issuance of shares of our common stock in this offering, assuming no exercise by the underwriters of their option to purchase additional shares.

          Of the             shares that will be outstanding immediately after the closing of this offering, we expect that the shares to be sold in this offering will be freely tradable without restriction under the Securities Act unless purchased by our "affiliates", as that term is defined in Rule 144 under the Securities Act. Shares purchased by our affiliates may not be resold except pursuant to an effective registration statement or an exemption from registration, including the safe harbor under Rule 144 of the Securities Act described below. In addition, following this offering,             shares of common stock issuable pursuant to awards granted under certain of our equity plans that are covered by a registration statement on Form S-8 will be freely tradable in the public market, subject to certain contractual and legal restrictions described below.

          The remaining             shares of our common stock outstanding after this offering will be "restricted securities", as that term is defined in Rule 144 of the Securities Act, and we expect that substantially all of these restricted securities will be subject to the lock-up agreements described below. These restricted securities may be sold in the public market only if the sale is registered or pursuant to an exemption from registration, such as Rule 144 or Rule 701 of the Securities Act, which are summarized below.


Lock-up Agreements

          We, each of our directors and executive officers and other shareholders and optionholders owning substantially all of our common stock and options to acquire common stock, have agreed that, without the prior written consent of Goldman Sachs & Co. LLC on behalf of the underwriters, we and they will not, subject to limited exceptions, directly or indirectly sell or dispose of any shares of common stock or any securities convertible into or exchangeable or exercisable for shares of common stock for a period of 180 days after the date of this prospectus. The lock-up restrictions and specified exceptions are described in more detail under "Underwriting".

          Prior to the consummation of the offering, certain of our employees, including our executive officers, and/or directors may enter into written trading plans that are intended to comply with Rule 10b5-1 under the Exchange Act. Sales under these trading plans would not be permitted until the expiration of the lock-up agreements relating to the offering described above.

          Following the lock-up periods set forth in the agreements described above, and assuming that the representatives of the underwriters do not release any parties from these agreements, all of the shares of our common stock that are restricted securities or are held by our affiliates as of the date of this prospectus will be eligible for sale in the public market in compliance with Rule 144 under the Securities Act.

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Registration Rights Agreement

          Pursuant to the registration rights agreement, we have granted Vista the right to cause us, in certain instances, at our expense, to file registration statements under the Securities Act covering resales of our common stock held by Vista or to piggyback on registered offerings initiated by us in certain circumstances. See "Certain Relationships and Related Party Transactions — Related Party Transactions — Registration Rights Agreement". These shares will represent         % of our outstanding common stock after this offering, or         % if the underwriters exercise their option to purchase additional shares in full.


Rule 144

          In general, under Rule 144, beginning 90 days after we become subject to the public company reporting requirements of the Exchange Act, any person who is not our affiliate, who was not our affiliate at any time during the preceding three months and who has held their shares for at least six months, including the holding period of any prior owner other than one of our affiliates, may sell shares without restriction, subject to the availability of current public information about us and subject to applicable lock-up restrictions. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than one of our affiliates, then that person would be entitled to sell those shares without complying with any of the requirements of Rule 144.

          Beginning 90 days after we become subject to the public company reporting requirements of the Exchange Act and subject to applicable lock-up restrictions, a person who is our affiliate or who was our affiliate at any time during the preceding three months and who has beneficially owned restricted securities for at least six months, including the holding period of any prior owner other than one of our affiliates, is entitled to sell a number of shares within any three-month period that does not exceed the greater of: (1) 1% of the number of shares of our common stock outstanding, which will equal approximately shares immediately after this offering; and (2) the average weekly trading volume of our common stock on NASDAQ during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

          Sales under Rule 144 by our affiliates are also subject to certain manner of sale provisions, notice requirements and to the availability of current public information about us.


Rule 701

          In general, under Rule 701, any of our employees, directors or officers who acquired shares from us in connection with a compensatory stock or option plan or other compensatory written agreement before the effective date of this offering are, subject to applicable lock-up restrictions, eligible to resell such shares in reliance upon Rule 144 beginning 90 days after the date of this prospectus. If such person is not an affiliate and was not our affiliate at any time during the preceding three months, the sale may be made subject only to the manner-of-sale restrictions of Rule 144. If such a person is an affiliate, the sale may be made under Rule 144 without compliance with the holding period requirements under Rule 144, but subject to the other Rule 144 restrictions described above.


Equity Incentive Plans

          Following this offering, we intend to file with the SEC a registration statement on Form S-8 under the Securities Act covering the shares of common stock that are subject to outstanding options and other awards issuable pursuant to our 2019 Plan. Shares covered by such registration statement will be available for sale in the open market following its effective date, subject to certain Rule 144 limitations applicable to affiliates and the terms of lock-up agreements applicable to those shares.

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS

          The following discussion is a summary of the material U.S. federal income tax consequences to Non-U.S. Holders (as defined below) of the purchase, ownership and disposition of our common stock issued pursuant to this offering, but does not purport to be a complete analysis of all potential tax effects. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local or non-U.S. tax laws are not discussed. This discussion is based on the Code, Treasury regulations promulgated thereunder, or Treasury Regulations, judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue Service, or the IRS, in each case as in effect as of the date hereof. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect a Non-U.S. Holder of our common stock. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position to those discussed below regarding the tax consequences of the purchase, ownership and disposition of our common stock.

          This discussion is limited to Non-U.S. Holders that hold our common stock as a "capital asset" within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to a Non-U.S. Holder's particular circumstances, including the impact of the Medicare contribution tax on net investment income. In addition, it does not address consequences relevant to Non-U.S. Holders subject to special rules, including, without limitation:

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          If any partnership or arrangement classified as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership and certain determinations made at the partner level. Accordingly, partnerships holding our common stock and partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them.

          INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.


Definition of a Non-U.S. Holder

          For purposes of this discussion, a "Non-U.S. Holder" is any beneficial owner of our common stock that is neither a "United States person" nor an entity treated as a partnership for U.S. federal income tax purposes. A United States person is any person that, for U.S. federal income tax purposes, is or is treated as any of the following:


Distributions

          As described in the section entitled "Dividend Policy", we do not anticipate declaring or paying dividends to holders of our common stock in the foreseeable future. However, if we do make distributions of cash or property on our common stock, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax purposes will constitute a return of capital and first be applied against and reduce a Non-U.S. Holder's adjusted tax basis in its common stock, but not below zero. Any excess will be treated as capital gain and will be treated as described below under "Sale or Other Taxable Disposition".

          Subject to the discussion below on effectively connected income, backup withholding, and the Foreign Account Tax Compliance Act, dividends paid to a Non-U.S. Holder of our common stock will be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividends (or such lower rate specified by an applicable income tax treaty, provided the Non-U.S. Holder furnishes to us or our paying agent prior to the payment of dividends a valid IRS Form W-8BEN or W-8BEN-E (or other applicable documentation) certifying qualification for the lower treaty rate). A Non-U.S. Holder that does not timely furnish the required documentation, but that qualifies for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing an

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appropriate claim for refund with the IRS. Non-U.S. Holders should consult their tax advisors regarding their entitlement to benefits under any applicable income tax treaty.

          If dividends paid to a Non-U.S. Holder are effectively connected with the Non-U.S. Holder's conduct of a trade or business within the U.S. (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the U.S. to which such dividends are attributable), the Non-U.S. Holder will be exempt from the U.S. federal withholding tax described above. To claim the exemption, the Non-U.S. Holder must furnish to the applicable withholding agent a valid IRS Form W-8ECI, certifying that the dividends are effectively connected with the Non-U.S. Holder's conduct of a trade or business within the U.S.

          Any such effectively connected dividends will be subject to U.S. federal income tax on a net income basis at the regular graduated rates. A Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on its effectively connected earnings and profits (as adjusted for certain items), which will include such effectively connected dividends. Non-U.S. Holders should consult their tax advisors regarding any applicable tax treaties that may provide for different rules.


Sale or Other Taxable Disposition

          Subject to the discussion below on backup withholding and the Foreign Account Tax Compliance Act, a Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain realized upon the sale or other taxable disposition of our common stock unless:

          Gain described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at the regular graduated rates. A Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on its effectively connected earnings and profits (as adjusted for certain items), which will include such effectively connected gain.

          A Non-U.S. Holder described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on any gain derived from the disposition, which may generally be offset by U.S. source capital losses of the Non-U.S. Holder (even though the individual is not considered a resident of the U.S.), provided the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses.

          With respect to the third bullet point above, we believe we currently are not, and do not anticipate becoming, a USRPHC. Because the determination of whether we are a USRPHC depends, however, on the fair market value of our USRPIs relative to the fair market value of our non-U.S. real property interests and our other business assets, there can be no assurance we currently are not a USRPHC or will not become one in the future. Even if we are or were to become a USRPHC, gain arising from the sale or other taxable disposition by a Non-U.S. Holder of our common stock will not be subject to U.S. federal income tax if our common stock is "regularly

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traded", as defined by applicable Treasury Regulations, on an established securities market, and such Non-U.S. Holder owned, actually and constructively, five percent or less of our common stock throughout the shorter of the five-year period ending on the date of the sale or other taxable disposition or the Non-U.S. Holder's holding period. If we were to become a USRPHC and our common stock were not considered to be "regularly traded" on an established securities market during the calendar year in which the relevant disposition by a Non-U.S. holder occurs, such Non-U.S. holder (regardless of the percentage of stock owned) would be subject to U.S. federal income tax on a sale or other taxable disposition of our common stock and a 15% withholding tax would apply to the gross proceeds from such disposition.

          Non-U.S. Holders should consult their tax advisors regarding potentially applicable income tax treaties that may provide for different rules.


Information Reporting and Backup Withholding

          Payments of dividends on our common stock generally will not be subject to backup withholding, provided the applicable withholding agent does not have actual knowledge or reason to know the Non-U.S. Holder is a United States person and the Non-U.S. Holder either certifies its non-U.S. status, such as by furnishing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI, or otherwise establishes an exemption. However, information returns are required to be filed with the IRS in connection with any dividends on our common stock paid to the Non-U.S. Holder, regardless of whether any tax was actually withheld. In addition, proceeds of the sale or other taxable disposition of our common stock within the U.S. or conducted through certain U.S.-related brokers generally will not be subject to backup withholding or information reporting if the applicable withholding agent receives the certification described above and does not have actual knowledge or reason to know that such Non-U.S. Holder is a United States person, or the Non-U.S. Holder otherwise establishes an exemption. If a Non-U.S. Holder does not provide the certification described above or the applicable withholding agent has actual knowledge or reason to know that such Non-U.S. Holder is a United States person, payments of dividends or of proceeds of the sale or other taxable disposition of our common stock may be subject to backup withholding at a rate currently equal to 24% of the gross proceeds of such dividend, sale, or taxable disposition Proceeds of a disposition of our common stock conducted through a non-U.S. office of a non-U.S. broker generally will not be subject to backup withholding or information reporting.

          Copies of information returns that are filed with the IRS may also be made available under the provisions of an applicable treaty or agreement to the tax authorities of the country in which the Non-U.S. Holder resides or is established.

          Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a Non-U.S. Holder's U.S. federal income tax liability, provided the required information is timely furnished to the IRS.


Additional Withholding Tax on Payments Made to Foreign Accounts

          Subject to the discussion below regarding recently issued Proposed Treasury Regulations, withholding taxes may be imposed under Sections 1471 to 1474 of the Code (such Sections commonly referred to as the Foreign Account Tax Compliance Act, or FATCA, on certain types of payments made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on, or gross proceeds from the sale or other disposition of, our common stock paid to a "foreign financial institution" or a "non-financial foreign entity" (each as defined in the Code) (including, in some cases, when such foreign financial institution or non-financial foreign entity is acting as an intermediary), unless (1) the foreign financial institution undertakes certain diligence and reporting obligations, (2) the non-financial foreign entity

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either certifies it does not have any "substantial United States owners" (as defined in the Code) or furnishes identifying information regarding each direct and indirect substantial United States owner, or (3) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in (1) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain "specified United States persons" or "United States-owned foreign entities" (each as defined in the Code), annually report certain information about such accounts, and withhold 30% on certain payments to noncompliant foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the U.S. governing FATCA may be subject to different rules.

          Under the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies to payments of dividends on our common stock, and subject to recently issued Proposed Treasury Regulations described below, will apply to payments of gross proceeds from the sale or other disposition of such stock on or after January 1, 2019. On December 13, 2018, the U.S. Department of the Treasury released proposed regulations which, if finalized in their present form, would eliminate FATCA withholding on the gross proceeds from a sale or other disposition of our common stock.

          Prospective investors should consult their tax advisors regarding the potential application of withholding under FATCA to their investment in our common stock.

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UNDERWRITING

          We and the underwriters named below have entered into an underwriting agreement with respect to the shares of common stock being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares of common stock indicated in the following table. Goldman Sachs & Co. LLC and BofA Securities, Inc. are the representatives of the underwriters.

Underwriters
  Number of Shares    

Goldman Sachs & Co. LLC

       

BofA Securities, Inc. 

       

RBC Capital Markets, LLC

       

Citigroup Global Markets Inc. 

       

Barclays Capital Inc. 

       

Credit Suisse Securities (USA) LLC

       

Deutsche Bank Securities Inc. 

       

Wells Fargo Securities, LLC

       

Raymond James & Associates, Inc. 

       

Stifel, Nicolaus & Company, Incorporated

       

William Blair & Company, L.L.C. 

       

Mizuho Securities USA LLC

       

Oppenheimer & Co. Inc. 

       

Total

       

          The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.

          The underwriters have an option to buy up to an additional             shares from us to cover sales by the underwriters of a greater number of shares than the total number set forth in the table above. They may exercise that option for a period of 30 days following the consummation of this offering. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

          The following tables show the per share and total underwriting discounts and commissions to be paid to the underwriters by us. Such amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase up to             additional shares from us.


Paid by the Company

  No Exercise   Full Exercise

Per Share

  $                $             

Total

  $                $             

          Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $             per share from the initial public offering price. After the initial offering of the shares, the representatives may change the offering price and the other selling terms. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters' right to reject any order in whole or in part.

          We and our officers, directors and holders of substantially all of the common stock and securities convertible into and exchangeable for our common stock, including the Vista Funds, have

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agreed or will agree with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our or their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of Goldman Sachs & Co. LLC. This agreement does not apply to any existing employee benefit plans. See the section entitled "Shares Eligible for Future Sale" for a discussion of certain transfer restrictions.

          Prior to the offering, there has been no public market for the shares. The initial public offering price has been negotiated among us and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.

          We have applied to quote the common stock on NASDAQ under the symbol "PING".

          In connection with the offering, the underwriters may purchase and sell shares of our common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering, and a short position represents the amount of such sales that have not been covered by subsequent purchases. A "covered short position" is a short position that is not greater than the amount of additional shares for which the underwriters' option described above may be exercised. The underwriters may cover any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to cover the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option described above. "Naked" short sales are any short sales that create a short position greater than the amount of additional shares for which the option described above may be exercised. The underwriters must cover any such naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of the offering.

          The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

          Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the Company's stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the common stock. As a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. The underwriters are not required to engage in these activities and may end any of these activities at any time. These transactions may be effected on NASDAQ, in the over-the-counter market or otherwise.

          We estimate that our share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $              million. We have agreed to reimburse the underwriters for certain of their expenses in an amount up to $35,000.

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          We have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act.

European Economic Area

          In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, or each, a Relevant Member State, an offer to the public of our common stock may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of our common stock may be made at any time under the following exemptions under the Prospectus Directive:

provided that no such offer or shares of our common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive.

          For the purposes of this provision, the expression an "offer to public" in relation to our common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and our common stock to be offered so as to enable an investor to decide to purchase our common stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression "Prospectus Directive" means Directive 2003/71/EC (as amended), including by Directive 2010/73/EU and includes any relevant implementing measure in the Relevant Member State.

          This European Economic Area selling restriction is in addition to any other selling restrictions set out below.

United Kingdom

          In the United Kingdom, this prospectus is only addressed to and directed at qualified investors who are (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order); or (ii) high net worth entities and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). Any investment or investment activity to which this prospectus relates is available only to relevant persons and will only be engaged with relevant persons. Any person who is not a relevant person should not act or rely on this prospectus or any of its contents.

Canada

          The securities may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions, and Ongoing Registrant Obligations. Any resale of the securities must be made in accordance with an exemption form, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

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          Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory of these rights or consult with a legal advisor.

          Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

Hong Kong

          The securities may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong), or the Companies (Winding Up and Miscellaneous Provisions) Ordinance, or which do not constitute an invitation to the public within the meaning of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong), or the Securities and Futures Ordinance, or (ii) to "professional investors" as defined in the Securities and Futures Ordinance and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance, and no advertisement, invitation or document relating to the securities may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" in Hong Kong as defined in the Securities and Futures Ordinance and any rules made thereunder.

Singapore

          This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the securities may not be circulated or distributed, nor may the securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor (as defined under Section 4A of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA) under Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to conditions set forth in the SFA.

          Where the securities are subscribed or purchased under Section 275 of the SFA by a relevant person which is a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor, the securities (as defined in Section 239(1) of the SFA) of that corporation shall not be transferable for 6 months after that corporation has acquired the securities under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer in that corporation's securities pursuant to Section 275(1A) of the SFA, (3) where no consideration is or will be given for

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the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore, or Regulation 32.

          Where the securities are subscribed or purchased under Section 275 of the SFA by a relevant person which is a trust (where the trustee is not an accredited investor (as defined in Section 4A of the SFA)) whose sole purpose is to hold investments and each beneficiary of the trust is an accredited investor, the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferable for 6 months after that trust has acquired the securities under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer that is made on terms that such rights or interest are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction (whether such amount is to be paid for in cash or by exchange of securities or other assets), (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32.

Japan

          The securities have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended), or the FIEA. The securities may not be offered or sold, directly or indirectly, in Japan or to or for the benefit of any resident of Japan (including any person resident in Japan or any corporation or other entity organized under the laws of Japan) or to others for reoffering or resale, directly or indirectly, in Japan or to or for the benefit of any resident of Japan, except pursuant to an exemption from the registration requirements of the FIEA and otherwise in compliance with any relevant laws and regulations of Japan.

Directed Share Program

          At our request, the underwriters have reserved up to             shares of common stock, or         % of the shares of common stock to be offered by this prospectus for sale, at the initial public offering price, to directors, officers, and their friends and family members through a directed share program. If purchased by these persons, these shares will not be subject to a lock-up restriction, except in the case of shares purchased by any director or officer. The number of shares of common stock available for sale to the general public will be reduced to the extent these individuals or entities purchase such reserved shares. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered by this prospectus. The underwriters will receive the same discount from such reserved shares as they will from other shares of our common stock sold to the public in this offering. We have agreed to indemnify the underwriters against certain liabilities and expenses, including liabilities under the Securities Act, in connection with sales of the reserved shares.

Other Relationships

          The Company estimates that its share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $             .

          The Company has agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act.

          The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the

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underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to the issuer and to persons and entities with relationships with the issuer, for which they received or will receive customary fees and expenses. Certain of the underwriters or their affiliates may have an indirect ownership interest in us through various private equity funds, including the Vista Funds or other funds affiliated with Vista.

          In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively traded securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the issuer (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the issuer. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments. An affiliate of Goldman Sachs & Co. LLC serves as administrative agent, collateral agent, swingline lender, and issuing bank under the Credit Agreement. As a result, such affiliate will receive a portion of the net proceeds of this offering in connection with the repayment of our Term Loan Facility. See "Use of Proceeds."

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LEGAL MATTERS

          The validity of the issuance of our common stock offered in this prospectus will be passed upon for us by Kirkland & Ellis LLP, Chicago, Illinois. Certain partners of Kirkland & Ellis LLP are members of a limited partnership that is an investor in one or more investment funds affiliated with Vista. Kirkland & Ellis LLP represents entities affiliated with Vista in connection with legal matters. Certain legal matters will be passed upon for the underwriters by Cooley LLP, Broomfield, Colorado.


EXPERTS

          The financial statements as of December 31, 2017 and 2018 and for the years then ended included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, or PwC, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

          In connection with this offering, PwC completed an independence assessment to evaluate the services and relationships with the Company and its affiliates that may bear on PwC's independence under the SEC and the PCAOB (United States) independence rules for an audit period commencing January 1, 2017. PwC informed us that certain of its member firms within PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity ("PwC member firm"), were engaged to perform non-audit services by entities that were under common control by Vista. These non-audit services and business relationships are not in accordance with the auditor independence standards of Regulation S-X and the Public Company Accounting Oversight Board and are described below.

          PwC noted the business relationship and non-audit services were entered into when the entities were not considered affiliates of the Company pursuant to the standards under which the audit engagement was performed (U.S. GAAS). The filing of the registration statement of which this prospectus is a part necessitates compliance with the SEC's independence rules. The Board and

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management of the Company and PwC have separately considered the impact that the business relationships and non-audit services may have had on PwC's independence with respect to us. After consideration of the relevant facts and circumstances, management, our Board and PwC have concluded that PwC is capable of exercising objective and impartial judgment in connection with their audits of the Company's financial statements for each of the years ended December 31, 2017 and 2018 and that no reasonable investor would conclude otherwise.


WHERE YOU CAN FIND MORE INFORMATION

          We have filed with the SEC a registration statement on Form S-1 under the Securities Act to register our common stock being offered in this prospectus. This prospectus, which forms part of the registration statement, does not contain all of the information included in the registration statement and the attached exhibits. You will find additional information about us and our common stock in the registration statement. References in this prospectus to any of our contracts, agreements or other documents are not necessarily complete, and you should refer to the exhibits attached to the registration statement for copies of the actual contracts, agreements or documents.

          You may read and copy the registration statement, the related exhibits and other information we file with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may also obtain copies of this information by mail from the Public Reference Room at prescribed rates. You may obtain information regarding the operation of the Public Reference Room by calling 1-800-SEC-0330. The SEC also maintains a website that contains reports, proxy statements and other information about companies like us, who file electronically with the SEC. The address of that website is http://www.sec.gov. This reference to the SEC's website is an inactive textual reference only and is not a hyperlink.

          Upon the effectiveness of the registration statement, we will be subject to the reporting, proxy and information requirements of the Exchange Act, and will be required to file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available for inspection and copying at the SEC's Public Reference Room and the website of the SEC referred to above, as well as on our website, https://www.pingidentity.com. This reference to our website is an inactive textual reference only and is not a hyperlink. The contents of our website are not part of this prospectus, and you should not consider the contents of our website in making an investment decision with respect to our common stock. We will furnish our shareholders with annual reports containing audited financial statements and quarterly reports containing unaudited interim financial statements for each of the first three quarters of each year.

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)
Index

    Page(s)  

Report of Independent Registered Public Accounting Firm

    F-2  

Consolidated Financial Statements

   
 
 

Consolidated Balance Sheets as of December 31, 2017 and 2018 and June 30, 2019 (unaudited)

   
F-3
 

Consolidated Statements of Operations for the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

   
F-4
 

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

   
F-5
 

Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

   
F-6
 

Consolidated Statements of Cash Flows for the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

   
F-7
 

Notes to Consolidated Financial Statements

   
F-8
 

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Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Ping Identity Holding Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.) and its subsidiaries (the "Company") as of December 31, 2018 and 2017, and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows for the years then ended, including the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Denver, Colorado
April 1, 2019

We have served as the Company's auditor since 2016.

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Consolidated Balance Sheets

(In thousands, except share amounts)

December 31, June 30, 2019

2017 2018 (unaudited)

Assets

     

Current assets:

     

Cash and cash equivalents

$ 20,969 $ 83,499 $ 83,000

Accounts receivable, net of allowances of $370, $455, and $513 at December 31, 2017 and 2018 and June 30, 2019 (unaudited), respectively

48,940 50,108 43,984

Contract assets, current

46,049 53,435 59,985

Deferred commissions, current

1,858 3,746 4,505

Prepaid expenses and other current assets

3,644 10,644 9,485

Total current assets

121,460 201,432 200,959

Noncurrent assets:

     

Property and equipment, net

5,083 5,630 6,493

Goodwill

401,724 417,696 417,696

Intangible assets, net

225,958 207,043 196,917

Contract assets, noncurrent

14,613 14,033 15,652

Deferred commissions, noncurrent

4,496 7,287 7,397

Deferred income taxes, net

1,711 1,829 2,465

Other noncurrent assets

1,178 2,073 1,858

Total noncurrent assets

654,763 655,591 648,478

Total assets

$ 776,223 $ 857,023 $ 849,437

Liabilities and stockholders' equity

     

Current liabilities:

     

Accounts payable

$ 1,790 $ 1,766 $ 1,370

Accrued expenses and other current liabilities

6,219 7,906 7,086

Accrued compensation

12,470 18,394 13,854

Deferred revenue, current

31,494 31,493 33,344

Current portion of long-term debt

2,500 2,500

Total current liabilities

51,973 62,059 58,154

Noncurrent liabilities:

     

Deferred revenue, noncurrent

2,316 3,874 2,146

Long-term debt, net of current portion

165,206 241,051 240,225

Deferred income taxes, net

35,886 39,112 38,209

Other liabilities, noncurrent

162 1,822 1,329

Total noncurrent liabilities

203,570 285,859 281,909

Total liabilities

255,543 347,918 340,063

Commitments and contingencies (Note 12)

     

Stockholders' equity:

     

Preferred stock; $0.001 par value; 200,000 shares authorized at December 31, 2017 and 2018 and June 30, 2019 (unaudited); no shares issued or outstanding at December 31, 2017 or 2018 or June 30, 2019 (unaudited)

Common stock; $0.001 par value; 500,000 shares authorized at December 31, 2017 and 2018 and June 30, 2019 (unaudited); 382,333, 382,358, and 383,185 shares issued and outstanding at December 31, 2017 and 2018 and June 30, 2019 (unaudited), respectively

Additional paid-in capital

513,234 516,044 519,121

Accumulated other comprehensive income (loss)

114 (787 ) (472 )

Retained earnings (accumulated deficit)

7,332 (6,152 ) (9,275 )

Total stockholders' equity

520,680 509,105 509,374

Total liabilities and stockholders' equity

$ 776,223 $ 857,023 $ 849,437

   

The accompanying notes are an integral part of these consolidated financial statements.

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Consolidated Statements of Operations

(In thousands, except share and per share amounts)

    Year Ended     Six Months Ended
June 30,
 

    December 31,     2018     2019
 

    2017     2018     (unaudited)     (unaudited)
 

Revenue:

                         

Subscription

  $ 160,219   $ 184,991   $ 90,576   $ 103,892  

Professional services and other          

    12,320     16,571     8,874     9,006  

Total revenue

    172,539     201,562     99,450     112,898  

Cost of revenue:

                         

Subscription (exclusive of amortization shown below)

    14,054     17,512     8,259     10,833  

Professional services and other (exclusive of amortization shown below)

    9,155     12,703     5,837     6,916  

Amortization expense

    12,626     14,396     7,064     7,822  

Total cost of revenue

    35,835     44,611     21,160     25,571  

Gross profit

    136,704     156,951     78,290     87,327  

Operating expenses:

                         

Sales and marketing

    49,481     60,140     28,121     37,334  

Research and development

    26,215     36,229     16,393     22,311  

General and administrative

    20,202     28,355     13,079     15,748  

Depreciation and amortization          

    16,526     16,341     8,356     8,274  

Total operating expenses

    112,424     141,065     65,949     83,667  

Income from operations

    24,280     15,886     12,341     3,660  

Other income (expense):

                         

Interest expense

    (19,277 )   (15,837 )   (7,791 )   (8,249 )

Loss on extinguishment of debt          

        (9,785 )   (9,785 )    

Other income (expense), net

    773     (335 )   (912 )   225  

Total other income (expense)          

    (18,504 )   (25,957 )   (18,488 )   (8,024 )

Income (loss) before income taxes

    5,776     (10,071 )   (6,147 )   (4,364 )

Benefit (provision) for income taxes

    13,185     (3,375 )   391     1,241  

Net income (loss)

  $ 18,961   $ (13,446 ) $ (5,756 ) $ (3,123 )

Net income (loss) per share:

                         

Basic

  $ 49.60   $ (35.17 ) $ (15.05 ) $ (8.17 )

Diluted

  $ 49.60   $ (35.17 ) $ (15.05 ) $ (8.17 )

Weighted-average shares used in computing net income (loss) per share:

                         

Basic

    382,258     382,365     382,364     382,425  

Diluted

    382,297     382,365     382,364     382,425  

   

The accompanying notes are an integral part of these consolidated financial statements.

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

    Year Ended     Six Months Ended
June 30,
 

    December 31,     2018     2019
 

    2017     2018     (unaudited)     (unaudited)
 

Net income (loss)

  $ 18,961   $ (13,446 ) $ (5,756 ) $ (3,123 )

Other comprehensive income (loss), net of tax:

                         

Foreign currency translation adjustments

    333     (901 )   (486 )   315  

Total other comprehensive income (loss)

    333     (901 )   (486 )   315  

Comprehensive income (loss)

  $ 19,294   $ (14,347 ) $ (6,242 ) $ (2,808 )

   

The accompanying notes are an integral part of these consolidated financial statements.

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Consolidated Statements of Stockholders' Equity

(In thousands, except share amounts)

                      Accumulated     Retained        

                Additional     Other     Earnings     Total  

    Common Stock     Paid-in     Comprehensive     (Accumulated     Stockholders'
 

    Shares     Amount     Capital     Income (Loss)     Deficit)     Equity
 

Balances at January 1, 2017

    382,226   $   $ 510,609   $ (219 ) $ (11,629 ) $ 498,761  

Net income

                    18,961     18,961  

Stock-based compensation

            2,524             2,524  

Exercise of stock options

    76         101             101  

Vesting of restricted stock

    31                      

Foreign currency translation adjustments, net of tax

                333         333  

Balances at December 31, 2017

    382,333   $   $ 513,234   $ 114   $ 7,332   $ 520,680  

Cumulative-effect adjustment for adoption of ASU 2016-09

            38         (38 )    

Net loss

                    (13,446 )   (13,446 )

Stock-based compensation

            2,848             2,848  

Vesting of restricted stock

    63                      

Repurchase of common stock

    (38 )       (76 )           (76 )

Foreign currency translation adjustments, net of tax

                (901 )       (901 )

Balances at December 31, 2018

    382,358   $   $ 516,044   $ (787 ) $ (6,152 ) $ 509,105  

Net loss (unaudited)

                    (3,123 )   (3,123 )

Stock-based compensation (unaudited)

            2,099             2,099  

Exercise of stock options (unaudited)

    733         978                 978  

Vesting of restricted stock (unaudited)

    94                      

Foreign currency translation adjustments, net of tax (unaudited)

                315         315  

Balances at June 30, 2019 (unaudited)

    383,185   $   $ 519,121   $ (472 ) $ (9,275 ) $ 509,374  

 

                      Accumulated     Retained        

                Additional     Other     Earnings     Total  

    Common Stock     Paid-in     Comprehensive     (Accumulated     Stockholders'
 

    Shares     Amount     Capital     Income (Loss)     Deficit)     Equity
 

Balances at January 1, 2018

    382,333   $   $ 513,234   $ 114   $ 7,332   $ 520,680  

Cumulative-effect adjustment for adoption of ASU 2016-09 (unaudited)

            38         (38 )    

Net loss (unaudited)

                    (5,756 )   (5,756 )

Stock-based compensation (unaudited)

            1,280             1,280  

Vesting of restricted stock (unaudited)

    31                      

Foreign currency translation adjustments, net of tax (unaudited)

                (486 )       (486 )

Balances at June 30, 2018 (unaudited)

    382,364   $   $ 514,552   $ (372 ) $ 1,538   $ 515,718  

   

The accompanying notes are an integral part of these consolidated financial statements.

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Consolidated Statements of Cash Flows

(In thousands)

Year Ended Six Months Ended
June 30,

December 31, 2018 2019

2017 2018 (unaudited) (unaudited)

Cash flows from operating activities

       

Net income (loss)

$ 18,961 $ (13,446 ) $ (5,756 ) $ (3,123 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

       

Loss on extinguishment of debt

9,785 9,785

Depreciation and amortization

29,152 30,737 15,420 16,096

Stock-based compensation expense

2,524 2,848 1,280 2,099

Amortization of deferred commissions

3,460 5,302 1,693 2,760

Amortization of deferred debt issuance costs

1,372 889 457 424

Deferred taxes

(13,286 ) 3,073 (582 ) (1,471 )

Other

61 (440 ) 10 69

Changes in operating assets and liabilities:

       

Accounts receivable

(9,967 ) (1,465 ) 2,545 6,044

Contract assets

(22,171 ) (6,806 ) (3,788 ) (8,169 )

Deferred commissions

(7,693 ) (9,981 ) (2,681 ) (3,629 )

Prepaid expenses and other current assets

(218 ) (5,770 ) (151 ) 3,087

Other assets

(31 ) (763 ) 126 225

Accounts payable

(34 ) 298 1,000 (376 )

Accrued compensation

(1,087 ) 6,070 (1,315 ) (4,611 )

Accrued expenses and other

(3,824 ) 1,113 (2,263 ) (1,484 )

Deferred revenue

6,204 1,442 (2,765 ) 123

Net cash provided by operating activities

3,423 22,886 13,015 8,064

Cash flows from investing activities

       

Purchases of property and equipment and other

(2,519 ) (3,437 ) (1,362 ) (2,330 )

Capitalized software development costs

(3,442 ) (6,310 ) (2,790 ) (4,492 )

Acquisition of Elastic Beam, net of cash acquired of $0

(17,414 ) (17,414 )

Other investing activities

500

Net cash used in investing activities

(5,961 ) (26,661 ) (21,566 ) (6,822 )

Cash flows from financing activities

       

Payment of Elastic Beam consideration and holdbacks

(1,136 )

Payment of deferred offering costs

(493 ) (543 )

Proceeds from stock option exercises

101 978

Repurchase of common stock

(76 )

Proceeds from long-term debt

250,000 250,000

Issuance costs of long-term debt

(5,994 ) (5,994 )

Payment of long-term debt

(171,250 ) (170,000 ) (1,250 )

Payment of debt extinguishment costs

(5,085 ) (5,085 )

Net cash provided by (used in) financing activities

101 67,102 68,921 (1,951 )

Effect of exchange rates on cash and cash equivalents and restricted cash

274 (653 ) (408 ) 220

Net (decrease) increase in cash and cash equivalents and restricted cash

(2,163 ) 62,674 59,962 (489 )

Cash and cash equivalents and restricted cash

       

Beginning of period

23,632 21,469 21,469 84,143

End of period

$ 21,469 $ 84,143 $ 81,431 $ 83,654

Supplemental disclosures of cash flow information:

       

Cash paid for interest

$ 20,758 $ 13,598 $ 5,960 $ 7,739

Cash paid for taxes

199 284 129 308

Noncash investing and financing activities:

       

Purchases of property and equipment in accounts payable

$ 367 $ 77 $ 82 $ 50

Accruals related to the acquisition of Elastic Beam

1,560 1,560

Deferred offering costs, accrued but not yet paid

833 1,546

Reconciliation of cash and cash equivalents and restricted cash within the consolidated balance sheets to the amounts shown in the statements of cash flows above:

       

Cash and cash equivalents

$ 20,969 $ 83,499 $ 80,783 $ 83,000

Restricted cash included in other noncurrent assets

500 644 648 654

Total cash and cash equivalents and restricted cash

$ 21,469 $ 84,143 $ 81,431 $ 83,654

   

The accompanying notes are an integral part of these consolidated financial statements.

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

1. Organization and Description of Business

          Ping Identity Holding Corp. and its wholly owned subsidiaries, referred to herein as the "Company", is headquartered in Denver, Colorado with international locations principally in Canada, Australia, the United Kingdom, Israel, and India. On August 22, 2019, the Board of Directors and stockholders approved the name change for the Company from Roaring Fork Holding, Inc. to Ping Identity Holding Corp. The Company, doing business as Ping Identity Corporation ("Ping Identity"), provides customers, employees, and partners with secure access to any service, application, or application programming interface ("API"), while also managing identity and profile data at scale.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

          The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated. The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). All amounts are reported in U.S. dollars. Certain amounts as of and for the year ended December 31, 2017 have been reclassified to conform with current period presentation.

Unaudited Interim Consolidated Financial Information

          The accompanying interim consolidated balance sheet as of June 30, 2019, the consolidated statements of operations, of comprehensive income (loss), and of cash flows for the six months ended June 30, 2018 and 2019, the consolidated statements of stockholders' equity for the six months ended June 30, 2018 and 2019, and the related footnote disclosures are unaudited. These unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in management's opinion, include all adjustments necessary to state fairly the consolidated financial position of the Company as of June 30, 2019 and the results of operations and cash flows for the six months ended June 30, 2018 and 2019. The results for the six months ended June 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or for any future period.

Use of Estimates

          The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, establishing allowances for doubtful accounts, determining useful lives for definite lived assets, assessing the recoverability of long lived assets (property and equipment, intangible assets, and goodwill), determining the fair values of assets acquired and liabilities assumed in business combinations, accounting for income taxes and related valuation allowances against deferred tax assets, valuing stock option awards, recognizing revenue, determining the amortization period for deferred commissions, and assessing the accounting treatment for

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

2. Summary of Significant Accounting Policies (Continued)

commitments and contingencies. Management evaluates these estimates and assumptions on an ongoing basis and makes estimates based on historical experience and various other assumptions that are believed to be reasonable. Actual results may differ from these estimates.

Segment and Geographic Information

          The Company operates in a single operating segment. Operating segments are defined as components of an enterprise for which discrete financial information is available and is regularly reviewed by the chief operating decision maker in order to make decisions regarding resource allocation and performance assessment. The Company has determined that its chief operating decision maker is its Chief Executive Officer. The Company's chief operating decision maker reviews the Company's financial information on a consolidated basis for purposes of allocating resources and evaluating financial performance. Since the Company operates in one operating segment, all required financial segment information can be found in the consolidated financial statements.

          Revenue by geographic region is based on the delivery address of the customer, and is summarized by geographic area as follows:

    Year Ended     Six Months Ended
June 30,
 

    December 31,     2018     2019
 

    2017     2018     (unaudited)     (unaudited)
 

    (in thousands)  

United States

  $ 130,135   $ 154,609   $ 75,641   $ 89,705  

International

    42,404     46,953     23,809     23,193  

Total revenue

  $ 172,539   $ 201,562   $ 99,450   $ 112,898  

          Other than the United States, no other individual country exceeded 10% of total revenue for the years ended December 31, 2017 and 2018 or the six months ended June 30, 2018 and 2019 (unaudited).

          The Company's long-lived assets are composed of property and equipment, net, and are summarized by geographic area as follows:

    December 31,     June 30, 2019
 

    2017     2018     (unaudited)
 

    (in thousands)  

United States

  $ 3,733   $ 4,388   $ 5,222  

Canada

    770     526     420  

Other international locations

    580     716     851  

Total property and equipment, net

  $ 5,083   $ 5,630   $ 6,493  

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

2. Summary of Significant Accounting Policies (Continued)

          Outside of the United States and Canada, no other individual country held greater than 10% of total long-lived assets at December 31, 2017 and 2018 or June 30, 2019 (unaudited).

Foreign Currency

          The reporting currency of the Company is the U.S. dollar. The functional currency of each subsidiary is the applicable local currency. For the subsidiary where the U.S. dollar is the functional currency, foreign currency denominated monetary assets and liabilities are remeasured into U.S. dollars at current exchange rates and foreign currency denominated nonmonetary assets and liabilities are remeasured into U.S. dollars at historical exchange rates. Transactions denominated in currencies other than the subsidiaries' functional currencies are recorded based on the exchange rates at the time such transactions arise. Resulting gains and losses are recorded in other income (expense), net in the consolidated statements of operations in the period of occurrence.

          The Company's foreign subsidiaries are translated from the applicable functional currency to the U.S. dollar using the average exchange rates during the reporting period, while assets and liabilities are translated at the period-end exchange rates. Resulting gains or losses from translating foreign currency are included in accumulated other comprehensive income (loss).

Cash and Cash Equivalents

          Cash consists of deposits with financial institutions whereas cash equivalents primarily consist of money market funds. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

          Accounts receivable represent amounts owed to the Company by its customers that are recorded at the invoiced amount. The Company reports accounts receivable net of allowance for doubtful accounts. Management makes judgments and estimates of the probable loss related to uncollectible accounts receivable considering a number of factors including collection trends, prevailing and anticipated economic conditions, and specific customer credit risk. The Company's allowance for doubtful accounts activity has historically not been significant. Probable losses are recorded in general and administrative expense in the accompanying consolidated statements of operations. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Concentrations of Credit Risk

          Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and cash equivalents on deposit at several financial institutions as well as accounts receivable. The Company deposits cash with high-credit-quality financial institutions, which, at times, may exceed federally insured amounts. The Company invests its cash equivalents in highly-rated money market funds. Additionally, the Company performs ongoing credit evaluations

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

2. Summary of Significant Accounting Policies (Continued)

of its customers' financial condition and will limit the amount of credit as deemed necessary, but currently does not require collateral from customers.

          As of December 31, 2017 and 2018 and June 30, 2019 (unaudited), no single customer represented greater than 10% of accounts receivable.

          For the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019, no single customer represented greater than 10% of revenue.

Fair Value Measurements

          Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a three-level valuation hierarchy for the disclosure of fair value measurements. The determination of the applicable level within the hierarchy of a particular asset or liability depends on the inputs used in its valuation as of the measurement date, and notably the extent to which the inputs are market-based (observable) or internally determined (unobservable). The three levels are defined as follows:

Property and Equipment

          Property and equipment are stated at historical cost less accumulated depreciation. Maintenance, repairs and minor renewals are expensed as incurred.

          Depreciation is computed using the straight-line method based on the following estimated useful lives:

Asset Type
  Useful Life  

Computer equipment

  3 years

Purchased computer software

  1 - 3 years

Furniture and fixtures

  3 - 5 years

Leasehold improvements

  Lesser of the lease term or 10 years

Other

  3 - 5 years

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

2. Summary of Significant Accounting Policies (Continued)

Capitalized Software Costs

          Costs for the development of new software products sold to customers and substantial enhancements to existing software products sold to customers are expensed as incurred until technological feasibility has been established, at which time any additional costs are capitalized during the development stage and until the software is generally released. The Company believes its current process for developing software will be essentially completed concurrently with the establishment of technological feasibility; hence, no costs have been capitalized to date.

          For development costs related to software to be used internally, the Company follows guidance of ASC 350-40, Internal Use Software. ASC 350-40 set forth the guidance for costs incurred for computer software developed or obtained for internal use and requires companies to capitalize qualifying computer software costs that are incurred during the application development stage. These capitalized costs are included in intangible assets in the consolidated balance sheets and are amortized on a straight-line basis over the expected useful life of the software, which is estimated to be between three and four years. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. For the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019, the Company capitalized $3.4 million, $6.3 million, $2.8 million, and $4.5 million, respectively, related to internal-use software costs.

          The Company capitalizes the cost of software purchased from third-party vendors and has classified such costs as property and equipment in the consolidated balance sheets. These costs are amortized over their useful lives, which are primarily estimated to be three years.

Goodwill

          Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations using the acquisition method of accounting, which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values. The Company evaluates goodwill for impairment annually in the fourth quarter of each year and as events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company's test for goodwill impairment starts with a qualitative assessment to determine whether it is necessary to perform a quantitative goodwill impairment test. If qualitative factors indicate that the fair value of the reporting unit is more likely than not less than its carrying amount, then a quantitative goodwill impairment test is performed. Under the quantitative impairment test, if the carrying amount of the reporting unit exceeds its fair value, then an impairment loss is recognized in an amount equal to that excess, not to exceed the total amount of goodwill. For purposes of the annual impairment test, the Company has determined it has one reporting unit. There was no impairment of goodwill recorded during the years ended December 31, 2017 and 2018 or the six months ended June 30, 2018 and 2019 (unaudited).

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

2. Summary of Significant Accounting Policies (Continued)

Intangible Assets

          Intangible assets with finite lives arising from business combinations are initially recorded at fair value and amortized over their useful lives using the straight-line method. The estimated useful life for each acquired intangible asset class is as follows:

Asset Type
  Useful Life  

Developed technology

  4 - 9 years

Customer relationships

  9 - 13 years

Trade names

  10 years

Product backlog

  2 - 3 years

Non-compete agreements

  3 years

          The Company records acquired in-process research and development as indefinite-lived intangible assets. Purchased intangible assets with indefinite lives are not amortized but assessed for potential impairment annually and when events or circumstances indicate that their carrying amounts might be impaired. There was no impairment of indefinite-lived intangible assets recorded during the years ended December 31, 2017 and 2018 or the six months ended June 30, 2018 and 2019 (unaudited). On completion of the related development projects, the in-process research and development assets are reclassified to developed technology and amortized over their estimated useful lives.

Impairment of Long-Lived Assets

          The Company reviews long-lived assets, including property and equipment and finite-lived intangible assets, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Such events and changes may include significant changes in performance relative to expected operating results, significant changes in asset use, significant negative industry or economic trends, and changes in the Company's business strategy. An impairment loss is recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. There were no events or changes in circumstances that indicated the Company's long-lived assets were impaired during the years ended December 31, 2017 and 2018 or the six months ended June 30, 2018 and 2019 (unaudited).

Deferred Debt Issuance Costs

          Issuance costs incurred to obtain debt financing are deferred and amortized to interest expense using the effective interest method over the contractual term of the debt. Total deferred debt issuance costs incurred by the Company were $6.8 million and $6.0 million, related to the 2016 Credit Facilities and the 2018 Credit Facilities, respectively (discussed in Note 7). The carrying value of deferred debt issuance costs was $4.8 million, $5.2 million, and $4.8 million at December 31, 2017 and 2018 and June 30, 2019 (unaudited), respectively, which is included as a reduction to long-term debt in the accompanying consolidated balance sheets.

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

2. Summary of Significant Accounting Policies (Continued)

Deferred Rent

          Certain of the Company's operating leases contain credits for tenant improvements, rent holidays, and rent escalation clauses. For these leases, the Company recognizes the related rent expense on a straight-line basis. The difference between the amounts charged to expense and the rent paid is recorded as deferred lease costs and amortized over the lease term.

Revenue Recognition

          The Company recognizes revenue under Accounting Standards Codification Topic 606 ("ASC 606"), Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. To determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements, the Company performs the following steps:

1.
Identification of the contract with a customer

          The Company contracts with its customers through order forms, which in some cases are governed by master sales agreements. The Company determines that it has a contract with a customer when the order form has been approved, each party's rights regarding the products or services to be transferred can be identified, the payment terms for the products or services can be identified, the Company has determined the customer has the ability and intent to pay, and the contract has commercial substance. The Company applies judgment in determining the customer's ability and intent to pay, which is based on a variety of factors, including the customer's historical payment experience or, in the case of a new customer, credit, reputation, and financial or other information pertaining to the customer. At contract inception, the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation.

2.
Determination of whether the goods or services in a contract comprise performance obligations

          Performance obligations promised in a contract are identified based on the products and services that will be transferred to the customer that are both (i) capable of being distinct, whereby the customer can benefit from a product or service either on its own or together with other resources that are readily available from third parties or from the Company, and (ii) are distinct in the context of the contract, whereby the transfer of certain products or services is separately identifiable from other promises in the contract.

          The Company sells its solutions through subscription-based contracts. The Company's subscriptions for solutions deployed on-premise within the customer's technology infrastructure are comprised of a term-based license and an obligation to provide support and maintenance, where the term-based license and the support and maintenance constitute separate performance obligations. The Company's SaaS subscriptions provide customers the right to access cloud-hosted software and support for the SaaS service, which the Company considers to be a single

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

2. Summary of Significant Accounting Policies (Continued)

performance obligation. The Company also renews subscriptions for support and maintenance, which the Company considers to be a single performance obligation.

          Professional services consist of consulting and training services. These services are distinct performance obligations from subscriptions and do not result in significant customization of the software.

3.
Measurement of the transaction price

          The Company determines the transaction price based on the consideration that the Company expects to receive in exchange for transferring the promised goods or services to the customer. This transaction price is exclusive of amounts collected on behalf of third parties, such as sales tax and value-added tax. The Company does not offer refunds, rebates, or credits to customers in the normal course of business, so the impact of variable consideration has not been material.

          In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that its contracts generally do not include a significant financing component. The primary purpose of the Company's invoicing terms is to provide customers with a simple and predictable way to purchase the Company's subscriptions, not to provide customers with financing.

4.
Allocation of the transaction price to separate performance obligations

          If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. For contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation based on each obligation's relative standalone selling price ("SSP").

          The SSP is determined based on the prices at which the Company separately sells the product, assuming the majority of these fall within a pricing range. In instances where SSP is not directly observable, such as when the Company does not sell the software license separately, the Company determines the SSP using information that may include market conditions and other observable inputs that can require significant judgment. There is typically a range of standalone selling prices for individual products and services based on a stratification of those products and services by quantity and other circumstances. If one of the performance obligations is outside of the SSP range, the Company determines SSP to be the nearest endpoint of the range.

5.
Recognition of revenue when or as the Company satisfies each performance obligation

          Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised product or service to the customer. The Company's software subscriptions include both upfront revenue recognition when the Company transfers control of the term-based license to the customer, as well as revenue recognized ratably over the contract period for support and maintenance based on the stand-ready nature of these subscription elements. Revenue for the Company's SaaS products is recognized ratably over the contract period as the Company satisfies the performance obligation.

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

2. Summary of Significant Accounting Policies (Continued)

          Professional services revenue provided on a time and materials basis is recognized as these services are performed. Revenue from training services and sponsorship fees is recognized on the date the services are complete.

          The Company generates sales directly through its sales team as well as through its channel partners. Where channel partners are involved, the Company has determined that it is the principal in these arrangements. Sales to channel partners are generally made at a discount, and revenues are recorded at the discounted price once the revenue recognition criteria above have been met. In certain instances, the Company pays referral fees to its partners, which the Company has determined to be commensurate with internal sales commissions and thus records these payments as sales commissions. Channel partners generally receive an order from an end customer prior to placing an order with the Company, and payment from channel partners is not contingent on the partner's collection from end customers.

Disaggregation of Revenue

          The following table presents revenue by category:

                Six Months Ended  

    Year Ended     June 30,
 

    December 31,     2018     2019
 

    2017     2018     (unaudited)     (unaudited)
 

    (in thousands)  

Subscription term-based licenses:

                         

Multi-year subscription term-based licenses

  $ 86,421   $ 88,925   $ 44,510   $ 52,425  

1-year subscription term-based licenses

    35,678     44,743     21,445     21,082  

Total subscription term-based licenses

    122,099     133,668     65,955     73,507  

Subscription SaaS and support and maintenance

    38,120     51,323     24,621     30,385  

Professional services and other

    12,320     16,571     8,874     9,006  

Total revenue

  $ 172,539   $ 201,562   $ 99,450   $ 112,898  

Contract Balances

          Contract assets represent amounts for which the Company has recognized revenue, pursuant to its revenue recognition policy, for contracts that have not yet been invoiced to customers where there is a remaining performance obligation, typically for multi-year arrangements. In multi-year agreements, the Company generally invoices customers on an annual basis on each anniversary of the contract start date. Amounts anticipated to be billed within one year of the balance sheet date are recorded as contract assets, current; the remaining portion is recorded as contract assets, noncurrent in the consolidated balance sheets. The change in the total contract asset balance relates to entering into new multi-year contracts and billing on existing contracts.

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

2. Summary of Significant Accounting Policies (Continued)

          The opening and closing balances of contract assets were as follows:

                Six Months Ended  

    Year Ended     June 30,
 

    December 31,     2018     2019
 

    2017     2018     (unaudited)     (unaudited)
 

    (in thousands)  

Beginning balance

  $ 38,491   $ 60,662   $ 60,662   $ 67,468  

Ending balance

    60,662     67,468     64,450     75,637  

Change

  $ 22,171   $ 6,806   $ 3,788   $ 8,169  

          Contract liabilities consist of customer billings in advance of revenue being recognized. The Company primarily invoices its customers for subscription arrangements annually in advance, though certain contracts require invoicing for the entire subscription in advance. Amounts anticipated to be recognized within one year of the balance sheet date are recorded as deferred revenue, current; the remaining portion is recorded as deferred revenue, noncurrent in the consolidated balance sheets.

          The opening and closing balances of contract liabilities included in deferred revenue were as follows:

                Six Months Ended  

    Year Ended     June 30,
 

    December 31,     2018     2019
 

    2017     2018     (unaudited)     (unaudited)
 

    (in thousands)  

Beginning balance

  $ 27,606   $ 33,810   $ 33,810   $ 35,367  

Ending balance

    33,810     35,367     31,160     35,490  

Change

  $ 6,204   $ 1,557   $ (2,650 ) $ 123  

          The change in deferred revenue relates primarily to invoicing customers and recognizing revenue in conjunction with the satisfaction of performance obligations. Revenue recognized during the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019 that was included in the deferred revenue balances at the beginning of the respective periods was as follows:

                Six Months Ended  

    Year Ended     June 30,
 

    December 31,     2018     2019
 

    2017     2018     (unaudited)     (unaudited)
 

    (in thousands)  

Deferred revenue recognized as revenue

  $ 26,332   $ 31,391   $ 22,697   $ 24,301  

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

2. Summary of Significant Accounting Policies (Continued)

Remaining Performance Obligations

          Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and noncancelable amounts to be invoiced. As of December 31, 2017 and 2018, the Company had $81.3 million and $95.8 million of transaction price allocated to remaining performance obligations, respectively. As of June 30, 2019 (unaudited), the Company had $114.3 million of transaction price allocated to remaining performance obligations, of which 88% is expected to be recognized as revenue over the next 24 months, with the remainder to be recognized thereafter.

Deferred Commissions

          Sales commissions earned by the Company's internal and external sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for new contracts and additional sales to existing customers, are deferred and recorded in deferred commissions, current and noncurrent in the Company's consolidated balance sheets. Deferred commissions are amortized over the period of benefit, which the Company has determined to be generally four years. The Company determined the period of benefit by taking into consideration its customer contracts, its technology, and other factors. Deferred commissions are amortized consistent with the pattern of revenue recognition for each performance obligation for contracts for which the commissions were earned. The Company includes amortization of deferred commissions in sales and marketing expense in the consolidated statements of operations. The Company periodically reviews the carrying amount of deferred commissions to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred costs. The Company did not recognize an impairment of deferred commissions during the years ended December 31, 2017 and 2018 or the six months ended June 30, 2018 and 2019 (unaudited).

          The following table summarizes the account activity of deferred commissions for the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019:

                Six Months Ended  

    Year Ended     June 30,
 

    December 31,     2018     2019
 

    2017     2018     (unaudited)     (unaudited)
 

    (in thousands)  

Beginning balance

  $ 2,121   $ 6,354   $ 6,354   $ 11,033  

Additions to deferred commissions          

    7,693     9,981     2,681     3,629  

Amortization of deferred commissions

    (3,460 )   (5,302 )   (1,693 )   (2,760 )

Ending balance

  $ 6,354   $ 11,033   $ 7,342   $ 11,902  

Deferred commissions, current

  $ 1,858   $ 3,746   $ 2,221   $ 4,505  

Deferred commissions, noncurrent

    4,496     7,287     5,121     7,397  

Total deferred commissions

  $ 6,354   $ 11,033   $ 7,342   $ 11,902  

F-18


Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

2. Summary of Significant Accounting Policies (Continued)

Research and Development

          Research and development costs include direct and allocated expenses. Other than software development costs that qualify for capitalization, as discussed above, research and development costs are expensed as incurred.

Advertising Costs

          The Company expenses advertising costs as incurred. Advertising expense is included within sales and marketing expense in the consolidated statements of operations. For the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019 (unaudited), advertising expenses were $1.2 million, $1.5 million, $0.6 million, and $0.7 million, respectively.

Stock-Based Compensation

          Stock-based compensation expense for time-based awards is determined based on the grant-date fair value, net of forfeitures, and is recognized on a straight-line basis over the requisite service period of the award, which is typically the vesting term of the award. Prior to the adoption of ASU 2016-09 on January 1, 2018, the Company estimated the forfeiture rate annually using its historical experience of forfeited awards. The Company then adjusted for actual forfeitures at each vesting date. After the adoption of ASU 2016-09, forfeitures are accounted for as they occur.

          Stock-based compensation expense for awards subject to both performance and market conditions is determined based on the grant-date fair value and is recognized on a graded vesting basis over the term of the award once it is probable that the performance conditions will be met.

          The fair value of each time-based option grant is estimated on the date of the grant using the Black-Scholes option pricing model. For awards subject to performance and market conditions, the Company uses a Monte Carlo simulation model, which utilizes multiple inputs to estimate the probability that market conditions will be achieved. Both models require highly subjective assumptions as inputs, including the following:

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

2. Summary of Significant Accounting Policies (Continued)

          The following assumptions were used for time-based options granted during the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019:

 
   
   
  Six Months Ended
June 30,
 
  Year Ended
December 31,
 
  2018
(unaudited)
  2019
(unaudited)
 
  2017   2018

Risk-free rate

  2.0% - 2.2%   2.6% - 3.0%   2.7%   —%

Expected term

  6.1 years   6.1 years   6.1 years   — years

Dividend yield

       

Volatility

  38% - 42%   39% - 42%   39%   —%

Weighted-average grant date fair value of options granted during period

  $583.36   $822.02   $614.08   $—

          The following assumptions were used for awards subject to performance and market conditions that were granted during the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019:

 
   
   
  Six Months Ended
June 30,
 
  Year Ended December 31,
 
  2018
(unaudited)
  2019
(unaudited)
 
  2017   2018

Risk-free rate

  1.5% - 1.9%   2.5% - 2.8%   2.5%    —%

Expected term

  3.8 - 4.5 years   1.7 - 3.3 years   3.3 years   — years

Dividend yield

       

Volatility

  57% - 62%   45% - 55%   55%   —%

Weighted-average grant date fair value of options granted during period

  $388.74   $388.63   $478.03   $—

          The Company calculates the fair value for restricted stock units ("RSUs") based on the estimated fair value of the Company's common stock on the date of grant and records

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

2. Summary of Significant Accounting Policies (Continued)

compensation expense over the vesting period using a straight-line method. Prior to the adoption of ASU 2016-09, the Company factored an estimated forfeiture rate in calculating compensation expense on RSUs and adjusted for actual forfeitures upon the vesting of each tranche of RSUs. After the adoption of ASU 2016-09, forfeitures are accounted for as they occur.

Income Taxes

          Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are computed annually for temporary differences between the financial statement basis and the income tax basis of assets and liabilities that will result in taxable or deductible amounts in the future. The Company's temporary differences result primarily from net operating losses, stock compensation, deferred revenue, intangible assets, and accrued expenses. Deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to the years in which the differences are expected to affect taxable income. A valuation allowance is established when necessary to reduce deferred income tax assets to the amounts expected to be realized.

          The Company evaluates the tax positions taken or expected to be taken in the course of preparing the Company's tax returns to determine whether the tax positions are more likely than not of being sustained by the applicable tax authority. Tax positions not deemed to meet the more likely than not threshold would not be recorded as a tax benefit or expense in the current year. Interest and penalties related to income tax liabilities are included in the benefit (provision) for income taxes.

Deferred Offering Costs

          Deferred offering costs are capitalized and consist of fees incurred in connection with the anticipated sale of common stock in an initial public offering ("IPO") and include legal, accounting, printing, and other IPO-related costs. Upon completion of an IPO, these deferred costs will be reclassified to stockholders' equity and recorded against the proceeds from the offering. In the event an IPO is terminated, the deferred offering costs would be expensed in the period of termination as a charge to operating expenses in the consolidated statements of operations.

          The balance of deferred offering costs included within prepaid expenses and other current assets at December 31, 2018 and June 30, 2019 (unaudited) was $1.3 million and $3.2 million, respectively. As of December 31, 2017, the Company had not incurred such costs.

Net Income Per Share

          Basic net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period, plus the dilutive effects of RSUs and stock options. Dilutive shares of common stock are determined by applying the treasury stock method.

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

2. Summary of Significant Accounting Policies (Continued)

Recent Accounting Pronouncements

          In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"), which supersedes the guidance in topic ASC 840, Leases. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 942, Leases, and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which affect certain aspects of the previously issued guidance. Amendments include an additional transition method that allows entities to apply the new standard on the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings, as well as a new practical expedient for lessors. The new leasing guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted. While the Company is currently determining its implementation approach and assessing the impact on its consolidated financial statements and related disclosures, the Company expects that the majority of its operating lease commitments will increase total assets and total liabilities on its consolidated balance sheet upon adoption.

          In March 2016, the FASB issued ASU No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"), which aligns with the FASB's current simplification initiatives. The major areas for simplification in ASU 2016-09 involve several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Specifically, ASU 2016-09 has introduced updates to minimum statutory tax withholding requirements, policy elections surrounding forfeitures, expected term, intrinsic values, and changes to the classification of certain share-based payment related transactions on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018, though early adoption is permitted. Effective January 1, 2018, the Company adopted ASU 2016-09 for the fiscal year as well as the interim periods within the fiscal year. The new guidance allows entities to make an election to account for forfeitures as they occur, which the Company adopted on a modified retrospective basis. An adjustment of $38.0 thousand was made to decrease retained earnings in the period of adoption for the cumulative prior years' impact. The adoption of the remaining provisions of ASU 2016-09 did not have a significant impact on the Company's consolidated financial statements.

          In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classifications of Certain Cash Receipts and Cash Payments ("ASU 2016-15"), which addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 addresses eight specific cash flow issues with the intention of reducing the

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

2. Summary of Significant Accounting Policies (Continued)

existing diversity in practice. The amendments are effective for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019, though early adoption is permitted. Effective January 1, 2017, the Company adopted ASU 2016-15. There was no material impact to the Company's consolidated financial statements except that after adoption, the Company included cash payments for debt prepayment and debt extinguishment costs as cash outflows for financing activities.

          In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash ("ASU 2016-18"), which requires entities to show the changes in total of cash, cash equivalents, restricted cash, and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017 as well as the interim periods within those years, and is applied retrospectively when adopted. Early adoption is permitted, and the Company elected to early adopt ASU 2016-18 effective January 1, 2017. Upon adoption, the Company has included restricted cash with cash and cash equivalents on its consolidated statements of cash flows and has excluded changes in restricted cash from net cash used in operating activities.

          In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ("ASU 2017-01"), which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The new guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within annual periods beginning after December 15, 2019. The impact to the Company's consolidated financial statements will depend on the facts and circumstances of any specific future transaction.

          In January 2017, the FASB issued ASU No. 2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"), which simplifies how companies test goodwill for impairment. Under the new guidance, entities are no longer required to perform Step 2 of the impairment test, where a goodwill impairment loss is measured by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of the goodwill. Instead, if the carrying amount of a reporting unit exceeds its fair value, then an impairment loss is recognized in the amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. This guidance is effective for fiscal years beginning after December 15, 2020, though early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted this standard effective October 1, 2017, and the adoption did not have a material effect on its consolidated financial statements.

          In May 2017, the FASB issued ASU No. 2017-09, Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017-09"), which clarifies which changes to the terms or conditions of a share-based payment award are subject to the guidance on modification accounting. Upon adoption, entities shall apply the modification guidance to any changes to the terms or conditions of a share-based payment award unless the fair value, vesting conditions, and classification of a modified award are the same immediately before and after the modification. The amendments in this guidance are effective for all entities for annual periods beginning after December 15, 2017, including interim periods therein, and should be applied

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

2. Summary of Significant Accounting Policies (Continued)

prospectively to an award modified on or after the adoption date. Effective January 1, 2018, the Company adopted ASU 2017-09 for the fiscal year and the interim periods within the fiscal year. Since the Company does not regularly modify the terms and conditions of its share-based payment awards, the adoption of this standard did not have a material impact on the Company's consolidated financial statements.

          In February 2018, the FASB issued ASU No. 2018-02, Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-02"), which provides financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded. For all entities, it is effective for fiscal years beginning after December 15, 2018, and interim periods therein, though early adoption is permitted. Effective January 1, 2019, the Company adopted ASU 2018-02 for the fiscal year and the interim periods within the fiscal year. The adoption did not have a material impact on the Company's consolidated financial statements.

          In June 2018, the FASB issued ASU No. 2018-07, Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting ("ASU 2018-07"), which simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. ASU 2018-07 is effective for the Company for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020, though early adoption is permitted. Effective January 1, 2018, the Company adopted ASU 2018-07 for the fiscal year and the interim periods within the fiscal year, and the adoption did not have a material impact on the Company's consolidated financial statements.

          In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"), which improves the disclosure requirements for fair value measurements. The updated guidance is effective for all entities for fiscal years beginning after December 15, 2019, and interim periods therein. Early adoption is permitted. Further, an entity is permitted to early adopt any removed or modified disclosures upon the issuance of ASU 2018-13 while delaying the adoption of the additional disclosures until their effective date. The Company is currently assessing the impact of adopting the updated provisions on its consolidated financial statements.

          In August 2018, the FASB issued ASU No. 2018-15, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"), which requires implementation costs incurred by customers in a cloud computing arrangement to be deferred over the noncancelable term of the cloud computing arrangement plus any optional renewal periods that (1) are reasonably certain to be exercised by the customer, or (2) for which exercise of the renewal option is controlled by the cloud service provider. The effective date of this pronouncement is for fiscal years beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021, though early adoption is permitted. The Company is currently evaluating the impact of this pronouncement on its consolidated financial statements.

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

2. Summary of Significant Accounting Policies (Continued)

Recent Accounting Pronouncements (unaudited)

          In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, though early adoption is permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

3. Fair Value of Financial Instruments

          The Company invests primarily in money market funds, which are measured and recorded at fair value on a recurring basis and are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The fair value of these financial instruments were as follows:

  December 31, 2017    

    Level 1     Level 2     Level 3     Total
 

    (in thousands)  

Cash and cash equivalents:

                         

Money market funds

  $ 789   $   $   $ 789  

 

  December 31, 2018    

    Level 1     Level 2     Level 3     Total
 

    (in thousands)  

Cash and cash equivalents:

                         

Money market funds

  $ 57,974   $   $   $ 57,974  

 

  June 30, 2019 (unaudited)    

    Level 1     Level 2     Level 3     Total
 

    (in thousands)  

Cash and cash equivalents:

                         

Money market funds

  $ 50,434   $   $   $ 50,434  

          The carrying amounts of the Company's accounts receivable, accounts payable, and other current liabilities approximate their fair values due to their short maturities. The carrying value of the Company's long-term debt approximates its fair value based on Level 2 inputs as the principal amounts outstanding are subject to variable interest rates that are based on market rates (see Note 7).

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

4. Property and Equipment

          Property and equipment consisted of the following:

    December 31,     June 30, 2019
 

  2017     2018     (unaudited)    

    (in thousands)  

Computer equipment

  $ 2,258   $ 4,218   $ 5,019  

Furniture and fixtures

    1,546     1,920     2,161  

Purchased computer software

    950     450     700  

Leasehold improvements

    2,627     2,868     3,236  

Other

    363     363     424  

Property and equipment, gross

    7,744     9,819     11,540  

Less: Accumulated depreciation

    (2,661 )   (4,189 )   (5,047 )

Property and equipment, net

  $ 5,083   $ 5,630   $ 6,493  

          Depreciation expense for the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019 (unaudited) was $1.9 million, $2.2 million, $1.0 million, and $1.4 million, respectively.

5. Business Combinations

Elastic Beam Inc. Acquisition

          On April 5, 2018, Ping Identity Corporation acquired 100% of the voting equity interest in Elastic Beam Inc., a Delaware Corporation ("Elastic Beam"). Elastic Beam is a machine learning/artificial intelligence API behavioral security software which detects, reports, and stops cyberattacks on data and applications via APIs. The purpose of this acquisition was to expand the Company's capabilities in identity security, particularly with regard to artificial intelligence.

          The total purchase price was $19.0 million, which includes up-front cash consideration of $17.4 million that was funded with existing cash resources, and $1.6 million, of which $1.1 million and $0.5 million is payable on the first and second anniversary of the acquisition, respectively. During the six months ended June 30, 2019 (unaudited), the Company paid the first anniversary payment of $1.1 million.

          $4.8 million and $4.2 million of contingent compensation is payable on the first and second anniversary of the acquisition, contingent on certain individuals remaining employed as of those dates. As these payments are subject to the continued employment of those individuals, they will be recognized through compensation expense as incurred. During the six months ended June 30, 2019 (unaudited), the Company paid the first anniversary payment of $4.8 million.

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

5. Business Combinations (Continued)

          The following table summarizes the allocation of the purchase price, based on the estimated fair value of the assets acquired and liabilities assumed at the acquisition date:

  April 5, 2018     Useful Life  

    (in thousands)    

Fair value of net assets acquired

         

In process research and development

  $ 3,006   Indefinite

Goodwill

    15,972   Indefinite

Deferred tax asset

    108    

Other assets

    3    

Total assets acquired

    19,089    

Deferred revenue

    (115 )  

Total liabilities assumed

    (115 )  

Net assets acquired

  $ 18,974    

          Goodwill is primarily attributable to the workforce acquired and the expected synergies arising from integrating Elastic Beam's behavioral security software with the Company's existing security platform. None of the goodwill is deductible for tax purposes. The Company incurred $0.6 million of acquisition related expenses in conjunction with the Elastic Beam acquisition which are included in general and administrative expenses on the consolidated statements of operations for the year ended December 31, 2018 and the six months ended June 30, 2018 (unaudited).

Additional Acquisition Related Information

          The operating results of Elastic Beam are included in the Company's consolidated statements of operations from the date of acquisition. Revenue and earnings of Elastic Beam since the date of acquisition and pro forma results of operations have not been prepared because the effect of the acquisition was not material to the consolidated statements of operations.

          Additional information, such as that related to income tax and other contingencies, existing as of the acquisition date but unknown to the Company may become known during the remainder of the measurement period, not to exceed one year from the acquisition date, which may result in changes to the amounts and allocations recorded.

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

6. Goodwill and Intangible Assets

          The changes in the carrying amount of the Company's goodwill balance were as follows:

    December 31,     June 30,
2019
 

  2017     2018     (unaudited)    

    (in thousands)  

Beginning balance

  $ 401,724   $ 401,724   $ 417,696  

Additions to goodwill related to acquisitions

        15,972      

Ending balance

  $ 401,724   $ 417,696   $ 417,696  

          The Company's intangible assets as of December 31, 2017 were as follows:

  December 31, 2017    

  Gross Amount     Accumulated
Amortization
 
  Net Carrying
Value
 
 

    (in thousands)  

Developed technology

  $ 104,932   $ (17,120 ) $ 87,812  

Customer relationships

    94,875     (11,199 )   83,676  

Trade names

    56,436     (8,441 )   47,995  

Product backlog

    2,185     (1,547 )   638  

Capitalized internal-use software

    5,112     (1,043 )   4,069  

Non-compete agreements

    1,224     (606 )   618  

Other intangible assets

    716     (152 )   564  

Total intangible assets subject to amortization

    265,480     (40,108 )   225,372  

In-process research and development

    586         586  

Total intangible assets

  $ 266,066   $ (40,108 ) $ 225,958  

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

6. Goodwill and Intangible Assets (Continued)

          The Company's intangible assets as of December 31, 2018 were as follows:

  December 31, 2018    

  Gross Amount     Accumulated
Amortization
 
  Net Carrying
Value
 
 

    (in thousands)  

Developed technology

  $ 107,938   $ (29,433 ) $ 78,505  

Customer relationships

    94,875     (18,702 )   76,173  

Trade names

    56,436     (14,084 )   42,352  

Product backlog

    2,185     (2,117 )   68  

Capitalized internal-use software

    11,422     (2,995 )   8,427  

Non-compete agreements

    1,224     (1,014 )   210  

Other intangible assets

    1,055     (333 )   722  

Total intangible assets subject to amortization

    275,135     (68,678 )   206,457  

In-process research and development

    586         586  

Total intangible assets

  $ 275,721   $ (68,678 ) $ 207,043  

          The Company's intangible assets as of June 30, 2019 were as follows:

  June 30, 2019
(unaudited)
 
 

  Gross Amount     Accumulated
Amortization
 
  Net Carrying
Value
 
 

    (in thousands)  

Developed technology

  $ 107,938   $ (35,847 ) $ 72,091  

Customer relationships

    94,875     (22,453 )   72,422  

Trade names

    56,584     (16,924 )   39,660  

Product backlog

    2,185     (2,168 )   17  

Capitalized internal-use software

    15,914     (4,338 )   11,576  

Non-compete agreements

    1,224     (1,218 )   6  

Other intangible assets

    1,001     (442 )   559  

Total intangible assets subject to amortization

    279,721     (83,390 )   196,331  

In-process research and development

    586         586  

Total intangible assets

  $ 280,307   $ (83,390 ) $ 196,917  

          Amortization expense for the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019 (unaudited) was $27.2 million, $28.6 million, $14.4 million, and $14.7 million, respectively. During the years ended December 31, 2017 and 2018, $3.0 million of in-process research and development was reclassified to developed technology when ready for intended use.

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

6. Goodwill and Intangible Assets (Continued)

          As of December 31, 2018, expected amortization expense for intangible assets subject to amortization for the next five years is as follows:

Year Ending December 31,
  December 31,
2018
 
 

    (in thousands)  

2019

  $ 29,028  

2020

    28,764  

2021

    27,979  

2022

    26,124  

2023

    24,572  

Thereafter

    69,990  

Total

  $ 206,457  

          As of June 30, 2019, expected amortization expense for intangible assets subject to amortization for the next five years is as follows:

Year Ending December 31,
  June 30, 2019
(unaudited)
 
 

    (in thousands)  

2019 (remaining six months)

  $ 14,985  

2020

    29,915  

2021

    29,130  

2022

    27,276  

2023

    25,092  

Thereafter

    69,933  

Total

  $ 196,331  

7. Debt

          In 2016, the Company entered into new credit facilities with a consortium of lenders comprised of (a) a term loan in an initial principal amount of $150.0 million, which was borrowed on June 30, 2016 and subsequently increased on August 3, 2016 by $20.0 million (the "2016 Term Loan"), and (b) a revolving line of credit in a principal committed amount of $10.0 million (the "2016 Revolver" and, collectively with the 2016 Term Loan, the "2016 Credit Facilities"). The 2016 Credit Facilities mature on June 30, 2021.

          The principal amount of the 2016 Term Loan is payable at the maturity date. The 2016 Term Loan bears interest at the option of the Company at a rate per annum equal to (a) an adjusted LIBO rate (with a floor of 1.00% per annum) plus an applicable margin of 9.25%, payable on the last day of the applicable interest period applicable thereto, or (b) the alternate base rate (with a floor of 2.00% per annum) plus an applicable margin of 8.25%, payable quarterly in arrears the last

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

7. Debt (Continued)

business day of each March, June, September, and December. The initial 2016 Term Loans were borrowed as LIBO rate loans.

          In conjunction with the 2016 Credit Facilities, the Company was required to comply with various financial debt covenants, including a recurring revenue leverage ratio of 2.1 to 1.0 beginning September 30, 2016 and decreasing quarterly to 1.3 to 1.0 on September 30, 2018, and a total leverage ratio of 8.3 to 1.0 beginning December 31, 2018 and decreasing quarterly to 2.4 to 1.0 on and after June 30, 2021. As of December 31, 2017, the Company was in compliance with all financial covenants.

          In 2018, the Company refinanced its outstanding debt. In connection with the refinancing, the Company entered into new credit facilities with a consortium of lenders comprised of (a) a term loan with a principal amount of $250.0 million (the "2018 Term Loan"), and (b) a revolving line of credit in a principal committed amount of $25.0 million (the "2018 Revolver" and, collectively with the 2018 Term Loan, the "2018 Credit Facilities"). The 2018 Term Loan and 2018 Revolver mature on January 25, 2025 and January 25, 2023, respectively. Borrowings under the 2018 Credit Facilities are collateralized by substantially all of the assets of the Company.

          There are no significant financial covenants to which the Company must comply in relation to the 2018 Term Loan. The wholly owned indirect subsidiary, Ping Identity Corporation, as borrower under the 2018 Credit Facilities, is limited to declare dividends or make any payment on account of its capital stock to, directly or indirectly, fund a dividend or other distribution to Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.) (the "Parent"), subject to limited exceptions, including (1) stock repurchases in an amount not to exceed the greater of $1.5 million per year or 3.75% of consolidated EBITDA, with any unused amount being carried forward to future periods, (2) unlimited amounts subject to compliance with a 4.25 to 1.00 total leverage ratio giving pro forma effect to any distribution, (3) unlimited amounts up to 7% of the Parent's market capitalization, and (4) payment of the Parent's overhead expenses.

          In conjunction with entering into the 2018 Credit Facilities, the Company paid all remaining balances of the 2016 Term Loan and terminated the 2016 Revolver, which resulted in a loss on extinguishment of debt of $9.8 million, included in the consolidated statements of operations for the year ended December 31, 2018 and the six months ended June 30, 2018 (unaudited).

          Beginning September 2018, 0.25% of the principal amount of the 2018 Term Loan is payable quarterly. The 2018 Term Loan bears interest at the option of the Company at a rate per annum equal to (a) an adjusted LIBO rate (with a floor of 1.00% per annum) plus an applicable margin of 3.75%, payable on the last day of the applicable interest period applicable thereto ("Eurodollar" loan), or (b) the alternate base rate (with a floor of 2.00% per annum) plus an applicable margin of 2.75%, payable quarterly in arrears the last business day of each March, June, September, and December. The 2018 Term Loan was borrowed as a Eurodollar loan.

          The Company recognized $17.9 million, $14.9 million, $7.3 million, and $7.8 million in interest expense in the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019 (unaudited), respectively.

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

7. Debt (Continued)

          As of December 31, 2017 and 2018 and June 30, 2019 (unaudited), the Company's outstanding long-term debt balance was $165.2 million, $241.1 million, and $240.2 million, respectively (net of the current portion of long-term debt of $0.0 million, $2.5 million, and $2.5 million, and debt issuance costs of $4.8 million, $5.2 million, and $4.8 million, respectively), which was included in long-term debt. Debt issuance costs are a direct deduction from the long-term debt liability and are amortized into interest expense over the contractual term of the borrowings using the effective interest method. During the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019 (unaudited), the Company amortized $1.4 million, $0.9 million, $0.5 million, and $0.4 million of debt issuance costs, respectively.

          Future principal payments on outstanding borrowings as of December 31, 2018 are as follows:

Year Ending December 31,
  December 31,
2018
 
 

    (in thousands)  

2019

  $ 2,500  

2020

    2,500  

2021

    2,500  

2022

    2,500  

2023

    2,500  

Thereafter

    236,250  

Total

  $ 248,750  

          Future principal payments on outstanding borrowings as of June 30, 2019 are as follows:

Year Ending December 31,
  June 30, 2019
(unaudited)
 
 

    (in thousands)  

2019 (remaining six months)

  $ 1,250  

2020

    2,500  

2021

    2,500  

2022

    2,500  

2023

    2,500  

Thereafter

    236,250  

Total

  $ 247,500  

8. Income Taxes

          On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the "Tax Act") was signed into law. The Tax Act significantly changed U.S. income tax law by, among other things, reducing the U.S. federal income tax rate from 35 percent to 21 percent, transitioning from a global tax system to a modified territorial tax system, and limiting the tax deduction for interest expense. The Company has included the impact of the Tax Act in its benefit for income taxes for the years ended

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

8. Income Taxes (Continued)

December 31, 2017 and 2018 in accordance with its understanding of the Tax Act and the guidance available on the date the financial statements were available to be issued. The recorded effects of the Tax Act include the following:

          With regard to the new provisions for global intangible low-taxed income ("GILTI"), the Company is allowed to make an accounting policy choice of either (1) treating taxes due for GILTI as a current-period expense when incurred or (2) factoring such amounts into the Company's measurement of its deferred taxes. In 2018, the Company elected to treat the taxes due for GILTI as a current-period expense when incurred.

          The amounts of income (loss) from continuing operations before income taxes was as follows:

  Year Ended
December 31,
 
 

  2017     2018    

    (in thousands)  

United States

  $ 3,996   $ (12,488 )

Foreign

    1,780     2,417  

Income (loss) before income taxes

  $ 5,776   $ (10,071 )

          The income taxes of foreign subsidiaries not included in the U.S. tax group are presented based on a separate return basis for each tax-paying entity.

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

8. Income Taxes (Continued)

          The benefit (provision) for income taxes from continuing operations was as follows:

    Year Ended
December 31,
 

    2017     2018
 

    (in thousands)  

Current

             

Federal

  $   $ (23 )

State

        (55 )

Foreign

    (96 )   (225 )

Total current expense

    (96 )   (303 )

Deferred

             

Federal

    14,501     1,416  

State

    (2,201 )   (4,756 )

Foreign

    981     268  

Total deferred benefit

    13,281     (3,072 )

Benefit (provision) for income taxes

  $ 13,185   $ (3,375 )

 

          The benefit (provision) for income taxes from continuing operations differs from the provision determined by applying the U.S. statutory tax rate to pretax earnings as a result of the following:

    Year Ended December 31,
 

    2017     2018
 

    (dollars in thousands)  

Statutory U.S. federal income taxes

  $ (2,021 )   (35.0 )% $ 2,115     (21.0 )%

State income taxes, net of federal taxes

    (166 )   (2.9 )   405     (4.0 )

Foreign taxes rate differential

    257     4.4     18     (0.2 )

Rate changes — tax reform

    17,040     295.0          

Rate changes — other

    (1,901 )   (32.9 )   (4,210 )   41.8  

Income tax credits

    1,358     23.5     536     (5.3 )

Change in valuation allowance

    (533 )   (9.2 )        

Deemed repatriation of untaxed foreign earnings

    (1,158 )   (20.0 )        

Contingent deal consideration

            (985 )   9.8  

Meals and entertainment

    (519 )   (9.0 )   (706 )   7.0  

GILTI inclusion

            (338 )   3.4  

Acquisition costs

            (134 )   1.3  

State net operating loss adjustment

    746     12.9          

Return to provision

    131     2.3     36     (0.4 )

Other permanent items

    (45 )   (0.8 )   (159 )   1.6  

Other

    (4 )   (0.1 )   47     (0.5 )

Benefit (provision) for income taxes

  $ 13,185     228.2 % $ (3,375 )   33.5 %

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

8. Income Taxes (Continued)

          Undistributed earnings of foreign subsidiaries were $10.6 million as of December 31, 2018, of which $8.9 million was deemed to be repatriated at December 31, 2017, pursuant to the Tax Act. The deemed repatriation resulted in $1.2 million of additional U.S. income tax expense. The Company considers the current earnings and any future foreign earnings to be indefinitely reinvested, and therefore does not record deferred taxes related to these earnings. Upon repatriation of earnings, in the form of dividends or otherwise, the Company would be subject to both U.S. income taxes (subject to a dividends received deduction) and withholding taxes payable to certain foreign jurisdictions. Withholding taxes of less than $0.6 million would be payable upon remittance of all previously unremitted earnings at December 31, 2018.

          The significant components of deferred tax assets and liabilities at December 31, 2017 and 2018 were as follows:

  December 31,    

  2017     2018    

    (in thousands)  

Deferred tax assets

             

Accruals and reserves

  $ 681   $  

Fixed assets and intangible assets

    332     130  

Tax credits

    3,163     3,386  

Deferred share-based compensation

    812     1,525  

Loss and other carryforwards

    46,297     35,191  

Other

    452     720  

Gross deferred tax assets

    51,737     40,952  

Valuation allowance

    (1,812 )   (1,812 )

Net deferred tax asset

    49,925     39,140  

Deferred tax liabilities

             

Accruals and reserves

        (138 )

Fixed assets and intangible assets

    (55,469 )   (53,849 )

Deferred revenue

    (28,096 )   (21,896 )

Other, net

    (535 )   (540 )

Gross deferred tax liabilities

    (84,100 )   (76,423 )

Net deferred tax liability

  $ (34,175 ) $ (37,283 )

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

8. Income Taxes (Continued)

          The components giving rise to the net deferred income tax liabilities detailed above have been included in the accompanying consolidated balance sheet at December 31, 2017 and 2018 as follows:

  December 31,    

  2017     2018    

    (in thousands)  

Noncurrent deferred tax assets

  $ 1,711   $ 1,829  

Noncurrent deferred tax liabilities

    (35,886 )   (39,112 )

Net deferred tax liability

  $ (34,175 ) $ (37,283 )

          At December 31, 2018, the Company had U.S. net operating loss carryforwards of $144.1 million and U.S. research and development ("R&D") credit carryforwards of $1.3 million. If not used, the U.S. net operating loss and R&D credit carryforwards will begin expiring in 2021 and 2024, respectively. The Company also has disallowed interest carryforwards of $1.6 million, which do not expire. Additionally, the Company had $2.3 million of foreign R&D credit carryforwards at December 31, 2018 which, if not used, will begin expiring in 2030. Section 382 and Section 383 of the Internal Revenue Code contain provisions that limit the utilization of net operating loss and tax credit carryforwards if there has been a change of ownership. The Company has completed an analysis of the historical changes in ownership, and has determined that $2.5 million of the net operating loss carryforward at December 31, 2018 will expire prior to utilization due to the Section 382 limitation. As such, the Company has established a valuation allowance against the deferred tax asset related to these net operating loss carryforwards. Additionally, a change in ownership could be triggered by subsequent sales of securities by the Company or its shareholders resulting in a limitation of the net operating loss and tax credit carryforwards in the future.

          The Company has determined that it is more likely than not it will be unable to realize the benefit of its deferred tax assets for R&D credit carryforwards in the U.S. prior to their expiration and has, therefore, established a valuation allowance offset against the deferred tax asset. A valuation allowance has not been established against the net deferred tax assets attributed to foreign jurisdictions. The valuation allowance for deferred tax assets was $1.8 million at December 31, 2017 and 2018. Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2017 and 2018 were as follows:

  December 31,    

  2017     2018    

    (in thousands)  

Valuation allowance at beginning of year

  $ 1,279   $ 1,812  

Increases recorded to income tax provision

    533      

Valuation allowance at end of year

  $ 1,812   $ 1,812  

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

8. Income Taxes (Continued)

          The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The tax years for the Company that remain subject to examination are:

  Years Under
Examination
 
  Additional
Open Years
 

Jurisdiction

       

U.S. Federal

  None   2015 - 2017

United Kingdom

  None   2013 - 2017

Canada

  None   2013 - 2017

Australia

  None   2013 - 2017

Israel

  None   2014 - 2017

France

  None   2016 - 2017

          Additionally, U.S. federal net operating losses and other foreign tax credits carried forward into open years may be subject to adjustment. The Company has evaluated its tax positions and has determined that it has certain unrecognized tax benefits. Accordingly, as of December 31, 2017 and 2018, the Company has reduced certain tax attributes to the extent they would be utilized to offset an unrecognized tax benefit. Changes in the unrecognized tax benefits during the years ended December 31, 2017 and 2018 were as follows:

  December 31,    

  2017     2018    

    (in thousands)  

Unrecognized tax benefits at beginning of the year

  $ 706   $ 292  

Statute expiration

    (365 )   (78 )

Currency

    11     (13 )

Tax rate changes

    (60 )   10  

Unrecognized tax benefits at end of the year

  $ 292   $ 211  

          The Company does not currently anticipate significant changes in its unrecognized tax benefits over the next 12 months. No interest or penalties for the Company's unrecognized tax benefits were recorded for the years ended December 31, 2017 and 2018.

9. Stockholders' Equity

          On June 30, 2016, the Board of Directors and stockholders approved the Second Amended and Restated Certificate of Incorporation authorizing the Company to issue up to 500,000 shares of common stock and 200,000 shares of preferred stock, each with a par value of $0.001 per share.

Common stock

          The Company's Second Amended and Restated Certificate of Incorporation authorizes issuance of 500,000 shares of common stock with a par value of $0.001 per share. The common stock confers upon its holders the right to vote on all matters to be voted on by the stockholders of

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

9. Stockholders' Equity (Continued)

the Company (with each share representing one vote) and to ratably participate in any distribution of dividends or payments in the event of liquidation or dissolution on a per share basis. The rights of the holders of common stock will be subject to, and may be adversely affected by, the rights of holders of any preferred stock that may be issued in the future.

Preferred stock

          The Company is authorized, without stockholder approval but subject to any limitations prescribed by law, to issue up to an aggregate of 200,000 shares of preferred stock (in one or more series or classes), to create additional series or classes of preferred stock, and to establish the number of shares to be included in such series or class. The Board of Directors is also authorized to increase or decrease the number of shares of any series or class subsequent to the issuance of shares of that series or class. Each series will have such rights, preferences and limitations, including voting rights, dividend rights, conversion rights, redemption privileges, and liquidation preferences as determined by the Board of Directors. As of December 31, 2017 and 2018 and June 30, 2019 (unaudited), the Company did not have any shares of preferred stock outstanding and currently has no plans to issue shares of preferred stock.

10. Stock-Based Compensation

          On June 30, 2016, the Company established the 2016 Stock Option Plan ("2016 Plan"). The 2016 Plan provides for grants of restricted stock units and stock options to executives, directors, consultants, advisors, and key employees which allow option holders to purchase stock in Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.). The Company has 40,000 shares of common stock reserved for issuance under the 2016 Plan.

          Stock-based compensation expense for all equity arrangements for the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019 was as follows:

    Year Ended     Six Months Ended
June 30,
 

    December 31,     2018     2019
 

    2017     2018     (unaudited)     (unaudited)
 

    (in thousands)  

Sales and marketing

  $ 626   $ 726   $ 351   $ 410  

Research and development

    297     342     108     433  

General and administrative

    1,601     1,780     821     1,256  

Total

  $ 2,524   $ 2,848   $ 1,280   $ 2,099  

Restricted Stock Units

          The Company grants RSUs that vest annually over one to four years. The weighted-average grant-date fair value of RSUs granted during the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019 (unaudited) was $1,333, $1,596, $1,596, and $2,260,

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

10. Stock-Based Compensation (Continued)

respectively. The total intrinsic value of RSUs vested during the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019 (unaudited) was $0.0 million, $0.1 million, $0.0 million, and $0.1 million, respectively. As of December 31, 2018 and June 30, 2019 (unaudited), there was $0.2 million and $0.2 million of total unrecognized compensation, which will be recognized over the remaining weighted-average vesting periods of 1.6 years and 1.0 years, respectively, using the straight-line method. A summary of the status of the Company's unvested RSUs and activity for the years ended December 31, 2017 and 2018 and the six months ended June 30, 2019 is as follows:

    Shares     Weighted
Average
Grant Date
Fair Value
 

Unvested as of January 1, 2017

    125   $ 1,333  

Granted

    125     1,333  

Forfeited/canceled

         

Vested

    (31 )   1,333  

Unvested as of December 31, 2017

    219   $ 1,333  

Granted

    63     1,596  

Forfeited/canceled

         

Vested

    (63 )   1,333  

Unvested as of December 31, 2018

    219   $ 1,409  

Granted (unaudited)

    62     2,260  

Forfeited/canceled (unaudited)

         

Vested (unaudited)

    (94 )   1,509  

Unvested as of June 30, 2019 (unaudited)

    187   $ 1,641  

Stock Options

          During the year ended December 31, 2017, the Company granted 3,353 time-based options and 1,676 options subject to performance and market conditions, both of which grant the holder the option to purchase common stock upon vesting. During the year ended December 31, 2018, the Company granted 8,313 time-based options and 4,157 options subject to performance and market conditions. During the six months ended June 30, 2018 (unaudited), the Company granted 833 time-based options and 417 options subject to performance and market conditions. No options were granted during the six months ended June 30, 2019 (unaudited). Time-based options vest over four years with 25% vesting one year after grant and the remainder vesting ratably on a quarterly basis thereafter. Options subject to performance and market conditions vest upon the sale of the business subject to certain conditions specified in the 2016 Plan. An option holder must be an employee of the Company at the date of sale of the business.

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

10. Stock-Based Compensation (Continued)

          A summary of the Company's stock option activity and related information is as follows:

    Options     Weighted
Average
Exercise
Price
    Weighted
Average
Remaining
Contractual
Term
    Aggregate
Intrinsic
Value
 

                (in years)     (in thousands)  

Outstanding — January 1, 2017

    25,880   $ 1,333     9.5   $  

Granted

    5,029     1,381           111  

Forfeited/canceled

    (2,500 )   1,333           86  

Exercised

    (76 )   1,333           8  

Outstanding — December 31, 2017

    28,333   $ 1,342     8.7   $ 2,849  

Granted

    12,470     2,062           84  

Forfeited/canceled

    (3,162 )   1,333           493  

Exercised

                   

Outstanding — December 31, 2018

    37,641   $ 1,581     8.4   $ 25,678  

Granted (unaudited)

                   

Forfeited/canceled (unaudited)

    (867 )   1,333           1,346  

Exercised (unaudited)

    (733 )   1,333           1,477  

Outstanding — June 30, 2019 (unaudited)

    36,041   $ 1,592     8.0   $ 63,242  

As of June 30, 2019 (unaudited)

                         

Vested and expected to vest (unaudited)

    24,014   $ 1,592     8.0   $ 42,135  

Vested and exercisable (unaudited)

    10,915   $ 1,342     7.2   $ 21,878  

          All options have a 10 year contractual life. As of December 31, 2018 and June 30, 2019 (unaudited), unamortized stock-based compensation expense related to the time-based awards was $10.6 million and $8.4 million, respectively, which will be recognized over the respective remaining weighted-average vesting terms of 3.0 years and 2.7 years. As of December 31, 2018 and June 30, 2019 (unaudited), the awards subject to performance and market conditions were not considered probable of meeting vesting requirements, and accordingly, no expense was recorded. For these awards, unrecognized stock-based compensation expense as of December 31, 2018 and June 30, 2019 (unaudited) was $5.3 million and $5.1 million, respectively. As the awards were not probable of meeting vesting requirements, the timing of when this expense will be recognized is unknown.

11. Related Party Transactions

          Vista Equity Partners ("Vista") is a U.S.-based investment firm that controls the funds which own a majority of the Company. During the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019 (unaudited), the Company paid for consulting services and other expenses related to services provided by Vista and Vista affiliates. The total expenses incurred by the Company for Vista were $0.9 million, $1.3 million, $0.6 million, and $0.6 million for the years

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

11. Related Party Transactions (Continued)

ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019 (unaudited), respectively. The Company had $0.3 million and $0.1 million in accounts payable related to these expenses at December 31, 2018 and June 30, 2019 (unaudited), respectively.

          The Company also has revenue arrangements with Vista affiliates. The Company recognized revenue of $0.8 million, $1.9 million, $1.5 million, and $0.2 million in the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019 (unaudited), respectively. The Company had $1.0 million, $0.5 million, and $0.2 million in accounts receivable related to these agreements at December 31, 2017 and 2018 and June 30, 2019 (unaudited), respectively.

          As discussed in Note 7, the Company entered into the 2018 Term Loan and 2018 Revolver on January 25, 2018 with a consortium of lenders for a principal amount of $250.0 million and principal committed amount of $25.0 million, respectively. At December 31, 2018, affiliates of Vista held $34.8 million of the 2018 Term Loan and there were no amounts drawn on the 2018 Revolver. During the year ended December 31, 2018, affiliates of Vista were paid $0.2 million in principal (beginning in September 2018) and $1.9 million in interest on the portion of the 2018 Term Loan held by them. During the six months ended June 30, 2018 (unaudited), affiliates of Vista were paid $0.8 million in interest.

          At June 30, 2019 (unaudited), affiliates of Vista held $34.7 million of the 2018 Term Loan and there were no amounts drawn on the 2018 Revolver. During the six months ended June 30, 2019 (unaudited), affiliates of Vista were paid $0.1 million in principal and $1.1 million in interest on the portion of the 2018 Term Loan held by them.

12. Commitments and Contingencies

Letters of Credit

          As of December 31, 2017 and 2018 and June 30, 2019 (unaudited), the Company had outstanding letters of credit under an office lease agreement that totaled $0.5 million, $0.6 million, and $0.7 million, respectively, which primarily guaranteed early termination fees in the event of default. The Company collateralizes the letters of credit with restricted cash balances which were classified in other noncurrent assets at December 31, 2017 and 2018 and June 30, 2019.

Leases

          The Company leases office space and certain office equipment under noncancelable leases. Most of the leases contain renewal options at then market rates.

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

12. Commitments and Contingencies (Continued)

          At December 31, 2018, future minimum lease payments under the existing leases were as follows:

Year Ending December 31,
  December 31,
2018
 
 

    (in thousands)  

2019

  $ 2,515  

2020

    2,955  

2021

    2,415  

2022

    2,315  

2023

    2,338  

Thereafter

    4,942  

Total

  $ 17,480  

          At June 30, 2019, future minimum lease payments under the existing leases were as follows:

Year Ending December 31,
  June 30, 2019
(unaudited)
 
 

    (in thousands)  

2019 (remaining six months)

  $ 1,267  

2020

    2,975  

2021

    2,420  

2022

    2,314  

2023

    2,338  

Thereafter

    4,943  

Total

  $ 16,257  

          Rent expense under noncancelable operating leases totaled $2.1 million, $2.3 million, $1.2 million, and $1.6 million for the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019 (unaudited), respectively.

Hosting Services Agreement

          In December 2018, the Company entered into a non-cancelable contractual agreement for hosting services for the period from January 1, 2019 until December 31, 2019. The Company is required to pay a minimum annual commitment of $5.6 million for these services, of which 50% was paid upfront in December 2018. The Company expects to pay the additional $2.8 million during the remaining six months of the year ended December 31, 2019.

Employment Agreements

          The Company has entered into various employment agreements with certain officers and foreign-based employees. The employment agreements provide for minimum annual base salaries,

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

12. Commitments and Contingencies (Continued)

allowances for benefits and insurance coverage, termination rights, and other provisions commonly found in such agreements. Under the terms of the employment agreements, the officers and employees are subject to noncompete provisions, as defined. Terms of the employment agreements vary and may be extended.

Employee Benefit Plans

          The Company established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code (the "401(k) Plan") in which full-time U.S. employees are eligible to participate on the first day of the subsequent month of his or her date of employment. The 401(k) Plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a percentage of their annual compensation as defined in the 401(k) Plan. Employees in the United Kingdom and Canada are covered by defined contribution savings arrangements that are administered based upon the legislative and tax requirements of the respective countries.

          The Company made contributions to its employee benefit plans of $1.4 million, $2.0 million, $1.0 million, and $1.4 million for the years ended December 31, 2017 and 2018 and the six months ended June 30, 2018 and 2019 (unaudited), respectively.

Litigation

          From time to time, the Company may be subject to various claims, charges, and litigation. The Company records a liability when it is both probable that a liability will be incurred and the amount of the loss can be reasonably estimated. The Company maintains insurance to cover certain actions and believes that resolution of such claims, charges, or litigation will not have a material impact on the Company's financial position, results of operations, or liquidity.

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Table of Contents


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

13. Net Income (Loss) Per Share

          The following table provides a reconciliation of the numerator and denominator used in the Company's calculation of basic and diluted net income (loss) per share:

    Year Ended     Six Months Ended
June 30,
 

    December 31,     2018     2019
 

    2017     2018     (unaudited)     (unaudited)
 

    (in thousands, except share and per share amounts)  

Numerator

                         

Net income (loss)

  $ 18,961   $ (13,446 ) $ (5,756 ) $ (3,123 )

Denominator

                         

Basic shares:

                         

Weighted-average common stock outstanding — basic

    382,258     382,365     382,364     382,425  

Diluted shares:

                         

Weighted-average common stock outstanding — basic

    382,258     382,365     382,364     382,425  

Effect of potentially dilutive securities:

                         

RSUs

    39              

Weighted-average common stock outstanding — diluted

    382,297     382,365     382,364     382,425  

Net income (loss) per share:

                         

Basic

  $ 49.60   $ (35.17 ) $ (15.05 ) $ (8.17 )

Diluted

  $ 49.60   $ (35.17 ) $ (15.05 ) $ (8.17 )

          The following shares were excluded from the computation of diluted net income (loss) per share for the periods presented, as their effect would have been antidilutive:

    Year Ended     Six Months Ended
June 30,
 

    December 31,     2018     2019
 

    2017     2018     (unaudited)     (unaudited)
 

RSUs

        219     251     187  

Stock options

    18,863     25,081     17,601     24,014  

Total antidilutive shares

    18,863     25,300     17,852     24,201  

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

14. Condensed Financial Information of Registrant (Parent Company Only)

Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)
(Parent Company Only)
Condensed Balance Sheets
(In thousands, except share amounts)

    December 31,
 

    2017     2018
 

Assets

             

Current assets:

             

Cash and cash equivalents

  $   $  

Total current assets

         

Noncurrent assets:

             

Investment in subsidiaries

    520,680     509,105  

Total noncurrent assets

    520,680     509,105  

Total assets

  $ 520,680   $ 509,105  

Liabilities and stockholders' equity

             

Current liabilities:

             

Current liabilities

  $   $  

Total current liabilities

         

Noncurrent liabilities:

             

Liabilities, noncurrent

         

Total noncurrent liabilities

         

Total liabilities

         

Commitments and contingencies

             

Stockholders' equity:

             

Preferred stock; $0.001 par value; 200,000 shares authorized at December 31, 2017 and 2018; no shares issued or outstanding at December 31, 2017 or 2018

         

Common stock; $0.001 par value; 500,000 shares authorized at December 31, 2017 and 2018; 382,333 and 382,358 shares issued and outstanding at December 31, 2017 and 2018, respectively

         

Additional paid-in capital

    513,234     516,044  

Accumulated other comprehensive income (loss)

    114     (787 )

Retained earnings (accumulated deficit)

    7,332     (6,152 )

Total stockholders' equity

    520,680     509,105  

Total liabilities and stockholders' equity

  $ 520,680   $ 509,105  

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

14. Condensed Financial Information of Registrant (Parent Company Only) (Continued)


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)
(Parent Company Only)
Condensed Statements of Operations
(In thousands)

    Year Ended
December 31,
 

    2017     2018
 

Revenue

  $   $  

Operating expenses

         

Income from operations

         

Other income (expense), net

         

Income before income taxes and equity in net income of subsidiaries

         

Benefit for income taxes

         

Equity in net income (loss) of subsidiaries

    18,961     (13,446 )

Net income (loss)

  $ 18,961   $ (13,446 )


Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)
(Parent Company Only)
Condensed Statements of Comprehensive Income (Loss)
(In thousands)

    Year Ended
December 31,
 

    2017     2018
 

Net income (loss)

  $ 18,961   $ (13,446 )

Other comprehensive income (loss), net of tax:

             

Subsidiaries' other comprehensive income (loss)

    333     (901 )

Total other comprehensive income (loss)

    333     (901 )

Comprehensive income (loss)

  $ 19,294   $ (14,347 )

Basis of Presentation

          Parent is a holding company with no material operations of its own that conducts substantially all of its activities through its subsidiaries. Parent has no direct outstanding debt obligations. However, Ping Identity Corporation, a wholly owned indirect subsidiary, as borrower under its 2016 Credit Facilities, is limited in its ability to declare dividends or make any payment on account of its capital stock to, directly or indirectly, fund a dividend or other distribution to the Parent, subject to limited exceptions, including (1) stock repurchases, (2) unlimited amounts subject to compliance with a 4.0 to 1.0 total leverage ratio giving pro forma effect to any distribution, (3) unlimited

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Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.)

Notes to Consolidated Financial Statements (Continued)

For the Years Ended December 31, 2017 and 2018 and the Six Months Ended June 30, 2018 and 2019 (unaudited)

14. Condensed Financial Information of Registrant (Parent Company Only) (Continued)

amounts up to 5% of the Parent's market capitalization and (4) payment of the Parent's overhead expenses. For a discussion of the 2016 Credit Facilities, see Note 7. Ping Identity Corporation is limited in its ability to declare dividends or make any payment on account of its capital stock to, directly or indirectly, fund a dividend or other distribution to the Parent as borrower under its 2018 Credit Facilities. For a discussion of the 2018 Credit Facilities and the associated dividend restrictions, refer to Note 7.

          These condensed financial statements have been presented on a "parent-only" basis. Under a parent-only presentation, the Parent's investments in subsidiaries are presented under the equity method of accounting. A condensed statement of cash flows was not presented because the Parent has no material operating, investing, or financing cash flow activities for the year ended December 31, 2017 or 2018. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. As such, these parent-only statements should be read in conjunction with the accompanying notes to consolidated financial statements.

15. Subsequent Events

          At April 1, 2019, the date at which the consolidated financial statements for the years ended December 31, 2017 and 2018 were available to be issued, the Company had not identified any material subsequent events requiring disclosure.

16. Subsequent Events (Unaudited)

          In preparing the unaudited interim consolidated financial statements as of June 30, 2019 and for the six months ended June 30, 2018 and 2019, the Company has evaluated subsequent events through August 2, 2019, the date at which the unaudited interim consolidated financial statements were available to be issued. The Company has not identified any material subsequent events requiring disclosure.

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GRAPHIC


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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.    Other Expenses of Issuance and Distribution.

          The following table sets forth all costs and expenses, other than the underwriting discounts and commissions payable by us, in connection with the offer and sale of the securities being registered. All amounts shown are estimates except for the Securities and Exchange Commission, or SEC, registration fee and the FINRA filing fee.

SEC registration fee

  $                      *

FINRA filing fee

      *

         listing fee

      *

Printing expenses

      *

Legal fees and expenses

      *

Accounting fees and expenses

      *

Transfer agent fees and registrar fees

      *

Miscellaneous expenses

      *

Total expenses

  $   *

*
To be provided by amendment.

Item 14.    Indemnification of Directors and Officers.

          Section 102(b)(7) of the Delaware General Corporation Law, or DGCL, allows a corporation to provide in its certificate of incorporation that a director of the corporation will not be personally liable to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, except where the director breached the duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. Our certificate of incorporation will provide for this limitation of liability.

          Section 145 of the DGCL, or Section 145, provides that a Delaware corporation may indemnify any person who was, is or is threatened to be made, party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was illegal. A Delaware corporation may indemnify any persons who are, were or are a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person is or was a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interests, provided that no indemnification is permitted without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above,

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the corporation must indemnify him against the expenses which such officer or director has actually and reasonably incurred.

          Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 145.

          Our bylaws will provide that we will indemnify our directors and officers to the fullest extent authorized by the DGCL and must also pay expenses incurred in defending any such proceeding in advance of its final disposition upon delivery of an undertaking, by or on behalf of an indemnified person, to repay all amounts so advanced if it should be determined ultimately that such person is not entitled to be indemnified under this section or otherwise.

          Upon completion, of this offering we intend to enter into indemnification agreements with each of our executive officers and directors. The indemnification agreements will provide the executive officers and directors with contractual rights to indemnification, expense advancement and reimbursement, to the fullest extent permitted under the DGCL.

          The indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, provision of our certificate of incorporation or bylaws, agreement, vote of shareholders or disinterested directors or otherwise.

          We will maintain standard policies of insurance that provide coverage (1) to our directors and officers against loss arising from claims made by reason of breach of duty or other wrongful act and (2) to us with respect to indemnification payments that we may make to such directors and officers. The proposed form of Underwriting Agreement to be filed as Exhibit 1.1 to this Registration Statement provides for indemnification of our directors and officers by the underwriters party thereto against certain liabilities arising under the Securities Act of 1933 or otherwise.

Item 15.    Recent Sales of Unregistered Securities.

          Set forth below is information regarding securities sold by us within the past three years that were not registered under the Securities Act. Also included is the consideration, if any, received by us for such securities and information relating to the section of the Securities Act, or rule of the SEC, under which exemption from registration was claimed.

          Since January 1, 2016, we have made sales of the following unregistered securities:

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          The offers and sales of the above securities were deemed to be exempt from registration under the Securities Act of 1933 in reliance upon Section 4(a)(2) of the Securities Act of 1933 or Regulation D promulgated thereunder, or Rule 701 promulgated under Section 3(b) of the Securities Act, as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of the above securities represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof. Appropriate legends were placed upon any stock certificates issued in these transactions.

Item 16.    Exhibits and Financial Statement Schedules.

 
Exhibit
Number
  Description  
  1.1 * Form of Underwriting Agreement.

 

3.1

 

Third Amended and Restated Certificate of Incorporation of Ping Identity Holding Corp. to be in effect upon the closing of this offering

 

3.2

 

Amended and Restated Bylaws of Ping Identity Holding Corp. to be in effect upon the closing of this offering

 

4.1

 

Registration Rights Agreement.

 

5.1

*

Opinion of Kirkland & Ellis LLP.

 

10.1

 

Credit Agreement, dated as of January 25, 2018, among Ping Identity Corporation, as borrower, Roaring Fork Intermediate, LLC, as holdings, the other guarantors from time to time party thereto, the lenders and issuing banks from time to time party thereto and Goldman Sachs Bank USA, as administrative agent, collateral agent, swingline lender and issuing bank.

 

10.2

 

Master Services Agreement, effective as of February 23, 2017, between Vista Consulting Group, LLC and Ping Identity Corporation.

 

10.3

 

Form of Ping Identity Holding Corp. Omnibus Incentive Plan.

 

10.4

 

Form of Option Award Agreement.

 

10.5

 

Form of Restricted Shares Award Agreement.

 

10.6

 

Form of Stock Appreciation Right Award Agreement.

 

10.7

 

Form of Restricted Stock Unit Award Agreement.

 

10.8

 

Form of Indemnification Agreement.

 

10.9

 

Director Nomination Agreement.

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Exhibit
Number
  Description  
  10.10   Lease Agreement, dated as of January 21, 2011, by and between FSP 1001 17th Street LLC (as successor in interest to MG-1005, LLC), as landlord and Ping Identity Corporation, as tenant.

 

10.11

 

First Amendment to Lease Agreement, dated as of November 12, 2015, by and between FSP 1001 17th Street LLC, as landlord and Ping Identity Corporation, as tenant.

 

10.12

 

Second Amendment to Lease Agreement, dated as of December 6, 2017, by and between FSP 1001 17th Street LLC, as landlord and Ping Identity Corporation, as tenant.

 

10.13

 

Third Amendment to Lease Agreement, dated as of August 21, 2018, by and between FSP 1001 17th Street LLC, as landlord and Ping Identity Corporation, as tenant.

 

10.14

 

Fourth Amendment to Lease Agreement, dated as of February 1, 2019, by and between FSP 1001 17th Street LLC, as landlord and Ping Identity Corporation, as tenant.

 

10.15

 

Fifth Amendment to Lease Agreement, dated as of March 18, 2019, by and between FSP 1001 17th Street LLC, as landlord and Ping Identity Corporation, as tenant.

 

10.16

+

Letter Agreement, dated as of June 20, 2016, by and between Andre Durand and Ping Identity Corporation.

 

10.17

+

Letter Agreement, dated as of November 2, 2018, by and between B. Kristian Nagel and Ping Identity Corporation.

 

10.18

+

Letter Agreement, dated as of October 22, 2018, by and between Bernard Harguindeguy and Ping Identity Corporation.

 

10.19

+

Letter Agreement, dated as of June 24, 2016, by and between Lauren Romer and Ping Identity Corporation.

 

10.20

+

Letter Agreement, dated as of July 7, 2016, by and between Raj Dani and Ping Identity Corporation.

 

10.21

+

Roaring Fork Holding, Inc. 2016 Stock Option Plan, as amended.

 

10.22

+

Form of Stock Option Agreement under the 2016 Stock Option Plan, as amended (409A Compliant Form).

 

10.23

+

Form of Stock Option Agreement under the 2016 Stock Option Plan, as amended (409A Exempt Form).

 

10.24

+

Form of Restricted Stock Unit Agreement under the 2016 Stock Option Plan, as amended.

 

10.25

+

Form of amended Restricted Stock Unit Agreement under the 2016 Stock Option Plan, as amended.

 

21.1

 

List of subsidiaries of Ping Identity Holding Corp.

 

23.1

 

Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm.

 

23.2

*

Consent of Kirkland & Ellis LLP (included in Exhibit 5.1).

 

24.1

 

Powers of Attorney (included on signature page).

+
Indicates a management contract or compensatory plan or agreement.

*
Indicates to be filed by amendment.

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          No financial statement schedules are provided because the information called for is not applicable or is shown in the financial statements or notes.

Item 17.    Undertakings.

          The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

          Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions referenced in Item 14 of this Registration Statement, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

          The undersigned registrant hereby undertakes that:

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SIGNATURES

          Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, State of Colorado, on August 23, 2019.

  Ping Identity Holding Corp.

 

By:

 

/s/ ANDRE DURAND


      Name:   Andre Durand

      Title:   Chief Executive Officer

***

POWER OF ATTORNEY

          The undersigned directors and officers of Ping Identity Holding Corp. hereby appoint each of Lauren Romer and Raj Dani, as attorney-in-fact for the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, to sign and file with the Securities and Exchange Commission under the Securities Act of 1933 any and all amendments (including post-effective amendments) and exhibits to this registration statement on Form S-1 (or any other registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933) and any and all applications and other documents to be filed with the Securities and Exchange Commission pertaining to the registration of the securities covered hereby, with full power and authority to do and perform any and all acts and things whatsoever requisite and necessary or desirable, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

          Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature
 
Title
 
Date

 

 

 

 

 
/s/ ANDRE DURAND

Andre Durand
  Chief Executive Officer and Director (Principal Executive Officer)   August 23, 2019

/s/ RAJ DANI

Raj Dani

 

Chief Financial Officer (Principal Financial Officer)

 

August 23, 2019

/s/ ADRIANA CARPENTER

Adriana Carpenter

 

Chief Accounting Officer (Principal Accounting Officer)

 

August 23, 2019

/s/ ROD ALIABADI

Rod Aliabadi

 

Director

 

August 23, 2019

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Signature
 
Title
 
Date

 

 

 

 

 
/s/ DAVID A. BREACH

David A. Breach
  Director   August 23, 2019

/s/ CLIFFORD CHIU

Clifford Chiu

 

Director

 

August 23, 2019

/s/ MICHAEL FOSNAUGH

Michael Fosnaugh

 

Director

 

August 23, 2019

/s/ LISA HOOK

Lisa Hook

 

Director

 

August 23, 2019

/s/ JOHN MCCORMACK

John McCormack

 

Director

 

August 23, 2019

/s/ BRIAN N. SHETH

Brian N. Sheth

 

Director

 

August 23, 2019

/s/ YANCEY L. SPRUILL

Yancey L. Spruill

 

Director

 

August 23, 2019

II-7





Exhibit 3.1

 

THIRD AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

PING IDENTITY HOLDING CORP.

 

*    *    *    *    *

 

[          ], being the [          ] of Ping Identity Holding Corp., a corporation duly organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation”), DOES HEREBY CERTIFY as follows:

 

FIRST:                                                      The present name of the Corporation is Ping Identity Holding Corp.  The Corporation was incorporated under the name Roaring Fork Holding, Inc. by the filing of its original Certificate of Incorporation with the Delaware Secretary of State on May 25, 2016.  The Corporation filed its (i) Amended and Restated Certificate of Incorporation on June 30, 2016, (ii) Second Amended Restated Certificate of Incorporation on August 3, 2016, (iii) a Certificate of Amendment to the Certificate of Incorporation changing the Corporation’s name to “Ping Identity Holding Corp.” on August 22, 2019 and (iv) a Certificate of Amendment to the Certificate of Incorporation on [               ], 2019 (as amended and restated, the “Certificate of Incorporation”).

 

SECOND:                                       The Board of Directors of the Corporation, pursuant to a unanimous written consent, adopted resolutions authorizing the Corporation to amend, integrate and restate the Certificate of Incorporation of the Corporation in its entirety to read as set forth in Exhibit A attached hereto and made a part hereof (the “Restated Certificate”).

 

THIRD:                                                  The Restated Certificate restates and integrates and further amends the Certificate of Incorporation of this Corporation.

 

FOURTH:                                     The Restated Certificate was duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware and by the written consent of its stockholders in accordance with Section 228 of the General Corporation Law of the State of Delaware.

 

*    *    *    *    *

 


 

IN WITNESS WHEREOF, Ping Identity Holding Corp. has caused this Third Amended and Restated Certificate of Incorporation to be executed by its duly authorized officer on this     day of            , 2019.

 

 

PING IDENTITY HOLDING CORP.

 

 

 

By:

 

 

Name:

 

Title:

 

2


 

Exhibit A

 

THIRD AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

PING IDENTITY HOLDING CORP.

 

ARTICLE ONE

 

The name of the corporation is Ping Identity Holding Corp. (the “Corporation”).

 

ARTICLE TWO

 

The address of the Corporation’s registered office in the State of Delaware is [        ]. The name of its registered agent at such address is [        ].

 

ARTICLE THREE

 

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

 

ARTICLE FOUR

 

Section 1.                                           Authorized Shares. The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is [550,000,000] shares, consisting of two classes as follows:

 

1.                                      [50,000,000] shares of Preferred Stock, par value $0.001 per share (the “Preferred Stock”); and

 

2.                                      [500,000,000] shares of Common Stock, par value $0.001 per share (the “Common Stock”).

 

The Preferred Stock and the Common Stock shall have the designations, rights, powers and preferences and the qualifications, restrictions and limitations thereof, if any, set forth below.

 

Section 2.                                           Preferred Stock. The Board of Directors of the Corporation (the “Board of Directors”) is authorized, subject to limitations prescribed by law, to provide, by resolution or resolutions for the issuance of shares of Preferred Stock in one or more series, and with respect to each series, to establish the number of shares to be included in each such series, and to fix the voting powers (if any), designations, powers, preferences, and relative, participating, optional or other special rights, if any, of the shares of each such series, and any qualifications, limitations or restrictions thereof.  The powers (including voting powers), preferences, and relative, participating, optional and other special rights of each series of Preferred Stock and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding.  Subject to the rights of the holders of any series of

 

1


 

Preferred Stock, the number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the approval of the Board of Directors and by the affirmative vote of the holders of a majority in voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in an election of directors, without the separate vote of the holders of the Preferred Stock as a class, irrespective of the provisions of Section 242(b)(2) of the DGCL.

 

Section 3.                                           Common Stock.

 

(a)                                 Except as otherwise provided by the DGCL or this third amended and restated certificate of incorporation (as it may be amended, the “Certificate of Incorporation”) and subject to the rights of holders of any series of Preferred Stock, all of the voting power of the stockholders of the Corporation shall be vested in the holders of the Common Stock.  Each share of Common Stock shall entitle the holder thereof to one vote for each share held by such holder on all matters voted upon by the stockholders of the Corporation; provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any certificate of designation relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation (including any certificate of designation relating to any series of Preferred Stock) or pursuant to the DGCL.

 

(b)                                 Except as otherwise required by law or expressly provided in this Certificate of Incorporation, each share of Common Stock shall have the same powers, rights and privileges and shall rank equally, share ratably and be identical in all respects as to all matters.

 

(c)                                  Subject to the rights of the holders of Preferred Stock and to the other provisions of applicable law and this Certificate of Incorporation, holders of Common Stock shall be entitled to receive equally, on a per share basis, such dividends and other distributions in cash, securities or other property of the Corporation if, as and when declared thereon by the Board of Directors from time to time out of assets or funds of the Corporation legally available therefor.

 

(d)                                 In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, after payment or provision for payment of the Corporation’s debts and any other payments required by law and amounts payable upon shares of Preferred Stock ranking senior to the shares of Common Stock upon such dissolution, liquidation or winding up, if any, the remaining net assets of the Corporation shall be distributed to the holders of shares of Common Stock and the holders of shares of any other class or series ranking equally with the shares of Common Stock upon such dissolution, liquidation or winding up, equally on a per share basis.  A merger or consolidation of the Corporation with or into any other corporation or other entity, or a sale or conveyance of all or any part of the assets of the Corporation (which shall not in fact result in the liquidation of the Corporation and the distribution of assets

 

2


 

to its stockholders) shall not be deemed to be a voluntary or involuntary liquidation or dissolution or winding up of the Corporation within the meaning of this Paragraph (d).

 

(e)                                  No holder of shares of Common Stock shall be entitled to preemptive or subscription rights.

 

ARTICLE FIVE

 

Section 1.                                           Board of Directors. Except as otherwise provided in this Certificate of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

 

Section 2.                                           Number of Directors. Subject to any rights of the holders of any class or series of Preferred Stock to elect additional directors under specified circumstances or otherwise, the number of directors which shall constitute the Board of Directors shall initially be nine (9) and, thereafter, shall be fixed from time to time exclusively by resolution of the Board.

 

Section 3.                                           Classes of Directors. The directors of the Corporation, other than those who may be elected by the holders of any series of Preferred Stock, shall be divided into three classes, as nearly equal in number as possible,  designated Class I, Class II and Class III.

 

3


 

Section 4.                                           Election and Term of Office. The directors shall be elected by a plurality of the votes cast; provided that, whenever the holders of any class or series of capital stock of the Corporation are entitled to elect one or more directors pursuant to the provisions of this Certificate of Incorporation (including, but not limited to, any duly authorized certificate of designation), such directors shall be elected by a plurality of the votes cast by such holders. The term of office of the initial Class I directors shall expire at the first annual meeting of stockholders following the date the Common Stock is first publicly traded (the “IPO Date”), the term of office of the initial Class II directors shall expire at the second succeeding annual meeting of stockholders after the IPO Date and the term of office of the initial Class III directors shall expire at the third succeeding annual meeting of the stockholders after the IPO Date. For the purposes hereof, the Board of Directors may assign directors already in office to Class I, Class II and Class III, in accordance with the terms of that certain Director Nomination Agreement, dated on or about [     ], 2019 (as amended and/or restated or supplemented in accordance with its terms, the “Nomination Agreement”), by and among the Corporation and the investors named therein.  At each annual meeting of stockholders after the IPO Date, directors elected to replace those of a class whose terms expire at such annual meeting shall be elected to hold office until the third succeeding annual meeting after their election and until their respective successors shall have been duly elected and qualified.  Each director shall hold office until the annual meeting of stockholders for the year in which such director’s term expires and a successor is duly elected and qualified or until his or her earlier death, resignation or removal. Nothing in this Certificate of Incorporation shall preclude a director from serving consecutive terms. Elections of directors need not be by written ballot unless the Bylaws of the Corporation (as amended and/or restated the “Bylaws”) shall so provide.

 

Section 5.                                           Newly-Created Directorships and Vacancies. Subject to the rights of the holders of any series of Preferred Stock then outstanding and except as otherwise set forth in the Nomination Agreement, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, disqualification, removal from office or any other cause may be filled only by resolution of a majority of the directors then in office, although less than a quorum, or by a sole remaining director, and may not be filled in any other manner.  A director elected or appointed to fill a vacancy shall serve for the unexpired term of his or her predecessor in office and until his or her successor is elected and qualified or until his or her earlier death, resignation or removal.  A director elected or appointed to fill a position resulting from an increase in the number of directors shall hold office until the next election of the class for which such director shall have been elected or appointed and until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal.  No decrease in the authorized number of directors shall shorten the term of any incumbent director.

 

Section 6.                                           Removal and Resignation of Directors. Subject to the rights of the holders of any series of Preferred Stock then outstanding and notwithstanding any other provision of this Certificate of Incorporation, (i) prior to the first date (the “Trigger Date”) on which Vista Equity Partners Fund VI, L.P., Vista Equity Partners Fund VI-A, L.P., VEPF VI FAF, L.P., Vista Equity Partners Fund VI GP, L.P., VEPF VI GP, Ltd., VEPF Management, L.P. and VEP Group, LLC  (collectively, “Vista”) and their Affiliated Companies (as defined herein) cease to beneficially own in the aggregate (directly or indirectly) 40% or more of the voting power of the then outstanding shares of capital stock of the Corporation then entitled to vote generally in the election of directors

 

4


 

(“Voting Stock”), directors may be removed with or without cause upon the affirmative vote of stockholders representing at least a majority of the voting power of the then outstanding shares of Voting Stock, voting together as a single class and (ii) on and after the Trigger Date, directors may only be removed for cause and only upon the affirmative vote of stockholders representing at least sixty-six and two-thirds percent (662/3%) of the voting power of the then outstanding shares of Voting Stock, at a meeting of the Corporation’s stockholders called for that purpose.  Any director may resign at any time upon written notice to the Corporation.

 

Section 7.                                           Rights of Holders of Preferred Stock. Notwithstanding the provisions of this ARTICLE FIVE, whenever the holders of one or more series of Preferred Stock shall have the right, voting separately or together by series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorship shall be subject to the rights of such series of Preferred Stock.  During any period when the holders of any series of Preferred Stock, voting separately as a series or together with one or more series, have the right to elect additional directors, then upon commencement and for the duration of the period during which such right continues: (i) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed pursuant to said provisions, and (ii) each such additional director shall serve until such director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to his or her earlier death, resignation, disqualification or removal.  Except as otherwise provided by the Board of Directors in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate (in which case each such director thereupon shall cease to be qualified as, and shall cease to be, a director) and the total authorized number of directors of the Corporation shall automatically be reduced accordingly.

 

Section 8.                                           Advance Notice. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws .

 

ARTICLE SIX

 

Section 1.                                           Limitation of Liability.

 

(a)                                 To the fullest extent permitted by the DGCL as it now exists or may hereafter be amended (but, in the case of any such amendment, only to the extent such amendment permits the Corporation to provide broader exculpation  than permitted prior thereto), no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages arising from a breach of fiduciary duty as a director.

 

(b)                                 Any amendment, repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a

 

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director of the Corporation existing at the time of such amendment, repeal or modification with respect to any act, omission or other matter occurring prior to such amendment, repeal or modification.

 

ARTICLE SEVEN

 

Section 1.                                           Action by Written Consent.  Prior to the first date (the “Stockholder Consent Trigger Date”) on which Vista and its Affiliated Companies (as defined herein) cease to beneficially own in the aggregate (directly or indirectly) at least 35% of the Voting Stock, any action which is required or permitted to be taken by the Corporation’s stockholders may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of the Corporation’s stock entitled to vote thereon were present and voted.  From and after the Stockholder Consent Trigger Date, any action required or permitted to be taken by the Corporation’s stockholders may be taken only at a duly called annual or special meeting of the Corporation’s stockholders and the power of stockholders to consent in writing without a meeting is specifically denied; provided, however, that any action required or permitted to be taken by the holders of Preferred Stock, voting separately as a series or separately as a class with one or more other such series, may be taken without a meeting, without prior notice and without a vote, to the extent expressly so provided the resolutions creating  such series of Preferred Stock.

 

Section 2.                                           Special Meetings of Stockholders.  Subject to the rights of the holders of any series of Preferred Stock then outstanding and to the requirements of applicable law, special meetings of stockholders of the Corporation may be called only (i) by or at the direction of the Board of Directors or the Chairman of the Board of Directors pursuant to a written resolution adopted by the affirmative vote of the majority of the total number of directors that the Corporation would have if there were no vacancies or (ii) prior to the Stockholder Consent Trigger Date, by the Chairman of the Board of Directors at the written request of the holders of a majority of the voting power of the then outstanding shares of Voting Stock in the manner provided for in the Bylaws.  Any business transacted at any special meeting of stockholders shall be limited to the purpose or purposes stated in the notice of the meeting.

 

ARTICLE EIGHT

 

Section 1.                                           Certain Acknowledgments. In recognition and anticipation that (i) certain of the directors, partners, principals, officers, members, managers and/or employees of Vista or its Affiliated Companies (as defined below) may serve as directors or officers of the Corporation and (ii) Vista and its Affiliated Companies engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, and (iii) that the Corporation and its Affiliated Companies may engage in material business transactions with Vista and its Affiliated Companies, and that the Corporation is expected to benefit therefrom, the provisions of this ARTICLE EIGHT are set forth to regulate and define the conduct of certain affairs of the Corporation as they may involve Vista and/or its Affiliated Companies and/or their respective

 

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directors, partners, principals, officers, members, managers and/or employees, including any of the foregoing who serve as officers or directors of the Corporation (collectively, the “Exempted Persons”), and the powers, rights, duties and liabilities of the Corporation and its officers, directors and stockholders in connection therewith.  As used in this Certificate of Incorporation, “Affiliated Companies” shall mean (a) in respect of Vista, any entity that controls, is controlled by or under common control with Vista (other than the Corporation and any company that is controlled by the Corporation) and any investment funds managed by Vista and (b) in respect of the Corporation, any company controlled by the Corporation.

 

Section 2.                                           Competition and Corporate Opportunities. To the fullest extent permitted by applicable law, none of the Exempted Persons shall have any fiduciary duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as the Corporation or any of its Affiliated Companies, and no Exempted Person shall be liable to the Corporation or its stockholders for breach of any fiduciary duty solely by reason of any such activities of Vista, its Affiliated Companies or such Exempted Person.  To the fullest extent permitted by applicable law, the Corporation, on behalf of itself and its Affiliated Companies, renounces any interest or expectancy of the Corporation and its Affiliated Companies in, or in being offered an opportunity to participate in, business opportunities that are from time to time presented to the Exempted Persons, even if the opportunity is one that the Corporation or its Affiliated Companies might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so, and each Exempted Person shall have no duty to communicate or offer such business opportunity to the Corporation or its Affiliated Companies and, to the fullest extent permitted by applicable law, shall not be liable to the Corporation, any of its Affiliated Companies or its stockholders for breach of any fiduciary or other duty, as a director, officer or stockholder of the Corporation solely, by reason of the fact that Vista, its Affiliated Companies or any such Exempted Person pursues or acquires such business opportunity, sells, assigns, transfers or directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to the Corporation or any of its Affiliated Companies. Notwithstanding anything to the contrary in this Section 2, the Corporation does not renounce any interest or expectancy it may have in any business opportunity that is expressly offered to any Exempted Person solely in his or her capacity as a director or officer of the Corporation, and not in any other capacity.

 

Section 3.                                           Certain Matters Deemed Not Corporate Opportunities. In addition to and notwithstanding the foregoing provisions of this ARTICLE EIGHT, a corporate opportunity shall not be deemed to belong to the Corporation if it is a business opportunity the Corporation is not financially able or contractually permitted or legally able to undertake, or that is, from its nature, not in the line of the Corporation’s business or is of no practical advantage to it or that is one in which the Corporation has no interest or reasonable expectancy.

 

Section 4.                                           Amendment of this Article. Notwithstanding anything to the contrary elsewhere contained in this Certificate of Incorporation, subject to the rights of the holders of any series of Preferred Stock then outstanding, and in addition to any vote required by applicable law, the affirmative vote of the holders of at least eighty percent (80%) of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to alter, amend or repeal, or to adopt any provision inconsistent with, this ARTICLE EIGHT; provided however, that, to the fullest extent permitted by law, neither the alteration, amendment

 

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or repeal of this ARTICLE EIGHT nor the adoption of any provision of this Certificate of Incorporation inconsistent with this ARTICLE EIGHT shall apply to or have any effect on the liability or alleged liability of any Exempted Person for or with respect to any activities or opportunities which such Exempted Person becomes aware prior to such alteration, amendment, repeal or adoption.

 

Section 5.                                           Deemed Notice. Any person or entity purchasing or otherwise acquiring or holding any interest in any shares of the Corporation shall be deemed to have notice of and to have consented to the provisions of this ARTICLE EIGHT.

 

ARTICLE NINE

 

Section 1.                                           Section 203 of the DGCL. The Corporation expressly elects not to be subject to the provisions of Section 203 of the DGCL.

 

Section 2.                                           Business Combinations with Interested Stockholders. Notwithstanding any other provision in this Certificate of Incorporation to the contrary, the Corporation shall not engage in any Business Combination (as defined hereinafter), at any point in time at which the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act of 1934, as amended (the “Exchange Act”), with any Interested Stockholder (as defined hereinafter) for a period of three years following the time that such stockholder became an Interested Stockholder, unless:

 

(a)                                 prior to such time the Board of Directors approved either the Business Combination or the transaction which resulted in such stockholder becoming an Interested Stockholder;

 

(b)                                 upon consummation of the transaction which resulted in such stockholder becoming an Interested Stockholder, such stockholder owned at least eighty-five percent (85%) of the Voting Stock of the Corporation outstanding at the time the transaction commenced, excluding for purposes of determining the Voting Stock outstanding (but not the outstanding Voting Stock owned by such Interested Stockholder) those shares owned (i) by Persons (as defined hereinafter) who are directors and also officers of the Corporation and (ii) employee stock plans of the Corporation in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

 

(c)                                  at or subsequent to such time, the Business Combination is approved by the Board of Directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least sixty-six and two-thirds percent (662/3%) of the outstanding Voting Stock which is not owned by such Interested Stockholder.

 

Section 3.                                           Exceptions to Prohibition on Interested Stockholder Transactions. The restrictions contained in this ARTICLE NINE shall not apply if:

 

(a)                                 a stockholder becomes an Interested Stockholder inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares so that the stockholder

 

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ceases to be an Interested Stockholder; and (ii) would not, at any time within the three- year period immediately prior to a Business Combination between the Corporation and such stockholder, have been an Interested Stockholder but for the inadvertent acquisition of ownership; or

 

(b)                                 the Business Combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required hereunder of a proposed transaction which (i) constitutes one of the transactions described in the second sentence of this Section 3(b) of ARTICLE NINE; (ii) is with or by a Person who either was not an Interested Stockholder during the previous three years or who became an Interested Stockholder with the approval of the Board of Directors; and (iii) is approved or not opposed by a majority of the directors then in office (but not less than one) who were directors prior to any Person becoming an Interested Stockholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors. The proposed transactions referred to in the preceding sentence are limited to (x) a merger or consolidation of the Corporation (except for a merger in respect of which, pursuant to Section 251(f) of the DGCL, no vote of the stockholders of the Corporation is required); (y) a sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation (other than to any direct or indirect wholly-owned subsidiary or to the Corporation) having an aggregate market value equal to fifty percent (50%) or more of either that aggregate market value of all of the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding Stock (as defined hereinafter) of the Corporation; or (z)  a proposed tender or exchange offer for fifty percent (50%) or more of the outstanding Voting Stock of the Corporation. The Corporation shall give not less than 20 days’ notice to all Interested Stockholders prior to the consummation of any of the transactions described in clause (x) or (y) of the second sentence of this Section 3(b) of ARTICLE NINE.

 

Section 4.                                           Definitions. As used in this ARTICLE NINE only, and unless otherwise provided by the express terms of this ARTICLE NINE, the following terms shall have the meanings ascribed to them as set forth in this Section 4:

 

(a)                                 Affiliate” means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another Person;

 

(b)                                 Associate,” when used to indicate a relationship with any Person, means: (i) any corporation, partnership, unincorporated association or other entity of which such Person is a director, officer or general partner or is, directly or indirectly, the owner of twenty percent (20%) or more of any class of Voting Stock; (ii) any trust or other estate in which such Person has at least a twenty percent (20%) beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such Person, or any relative of such spouse, who has the same residence as such Person;

 

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(c)                                  Business Combination” means:

 

(i)            any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation with (A) the Interested Stockholder, or (B) any other corporation, partnership, unincorporated association or entity if the merger or consolidation is caused by the Interested Stockholder and as a result of such merger or consolidation Section 2 of this ARTICLE NINE is not applicable to the surviving entity;

 

(ii)           any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the Interested Stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to ten percent (10%) or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding Stock of the Corporation;

 

(iii)          any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any Stock of the Corporation or of such subsidiary to the Interested Stockholder, except: (A) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into Stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the Interested Stockholder became such; (B) pursuant to a merger under Section 251(g) of the DGCL; (C) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into Stock of the Corporation or any such subsidiary which security is distributed, pro rata to all holders of a class or series of Stock of the Corporation subsequent to the time the Interested Stockholder became such; (D) pursuant to an exchange offer by the Corporation to purchase Stock made on the same terms to all holders of such Stock; or (E) any issuance or transfer of Stock by the Corporation; provided however, that in no case under items (C)-(E) of this Section 4(c)(iii) of ARTICLE NINE shall there be an increase in the Interested Stockholder’s proportionate share of the Stock of any class or series of the Corporation or of the Voting Stock of the Corporation;

 

(iv)          any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of the Stock of any class or series, or securities convertible into the Stock of any class or series, of the Corporation or of any such subsidiary which is owned by the Interested Stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of Stock not caused, directly or indirectly, by the Interested Stockholder; or

 

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(v)           any receipt by the Interested Stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation), of any loans, advances, guarantees, pledges or other financial benefits (other than those expressly permitted in Sections 4(c)(i)-(iv) of ARTICLE NINE) provided by or through the Corporation or any direct or indirect majority-owned subsidiary of the Corporation;

 

(d)                                 Control,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of Voting Stock, by contract or otherwise. A Person who is the owner of twenty percent (20%) or more of the outstanding Voting Stock of any corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary; notwithstanding the foregoing, a presumption of control shall not apply where such Person holds Voting Stock, in good faith and not for the purpose of circumventing this ARTICLE NINE, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group (as such term is used in Rule 13d-5 under the Securities Exchange Act of 1934, as such Rule is in effect as of the date of this Certificate of Incorporation) have control of such entity;

 

(e)                                  Interested Stockholder” means any Person (other than the Corporation and any direct or indirect majority-owned subsidiary of the Corporation) that (i) is the owner of fifteen percent (15%) or more of the outstanding Voting Stock of the Corporation, or (ii) is an Affiliate or Associate of the Corporation and was the owner of fifteen percent (15%) or more of the outstanding Voting Stock of the Corporation at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such Person is an Interested Stockholder, and the affiliates and associates of such Person. Notwithstanding anything in this ARTICLE NINE to the contrary, the term “Interested Stockholder” shall not include: (x) Vista or any of its Affiliated Companies, or any other Person with whom any of the foregoing are acting as a group or in concert for the purpose of acquiring, holding, voting or disposing of shares of Stock of the Corporation, (y) any Person who would otherwise be an Interested Stockholder either in connection with or because of a transfer, sale, assignment, conveyance, hypothecation, encumbrance, or other disposition of five percent (5%) or more of the outstanding Voting Stock of the Corporation (in one transaction or a series of transactions) by Vista or any of its affiliates or associates to such Person; provided, however, that such Person was not an Interested Stockholder prior to such transfer, sale, assignment, conveyance, hypothecation, encumbrance, or other disposition; or (z) any Person whose ownership of shares in excess of the fifteen percent (15%) limitation set forth herein is the result of action taken solely by the Corporation, provided that, for purposes of this clause (z) only, such Person shall be an Interested Stockholder if thereafter such Person acquires additional shares of Voting Stock of the Corporation, except as a result of further action by the Corporation not caused, directly or indirectly, by such Person;

 

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(f)                                   Owner,” including the terms “own” and “owned,” when used with respect to any Stock, means a Person that individually or with or through any of its Affiliates or Associates beneficially owns such Stock, directly or indirectly; or has (A) the right to acquire such Stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the owner of Stock tendered pursuant to a tender or exchange offer made by such Person or any of such Person’s Affiliates or Associates until such tendered Stock is accepted for purchase or exchange; or (B) the right to vote such Stock pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the owner of any Stock because of such Person’s right to vote such Stock if the agreement, arrangement or understanding to vote such Stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more Persons; or (C) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in (B) of this Section 4(f) of ARTICLE NINE), or disposing of such Stock with any other Person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such Stock; provided, that, for the purpose of determining whether a Person is an Interested Stockholder, the Voting Stock of the Corporation deemed to be outstanding shall include Stock deemed to be owned by the Person through application of this definition of “owned” but shall not include any other unissued Stock of the Corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise;

 

(g)                                  Person” means any individual, corporation, partnership, unincorporated association or other entity;

 

(h)                                 Stock” means, with respect to any corporation, any capital stock of such corporation and, with respect to any other entity, any equity interest of such entity; and

 

(i)            Voting Stock” means, with respect to any corporation, Stock of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a corporation, any equity interest entitled to vote generally in the election of the governing body of such entity. Every reference to a percentage of Voting Stock shall refer to such percentage of the votes of such Voting Stock.

 

ARTICLE TEN

 

Section 1.                                           Amendments to the Bylaws.  Subject to the rights of holders of any series of Preferred Stock then outstanding, in furtherance and not in limitation of the powers conferred by law, prior to the first date (the “Amendment Trigger Date”) on which Vista and its Affiliated Companies cease to beneficially own in the aggregate (directly or indirectly) at least 50% of the Voting Stock, the Bylaws may be amended, altered or repealed and new bylaws made by, in addition to any vote of the holders of any class or series of capital stock of the Corporation required herein (including any resolution setting forth the terms of any series of Preferred Stock) and any other vote otherwise required by  applicable law, the affirmative vote of the holders of at least a majority of

 

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the voting power of all of the then outstanding shares of Voting Stock, voting together as a single class.  On and after the Amendment Trigger Date, the Bylaws may be amended, altered or repealed and new bylaws made by (i) the Board or (ii) in addition to any of the holders of any class or series of capital stock of the Corporation required herein (including any certificate of designation relating to any series of Preferred Stock), the Bylaws or applicable law, the affirmative vote of the holders of at least sixty-six and two-thirds percent (662/3%) of the voting power of the then outstanding Voting Stock, voting together as a single class.

 

Section 2.                                           Amendments to this Certificate of Incorporation.  Subject to the rights of holders of any series of Preferred Stock then outstanding, notwithstanding any other provision of this Certificate of Incorporation or the Bylaws, and in addition to any affirmative vote of the holders of any particular class or series of the capital stock required by law or otherwise, no provision of ARTICLE FIVE, ARTICLE SIX, ARTICLE SEVEN, ARTICLE NINE, ARTICLE TEN or ARTICLE ELEVEN of this Certificate of Incorporation may be altered, amended or repealed in any respect, nor may any provision of this Certificate of Incorporation or the Bylaws inconsistent therewith be adopted, unless in addition to any other vote required by this Certificate of Incorporation or otherwise required by law, (i) prior to the Amendment Trigger Date, such alteration, amendment, repeal or adoption is approved by the affirmative vote of the holders of a majority of the voting power of all outstanding shares of Voting Stock, voting together as a single class, and (ii) from and after the Amendment Trigger Date, such alteration, amendment, repeal or adoption is approved by the affirmative vote of holders of at least sixty-six and two-thirds percent (662/3%) of the voting power of all outstanding shares of Voting Stock, voting together as a single class, at a meeting of the Corporation’s stockholders called for that purpose.

 

ARTICLE ELEVEN

 

Section 1.                                           Exclusive Forum. Unless this Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the United States District Court for the District of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or stockholder of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, the Certificate of Incorporation or the Bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine; provided that for the avoidance of doubt, this provision, including for any “derivative action”, will not apply to suits to enforce a duty or liability created by the Securities Act, the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.

 

Section 2.                                           Notice. Any Person purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation (including, without limitation, shares of Common Stock) shall be deemed to have notice of and to have consented to the provisions of this ARTICLE ELEVEN.

 

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ARTICLE TWELVE

 

If any provision or provisions of this Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not, to the fullest extent permitted by applicable law, in any way be affected or impaired thereby.

 

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Exhibit 3.2

 

AMENDED AND RESTATED BYLAWS

 

OF

 

PING IDENTITY HOLDING CORP.

 

A Delaware corporation
(Adopted as of [     ], 2019)

 

ARTICLE I
OFFICES

 

Section 1.                                           Offices. Ping Identity Holding Corp. (the “Corporation”) may have an office or offices other than its registered office at such place or places, either within or outside the State of Delaware, as the Board of Directors of the Corporation (the “Board of Directors”) may from time to time determine or the business of the Corporation may require.  The registered office of the Corporation in the State of Delaware shall be as stated in the corporation’s certificate of incorporation as then in effect (the “Certificate of Incorporation”).

 

ARTICLE II
MEETINGS OF STOCKHOLDERS

 

Section 1.                                           Place of Meetings. The Board of Directors may designate a place, if any, either within or outside the State of Delaware, as the place of meeting for any annual meeting or for any special meeting of stockholders.

 

Section 2.                                           Annual Meeting. An annual meeting of the stockholders shall be held at such date and time as is specified by resolution of the Board of Directors. At the annual meeting, stockholders shall elect directors to succeed those whose terms expire at such annual meeting and transact such other business as properly may be brought before the annual meeting pursuant to Section 11 of this ARTICLE II of these Amended and Restated Bylaws (these “Bylaws”).  The Board of Directors may postpone, reschedule or cancel any annual meeting of stockholders previously scheduled by the Board of Directors.

 

Section 3.                                           Special Meetings. Special meetings of the stockholders may only be called in the manner provided in the Certificate of Incorporation.  Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.  The Board of Directors may postpone, reschedule or cancel any special meeting of stockholders previously scheduled by the Board of Directors.

 

Section 4.                                           Notice of Meetings. Whenever stockholders are required or permitted to take action at a meeting, notice of the meeting shall be given that shall state the place, if any, date, and time of the meeting of the stockholders, the means of remote communications, if any, by which stockholders and proxyholders not physically present may be deemed to be present in person and vote at such meeting, the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of the meeting, and, in the case of a special meeting, the purpose or purposes for which

 


 

the meeting is called, shall be given, not less than 10 nor more than 60 days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting, except as otherwise provided herein or required by law (meaning, here and hereinafter, as required from time to time by the General Corporation Law of the State of Delaware (the “DGCL”)) or the Certificate of Incorporation.

 

(a)                                 Form of Notice. All such notices shall be delivered in writing or in any other manner permitted by the DGCL. If mailed, such notice shall be deemed given when deposited in the United States mail, postage prepaid, addressed to the stockholder at his, her or its address as the same appears on the records of the Corporation. If given by facsimile telecommunication, such notice shall be deemed given when directed to a number at which the stockholder has consented to receive notice by facsimile. Subject to the limitations of Section 4(c) of this ARTICLE II, if given by electronic transmission, such notice shall be deemed to be delivered: (i) by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (ii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (x) such posting and (y) the giving of such separate notice; and (iii) if by any other form of electronic transmission, when directed to the stockholder. An affidavit of the secretary or an assistant secretary of the Corporation, the transfer agent of the Corporation or any other agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

 

(b)                                 Waiver of Notice. Whenever notice is required to be given under any provisions of the DGCL, the Certificate of Incorporation or these Bylaws, a written waiver thereof, signed by the stockholder entitled to notice, or a waiver by electronic transmission given by the stockholder entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Neither the business to be transacted at, nor the purpose of, any meeting of the stockholders of the Corporation need be specified in any waiver of notice of such meeting. Attendance of a stockholder of the Corporation at a meeting of such stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened and does not further participate in the meeting.

 

(c)                                  Notice by Electronic Transmission. Without limiting the manner by which notice otherwise may be given effectively to stockholders of the Corporation pursuant to the DGCL, the Certificate of Incorporation or these Bylaws, any notice to stockholders of the Corporation given by the Corporation under any provision of the DGCL, the Certificate of Incorporation or these Bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder of the Corporation to whom the notice is given. Any such consent shall be deemed revoked if: (i) the Corporation is unable to deliver by electronic transmission two (2) consecutive notices given by the Corporation in accordance with such consent; and (ii) such inability becomes known to the secretary or an assistant secretary of the Corporation or to the transfer agent or other person responsible for the giving of notice. However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. For purposes of these Bylaws, except as otherwise limited by applicable

 

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law, the term “electronic transmission” means any form of communication not directly involving the physical transmission of paper that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such recipient through an automated process.

 

Section 5.                                           List of Stockholders. The Corporation shall prepare, at least 10 days before each meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, provided, however, if the record date for determining the stockholders entitled to vote is less than 10 days before the meeting date, the list shall reflect the stockholders entitled to vote as of the 10th day before the meeting date, arranged in alphabetical order and showing the address of each such stockholder and the number of shares registered in the name of each such stockholder.  Nothing contained in this section shall require the Corporation to include electronic mail addresses or other electronic contact information on such list.  Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least 10 days prior to the meeting: (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the principal place of business of the Corporation. In the event the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation.  If the meeting is to be held at a place, the list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.  If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.  Except as otherwise provided by law, the list shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 5 or to vote in person or by proxy at any meeting of stockholders.

 

Section 6.                                           Quorum. The holders of a majority in voting power of the outstanding capital stock entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders, except as otherwise provided by law, by the Certificate of Incorporation or these Bylaws. If a quorum is not present, the chairman of the meeting or the holders of a majority of the voting power present in person or represented by proxy at the meeting and entitled to vote at the meeting may adjourn the meeting to another time and/or place from time to time until a quorum shall be present or represented by proxy. When a specified item of business requires a vote by a class or series (if the Corporation shall then have outstanding shares of more than one class or series) voting as a separate class or series, the holders of a majority in voting power of the outstanding stock of such class or series shall constitute a quorum (as to such class or series) for the transaction of such item of business.  A quorum once established at a meeting shall not be broken by the withdrawal of enough votes to leave less than a quorum.

 

Section 7.                                           Adjourned Meetings. Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place.  When a meeting is adjourned to another time and place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the

 

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adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the Board of Directors shall fix a new record date for notice of such adjourned meeting, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and, except as otherwise required by law, shall not be more than 60 days nor less than 10 days before the date of such adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting.

 

Section 8.                                           Vote Required. Subject to the rights of the holders of any series of preferred stock then outstanding, when a quorum has been established, all matters other than the election of directors shall be determined by the affirmative vote of the majority of voting power of capital stock present in person or represented by proxy at the meeting and entitled to vote on the subject matter, unless by express provisions of an applicable law, the rules of any stock exchange upon which the Corporation’s securities are listed, any regulation applicable to the Corporation or its securities, the Certificate of Incorporation or these Bylaws a minimum or different vote is required, in which case such express provision shall govern and control the vote required on such matter.  Directors shall be elected by a plurality of the votes cast.

 

Section 9.                                           Voting Rights. Subject to the rights of the holders of any series of preferred stock then outstanding, except as otherwise provided by the DGCL, the Certificate of Incorporation or these Bylaws, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote in person or by proxy for each share of capital stock held by such stockholder which has voting power upon the matter in question.  Voting at meetings of stockholders need not be by written ballot.

 

Section 10.                                    Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power.  A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally.

 

Section 11.                                    Advance Notice of Stockholder Business and Director Nominations.

 

(a)                                 Business at Annual Meetings of Stockholders.

 

(i)            Only such business (other than nominations of persons for election to the Board of Directors, which must be made in compliance with and are governed exclusively by Section 11(b) of this ARTICLE II) shall be conducted at an annual meeting of the stockholders as shall have been brought before the meeting (A) as specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors or any duly authorized

 

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committee thereof, (B) by or at the direction of the Board of Directors or any duly authorized committee thereof, or (C) by any stockholder of the Corporation who (1) was a stockholder of record at the time of giving of notice provided for in Section 11(a)(iii) of this ARTICLE II and at the time of the meeting, (2) is entitled to vote at the meeting and (3) complies with the notice procedures set forth in Section 11(a)(iii) of this ARTICLE II. For the avoidance of doubt, the foregoing clause (C) of this Section 11(a)(i) of ARTICLE II shall be the exclusive means for a stockholder to propose such business (other than business included in the Corporation’s proxy materials pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or business brought by Vista (as defined below) and any entity that controls, is controlled by or under common control with Vista (other than the Corporation and any company that is controlled by the Corporation) and any investment funds managed by Vista (the “Vista Affiliates”) at any time prior to the Advance Notice Trigger Date (as defined below)) before an annual meeting of stockholders.

 

(ii)           For any business (other than (A) nominations of persons for election to the Board of Directors, which must be made in compliance with and are governed exclusively by Section 11(b) of this ARTICLE II or (B) business brought by any of Vista Equity Partners Fund VI, L.P., Vista Equity Partners Fund VI-A, L.P., VEPF VI FAF, L.P., Vista Equity Partners Fund VI GP, L.P., VEPF VI GP, Ltd., VEPF Management, L.P. and VEP Group, LLC (collectively, “Vista”) and Vista Affiliates at any time prior to the date when Vista ceases to beneficially own in the aggregate (directly or indirectly) at least 10% of the voting power of the then outstanding shares of capital stock of the Corporation then entitled to vote generally in the election of directors (the “Advance Notice Trigger Date”) to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in proper written form as described in Section 11(a)(iii) of this ARTICLE II to the Secretary; any such proposed business must be a proper matter for stockholder action and the stockholder and the Stockholder Associated Person (as defined in Section 11(e) of this ARTICLE II) must have acted in accordance with the representations set forth in the Solicitation Statement (as defined in Section 11(a)(iii) of this ARTICLE II) required by these Bylaws. To be timely, a stockholder’s notice for such business (other than such a notice by Vista prior to the Advance Notice Trigger Date, which may be delivered at any time prior to the mailing of the definitive proxy statement pursuant to Section 14(a) of the Exchange Act related to the next annual meeting of stockholders) must be delivered by hand and received by the Secretary at the principal executive offices of the Corporation in proper written form not less than ninety (90) days and not more than one hundred twenty (120) days prior to the first anniversary of the preceding year’s annual meeting of stockholders (which date shall, for purposes of the Corporation’s first annual meeting of stockholders after its shares of Common Stock are first publicly traded, be deemed to have occurred on [     ], 2019); provided, however, that if and only if the annual meeting is not scheduled to be held within a period that commences thirty (30) days before such anniversary date and ends thirty (30) days after such anniversary date, or if no annual meeting was held in the preceding year (other than for purposes of the

 

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Corporation’s first annual meeting of stockholders after its shares of Common Stock are first publicly traded), such stockholder’s notice must be delivered by the later of (A) the tenth day following the day the Public Announcement (as defined in Section 11(e) of this ARTICLE II) of the date of the annual meeting is first made or (B) the date which is ninety (90) days prior to the date of the annual meeting. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. Notices delivered pursuant to Section 11(a) of this ARTICLE II will be deemed received on any given day only if received prior to the close of business on such day (and otherwise shall be deemed received on the next succeeding business day).

 

(iii)          To be in proper written form, a stockholder’s notice to the Secretary must set forth as to each matter of business the stockholder proposes to bring before the annual meeting:

 

(A)          a brief description of the business desired to be brought before the annual meeting (including the specific text of any resolutions or actions proposed for consideration and if such business includes a proposal to amend these Bylaws, the specific language of the proposed amendment) and the reasons for conducting such business at the annual meeting,

 

(B)          the name and address of the stockholder proposing such business, as they appear on the Corporation’s books, the name and address (if different from the Corporation’s books) of such proposing stockholder, and the name and address of any Stockholder Associated Person,

 

(C)          the class or series and number of shares of stock of the Corporation which are directly or indirectly held of record or beneficially owned by such stockholder or by any Stockholder Associated Person, a description of any Derivative Positions (as defined in Section 11(e) of this ARTICLE II) directly or indirectly held or beneficially held by the stockholder or any Stockholder Associated Person, and whether and to the extent to which a Hedging Transaction (as defined in Section 11(e) of this ARTICLE II) has been entered into by or on behalf of such stockholder or any Stockholder Associated Person,

 

(D)          a description of all arrangements or understandings between or among such stockholder or any Stockholder Associated Person and any other person or entity (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder, any Stockholder Associated Person or such other person or entity in such business,

 

(E)           a representation that such stockholder is a stockholder of record of the Corporation entitled to vote at such meeting and intends to

 

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appear in person or by proxy at the annual meeting to bring such business before the meeting,

 

(F)           any other information related to such stockholder or any Stockholder Associated Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies or consents (even if a solicitation is not involved) by such stockholder or Stockholder Associated Person in support of the business proposed to be brought before the meeting pursuant to Section 14 of the Exchange Act, and the rules, regulations and schedules promulgated thereunder, and

 

(G)          a representation as to whether such stockholder or any Stockholder Associated Person intends or is part of a group which intends to deliver a proxy statement and/or form of proxy to the holders of at least the percentage of the Corporation’s outstanding capital stock required to approve the proposal or otherwise to solicit proxies or votes from stockholders in support of the proposal (such representation, a “Solicitation Statement”).

 

In addition, any stockholder who submits a notice pursuant to Section 11(a) of this ARTICLE II is required to update and supplement the information disclosed in such notice, if necessary, in accordance with Section 11(d) of this ARTICLE II.

 

(iv)          Notwithstanding anything in these Bylaws to the contrary, no business (other than nominations of persons for election to the Board of Directors, which must be made in compliance with and are governed exclusively by Section 11(b) of this ARTICLE II) shall be conducted at an annual meeting except in accordance with the procedures set forth in Section 11(a) of this ARTICLE II.

 

(b)           Nominations at Annual Meetings of Stockholders.

 

(i)            Only persons who are nominated in accordance and compliance with the procedures set forth in this Section 11(b) of ARTICLE II shall be eligible for election to the Board of Directors at an annual meeting of stockholders.

 

(ii)           Nominations of persons for election to the Board of Directors of the Corporation may be made at an annual meeting of stockholders only (A) by or at the direction of the Board of Directors or any duly authorized committee thereof or (B) by any stockholder of the Corporation who (1) was a stockholder of record at the time of giving of notice provided for in this Section 11(b) of ARTICLE II and at the time of the annual meeting, (2) is entitled to vote at the meeting and (3) complies with the notice procedures set forth in this Section 11(b) of ARTICLE II. For the avoidance of doubt, clause (B) of this Section 11(b)(ii) of ARTICLE II shall be the exclusive means for a stockholder to make nominations of persons for election to the Board of Directors at an annual meeting of stockholders. For nominations to be properly brought by a stockholder at an

 

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annual meeting of stockholders, the stockholder must have given timely notice thereof in proper written form as described in Section 11(b)(iii) of this ARTICLE II to the Secretary and the stockholder and the Stockholder Associated Person must have acted in accordance with the representations set forth in the Nomination Solicitation Statement required by these Bylaws. To be timely, a stockholder’s notice for the nomination of persons for election to the Board of Directors (other than such a notice by Vista prior to the Advance Notice Trigger Date, which may be delivered at any time up to thirty-five (35) days prior to the next annual meeting of stockholders) must be delivered to the Secretary at the principal executive offices of the Corporation in proper written form not less than ninety (90) days and not more than one hundred twenty (120) days prior to the first anniversary of the preceding year’s annual meeting of stockholders (which date shall, for purposes of the Corporation’s first annual meeting of stockholders after its shares of Common Stock are first publicly traded, be deemed to have occurred on [      ], 2019); provided, however, that if and only if the annual meeting is not scheduled to be held within a period that commences thirty (30) days before such anniversary date and ends thirty (30) days after such anniversary date, or if no annual meeting was held in the preceding year (other than for purposes of the Corporation’s first annual meeting of stockholders after its shares of Common Stock are first publicly traded), such stockholder’s notice must be delivered by the later of the tenth day following the day the Public Announcement of the date of the annual meeting is first made and the date which is ninety (90) days prior to the date of the annual meeting. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. Notices delivered pursuant to this Section 11(b) of ARTICLE II will be deemed received on any given day if received prior to the close of business on such day (and otherwise on the next succeeding day).

 

(iii)          To be in proper written form, a stockholder’s notice to the Secretary shall set forth:

 

(A) as to each person that the stockholder proposes to nominate for election or re-election as a director of the Corporation, (1) the name, age, business address and residence address of the person, (2) the principal occupation or employment of the person, (3) the class or series and number of shares of capital stock of the Corporation which are directly or indirectly owned beneficially or of record by the person, (4) the date such shares were acquired and the investment intent of such acquisition and (5) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitation of proxies or consents for a contested election of directors (even if an election contest or proxy solicitation is not involved), or is otherwise required, pursuant to Section 14 of the Exchange Act, and the rules, regulations and schedules promulgated thereunder (including such person’s written consent to being named in the

 

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proxy statement as a nominee of the stockholder, if applicable, and to serving as a director if elected),

 

(B) as to the stockholder giving the notice, the name and address of such stockholder, as they appear on the Corporation’s books, the name and address (if different from the Corporation’s books) of such proposing stockholder, and the name and address of any Stockholder Associated Person,

 

(C) the class or series and number of shares of stock of the Corporation which are directly or indirectly held of record or beneficially owned by such stockholder or by any Stockholder Associated Person with respect to the Corporation’s securities, a description of any Derivative Positions directly or indirectly held or beneficially held by the stockholder or any Stockholder Associated Person, and whether and the extent to which a Hedging Transaction has been entered into by or on behalf of such stockholder or any Stockholder Associated Person,

 

(D) a description of all arrangements or understandings (including financial transactions and direct or indirect compensation) between or among such stockholder or any Stockholder Associated Person and each proposed nominee and any other person or entity (including their names) pursuant to which the nomination(s) are to be made by such stockholder,

 

(E) a representation that such stockholder is a holder of record of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the persons named in its notice,

 

(F) any other information relating to such stockholder or any Stockholder Associated Person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitation of proxies or consents for a contested election of directors (even if an election contest or proxy solicitation is not involved), or otherwise required, pursuant to Section 14 of the Exchange Act, and the rules, regulations and schedules promulgated thereunder, and

 

(G) a representation as to whether such stockholder or any Stockholder Associated Person  intends or is part of a group which intends to deliver a proxy statement and/or form of proxy to the holders of a sufficient number of the Corporation’s outstanding shares reasonably believed by the stockholder or any Stockholder Associated Person, as the case may be, to elect each proposed nominee or otherwise to solicit proxies or votes from stockholders in support of the nomination (such representation, a “Nomination Solicitation Statement”).

 

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In addition, any stockholder who submits a notice pursuant to this Section 11(b) of ARTICLE II is required to update and supplement the information disclosed in such notice, if necessary, in accordance with Section 11(d) of this ARTICLE II and shall comply with Section 11(f) of this ARTICLE II.

 

(iv)                              Notwithstanding anything in Section 11(b)(ii) of this ARTICLE II to the contrary, if the number of directors to be elected to the Board of Directors is increased effective after the time period for which nominations would otherwise be due under paragraph 11(b)(ii) of this Article II and there is no Public Announcement naming the nominees for additional directorships at least ten (10) days prior to the last day a stockholder may deliver a notice of nomination in accordance with Section 11(b)(ii), a stockholder’s notice required by Section 11(b)(ii) of this ARTICLE II shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth day following the day on which such Public Announcement is first made by the Corporation.

 

(c)                                  Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the notice of meeting. Only persons who are nominated in accordance and compliance with the procedures set forth in this Section 11(c) of ARTICLE II shall be eligible for election to the Board of Directors at a special meeting of stockholders at which directors are to be elected. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the notice of meeting only (i) by or at the direction of the Board of Directors, any duly authorized committee thereof, or stockholders (if stockholders are permitted to call a special meeting of stockholders pursuant to Section 2 of Article EIGHT of the Certificate of Incorporation) or (ii) provided that the Board of Directors or stockholders (if stockholders are permitted to call a special meeting of stockholders pursuant to Section 2 of Article Eight of the Certificate of Incorporation) has determined that directors are to be elected at such special meeting, by any stockholder of the Corporation who (A) was a stockholder of record at the time of giving of notice provided for in this Section 11(c) of ARTICLE II and at the time of the special meeting, (B) is entitled to vote at the meeting and (C) complies with the notice procedures provided for in this Section 11(c) of ARTICLE II. For the avoidance of doubt, the foregoing clause (ii) of this Section 11(c) of ARTICLE II shall be the exclusive means for a stockholder to propose nominations of persons for election to the Board of Directors at a special meeting of stockholders at which directors are to be elected. For nominations to be properly brought by a stockholder at a special meeting of stockholders, the stockholder must have given timely notice thereof in proper written form as described in this Section 11(c) of ARTICLE II to the Secretary. To be timely, a stockholder’s notice for the nomination of persons for election to the Board of Directors (other than such a notice by Vista prior to the Advance Notice Trigger Date, which may be delivered at any time up to the later of (i) thirty-five (35) days prior to the special meeting of stockholders and (ii) the tenth day following the day on which a Public Announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting) must be received by the Secretary at the principal executive offices of the Corporation not earlier than the 120th day prior to such special meeting and not later than the close of business on the

 

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later of the 90th day prior to such special meeting or the tenth day following the day on which a Public Announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.  In no event shall any adjournment or postponement of a special meeting or the announcement thereof commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. Notices delivered pursuant to this Section 11(c) of ARTICLE II will be deemed received on any given day if received prior to the close of business on such day (and otherwise on the next succeeding day). To be in proper written form, such stockholder’s notice shall set forth all of the information required by, and otherwise be in compliance with, Section 11(b)(iii) of this ARTICLE II. In addition, any stockholder who submits a notice pursuant to this Section 11(c) of ARTICLE II is required to update and supplement the information disclosed in such notice, if necessary, in accordance with Section 11(d) of this ARTICLE II and shall comply with Section 11(f) of this ARTICLE II.

 

(d)                                 Update and Supplement of Stockholder’s Notice. Any stockholder who submits a notice of proposal for business or nomination for election pursuant to this Section 11 of ARTICLE II is required to update and supplement the information disclosed in such notice, if necessary, so that the information provided or required to be provided in such notice shall be true and correct as of the record date for determining the stockholders entitled to notice of the meeting of stockholders and as of the date that is ten (10) business days prior to such meeting of the stockholders or any adjournment or postponement thereof, and such update and supplement shall be received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the fifth business day after the record date for the meeting of stockholders (in the case of the update and supplement required to be made as of the record date), and not later than the close of business on the eighth business day prior to the date for the meeting of stockholders or any adjournment or postponement thereof (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting of stockholders or any adjournment or postponement thereof).

 

(e)                                  Definitions. For purposes of this Section 11 of ARTICLE II, the term:

 

(i)                                     Derivative Positions” means, with respect to a stockholder or any Stockholder Associated Person, any derivative positions including, without limitation, any short position, profits interest, option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise and any performance-related fees to which such stockholder or any Stockholder Associated Person is entitled based, directly or indirectly, on any increase or decrease in the value of shares of capital stock of the Corporation;

 

(ii)                                  Hedging Transaction” means, with respect to a stockholder or any Stockholder Associated Person, any hedging or other transaction (such as borrowed or loaned shares) or series of transactions, or any other agreement,

 

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arrangement or understanding, the effect or intent of which is to increase or decrease the voting power or economic or pecuniary interest of such stockholder or any Stockholder Associated Person with respect to the Corporation’s securities;

 

(iii)                               Public Announcement” means disclosure in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or comparable news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act; and

 

(iv)                              Stockholder Associated Person” of any stockholder means (A) any person controlling, directly or indirectly, or acting in concert with, such stockholder, (B) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder or (C) any person directly or indirectly controlling, controlled by or under common control with such Stockholder Associated Person.

 

(f)                                   Submission of Questionnaire, Representation and Agreement. To be qualified to be a nominee for election or re-election as a director of the Corporation, a person must deliver (in the case of a person nominated by a stockholder in accordance with Sections 11(b) or 11(c) of this ARTICLE II, in accordance with the time periods prescribed for delivery of notice under such sections) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (i) is not and will not become a party to (A) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (B) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (ii) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein and (iii) would be in compliance, and if elected as a director of the Corporation will comply, with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.  The Corporation may also require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve either as a director of the Corporation or as an independent director of the Corporation under applicable Securities and Exchange Commission and stock exchange rules and the Corporation’s publicly disclosed corporate governance guidelines, or that could be material to a reasonable stockholder’s understanding of the qualifications and/or independence, or lack thereof, of such nominee, as determined in the Board of Directors’ sole discretion.

 

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(g)                                  Authority of Chairman; General Provisions. Except as otherwise provided by applicable law, the Certificate of Incorporation or these Bylaws, the chairman of the meeting shall have the power and duty to determine whether any nomination or other business proposed to be brought before the meeting was made or brought in accordance with the procedures set forth in these Bylaws (including whether the stockholder or Stockholder Associated Person, if any, on whose behalf the nomination or proposal is made or solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies or votes in support of such stockholder’s nominee or proposal in compliance with such stockholder’s representation as required by Section 11(a)(iii)(G) or Section 11(b)(iii)(G), as applicable, of these Bylaws) and, if any nomination or other business is not made or brought in compliance with these Bylaws, to declare that such nomination or proposal of other business be disregarded and not acted upon.  Notwithstanding the foregoing provisions of this Section 11, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or proposed business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.  For purposes of this Section 11, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

 

(h)                                 Compliance with Exchange Act. Notwithstanding the foregoing provisions of these Bylaws, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules, regulations and schedules promulgated thereunder with respect to the matters set forth in these Bylaws; provided, however, that any references in these Bylaws to the Exchange Act or the rules, regulations and schedules promulgated thereunder are not intended to and shall not limit the requirements applicable to any nomination or other business to be considered pursuant to Section 11 of this ARTICLE II.

 

(i)                                     Effect on Other Rights. Nothing in these Bylaws shall be deemed to (A) affect any rights of the stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act, (B) confer upon any stockholder a right to have a nominee or any proposed business included in the Corporation’s proxy statement, except as set forth in the Certificate of Incorporation or these Bylaws, (C) affect any rights of the holders of any series of preferred stock to elect directors pursuant to any applicable provisions of the Certificate of Incorporation or (D) limit the exercise, the method or timing of the exercise of, the rights of any person granted by the Corporation to nominate directors (including pursuant to that Director Nomination Agreement, dated as of on or about [      ], 2019 (as amended and/or restated or supplemented from time to time, the “Nomination Agreement”), by and among the Corporation and the investors named therein, which rights may be exercised without compliance with the provisions of this Section 11 of ARTICLE II.

 

Section 12.                                    Fixing a Record Date for Stockholder Meetings. In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board of Directors may fixa record date, which record date shall

 

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not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than 60 days nor less than 10 days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the next day preceding the day on which notice is first given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting in conformity herewith; and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance with the foregoing provisions of this Section 12 at the adjourned meeting.

 

Section 13.                                    Action by Stockholders Without a Meeting.  So long as stockholders of the Corporation have the right to act by written consent in accordance with Section 1 of ARTICLE EIGHT of the Certificate of Incorporation, the following provisions shall apply:

 

(a)                                 Record Date. For the purpose of determining the stockholders entitled to consent to corporate action in writing without a meeting as may be permitted by the Certificate of Incorporation or the certificate of designation relating to any outstanding class or series of preferred stock, the Board of Directors may fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than ten (10) (or the maximum number permitted by applicable law) days after the date on which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take action by written consent shall, by written notice delivered by hand to the Secretary at the Corporation’s principal place of business during regular business hours, request that the Board of Directors fix a record date, which notice shall include the text of any proposed resolutions. Notices delivered pursuant to Section 13(a) of this ARTICLE II will be deemed received on any given day only if received prior to the close of business on such day (and otherwise shall be deemed received on the next succeeding business day).  The Board of Directors shall promptly, but in all events within ten (10) days after the date on which such written notice is properly delivered to and deemed received by the Secretary, adopt a resolution fixing the record date (unless a record date has previously been fixed by the Board of Directors pursuant to the first sentence of this Section 13(a)).  If no record date has been fixed by the Board of Directors pursuant to this Section 13(a) or otherwise within ten (10) days of receipt of a valid request by a stockholder, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required pursuant to applicable law, shall be the first date after the expiration of such ten (10) day time period on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation pursuant to Section 13(b); provided, however, that if prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall in such an event be at the close

 

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of business on the day on which the Board of Directors adopts the resolution taking such prior action.

 

(b)                                 Generally.  No written consent shall be effective to take the corporate action referred to therein unless written consents signed by a sufficient number of stockholders to take such action are delivered to the Corporation, in the manner required by this Section 13, within sixty (60) (or the maximum number permitted by applicable law) days of the date of the earliest dated consent delivered to the Corporation in the manner required by applicable law. The validity of any consent executed by a proxy for a stockholder pursuant to an electronic transmission transmitted to such proxy holder by or upon the authorization of the stockholder shall be determined by or at the direction of the Secretary. A written record of the information upon which the person making such determination relied shall be made and kept in the records of the proceedings of the stockholders. Any such consent shall be inserted in the minute book as if it were the minutes of a meeting of stockholders. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given by the Corporation (at its expense) to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that written consent signed by a sufficient number of holders to take the action were delivered to the Corporation.

 

Section 14.                                    Conduct of Meetings.

 

(a)                                 Generally. Meetings of stockholders shall be presided over by the Chairman of the Board, if any, or in the Chairman’s absence or disability, by the Chief Executive Officer, or in the Chief Executive Officer’s absence or disability, by the President, or in the President’s absence or disability, by a Vice President (in the order as determined by the Board of Directors), or in the absence or disability of the foregoing persons by a chairman designated by the Board of Directors, or in the absence or disability of such person, by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in the Secretary’s absence or disability the chairman of the meeting may appoint any person to act as secretary of the meeting.

 

(b)                                 Rules, Regulations and Procedures. The Board of Directors may adopt by resolution such rules, regulations and procedures for the conduct of any meeting of stockholders of the Corporation as it shall deem appropriate including, without limitation, such guidelines and procedures as it may deem appropriate regarding the participation by means of remote communication of stockholders and proxyholders not physically present at a meeting. Except to the extent inconsistent with such rules, regulations and procedures as adopted by the Board of Directors, the chairman of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time

 

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allotted to questions or comments by participants. The chairman of the meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a nomination or matter or business was not properly brought before the meeting and if such chairman should so determine, such chairman shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. The chairman of the meeting shall announce at the meeting when the polls for each matter to be voted upon at the meeting will be opened and closed. After the polls close, no ballots, proxies or votes or any revocations or changes thereto may be accepted. The chairman of the meeting shall have the power, right and authority, for any or no reason, to convene, recess and/or adjourn any meeting of stockholders.

 

(c)                                  Inspectors of Elections. The Corporation may, and to the extent required by law shall, in advance of any meeting of stockholders, appoint one or more inspectors of election to act at the meeting and make a written report thereof. One or more other persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by law, inspectors may be officers, employees or agents of the Corporation.  No person who is a candidate for an office at an election may serve as an inspector at such election.  Each inspector, before entering upon the discharge of such inspector’s duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector’s ability. The inspector shall have the duties prescribed by law and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by law.

 

ARTICLE III
DIRECTORS

 

Section 1.                                           General Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

 

Section 2.                                           Annual Meetings. The annual meeting of the Board of Directors shall be held without other notice than this Bylaw immediately after, and at the same place as, the annual meeting of stockholders.  In the event that the annual meeting of stockholders takes place telephonically or through any other means by which the stockholders do not convene in any one location, the annual meeting of the Board of Directors shall be held at the principal offices of the Corporation immediately after the annual meeting of the stockholders.

 

Section 3.                                           Regular Meetings and Special Meetings. Regular meetings, other than the annual meeting, of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by resolution of the Board of Directors and publicized among all directors. Special meetings of the Board of Directors may be called by (i) the Chairman of the Board, if any, (ii) by the Secretary upon the written request of a majority of the directors then in office or (iii) if the Board of Directors then includes a director nominated or

 

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designated for nomination by Vista, by any director nominated or designated for nomination by Vista, and in each case shall be held at the place, if any, on the date and at the time as he, she or they shall fix.  Any and all business may be transacted at a special meeting of the Board of Directors.

 

Section 4.                                           Notice of Meetings. Notice of regular meetings of the Board of Directors need not be given except as otherwise required by law or these Bylaws. Notice of each special meeting of the Board of Directors, and of each regular and annual meeting of the Board of Directors for which notice is required, shall be given by the Secretary as hereinafter provided in this Section 4.  Such notice shall be state the date, time and place, if any, of the meeting. Notice of any special meeting, and of any regular or annual meeting for which notice is required, shall be given to each director at least (a) twenty-four (24) hours before the meeting if by telephone or by being personally delivered or sent by overnight courier, telecopy, electronic transmission, email or similar means or (b) five (5) days before the meeting if delivered by mail to the director’s residence or usual place of business. Such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage prepaid, or when transmitted if sent by telex, telecopy, electronic transmission, email or similar means. Neither the business to be transacted at, nor the purpose of, any special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

 

Section 5.                                           Waiver of Notice. Any director may waive notice of any meeting of directors by a writing signed by the director or by electronic transmission.  Any member of the Board of Directors or any committee thereof who is present at a meeting shall have waived notice of such meeting except when such member attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened and does not further participate in the meeting.  Such member shall be conclusively presumed to have assented to any action taken unless his or her dissent shall be entered in the minutes of the meeting or unless his or her written dissent to such action shall be filed with the person acting as the secretary of the meeting before the adjournment thereof or shall be forwarded by registered mail to the secretary of the Corporation immediately after the adjournment of the meeting.  Such right to dissent shall not apply to any member who voted in favor of such action.

 

Section 6.                                           Chairman of the Board, Quorum, Required Vote and Adjournment. The Board of Directors may elect a Chairman of the Board. Notwithstanding the foregoing, Vista shall have the right to designate the Chairman of the Board of Directors for so long as Vista beneficially owns in the aggregate (directly or indirectly) at least 30% or more of the voting power of the then outstanding shares of capital stock of the Corporation then entitled to vote generally in the election of directors. The Chairman of the Board must be a director and may be an officer of the Corporation. Subject to the provisions of these Bylaws and the direction of the Board of Directors, he or she shall perform all duties and have all powers which are commonly incident to the position of Chairman of the Board or which are delegated to him or her by the Board of Directors, preside at all meetings of the stockholders and Board of Directors at which he or she is present and have such powers and perform such duties as the Board of Directors may from time to time prescribe. If the Chairman of the Board is not present at a meeting of the Board of Directors, the Chief Executive Officer (if the Chief Executive Officer is a director and is not also the Chairman of the Board) shall preside at such meeting, and, if the Chief Executive Officer is not present at such meeting, a majority of the directors present at such meeting shall elect one of the directors present at the meeting to so preside. At all meetings of the Board of Directors, a majority of the directors then in office shall constitute a quorum for the transaction of business, provided, however, that a quorum shall never be less than

 

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one-third the total number of directors. Unless by express provision of an applicable law, the Certificate of Incorporation or these Bylaws a different vote is required, the vote of a majority of directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. At any meeting of the Board of Directors, business shall be transacted in such order and manner as the Board of Directors may from time to time determine. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may, to the fullest extent permitted by law, adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

 

Section 7.                                           Committees.

 

(a)                                 The Board of Directors may designate one or more committees, including an executive committee, consisting of one or more of the directors of the Corporation, and any committees required by the rules and regulations of such exchange as any securities of the Corporation are listed.  The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Except to the extent restricted by applicable law or the Certificate of Incorporation, each such committee, to the extent provided by the DGCL and in the resolution creating it, shall have and may exercise all the powers and authority of the Board of Directors. Each such committee shall serve at the pleasure of the Board of Directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors upon request.

 

(b)                                 Each committee of the Board of Directors may fix its own rules of procedure and shall hold its meetings as provided by such rules, except as may otherwise be provided by a resolution of the Board of Directors designating such committee. Unless otherwise provided in such a resolution, the presence of at least a majority of the members of the committee shall be necessary to constitute a quorum. All matters shall be determined by a majority vote of the members present at a meeting at which a quorum is present. Unless otherwise provided in such a resolution, in the event that a member and that member’s alternate, if alternates are designated by the Board of Directors, of such committee is or are absent or disqualified, the member or members present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member.

 

Section 8.                                           Action by Written Consent. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board of Directors or such committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

 

Section 9.                                           Compensation. The Board of Directors shall have the authority to fix the compensation, including fees, reimbursement of expenses and equity compensation, of directors for services to the Corporation in any capacity, including for attendance of meetings of the Board

 

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of Directors or participation on any committees.  No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

 

Section 10.                                    Reliance on Books and Records. A member of the Board of Directors, or a member of any committee designated by the Board of Directors shall, in the performance of such member’s duties, be fully protected in relying in good faith upon records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or committees of the Board of Directors, or by any other person as to matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

 

Section 11.                                    Telephonic and Other Meetings. Unless restricted by the Certificate of Incorporation, any one or more members of the Board of Directors or any committee thereof may participate in a meeting of the Board of Directors or such committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other.  Participation by such means shall constitute presence in person at a meeting.

 

ARTICLE IV
OFFICERS

 

Section 1.                                           Number and Election. Subject to the authority of Chief Executive Officer to appoint officers as set forth in Section 11 of this Article IV, the officers of the Corporation shall be elected by the Board of Directors and shall consist of a Chief Executive Officer, a President, one or more Vice Presidents, a Secretary, a Chief Financial Officer, a Treasurer and such other officers and assistant officers as may be deemed necessary or desirable by the Board of Directors.  Any number of offices may be held by the same person.  In its discretion, the Board of Directors may choose not to fill any office for any period as it may deem advisable.

 

Section 2.                                           Term of Office.   Each officer shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal as hereinafter provided.

 

Section 3.                                           Removal. Any officer or agent of the Corporation may be removed with or without cause by the Board of Directors, a duly authorized committee thereof or by such officers as may be designated by a resolution of the Board of Directors, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.  Any officer appointed by the Chief Executive Officer in accordance with Section 11 of this Article IV may also be removed by the Chief Executive Officer in his or her sole discretion.

 

Section 4.                                           Vacancies. Any vacancy occurring in any office because of death, resignation, removal, disqualification or otherwise may be filled by the Board of Directors or the Chief Executive Officer in accordance with Section 11 of this Article IV.

 

Section 5.                                           Compensation. Compensation of all executive officers shall be approved by the Board of Directors or a duly authorized committee thereof, and no officer shall be

 

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prevented from receiving such compensation by virtue of his or her also being a director of the Corporation.

 

Section 6.                                           Chief Executive Officer. The Chief Executive Officer shall have the powers and perform the duties incident to that position. The Chief Executive Officer shall, in the absence of the Chairman of the Board, or if a Chairman of the Board shall not have been elected, preside at each meeting of (a) the Board of Directors if the Chief Executive Officer is a director and (b) the stockholders.  Subject to the powers of the Board of Directors and the Chairman of the Board, the Chief Executive Officer shall be in general and active charge of the entire business and affairs of the Corporation, and shall be its chief policy making officer. The Chief Executive Officer shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or provided in these Bylaws. The Chief Executive Officer is authorized to execute bonds, mortgages and other contracts requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. Whenever the President is unable to serve, by reason of sickness, absence or otherwise, the Chief Executive Officer shall perform all the duties and responsibilities and exercise all the powers of the President.

 

Section 7.                                           The President. The President of the Corporation shall, subject to the powers of the Board of Directors, the Chairman of the Board and the Chief Executive Officer, have general charge of the business, affairs and property of the Corporation, and control over its officers, agents and employees. The President shall see that all orders and resolutions of the Board of Directors are carried into effect. The President is authorized to execute bonds, mortgages and other contracts requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. The President shall, in the absence of the Chief Executive Officer, act with all of the powers and be subject to all of the restrictions of the Chief Executive Officer.  The President shall have such other powers and perform such other duties as may be prescribed by the Chairman of the Board, the Chief Executive Officer, the Board of Directors or as may be provided in these Bylaws.

 

Section 8.                                           Vice Presidents. The Vice President, or if there shall be more than one, the Vice Presidents, in the order determined by the Board of Directors or the Chairman of the Board, shall, perform such duties and have such powers as the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President or these Bylaws may, from time to time, prescribe. The Vice Presidents may also be designated as Executive Vice Presidents or Senior Vice Presidents, as the Board of Directors may from time to time prescribe.

 

Section 9.                                           The Secretary and Assistant Secretaries. The Secretary shall attend all meetings of the Board of Directors (other than executive sessions thereof) and all meetings of the stockholders and record all the proceedings of the meetings in a book or books to be kept for that purpose or shall ensure that his or her designee attends each such meeting to act in such capacity. Under the Board of Directors’ supervision, the Secretary shall give, or cause to be given, all notices required to be given by these Bylaws or by law; shall have such powers and perform such duties as the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the

 

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President or these Bylaws may, from time to time, prescribe; and shall have custody of the corporate seal of the Corporation. The Secretary, or an Assistant Secretary, shall have authority to affix the corporate seal to any instrument requiring it and when so affixed, it may be attested by his or her signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his or her signature. The Assistant Secretary, or if there be more than one, any of the assistant secretaries, shall in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President, or Secretary may, from time to time, prescribe.

 

Section 10.                                    The Chief Financial Officer and the Treasurer. The Chief Financial Officer shall have the custody of the corporate funds and securities; shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation as shall be necessary or desirable in accordance with applicable law or generally accepted accounting principles; shall deposit all monies and other valuable effects in the name and to the credit of the Corporation as may be ordered by the Chairman of the Board or the Board of Directors; shall receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever; shall cause the funds of the Corporation to be disbursed when such disbursements have been duly authorized, taking proper vouchers for such disbursements; and shall render to the Board of Directors, at its regular meeting or when the Board of Directors so requires, an account of the financial condition and operations of the Corporation; shall have such powers and perform such duties as the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President or these Bylaws may, from time to time, prescribe.  The Treasurer, if any, shall in the absence or disability of the chief financial officer, perform the duties and exercise the powers of the chief financial officer, subject to the power of the board of directors.  The Treasurer, if any, shall perform such other duties and have such other powers as the board of directors may, from time to time, prescribe.

 

Section 11.                                    Appointed Officers.  In addition to officers designated by the Board in accordance with this ARTICLE IV, the Chief Executive Officer shall have the authority to appoint other officers below the level of Board-appointed Vice President as the Chief Executive Officer may from time to time deem expedient and may designate for such officers titles that appropriately reflect their positions and responsibilities.  Such appointed officers shall have such powers and shall perform such duties as may be assigned to them by the Chief Executive Officer or the senior officer to whom they report, consistent with corporate policies.  An appointed officer shall serve until the earlier of such officer’s resignation or such officer’s removal by the Chief Executive Officer or the Board of Directors at any time, either with or without cause.

 

Section 12.                                    Other Officers, Assistant Officers and Agents. Officers, assistant officers and agents, if any, other than those whose duties are provided for in these Bylaws, shall have such authority and perform such duties as may from time to time be prescribed by resolution of the Board of Directors and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board of Directors.

 

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Section 13.                                    Officers’ Bonds or Other Security. If required by the Board of Directors, any officer of the Corporation shall give a bond or other security for the faithful performance of his duties, in such amount and with such surety as the Board of Directors may require.

 

Section 14.                                    Delegation of Authority. The Board of Directors may by resolution delegate the powers and duties of such officer to any other officer or to any director, or to any other person whom it may select.

 

ARTICLE V
CERTIFICATES OF STOCK

 

Section 1.                                           Form. The shares of stock of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution that some or all of any or all classes or series of its stock shall be uncertificated shares.  Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation.  If shares are represented by certificates, the certificates shall be in such form as required by applicable law and as determined by the Board of Directors. Each certificate shall certify the number of shares owned by such holder in the Corporation and shall be signed by, or in the name of the Corporation by two authorized officers of the Corporation including, but not limited to, the Chairman of the Board (if an officer), the President, a Vice President, the Treasurer, the Secretary and an Assistant Secretary of the Corporation.  Any or all signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed, or whose facsimile signature or signatures have been used on, any such certificate or certificates shall cease to be such officer, transfer agent or registrar of the Corporation whether because of death, resignation or otherwise before such certificate or certificates have been issued by the Corporation, such certificate or certificates may nevertheless be issued as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures have been used thereon had not ceased to be such officer, transfer agent or registrar of the Corporation at the date of issue. All certificates for shares shall be consecutively numbered or otherwise identified.  The Board of Directors may appoint a bank or trust company organized under the laws of the United States or any state thereof to act as its transfer agent or registrar, or both in connection with the transfer of any class or series of securities of the Corporation. The Corporation, or its designated transfer agent or other agent, shall keep a book or set of books to be known as the stock transfer books of the Corporation, containing the name of each holder of record, together with such holder’s address and the number and class or series of shares held by such holder and the date of issue. When shares are represented by certificates, the Corporation shall issue and deliver to each holder to whom such shares have been issued or transferred, certificates representing the shares owned by such holder, and shares of stock of the Corporation shall only be transferred on the books of the Corporation by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the Corporation or its designated transfer agent or other agent of the certificate or certificates for such shares endorsed by the appropriate person or persons, with such evidence of the authenticity of such endorsement, transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps. In that event, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate or certificates and record the transaction on its books. When shares are not represented by certificates, shares of stock of the Corporation shall only be transferred on the books of the

 

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Corporation by the holder of record thereof or by such holder’s attorney duly authorized in writing, with such evidence of the authenticity of such transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps, and within a reasonable time after the issuance or transfer of such shares, the Corporation shall, if required by applicable law, send the holder to whom such shares have been issued or transferred a written statement of the information required by applicable law. Unless otherwise provided by applicable law, the Certificate of Incorporation, Bylaws or any other instrument, the rights and obligations of the holders of uncertificated stock and the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical.

 

Section 2.                                           Lost Certificates. The Corporation may issue or direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates previously issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the owner of the lost, stolen or destroyed certificate. When authorizing such issue of a new certificate or certificates or uncertificated shares, the Corporation may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his or her legal representative, to give the Corporation a bond in such sum as it may direct, sufficient to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

 

Section 3.                                           Registered Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its records as the owner of shares of stock to receive dividends, to vote, to receive notifications and otherwise to exercise all the rights and powers of an owner, except as otherwise required by applicable law. The Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares of stock on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by applicable law.

 

Section 4.                                           Fixing a Record Date for Purposes Other Than Stockholder Meetings or Actions by Written Consent. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment or any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purposes of any other lawful action (other than stockholder meetings and stockholder written consents which are expressly governed by Sections 12 and 13 of ARTICLE II hereof), the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

 

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ARTICLE VI
GENERAL PROVISIONS

 

Section 1.                                           Dividends. Subject to and in accordance with applicable law, the Certificate of Incorporation and any certificate of designation relating to any series of preferred stock, dividends upon the shares of capital stock of the Corporation may be declared and paid by the Board of Directors, in accordance with applicable law. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock, subject to the provisions of applicable law and the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends a reserve or reserves for any proper purpose. The Board of Directors may modify or abolish any such reserves in the manner in which they were created.

 

Section 2.                                           Checks, Notes, Drafts, Etc. All checks, notes, drafts or other orders for the payment of money of the Corporation shall be signed, endorsed or accepted in the name of the Corporation by such officer, officers, person or persons as from time to time may be designated by the Board of Directors or by an officer or officers authorized by the Board of Directors to make such designation.

 

Section 3.                                           Contracts. In addition to the powers otherwise granted to officers pursuant to ARTICLE IV hereof, the Board of Directors may authorize any officer or officers, or any agent or agents, in the name and on behalf of the Corporation to enter into or execute and deliver any and all deeds, bonds, mortgages, contracts and other obligations or instruments, and such authority may be general or confined to specific instances.

 

Section 4.                                           Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

 

Section 5.                                           Corporate Seal. The Board of Directors may provide a corporate seal which shall be in the form of a circle and shall have inscribed thereon the name of the Corporation and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Notwithstanding the foregoing, no seal shall be required by virtue of this Section.

 

Section 6.                                           Voting Securities Owned By Corporation. Voting securities in any other corporation or entity held by the Corporation shall be voted by the Chairman of the Board, Chief Executive Officer, the President or the Chief Financial Officer, unless the Board of Directors specifically confers authority to vote with respect thereto, which authority may be general or confined to specific instances, upon some other person or officer. Any person authorized to vote securities shall have the power to appoint proxies, with general power of substitution.

 

Section 7.                                           Facsimile Signatures. In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws and subject to applicable law, facsimile signatures of any officer or officers of the Corporation may be used.

 

Section 8.                                           Section Headings. Section headings in these Bylaws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.

 

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Section 9.                                           Inconsistent Provisions. In the event that any provision (or part thereof) of these Bylaws is or becomes inconsistent with any provision of the Certificate of Incorporation, the DGCL, any other applicable law or the Nomination Agreement, the provision (or part thereof) of these Bylaws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect.

 

ARTICLE VII
INDEMNIFICATION

 

Section 1.                                           Right to Indemnification and Advancement. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved (including involvement, without limitation, as a witness) in any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”), by reason of the fact that he or she is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director or officer or in any other capacity while serving as a director or officer, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including attorneys’ fees and related disbursements, judgments, fines, excise taxes or penalties under the Employee Retirement Income Security Act of 1974, as amended from time to time (“ERISA”) and any other penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the indemnitee’s heirs, executors and administrators; provided, however, that, except as provided in this Section 2 of this ARTICLE VII with respect to proceedings to enforce rights to indemnification and advance of expenses (as defined below), the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized in the specific case by the Board of Directors of the Corporation. The rights to indemnification and advance of expenses conferred in this Section 1 of ARTICLE VII shall be contract rights. In addition to the right to indemnification conferred herein, an indemnitee shall also have the right, to the fullest extent not prohibited by law, to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (an “advance of expenses”); provided, however, that if and to the extent that the DGCL requires, an advance of expenses shall be made only upon delivery to the Corporation of an undertaking (an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section 1 or otherwise. The Corporation may also, by action of its Board of Directors, provide indemnification and advancement to employees and agents of the Corporation. Any reference to an officer of the Corporation in this ARTICLE VII shall be deemed to refer exclusively to the Chairman of the Board of Directors, Chief Executive Officer, President, Secretary and Treasurer of the

 

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Corporation appointed pursuant to ARTICLE IV, and to any Vice President, Assistant Secretary, Assistant Treasurer or other officer of the Corporation appointed by the Board of Directors pursuant to ARTICLE IV of these By-laws, and any reference to an officer of any other enterprise shall be deemed to refer exclusively to an officer appointed by the board of directors or equivalent governing body of such other entity pursuant to the certificate of incorporation and bylaws or equivalent organizational documents of such other enterprise. The fact that any person who is or was an employee of the Corporation or an employee of any other enterprise has been given or has used the title of “Vice President” or any other title that could be construed to suggest or imply that such person is or may be an officer of the Corporation or of such other enterprise shall not result in such person being constituted as, or being deemed to be, an officer of the Corporation or of such other enterprise for purposes of this ARTICLE VII.

 

Section 2.                                           Procedure for Indemnification. Any claim for indemnification or advance of expenses by an indemnitee under this Section 2 of ARTICLE VII shall be made promptly, and in any event within forty-five days (or, in the case of an advance of expenses, twenty days, provided that the director or officer has delivered the undertaking contemplated by Section 1 of this ARTICLE VII if required), upon the written request of the indemnitee. If the Corporation denies a written request for indemnification or advance of expenses, in whole or in part, or if payment in full pursuant to such request is not made within forty-five days (or, in the case of an advance of expenses, twenty days, provided that the indemnitee has delivered the undertaking contemplated by Section 1 of this ARTICLE VII if required), the right to indemnification or advances as granted by this ARTICLE VII shall be enforceable by the indemnitee in any court of competent jurisdiction. Such person’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation to the fullest extent permitted by applicable law. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of expenses where the undertaking required pursuant to Section 1 of this ARTICLE VII, if any, has been tendered to the Corporation) that the claimant has not met the applicable standard of conduct which make it permissible under the DGCL for the Corporation to indemnify the claimant for the amount claimed, but the burden of proof shall be on the Corporation to the fullest extent permitted by law. Neither the failure of the Corporation (including its Board of Directors, a committee thereof, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

 

Section 3.                                           Insurance. The Corporation may purchase and maintain insurance on its own behalf and on behalf of any person who is or was or has agreed to become a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, partner, member, trustee, administrator, employee or agent of another corporation, partnership, joint venture, limited liability company, trust or other enterprise against any expense, liability or loss asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation

 

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would have the power to indemnify such person against such expenses, liability or loss under the DGCL.

 

Section 4.                                           Service for Subsidiaries. Any person serving as a director, officer, partner, member, trustee, administrator, employee or agent of another corporation, partnership, limited liability company, joint venture, trust or other enterprise, at least 50% of whose equity interests are owned by the Corporation (a “subsidiary” for purposes of this ARTICLE VII) shall be conclusively presumed to be serving in such capacity at the request of the Corporation.

 

Section 5.                                           Reliance. Persons who after the date of the adoption of this provision become or remain directors or officers of the Corporation or who, while a director or officer of the Corporation, become or remain a director, officer, employee or agent of a subsidiary, shall be conclusively presumed to have relied on the rights to indemnity, advance of expenses and other rights contained in this ARTICLE VII in entering into or continuing such service. To the fullest extent permitted by law, the rights to indemnification and to the advance of expenses conferred in this ARTICLE VII shall apply to claims made against an indemnitee arising out of acts or omissions which occurred or occur both prior and subsequent to the adoption hereof. Any amendment, alteration or repeal of this ARTICLE VII that adversely affects any right of an indemnitee or its successors shall be prospective only and shall not limit, eliminate, or impair any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment or repeal.

 

Section 6.                                           Non-Exclusivity of Rights; Continuation of Rights of Indemnification. The rights to indemnification and to the advance of expenses conferred in this ARTICLE VII shall not be exclusive of any other right which any person may have or hereafter acquire under the Certificate of Incorporation or under any statute, by-law, agreement, vote of stockholders or disinterested directors or otherwise. All rights to indemnification under this ARTICLE VII shall be deemed to be a contract between the Corporation and each director or officer of the Corporation who serves or served in such capacity at any time while this ARTICLE VII is in effect.  Any repeal or modification of this ARTICLE VII or repeal or modification of relevant provisions of the DGCL or any other applicable laws shall not in any way diminish any rights to indemnification and advancement of expenses of such director or officer or the obligations of the Corporation arising hereunder with respect to any proceeding arising out of, or relating to, any actions, transactions or facts occurring prior to the final adoption of such repeal or modification.

 

Section 7.                                           Merger or Consolidation. For purposes of this ARTICLE VII, references to the “Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this ARTICLE VII with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued.

 

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Section 8.                                           Savings Clause. To the fullest extent permitted by law, if this ARTICLE VII or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify and advance expenses to each person entitled to indemnification under Section 1 of this ARTICLE VII as to all expense, liability and loss (including attorneys’ fees and related disbursements, judgments, fines, ERISA excise taxes and penalties and any other penalties and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person and for which indemnification and advancement of expenses is available to such person pursuant to this ARTICLE VII to the fullest extent permitted by any applicable portion of this ARTICLE VII that shall not have been invalidated.

 

ARTICLE VIII
AMENDMENTS

 

These Bylaws may be amended, altered, changed or repealed or new Bylaws adopted only in accordance with Section 1 of ARTICLE ELEVEN of the Certificate of Incorporation.

 

*     *     *     *     *

 

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Exhibit 4.1

 

PING IDENTITY HOLDING CORP.

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of [            ], 2019 among Ping Identity Holding Corp., a Delaware corporation (the “Company”), and each of the investors listed on the signature pages hereto under the caption “Investors” (collectively, the “Investors”), each of the executives listed on the signature pages under the caption “Executives” or who executes a Joinder as an “Executive” (collectively, the “Executives”), and each other Person who executes a Joinder as an “Other Holder” (collectively, the “Other Holders”). Except as otherwise specified herein, all capitalized terms used in this Agreement are defined in Exhibit A attached hereto.

 

In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

 

Section 1                      Demand Registrations.

 

(a)         Requests for Registration.  At any time and from time to time, the Majority Holders may request registration under the Securities Act of all or any portion of their Registrable Securities on Form S-1 or any similar long-form registration (“Long-Form Registrations”) or on Form S-3 or any similar short-form registration (“Short-Form Registrations”), if available (any such requested registration, a “Demand Registration”).  The Majority Holders may request that any Demand Registration be made pursuant to Rule 415 under the Securities Act (a “Shelf Registration”) and (if the Company is a WKSI at the time any such request is submitted to the Company or will become one by the time of the filing of such Shelf Registration) that such Shelf Registration be an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) (an “Automatic Shelf Registration Statement”).  Each request for a Demand Registration must specify the approximate number or dollar value of Registrable Securities requested to be registered by the requesting Holders and (if known) the intended method of distribution.  The Majority Holders will be entitled to request an unlimited number of Demand Registrations in which the Company will pay all Registration Expenses, whether or not any such registration is consummated.

 

(b)         Notice to Other Holders.  Within ten (10) days after receipt of any such request, the Company will give written notice of the Demand Registration to all other Holders and, subject to the terms of Section 1(e), will include in such Demand Registration (and in all related registrations and qualifications under state blue sky laws and in any related underwriting) all Registrable Securities with respect to which the Company has received written requests for inclusion therein within ten (10) days after the receipt of the Company’s notice; provided that, with the consent of the Majority Holders, the Company may instead provide notice of the Demand Registration to all other Holders within three (3) Business Days following the non-confidential filing of the registration statement with respect to the Demand Registration so long as such registration statement is not an Automatic Shelf Registration Statement.

 


 

(c)          Form of Registrations.  All Long-Form Registrations will be underwritten registrations unless otherwise approved by the Majority Holders.  Demand Registrations will be Short-Form Registrations whenever the Company is permitted to use any applicable short form and if the managing underwriters (if any) and the Majority Holders agree to the use of a Short-Form Registration.

 

(d)         Shelf Registrations.

 

(i)                                     For so long as a registration statement for a Shelf Registration (a “Shelf Registration Statement”) is and remains effective, the Majority Holders will have the right at any time or from time to time to elect to sell pursuant to an offering (including an underwritten offering) Registrable Securities available for sale pursuant to such registration statement (“Shelf Registrable Securities”). If the Majority Holders desire to sell Registrable Securities pursuant to an underwritten offering, they shall deliver to the Company a written notice (a “Shelf Offering Notice”) specifying the number of Shelf Registrable Securities that the holders desire to sell pursuant to such underwritten offering (the “Shelf Offering”).  As promptly as practicable, but in no event later than two (2) Business Days after receipt of a Shelf Offering Notice, the Company will give written notice of such Shelf Offering Notice to all other Holders of Shelf Registrable Securities that have been identified as selling stockholders in such Shelf Registration Statement and are otherwise permitted to sell in such Shelf Offering.  The Company, subject to Section 1(e) and Section 7, will include in such Shelf Offering all Shelf Registrable Securities with respect to which the Company has received written requests for inclusion (which request will specify the maximum number of Shelf Registrable Securities intended to be disposed of by such Holder) within seven (7) days after the receipt of the Shelf Offering Notice.  The Company will, as expeditiously as possible (and in any event within 20 days after the receipt of a Shelf Offering Notice), but subject to Section 1(e), use its best efforts to facilitate such Shelf Offering.

 

(ii)                                  If the Majority Holders wish to engage in an underwritten block trade or bought deal off of a Shelf Registration Statement (either through filing an Automatic Shelf Registration Statement or through a take-down from an already existing Shelf Registration Statement) (each, an “Underwritten Block Trade”), then notwithstanding the time periods set forth in Section 1(d)(i), such Majority Holders will notify the Company of the Underwritten Block Trade not less than two (2) Business Days prior to the day such offering is first anticipated to commence.  If requested by the Majority Holders, the Company will promptly notify other Holders of such Underwritten Block Trade and such notified Holders (each, a “Potential Participant”) may elect whether or not to participate no later than the next Business Day (i.e. one (1) Business Day prior to the day such offering is to commence) (unless a longer period is agreed to by the Majority Holders), and the Company will as expeditiously as possible use its best efforts to facilitate such Underwritten Block Trade (which may close as early as two (2) Business Days after the date it commences); provided further that, notwithstanding the provisions of Section 1(d)(i), no Holder (other than Holders of Investor Registrable Securities) will be permitted to participate in an Underwritten Block Trade without the consent of the Majority Holders. Any Potential Participant’s request to participate in an Underwritten Block Trade shall be binding on the Potential Participant.

 

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(iii)                               All determinations as to whether to complete any Shelf Offering and as to the timing, manner, price and other terms of any Shelf Offering contemplated by this Section 1(d) shall be determined by the Majority Holders, and the Company shall use its best efforts to cause any Shelf Offering to occur as promptly as practicable.

 

(iv)                              The Company will, at the request of the Majority Holders, file any prospectus supplement or any post-effective amendments and otherwise take any action necessary to include therein all disclosure and language deemed necessary or advisable by the Majority Holders to effect such Shelf Offering.

 

(e)          Priority on Demand Registrations and Shelf Offerings.  The Company will not include in any Demand Registration any securities which are not Registrable Securities without the prior written consent of the Majority Holders.  If a Demand Registration or a Shelf Offering is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of Registrable Securities and (if permitted hereunder) other securities requested to be included in such offering exceeds the number of Registrable Securities and other securities (if any), which can be sold therein without adversely affecting the marketability, proposed offering price, timing or method of distribution of the offering, then the Company will include in such offering (prior to the inclusion of any securities which are not Registrable Securities); (i) first, the number of Investor Registrable Securities requested to be included which, in the opinion of such underwriters, can be sold, without any such adverse effect, pro rata among the respective Investors on the basis of the number of Investor Registrable Securities owned by each such Investor; and (ii) second, the number of Registrable Securities requested to be included by Other Holders which, in the opinion of such underwriters, can be sold, without any such adverse effect, pro rata among the respective other Holders on the basis of the number of Registrable Securities owned by each such other Holder. In addition, if any Holders of Executive Registrable Securities have requested to include such securities in an underwritten offering and the managing underwriters for such offering advise the Company that in their opinion the inclusion of some or all of such Executive Registrable Securities could adversely affect the marketability, proposed offering price, timing and/or method of distribution of the offering, then the Company shall exclude from such offering the number of such Executive Registrable Securities identified by the managing underwriters as having any such adverse effect prior to the exclusion of any Registrable Securities of any other Holders as set forth in this Section 1(e).

 

(f)           Restrictions on Demand Registration and Shelf Offerings.

 

(i)                                     The Company may postpone, for up to sixty (60) days from the date of the request (the “Suspension Period”), the filing or the effectiveness of a registration statement for a Demand Registration or suspend the use of a prospectus that is part of a Shelf Registration Statement (and therefore suspend sales of the Shelf Registrable Securities) by providing written notice to the Holders if the following conditions are met: (A) the Company determines that the offer or sale of Registrable Securities would reasonably be expected to have a material adverse effect on any proposal or plan by the Company or any Subsidiary to engage in any material acquisition of assets or stock (other than in the ordinary course of business) or any material merger, consolidation, tender offer, recapitalization, reorganization, financing or other transaction involving the Company and (B) upon advice of counsel, the sale of Registrable Securities pursuant to the registration

 

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statement would require disclosure of material non-public information not otherwise required to be disclosed under applicable law, and (x) the Company has a bona fide business purpose for preserving the confidentiality of such transaction, (y) disclosure would have a material adverse effect on the Company or the Company’s ability to consummate such transaction, or (z) such transaction renders the Company unable to comply with SEC requirements, in each case under circumstances that would make it impractical or inadvisable to cause the registration statement (or such filings) to become effective or to promptly amend or supplement the registration statement on a post effective basis, as applicable. The Company may delay or suspend the effectiveness of a Demand Registration or Shelf Registration Statement pursuant to this Section 1(f)(i) only once in any twelve (12)-month period (for avoidance of doubt, in addition to the Company’s rights and obligations under Section 4(a)(vi)).

 

(ii)                                  In the case of an event that causes the Company to suspend the use of a Shelf Registration Statement as set forth in paragraph (f)(ii) above or pursuant to Section 4(a)(vi) (a “Suspension Event”), the Company will give a notice to the Holders whose Registrable Securities are registered pursuant to such Shelf Registration Statement (a “Suspension Notice”) to suspend sales of the Registrable Securities and such notice must state generally the basis for the notice and that such suspension will continue only for so long as the Suspension Event or its effect is continuing.  Each Holder agrees not to effect any sales of its Registrable Securities pursuant to such Shelf Registration Statement (or such filings) at any time after it has received a Suspension Notice from the Company and prior to receipt of an End of Suspension Notice.  A Holder may recommence effecting sales of the Registrable Securities pursuant to the Shelf Registration Statement (or such filings) following further written notice to such effect (an “End of Suspension Notice”) from the Company, which End of Suspension Notice will be given by the Company to the Holders promptly following the conclusion of any Suspension Event.

 

(g)          Selection of Underwriters.  The Majority Holders will have the right to select the investment banker(s) and manager(s) to administer any underwritten offering in connection with any Demand Registration or Shelf Offering.

 

(h)         Other Registration Rights.  Except as provided in this Agreement, the Company will not grant to any Person(s) the right to request the Company or any Subsidiary to register any equity securities of the Company or any Subsidiary, or any securities convertible or exchangeable into or exercisable for such securities, without the prior written consent of the Majority Holders.

 

(i)             Revocation of Demand Notice or Shelf Offering Notice.  At any time prior to the effective date of the registration statement relating to a Demand Registration or the “pricing” of any offering relating to a Shelf Offering Notice, the Majority Holders may revoke such notice of a Demand Registration or Shelf Offering Notice on behalf of all Holders participating in such Demand Registration or Shelf Offering without liability to such Holders (including, for the avoidance of doubt, the Majority Holders), in each case by providing written notice to the Company.

 

(j)            Confidentiality.  Each Holder agrees to treat as confidential the receipt of any notice hereunder (including notice of a Demand Registration, a Shelf Offering Notice and a

 

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Suspension Notice) and the information contained therein, and not to disclose or use the information contained in any such notice (or the existence thereof) without the prior written consent of the Company until such time as the information contained therein is or becomes available to the public generally (other than as a result of disclosure by such Holder in breach of the terms of this Agreement).

 

Section 2                      Piggyback Registrations.

 

(a)         Right to Piggyback.  Whenever the Company proposes to register any of its equity securities under the Securities Act (including primary and secondary registrations, and other than pursuant to an Excluded Registration) (a “Piggyback Registration”), the Company will give prompt written notice (and in any event within three (3) Business Days after the public filing of the registration statement relating to the Piggyback Registration) to all Holders of its intention to effect such Piggyback Registration and, subject to the terms of Section 2(b) and Section 2(c), will include in such Piggyback Registration (and in all related registrations or qualifications under blue sky laws and in any related underwriting) all Registrable Securities with respect to which the Company has received written requests for inclusion therein within ten (10) days after delivery of the Company’s notice; provided that the Company shall not be required to provide such notice or include any Registrable Securities in such registration if the Investor elects not to include any Investor Registrable Securities in such registration, unless the Majority Holders otherwise consent in writing.

 

(b)         Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability, proposed offering price, timing or method of distribution of the offering, the Company will include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Investor Registrable Securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect, pro rata among the Investors on the basis of the number of Investor Registrable Securities owned by each such Investor, (iii) third, the Registrable Securities requested to be included in such registration by Other Holders which, in the opinion of the underwriters, can be sold without any such adverse effect, pro rata among the other Holders on the basis of the number of Registrable Securities owned by each such other Holder, and (iv) fourth, other securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect.  In addition, if any Holders of Executive Registrable Securities have requested to include such securities in a Piggyback Registration that is an underwritten primary offering on behalf of the Company and the managing underwriters for such offering advise the Company in writing that in their opinion the inclusion of some or all of such Executive Registrable Securities could adversely affect the marketability, proposed offering price, timing and/or method of distribution of the offering, the Company shall first exclude from such offering the number (which may be all) of such Executive Registrable Securities identified by the managing underwriters as having any such adverse effect prior to the exclusion of any securities in such offering.

 

(c)          Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company’s equity securities (other

 

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than Majority Holders), and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability, proposed offering price, timing or method of distribution of the offering, the Company will include in such registration (i) first, the securities requested to be included therein by the holders initially requesting such registration and the Registrable Securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect, (ii) second, the Registrable Securities requested to be included in such registration, pro rata among the Holders on the basis of the number of Registrable Securities owned by each such Holder which, in the opinion of the underwriters, can be sold without any such adverse effect,  and (iii) third, other securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect. In addition, if any Holders of Executive Registrable Securities have requested to include such securities in a Piggyback Registration that is an underwritten secondary offering and the managing underwriters for such offering advise the Company in writing that in their opinion the inclusion of some or all of such Executive Registrable Securities could adversely affect the marketability, proposed offering price, timing or method of distribution of the offering, the Company shall be permitted to first exclude from such offering the number (which may be all) of such Executive Registrable Securities identified by the managing underwriters as having any such adverse effect prior to the exclusion of any securities in such offering.

 

(d)         Right to Terminate Registration. The Company will have the right to terminate or withdraw any registration initiated by it under this Section 2, whether or not any holder of Registrable Securities has elected to include securities in such registration.

 

(e)          Selection of Underwriters. If any Piggyback Registration is an underwritten offering, the selection of investment banker(s) and manager(s) for the offering must be approved by the Majority Holders, which approval shall not be unreasonably withheld, conditioned, or delayed.

 

Section 3                      Stockholder Lock-Up Agreements and Company Holdback Agreement.

 

(a)         Stockholder Lock-up Agreements. In connection with any underwritten Public Offering, each Holder will enter into any lock-up, holdback or similar agreements requested by the underwriter(s) managing such offering, in each case with such modifications and exceptions as may be approved by the Majority Holders.  Without limiting the generality of the foregoing, each Holder hereby agrees that in connection with the Company’s initial Public Offering and in connection with any Demand Registration, Shelf Offering or Piggyback Registration that is an underwritten Public Offering, not to (i) offer, sell, contract to sell, pledge or otherwise dispose of (including sales pursuant to Rule 144), directly or indirectly, any equity securities of the Company (including equity securities of the Company that may be deemed to be owned beneficially by such Holder in accordance with the rules and regulations of the SEC) (collectively, “Securities”), or any securities, options or rights convertible into or exchangeable or exercisable for Securities (collectively, “Other Securities”), (ii) enter into a transaction which would have the same effect as described in clause (i) above, (iii) enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences or ownership of any Securities or Other Securities, whether such transaction is to be settled by delivery of such Securities or Other

 

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Securities, in cash or otherwise (each of (i), (ii) and (iii) above, a “Sale Transaction”), or (iv) publicly disclose the intention to enter into any Sale Transaction, commencing on the date on which the Company gives notice to the Holders that a preliminary prospectus has been circulated for such underwritten Public Offering or the “pricing” of such offering and continuing to the date that is (x) 180 days following the date of the final prospectus for such underwritten Public Offering in the case of the Company’s initial Public Offering, or (y) 90 days following the date of the final prospectus in the case of any other such underwritten Public Offering (each such period, or such shorter period as agreed to by the managing underwriters, a “Holdback Period”), in each case with such modifications and exceptions as may be approved by the Majority Holders.  The Company may impose stop-transfer instructions with respect to any Securities or Other Securities subject to the restrictions set forth in this Section 3(a) until the end of such Holdback Period. Notwithstanding the foregoing, no Holder (other than officers and directors of the Company) will be subject to the Holdback Period in connection with an underwritten block Shelf Offering unless such Holder was provided notice one day prior to such underwritten block Shelf Offering and provided the opportunity to participate therein (whether or not such Holder elects to participate in such underwritten block trade).

 

(b)         Company Holdback Agreement.  The Company (i) will not file any registration statement for a Public Offering or cause any such registration statement to become effective, or effect any public sale or distribution of its Securities or Other Securities during any Holdback Period (other than as part of such underwritten Public Offering, or a registration on Form S-4 or Form S-8 or any successor or similar form which is (x) then in effect or (y) shall become effective upon the conversion, exchange or exercise of any then outstanding Other Securities) and (ii) will cause each holder of Securities and Other Securities (including each of its directors and executive officers) to agree not to effect any Sale Transaction during any Holdback Period, except as part of such underwritten registration (if otherwise permitted), unless approved in writing by the Majority Holders and the underwriters managing the Public Offering and to enter into any lock-up, holdback or similar agreements requested by the underwriter(s) managing such offering, in each case with such modifications and exceptions as may be approved by the Majority Holders.

 

Section 4                      Registration Procedures.

 

(a)         Company Obligations. Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement or have initiated a Shelf Offering, the Company will use its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company will as expeditiously as possible:

 

(i)                                     prepare and file with (or submit confidentially to) the SEC a registration statement, and all amendments and supplements thereto and related prospectuses, with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective, all in accordance with the Securities Act and all applicable rules and regulations promulgated thereunder (provided that before filing or confidentially submitting a registration statement or prospectus or any amendments or supplements thereto, the Company will furnish to the counsel selected by the Majority Holders covered by such registration statement copies of all such documents proposed to

 

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be filed or submitted, which documents will be subject to the review and comment of such counsel);

 

(ii)                                  notify each Holder of (A) the issuance by the SEC of any stop order suspending the effectiveness of any registration statement or the initiation of any proceedings for that purpose, (B) the receipt by the Company or its counsel of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, and (C) the effectiveness of each registration statement filed hereunder;

 

(iii)                               prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period ending when all of the securities covered by such registration statement have been disposed of in accordance with the intended methods of distribution by the sellers thereof set forth in such registration statement (but not in any event before the expiration of any longer period required under the Securities Act or, if such registration statement relates to an underwritten Public Offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sale of Registrable Securities by an underwriter or dealer) and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement;

 

(iv)                              furnish, without charge, to each seller of Registrable Securities thereunder and each underwriter, if any, such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus) (in each case including all exhibits and documents incorporated by reference therein), each amendment and supplement thereto, each Free Writing Prospectus and such other documents as such seller  or underwriter, if any, may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller (the Company hereby consenting to the use in accordance with all applicable laws of each such registration statement, each such amendment and supplement thereto, and each such prospectus (or preliminary prospectus or supplement thereto) or Free Writing Prospectus by each such seller of Registrable Securities and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such registration statement or prospectus);

 

(v)                                 use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company will not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph or (B) consent to general service of process in any such jurisdiction or (C) subject itself to taxation in any such jurisdiction);

 

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(vi)                              notify in writing each seller of such Registrable Securities (A) promptly after it receives notice thereof, of the date and time when such registration statement and each post-effective amendment thereto has become effective or a prospectus or supplement to any prospectus relating to a registration statement has been filed and when any registration or qualification has become effective under a state securities or blue sky law or any exemption thereunder has been obtained, (B) promptly after receipt thereof, of any request by the SEC for the amendment or supplementing of such registration statement or prospectus or for additional information, and (C) at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event  or of any information or circumstances as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, subject to Section 1(f), if required by applicable law or to the extent requested by the Majority Holders, the Company will use its best efforts to promptly prepare and file a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading and (D) if at any time the representations and warranties of the Company in any underwriting agreement, securities sale agreement, or other similar agreement, relating to the offering shall cease to be true and correct;

 

(vii)                           (A) use best efforts to cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed and, if not so listed, to be listed on a securities exchange and, without limiting the generality of the foregoing, to arrange for at least two market markers to register as such with respect to such Registrable Securities with FINRA, and (B) comply (and continue to comply) with the requirements of any self-regulatory organization applicable to the Company, including without limitation all corporate governance requirements;

 

(viii)                        use best efforts to provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement;

 

(ix)                              enter into and perform such customary agreements (including, as applicable, underwriting agreements in customary form) and take all such other actions as the Majority Holders or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, making available the executive officers of the Company and participating in “road shows,” investor presentations, marketing events and other selling efforts and effecting a stock or unit split or combination, recapitalization or reorganization);

 

(x)                                 make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition or sale pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate and business documents and properties of the Company as will be necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors, employees, agents, representatives and independent accountants to supply all information reasonably

 

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requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement and the disposition of such Registrable Securities pursuant thereto;

 

(xi)                              take all actions to ensure that any Free-Writing Prospectus utilized in  connection with any Demand Registration or Piggyback Registration or Shelf Offering hereunder complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related prospectus, prospectus supplement and related documents, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

 

(xii)                           otherwise use its best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the registration statement, which earnings statement will satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

 

(xiii)                        permit any Holder which, in its sole and exclusive judgment, might be deemed to be an underwriter or a controlling person of the Company, to participate in the preparation of such registration or comparable statement and to allow such Holder to provide language for insertion therein, in form and substance satisfactory to the Company, which in the reasonable judgment of such Holder and its counsel should be included;

 

(xiv)                       use best efforts to (A) make Short-Form Registration available for the sale of Registrable Securities and (B) prevent the issuance of any stop order suspending the effectiveness of a registration statement, or the issuance of any order suspending or preventing the use of any related prospectus or suspending the qualification of any Common Equity included in such registration statement for sale in any jurisdiction use, and in the event any such order is issued, best efforts to obtain promptly the withdrawal of such order;

 

(xv)                          use its best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities;

 

(xvi)                       cooperate with the Holders covered by the registration statement and the managing underwriter or agent, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing securities to be sold under the registration statement, or the removal of any restrictive legends associated with any account at which such securities are held, and enable such securities to be in such denominations and registered in such names as the managing underwriter, or agent, if any, or such Holders may request;

 

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(xvii)                    if requested by any managing underwriter, include in any prospectus or prospectus supplement updated financial or business information for the Company’s most recent period or current quarterly period (including estimated results or ranges of results) if required for purposes of marketing the offering in the view of the managing underwriter;

 

(xviii)                 take no direct or indirect action prohibited by Regulation M under the Exchange Act; provided, however, that to the extent that any prohibition is applicable to the Company, the Company will take such action as is necessary to make any such prohibition inapplicable;

 

(xix)                       cooperate with each Holder covered by the registration statement and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with the preparation and filing of applications, notices, registrations and responses to requests for additional information with FINRA, the New York Stock Exchange, Nasdaq or any other national securities exchange on which the shares of Common Equity are or are to be listed, and (B) to the extent required by the rules and regulations of FINRA, retain a Qualified Independent Underwriter acceptable to the managing underwriter;

 

(xx)                          in the case of any underwritten offering, use its best efforts to obtain, and deliver to the underwriter(s), in the manner and to the extent provided for in the applicable underwriting agreement, one or more cold comfort letters from the Company’s independent public accountants in customary form and covering such matters of the type customarily covered by cold comfort letters;

 

(xxi)                       use its best efforts to provide a legal opinion of the Company’s outside counsel, (i) dated the effective date of such registration statement addressed to the Company addressing the validity of the Registrable Securities being offered thereby, and (ii) on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a Demand Registration or Shelf Offering, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the closing date of the applicable sale, (A) one or more legal opinions of the Company’s outside counsel, dated such date, in form and substance as customarily given to underwriters in an underwritten public offering or, in the case of a non-underwritten offering, to the broker, placement agent or other agent of the Holders assisting in the sale of the Registrable Securities and (B) one or more “negative assurances letters” of the Company’s outside counsel, dated such date, in form and substance as is customarily given to underwriters in an underwritten public offering or, in the case of a non-underwritten offering, to the broker, placement agent or other agent of the Holders assisting in the sale of the Registrable Securities, in each case, addressed to the underwriters, if any, or, if requested, in the case of a non-underwritten offering, to the broker, placement agent or other agent of the Holders assisting in the sale of the Registrable Securities and (ii) customary certificates executed by authorized officers of the Company as may be requested by any Holder or any underwriter of such Registrable Securities;

 

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(xxii)                    if the Company files an Automatic Shelf Registration Statement covering any Registrable Securities, use its best efforts to remain a WKSI (and not become an ineligible issuer (as defined in Rule 405 under the Securities Act)) during the period during which such Automatic Shelf Registration Statement is required to remain effective;

 

(xxiii)                 if the Company does not pay the filing fee covering the Registrable Securities at the time an Automatic Shelf Registration Statement is filed, pay such fee at such time or times as the Registrable Securities are to be sold; and

 

(xxiv)                if the Automatic Shelf Registration Statement has been outstanding for at least three (3) years, at the end of the third year, refile a new Automatic Shelf Registration Statement covering the Registrable Securities, and, if at any time when the Company is required to re-evaluate its WKSI status the Company determines that it is not a WKSI, use its best efforts to refile the Shelf Registration Statement on Form S-3 and, if such form is not available, Form S-1 and keep such registration statement effective during the period during which such registration statement is required to be kept effective.

 

(b)         Officer Obligations. Each Holder that is an officer of the Company agrees that if and for so long as he or she is employed by the Company or any Subsidiary thereof, he or she will participate fully in the sale process in a manner customary for persons in like positions and consistent with his or her other duties with the Company, including the preparation of the registration statement and the preparation and presentation of any road shows.

 

(c)          Automatic Shelf Registration Statements. If the Company files any Automatic Shelf Registration Statement for the benefit of the holders of any of its securities other than the Holders, and the Holders of Investor Registrable Securities do not request that their Registrable Securities be included in such Shelf Registration Statement, the Company agrees that, at the request of the Majority Holders, it will include in such Automatic Shelf Registration Statement such disclosures as may be required by Rule 430B in order to ensure that the Holders of Investor Registrable Securities may be added to such Shelf Registration Statement at a later time through the filing of a prospectus supplement rather than a post-effective amendment.  If the Company has filed any Automatic Shelf Registration Statement for the benefit of the holders of any of its securities other than the Holders, the Company shall, at the request of the Majority Holders, file any post-effective amendments necessary to include therein all disclosure and language necessary to ensure that the holders of Registrable Securities may be added to such Shelf Registration Statement.

 

(d)         Additional Information. The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish the Company such information regarding such seller and the distribution of such securities as the Company may from time to time reasonably request in writing, as a condition to such seller’s participation in such registration.

 

(e)          In-Kind Distributions. If an Investor (and/or any of their Affiliates) seeks to effectuate an in-kind distribution of all or part of their Registrable Securities to their respective direct or indirect equityholders, the Company will, subject to any applicable lock-ups, work with the foregoing Persons to facilitate such in-kind distribution in the manner reasonably requested and consistent with the Company’s obligations under the Securities Act.

 

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(f)           Suspended Distributions.  Each Person participating in a registration hereunder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(a)(vi), such Person will immediately discontinue the disposition of its Registrable Securities pursuant to the registration statement until such Person’s receipt of the copies of of a supplemented or amended prospectus as contemplated by Section 4(a)(vi), subject to the Company’s compliance with its obligations under Section 4(a)(vi).

 

(g)          Other.  To the extent that any of the Investors is or may be deemed to be an “underwriter” of Registrable Securities pursuant to any SEC comments or policies, the Company agrees that (i) the indemnification and contribution provisions contained in Section 6 shall be applicable to the benefit of such Investor in their role as an underwriter or deemed underwriter in addition to their capacity as a holder and (2) such Investor shall be entitled to conduct the due diligence which they would normally conduct in connection with an offering of securities registered under the Securities Act, including without limitation receipt of customary opinions and comfort letters addressed to such Investor.

 

Section 5                      Registration Expenses.

 

Except as expressly provided herein, all out-of-pocket expenses incurred by the Company or any Investor in connection with the performance of or compliance with this Agreement and/or in connection with any Demand Registration, Piggyback Registration or Shelf Offering, whether or not the same shall become effective, shall be paid by the Company, including, without limitation: (i) all registration and filing fees, and any other fees and expenses associated with filings required to be made with the SEC or FINRA, (ii) all fees and expenses in connection with compliance with any securities or “blue sky” laws, (iii) all printing, duplicating, word processing, messenger, telephone, facsimile and delivery expenses (including expenses of printing certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company or other depositary and of printing prospectuses and Company Free Writing Prospectuses), (iv) all fees and disbursements of counsel for the Company and of all independent certified public accountants of the Company (including the expenses of any special audit and cold comfort letters required by or incident to such performance), (v) Securities Act liability insurance or similar insurance if the Company so desires or the underwriters so require in accordance with then-customary underwriting practice, (vi) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange on which similar securities of the Company are then listed (or on which exchange the Registrable Securities are proposed to be listed in the case of the Company’s initial Public Offering), (vii) all applicable rating agency fees with respect to the Registrable Securities, (viii) all fees and disbursements of legal counsel for the Company, (ix) all reasonable fees and disbursements of one legal counsel for selling Holders selected by the Majority Holders together with any necessary local counsel as may be required by either the Investors, (x) all reasonable fees and disbursements of legal counsel for each Holder participating in such Registration (or, in the case of a Shelf Registration, each Holder selling Registrable Securities under the Shelf Registration Statement) solely in connection with the preparation of any legal opinions requested by the underwriters in respect of such Holder personally, (xi) any fees and disbursements of underwriters customarily paid by issuers or sellers of securities, (xii) all fees and expenses of any special experts or other Persons retained by the Company or the Majority Holders in connection with any Registration (xiii) all of the Company’s internal expenses (including all salaries and expenses of its officers and employees performing

 

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legal or accounting duties) and (xiv) all expenses related to the “road-show” for any underwritten offering, including all travel, meals and lodging.  All such expenses are referred to herein as “Registration Expenses.”  The Company shall not be required to pay, and each Person that sells securities pursuant to a Demand Registration, Shelf Offering or Piggyback Registration hereunder will bear and pay, all underwriting discounts and commissions applicable to the Registrable Securities sold for such Person’s account and all transfer taxes (if any) attributable to the sale of Registrable Securities.

 

Section 6                      Indemnification and Contribution.

 

(a)         By the Company.  The Company will indemnify and hold harmless, to the fullest extent permitted by law and without limitation as to time, each Holder, such Holder’s officers, directors employees, agents, fiduciaries, stockholders, managers, partners, members, affiliates, direct and indirect equityholders, consultants and representatives, and any successors and assigns thereof, and each Person who controls such holder (within the meaning of the Securities Act) (the “Indemnified Parties”) against all losses, claims, actions, damages, liabilities and expenses (including with respect to actions or proceedings, whether commenced or threatened, and including reasonable attorney fees and expenses) (collectively, “Losses”) caused by, resulting from, arising out of, based upon or related to any of the following (each, a “Violation”) by the Company:  (i) any untrue or alleged untrue statement of material fact contained in (A) any registration statement, prospectus, preliminary prospectus or Free-Writing Prospectus, or any amendment thereof or supplement thereto or (B) any application or other document or communication (in this Section 6, collectively called an “application”) executed by or on behalf of the Company or based upon written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify any securities covered by such registration under the “blue sky” or securities laws thereof, (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any violation or alleged violation by the Company of the Securities Act or any other similar federal or state securities laws or any rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance.  In addition, the Company will reimburse such Indemnified Party for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such Losses.  Notwithstanding the foregoing, the Company will not be liable in any such case to the extent that any such Losses result from, arise out of, are based upon, or relate to an untrue statement, or omission, made in such registration statement, any such prospectus, preliminary prospectus or Free-Writing Prospectus or any amendment or supplement thereto, or in any application, in reliance upon, and in conformity with, written information prepared and furnished in writing to the Company by such Indemnified Party expressly for use therein or by such Indemnified Party’s failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such Indemnified Party with a sufficient number of copies of the same.  In connection with an underwritten offering, the Company will indemnify such underwriters, their officers and directors, and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Indemnified Parties or as otherwise agreed to in the underwriting agreement executed in connection with such underwritten offering. Such indemnity and reimbursement of expenses shall remain in full force and effect regardless of

 

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any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of such securities by such seller.

 

(b)         By Holders.  In connection with any registration statement in which a Holder is participating, each such Holder will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the extent permitted by law, will indemnify the Company, its officers, directors, employees, agents and representatives, and each Person who controls the Company (within the meaning of the Securities Act) against any Losses resulting from (as determined by a final and appealable judgment, order or decree of a court of competent jurisdiction) any untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such Holder expressly for use therein; provided that the obligation to indemnify will be individual, not joint and several, for each holder and will be limited to the net amount of proceeds received by such Holder from the sale of Registrable Securities pursuant to such registration statement.

 

(c)          Claim Procedure.  Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice will impair any Person’s right to indemnification hereunder only to the extent such failure has prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party.  If such defense is assumed, the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld, conditioned or delayed).  An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. In such instance, the conflicted indemnified parties will have a right to retain one separate counsel, chosen by the Majority Holders, at the expense of the indemnifying party.

 

(d)         Contribution.  If the indemnification provided for in this Section 6 is held by a court of competent jurisdiction to be unavailable to, or is insufficient to hold harmless, an indemnified party or is otherwise unenforceable with respect to any Loss referred to herein, then such indemnifying party will contribute to the amounts paid or payable by such indemnified party as a result of such Loss, (i) in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other hand in connection with the statements or omissions which resulted in such Loss as well as any other relevant equitable considerations or (ii) if the allocation provided by clause (i) of this Section 6(d) is not permitted by applicable law, then in such proportion as is appropriate to reflect not only such relative fault but also the relative benefit of the Company on the one hand and of the sellers of Registrable Securities and any other sellers participating in the registration statement on the other in connection

 

15


 

with the statement or omissions which resulted in such Losses, as well as any other relevant equitable considerations; provided that the maximum amount of liability in respect of such contribution will be limited, in the case of each seller of Registrable Securities, to an amount equal to the net proceeds actually received by such seller from the sale of Registrable Securities effected pursuant to such registration.  The relative fault of the indemnifying party and of the indemnified party will be determined by reference to, among other things, whether the untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The parties hereto agree that it would not be just or equitable if the contribution pursuant to this Section 6(d) were to be determined by pro rata allocation or by any other method of allocation that does not take into account such equitable considerations.  The amount paid or payable by an indemnified party as a result of the Losses referred to herein will be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending against any action or claim which is the subject hereof.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.

 

(e)          Release.  No indemnifying party will, except with the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

 

(f)           Non-exclusive Remedy; Survival.  The indemnification and contribution provided for under this Agreement will be in addition to any other rights to indemnification or contribution that any indemnified party may have pursuant to law or contract (and the Company and its Subsidiaries shall be considered the indemnitors of first resort in all such circumstances to which this Section 6 applies) and will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and will survive the transfer of Registrable Securities and the termination or expiration of this Agreement.

 

Section 7                      Cooperation with Underwritten Offerings.  No Person may participate in any underwritten registration hereunder unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including, without limitation, pursuant to the terms of any over-allotment or “green shoe” option requested by the underwriters; provided that no Holder will be required to sell more than the number of Registrable Securities such Holder has requested to include in such registration) and (ii) completes, executes and delivers all questionnaires, powers of attorney, stock powers, custody agreements, indemnities, underwriting agreements and other documents and agreements required under the terms of such underwriting arrangements or as may be reasonably requested by the Company and the lead managing underwriter(s).  To the extent that any such agreement is entered into pursuant to, and consistent with, Section 3, Section 4 and/or this Section 7, the respective rights and obligations created under

 

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such agreement will supersede the respective rights and obligations of the Holders, the Company and the underwriters created thereby with respect to such registration.

 

Section 8                      Subsidiary Public Offering. If, after an initial Public Offering of the common equity securities of one of its Subsidiaries, the Company distributes securities of such Subsidiary to its equityholders, then the rights and obligations of the Company pursuant to this Agreement will apply, mutatis mutandis, to such Subsidiary, and the Company will cause such Subsidiary to comply with such Subsidiary’s obligations under this Agreement as if it were the Company hereunder.

 

Section 9                      Joinder; Additional Parties; Transfer of Registrable Securities.

 

(a)         Joinder. The Company may from time to time (with the prior written consent of the Majority Holders) permit any Person who acquires Common Equity (or rights to acquire Common Equity) to become a party to this Agreement and to be entitled to and be bound by all of the rights and obligations as a Holder by obtaining an executed joinder to this Agreement from such Person in the form of Exhibit B attached hereto (a “Joinder”).  Upon the execution and delivery of a Joinder by such Person, the Common Equity held by such Person shall become the category of Registrable Securities (i.e. Investor, Executive or Other Registrable Securities), and such Person shall be deemed the category of Holder (i.e. Investor, Executive or Other Holder), in each case as set forth on the signature page to such Joinder.

 

(b)         Restrictions on Transfers.  Prior to transferring any Registrable Securities to any Person (including, without limitation, by operation of law), the transferring Holder must first obtain the prior written consent of the Majority Holders, and if so obtained, cause the prospective transferee to execute and deliver to the Company a Joinder, except that such consent and Joinder shall not be required in the case of (i) a transfer to the Company, (ii) a transfer by the Investor to its partners or members, (iii) a Public Offering, (iv) a sale pursuant to Rule 144 after the completion of the Company’s initial Public Offering and/or (v) a transfer in connection with a Sale of the Company.  Any transfer or attempted transfer of Registrable Securities in violation of any provision of this Agreement will be void, and the Company will not record such transfer on its books or treat any purported transferee of such Registrable Securities as the owner thereof for any purpose (but the Company will be entitled to enforce against such Person the obligations hereunder).

 

(c)          Legend.  Each certificate (if any) evidencing any Registrable Securities and each certificate issued in exchange for or upon the transfer of any Registrable Securities (unless such Registrable Securities would no longer be Registrable Securities after such transfer) will be stamped or otherwise imprinted with a legend in substantially the following form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS SET FORTH IN A REGISTRATION RIGHTS AGREEMENT DATED AS OF             , 20   AMONG THE ISSUER OF SUCH SECURITIES (THE “COMPANY”) AND CERTAIN OF THE COMPANY’S EQUITYHOLDERS, AS AMENDED.  A COPY OF SUCH

 

17


 

AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

 

The Company will imprint such legend on certificates evidencing Registrable Securities outstanding prior to the date hereof.  The legend set forth above will be removed from the certificates evidencing any securities that have ceased to be Registrable Securities.

 

Section 10               General Provisions.

 

(a)         Amendments and Waivers.  Except as otherwise provided herein, the provisions of this Agreement may be amended, modified or waived only with the prior written consent of the Company and the Majority Holders. The failure or delay of any Person to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such Person thereafter to enforce each and every provision of this Agreement in accordance with its terms.  A waiver or consent to or of any breach or default by any Person in the performance by that Person of his, her or its obligations under this Agreement will not be deemed to be a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person under this Agreement.

 

(b)         Remedies.  The parties to this Agreement will be entitled to enforce their rights under this Agreement specifically (without posting a bond or other security), to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor.  The parties hereto agree and acknowledge that a breach of this Agreement would cause irreparable harm and money damages would not be an adequate remedy for any such breach and that, in addition to any other rights and remedies existing hereunder, any party will be entitled to specific performance and/or other injunctive relief from any court of law or equity of competent jurisdiction (without posting any bond or other security) in order to enforce or prevent violation of the provisions of this Agreement.

 

(c)          Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited, invalid, illegal or unenforceable in any respect under any applicable law or regulation in any jurisdiction, such prohibition, invalidity, illegality or unenforceability will not affect the validity, legality or enforceability of any other provision of this Agreement in such jurisdiction or in any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such prohibited, invalid, illegal or unenforceable provision had never been contained herein.

 

(d)         Entire Agreement.  Except as otherwise provided herein, this Agreement contains the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties hereto, written or oral, which may have related to the subject matter hereof in any way.

 

(e)          Successors and Assigns.  Except as otherwise provided herein, this Agreement will bind and inure to the benefit and be enforceable by the Company and its successors and

 

18


 

permitted assigns and the Holders and their respective successors and permitted assigns (whether so expressed or not).

 

(f)           Notices.  Any notice, demand or other communication to be given under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given (i) when delivered personally to the recipient, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; but if not, then on the next Business Day, (iii) one Business Day after it is sent to the recipient by reputable overnight courier service (charges prepaid) or (iv) three Business Days after it is mailed to the recipient by first class mail, return receipt requested.  Such notices, demands and other communications will be sent to the Company at the address specified on the signature page hereto or any Joinder and to any holder, or at such address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party.  Any party may change such party’s address for receipt of notice by giving prior written notice of the change to the sending party as provided herein.  The Company’s address is:

 

Ping Identity Holding Corp.

1001 17th Street, Suite 100
Denver, CO 80202
Attn: Lauren Romer
Facsimile: 303-468-2909

 

With a copy to:

 

Kirkland & Ellis LLP
300 N. LaSalle
Chicago, IL 60654
Attn:                    Robert Hayward, P.C.

Robert Goedert, P.C.

Email:            rhayward@kirkland.com

rgoedert@kirkland.com
Facsimile: 312-862-2200

 

or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party.

 

(g)          Business Days.  If any time period for giving notice or taking action hereunder expires on a day that is not a Business Day, the time period will automatically be extended to the Business Day immediately following such Saturday, Sunday or legal holiday.

 

(h)         Governing Law.  The corporate law of the State of Delaware will govern all issues and questions concerning the relative rights of the Company and its equityholders.  All issues and questions concerning the construction, validity, interpretation and enforcement of this Agreement and the exhibits and schedules hereto will be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

 

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(i)             MUTUAL WAIVER OF JURY TRIAL.  AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

 

(j)            CONSENT TO JURISDICTION AND SERVICE OF PROCESS.  EACH OF THE PARTIES IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.  EACH OF THE PARTIES HERETO FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO SUCH PARTY’S RESPECTIVE ADDRESS SET FORTH ABOVE WILL BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDING WITH RESPECT TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION IN THIS PARAGRAPH.  EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, AND HEREBY AND THEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

(k)         No Recourse.  Notwithstanding anything to the contrary in this Agreement, the Company and each Holder agrees and acknowledges that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement, will be had against any current or future director, officer, employee, general or limited partner or member of any Holder or any Affiliate or assignee thereof, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever will attach to, be imposed on or otherwise be incurred by any current or future officer, agent or employee of any Holder or any current or future member of any Holder or any current or future director, officer, employee, partner or member of any Holder or of any Affiliate or assignee thereof, as such for any obligation of any Holder under this Agreement or any documents or instruments delivered in connection with this Agreement for any claim based on, in respect of or by reason of such obligations or their creation.

 

(l)             Descriptive Headings; Interpretation.  The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.  The use of the word “including” in this Agreement will be by way of example rather than by limitation.

 

20


 

(m)     No Strict Construction.  The language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any party.

 

(n)         Counterparts.  This Agreement may be executed in multiple counterparts, any one of which need not contain the signature of more than one party, but all such counterparts taken together will constitute one and the same agreement.

 

(o)         Electronic Delivery.  This Agreement, the agreements referred to herein, and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent executed and delivered by means of a photographic, photostatic, facsimile or similar reproduction of such signed writing using a facsimile machine or electronic mail will be treated in all manner and respects as an original agreement or instrument and will be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto will re-execute original forms thereof and deliver them to all other parties.  No party hereto or to any such agreement or instrument will raise the use of a facsimile machine or electronic mail to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or electronic mail as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.

 

(p)         Further Assurances.  In connection with this Agreement and the transactions contemplated hereby, each Holder agrees to execute and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate and perform the provisions of this Agreement and the transactions contemplated hereby.

 

(q)         Dividends, Recapitalizations, Etc.  If at any time or from time to time there is any change in the capital structure of the Company by way of a stock split, stock dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment will be made in the provisions hereof so that the rights and privileges granted hereby will continue.

 

(r)            No Third-Party Beneficiaries. No term or provision of this Agreement is intended to be, or shall be, for the benefit of any Person not a party hereto, and no such other Person shall have any right or cause of action hereunder, except as otherwise expressly provided herein.

 

(s)           Current Public Information At all times after the Company has filed a registration statement with the SEC pursuant to the requirements of either the Securities Act or the Exchange Act, the Company will file all reports required to be filed by it under the Securities Act and the Exchange Act and will take such further action as the Majority Holders may reasonably request, all to the extent required to enable such Holders to sell Registrable Securities (or securities that would be Registrable Securities but for the final sentence of the definition of Registrable Securities) pursuant to Rule 144.

 

*     *     *     *    *

 

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

 

 

PING IDENTITY HOLDING CORP.

 

 

 

 

 

By:

 

 

Its:

 

 

 

 

 

 

INVESTORS:

 

 

 

VISTA EQUITY PARTNERS FUND VI, L.P.

 

 

 

 

 

By:

 

 

Its:

 

 

Address:

 

 

 

 

 

 

 

 

 

 

VISTA EQUITY PARTNERS FUND VI-A, L.P.

 

 

 

 

 

 

 

By:

 

 

Its:

 

 

Address:

 

 

 

 

 

 

 

 

 

 

VEPF VI FAF, L.P.

 

 

 

 

 

By:

 

 

Its:

 

 

Address:

 

 

 

 

 

 

 

 

[Signature Page to Registration Rights Agreement]

 


 

 

EXECUTIVES:

 

 

 

 

 

Name:

Andre Durand

 

 

 

 

Address:

 

 

 

 

 

 

 

 

[Signature Page to Registration Rights Agreement]

 


 

EXHIBIT A

 

DEFINITIONS

 

Capitalized terms used in this Agreement have the meanings set forth below.

 

Affiliate” of any Person means any other Person controlled by, controlling or under common control with such Person and, in the case of an individual, also includes any member of such individual’s Family Group; provided that the Company and its Subsidiaries will not be deemed to be Affiliates of any holder of Registrable Securities.  As used in this definition, “control” (including, with its correlative meanings, “controlling,” “controlled by” and “under common control with”) will mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities, by contract or otherwise).

 

Agreement” has the meaning set forth in the recitals.

 

Automatic Shelf Registration Statement” has the meaning set forth in Section 1(a).

 

Business Day” means a day that is not a Saturday or Sunday or a day on which banks in New York City are authorized or requested by law to close.

 

Common Equity” means the Company’s common stock, par value $0.001 per share.

 

Company” has the meaning set forth in the preamble and shall include its successor(s).

 

Demand Registrations” has the meaning set forth in Section 1(a).

 

End of Suspension Notice” has the meaning set forth in Section 1(f)(ii).

 

Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor federal law then in force, together with all rules and regulations promulgated thereunder.

 

Excluded Registration” means any registration (i) pursuant to a Demand Registration (which is addressed in Section 1(a)) and (ii) in connection with registrations on Form S-4 or S-8 promulgated by the SEC or any successor or similar forms).

 

Executives” has the meaning set forth in the recitals.

 

Executive Registrable Securities” means any Common Equity held by the management employees of the Company who are listed as “Executives” on the signature page hereto or to a Joinder.

 

Family Group” means with respect to any individual, such individual’s current or former spouse, their respective parents, descendants of such parents (whether natural or adopted)

 

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and the spouses of such descendants, any any trust, limited partnership, corporation or limited liability company established solely for the benefit of such individual or such individual’s current or former spouse, their respective parents, descendants of such parents (whether natural or adopted) or the spouses of such descendants.

 

FINRA” means the Financial Industry Regulatory Authority.

 

Free Writing Prospectus” means a free-writing prospectus, as defined in Rule 405.

 

Holdback Period” has the meaning set forth in Section 3(a).

 

Holder” means a holder of Registrable Securities who is a party to this Agreement (including by way of Joinder).

 

Indemnified Parties” has the meaning set forth in Section 6(a).

 

Investors” has the meaning set forth in the recitals.

 

Investor Registrable Securities” means (i) any Common Equity held (directly or indirectly) by an Investor or any of its Affiliates, and (ii) any equity securities of the Company or any Subsidiary issued or issuable with respect to the securities referred to in clause (i) above by way of dividend, distribution, split or combination of securities, or any recapitalization, merger, consolidation or other reorganization.

 

Joinder” has the meaning set forth in Section 9(a).

 

Long-Form Registrations” has the meaning set forth in Section 1(a).

 

Losses” has the meaning set forth in Section 6(c).

 

Majority Holders” means the holders of a majority of all Investor Registrable Securities.

 

Other Holders” has the meaning set forth in the recitals.

 

Other Registrable Securities” means (i) any Common Equity held (directly or indirectly) by any Other Holders or any of their Affiliates, and (ii) any equity securities of the Company or any Subsidiary issued or issuable with respect to the securities referred to in clause (i) above by way of dividend, distribution, split or combination of securities, or any recapitalization, merger, consolidation or other reorganization.

 

Other Securities” has the meaning set forth in Section 3(a).

 

Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

 

Piggyback Registrations” has the meaning set forth in Section 2(a).

 

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Potential Participant” has the meaning set forth in Section 1(d)(ii).

 

Public Offering” means any sale or distribution by the Company, one of its Subsidiaries and/or Holders to the public of Common Equity or other securities convertible into or exchangeable for Common Equity pursuant to an offering registered under the Securities Act.

 

Qualified Independent Underwriter” has the meaning set forth by FINRA in Section 5121(f)(12), or any successor provision thereto.

 

Registrable Securities” means Investor Registrable Securities and Executive Registrable Securities.  As to any particular Registrable Securities, such securities will cease to be Registrable Securities when they have been (a) sold or distributed pursuant to a Public Offering, (b) sold in compliance with Rule 144 following the consummation of the Company’s initial Public Offering or (c) repurchased by the Company or a Subsidiary of the Company.  For purposes of this Agreement, a Person will be deemed to be a holder of Registrable Securities, and the Registrable Securities will be deemed to be in existence, whenever such Person has the right to acquire, directly or indirectly, such Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected, and such Person will be entitled to exercise the rights of a holder of Registrable Securities hereunder (it being understood that a holder of Registrable Securities may only request that Registrable Securities in the form of Common Equity be registered pursuant to this Agreement).  Notwithstanding the foregoing, following the consummation of an initial Public Offering, any Registrable Securities held by any Person (other than an Investor or its Affiliates) that may be sold under Rule 144(b)(1)(i) without limitation under any of the other requirements of Rule 144 will not be deemed to be Registrable Securities.

 

Registration Expenses” has the meaning set forth in Section 5.

 

Rule 144”, “Rule 158”, “Rule 405”, “Rule 415”, and “Rule 430B” mean, in each case, such rule promulgated under the Securities Act (or any successor provision) by the SEC, as the same will be amended from time to time, or any successor rule then in force.

 

Sale Transaction” has the meaning set forth in Section 3(a).

 

SEC” means the United States Securities and Exchange Commission.

 

Securities” has the meaning set forth in Section 3(a).

 

Securities Act” means the Securities Act of 1933, as amended from time to time, or any successor federal law then in force, together with all rules and regulations promulgated thereunder.

 

Shelf Offering” has the meaning set forth in Section 1(d)(i).

 

Shelf Offering Notice” has the meaning set forth in Section 1(d)(i).

 

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Shelf Registration” has the meaning set forth in Section 1(a).

 

Shelf Registrable Securities” has the meaning set forth in Section 1(d)(i).

 

Shelf Registration Statement” has the meaning set forth in Section 1(d).

 

Short-Form Registrations” has the meaning set forth in Section 1(a).

 

Subsidiary” means, with respect to the Company, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by the Company or one or more of the other Subsidiaries of the Company or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity, a majority of the limited liability company, partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by the Company or one or more Subsidiaries of the Company or a combination thereof.  For purposes hereof, a Person or Persons will be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons will be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or will be or control the managing director or general partner of such limited liability company, partnership, association or other business entity.

 

Suspension Event” has the meaning set forth in Section 1(f)(ii).

 

Suspension Notice” has the meaning set forth in Section 1(f)(ii).

 

Suspension Period” has the meaning set forth in Section 1(f)(i).

 

Underwritten Block Trade” has the meaning set forth in Section 1(d)(ii).

 

Violation” has the meaning set forth in Section 6(a).

 

WKSI” means a “well-known seasoned issuer” as defined under Rule 405.

 

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EXHIBIT B

 

The undersigned is executing and delivering this Joinder pursuant to the Registration Rights Agreement dated as of                   , 20   (as amended, modified and waived from time to time, the “Registration Agreement”), among Ping Identity Holding Corp., a Delaware corporation (the “Company”), and the other persons named as parties therein (including pursuant to other Joinders).  Capitalized terms used herein have the meaning set forth in the Registration Agreement.

 

By executing and delivering this Joinder to the Company, the undersigned hereby agrees to become a party to, to be bound by, and to comply with the provisions of, the Registration Agreement as a Holder in the same manner as if the undersigned were an original signatory to the Registration Agreement, and the undersigned will be deemed for all purposes to be a Holder, an [Investor//Executive thereunder] and the undersigned’s      shares of Common Equity will be deemed for all purposes to be [Investor // Executive] Registrable Securities under the Registration Agreement.

 

Accordingly, the undersigned has executed and delivered this Joinder as of the     day of             , 20   .

 

 

 

 

Signature

 

 

 

 

 

 

 

Print Name

 

 

 

Address:

 

 

 

 

 

 

Agreed and Accepted as of

 

 

 

               , 20   :

 

 

 

PING IDENTITY HOLDING CORP.

 

 

 

By:

 

 

 

 

 

 

 

Its:

 

 

 

 

B-1





Exhibit 10.1

 

Execution Version

 

 

CREDIT AGREEMENT

 

dated as of January 25, 2018,

 

among

 

PING IDENTITY CORPORATION,

as Borrower,

 

ROARING FORK INTERMEDIATE, LLC,

as Holdings,

 

THE OTHER GUARANTORS FROM TIME TO TIME PARTY HERETO,

 

THE LENDERS FROM TIME TO TIME PARTY HERETO,

 

GOLDMAN SACHS BANK USA,
as Administrative Agent and Collateral Agent,
and as a Joint Lead Arranger and a Joint Bookrunner,

 

ANTARES CAPITAL LP AND MACQUARIE CAPITAL (USA) INC.

as Joint Lead Arrangers and Joint Bookrunners

 

and

 

ING CAPITAL LLC,

as Documentation Agent

 

 


 

TABLE OF CONTENTS

 

 

 

Page

 

 

ARTICLE I

DEFINITIONS

 

 

 

Section 1.01

Defined Terms

1

Section 1.02

Classification of Loans and Borrowings

74

Section 1.03

Terms Generally

74

Section 1.04

Accounting Terms; GAAP; Tax Laws

75

Section 1.05

Resolution of Drafting Ambiguities

77

Section 1.06

Limited Condition Transaction

77

Section 1.07

Times of Day

79

Section 1.08

Deliveries

79

Section 1.09

Schedules and Exhibits

79

Section 1.10

Currency Generally

79

Section 1.11

Basket Amounts and Application of Multiple Relevant Provisions

79

Section 1.12

Letter of Credit Amounts

81

 

 

 

ARTICLE II

THE CREDITS

 

 

 

Section 2.01

Commitments

81

Section 2.02

Loans

81

Section 2.03

Borrowing Procedure

82

Section 2.04

Evidence of Debt; Repayment of Loans

83

Section 2.05

Fees

84

Section 2.06

Interest on Loans

86

Section 2.07

Termination and Reduction of Commitments

86

Section 2.08

Interest Elections

87

Section 2.09

Amortization of Term Loan Borrowings

88

Section 2.10

Optional and Mandatory Prepayments of Loans

89

Section 2.11

Alternate Rate of Interest

96

Section 2.12

Yield Protection

96

Section 2.13

Funding Losses

98

Section 2.14

Payments Generally; Pro Rata Treatment; Sharing of Setoffs

98

Section 2.15

Taxes

101

Section 2.16

Mitigation Obligations; Replacement of Lenders

105

Section 2.17

Swing Line Loans

106

Section 2.18

Letters of Credit

109

Section 2.19

Defaulting Lenders

118

Section 2.20

Increase in Commitments

121

Section 2.21

Extension Amendments

126

Section 2.22

Refinancing Facilities

129

Section 2.23

Permitted Debt Exchanges

130

Section 2.24

Designation of Borrowers

133

 


 

Section 2.25

AHYDO Prepayment

134

Section 2.26

Illegality

134

 

 

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

 

 

Section 3.01

Organization; Powers

135

Section 3.02

Authorization; Enforceability

135

Section 3.03

No Conflicts

136

Section 3.04

Financial Statements; Projections

136

Section 3.05

Properties

136

Section 3.06

Intellectual Property

137

Section 3.07

Equity Interests and Restricted Subsidiaries

137

Section 3.08

Litigation

137

Section 3.09

Federal Reserve Regulations

138

Section 3.10

Investment Company Act

138

Section 3.11

Use of Proceeds

138

Section 3.12

Taxes

138

Section 3.13

No Material Misstatements

138

Section 3.14

Labor Matters

139

Section 3.15

Solvency

139

Section 3.16

Employee Benefit Plans

139

Section 3.17

Environmental Matters

140

Section 3.18

Security Documents

141

Section 3.19

Anti-Terrorism Law

141

Section 3.20

OFAC

141

Section 3.21

Foreign Corrupt Practices Act

141

Section 3.22

Compliance with Law

142

 

 

 

ARTICLE IV

CONDITIONS

 

 

 

Section 4.01

Conditions to Initial Credit Extension

142

Section 4.02

Conditions to All Credit Extensions

144

 

 

 

ARTICLE V

AFFIRMATIVE COVENANTS

 

 

 

Section 5.01

Financial Statements, Reports, etc.

145

Section 5.02

Litigation and Other Notices

147

Section 5.03

Existence; Properties

148

Section 5.04

Insurance

148

Section 5.05

Taxes

149

Section 5.06

Employee Benefits

149

Section 5.07

Maintaining Records; Access to Properties and Inspections

150

Section 5.08

Use of Proceeds

150

Section 5.09

Compliance with Environmental Laws; Environmental Reports

150

 

ii


 

Section 5.10

Additional Collateral; Additional Guarantors

151

Section 5.11

Security Interests; Further Assurances

153

Section 5.12

Maintenance of Ratings

153

Section 5.13

Compliance with Law

153

Section 5.14

Anti-Terrorism Law; Anti-Money Laundering; Foreign Corrupt Practices Act

153

Section 5.15

Post-Closing Deliveries

154

 

 

 

ARTICLE VI

NEGATIVE COVENANTS

 

 

 

Section 6.01

Indebtedness

155

Section 6.02

Liens

159

Section 6.03

Investments, Loans and Advances

163

Section 6.04

Mergers and Consolidations

167

Section 6.05

Asset Sales

168

Section 6.06

Dividends

171

Section 6.07

Transactions with Affiliates

175

Section 6.08

First Lien Leverage Ratio

176

Section 6.09

Prepayments of Certain Indebtedness; Modifications of Organizational Documents and Other Documents, etc.

177

Section 6.10

Holding Company Status

178

Section 6.11

No Further Negative Pledge; Subsidiary Distributions

179

Section 6.12

Nature of Business

180

Section 6.13

Fiscal Year

180

 

 

 

ARTICLE VII

GUARANTEE

 

 

 

Section 7.01

The Guarantee

180

Section 7.02

Obligations Unconditional

181

Section 7.03

Reinstatement

183

Section 7.04

Subrogation; Subordination

183

Section 7.05

Remedies

184

Section 7.06

Instrument for the Payment of Money

184

Section 7.07

Continuing Guarantee

184

Section 7.08

General Limitation on Guarantee Obligations

184

Section 7.09

Release of Guarantors

184

Section 7.10

Right of Contribution

185

 

 

 

ARTICLE VIII

EVENTS OF DEFAULT

 

 

 

Section 8.01

Events of Default

185

Section 8.02

Application of Proceeds

189

Section 8.03

Equity Cure

190

 

iii


 

ARTICLE IX

THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT

 

 

 

Section 9.01

Appointment and Authority

192

Section 9.02

Rights as a Lender

193

Section 9.03

Exculpatory Provisions

193

Section 9.04

Reliance by Administrative Agent

194

Section 9.05

Delegation of Duties

195

Section 9.06

Resignation of Administrative Agent

195

Section 9.07

Non-Reliance on Administrative Agent and Other Lenders

197

Section 9.08

No Other Duties, Etc.

197

Section 9.09

Administrative Agent May File Proofs of Claim; Credit Bidding

197

Section 9.10

Collateral and Guarantee Matters

199

Section 9.11

Secured Cash Management Agreements and Secured Hedging Agreements

200

Section 9.12

Withholding Tax

201

Section 9.13

Certain ERISA Matters

201

 

 

 

ARTICLE X

MISCELLANEOUS

 

 

 

Section 10.01

Notices

203

Section 10.02

Waivers; Amendment

207

Section 10.03

Expenses; Indemnity; Damage Waiver

213

Section 10.04

Successors and Assigns

217

Section 10.05

Survival of Agreement

225

Section 10.06

Counterparts; Integration; Effectiveness

225

Section 10.07

Severability

226

Section 10.08

Right of Setoff

226

Section 10.09

Governing Law; Jurisdiction; Consent to Service of Process

226

Section 10.10

Waiver of Jury Trial

227

Section 10.11

Headings

227

Section 10.12

Treatment of Certain Information; Confidentiality

227

Section 10.13

USA PATRIOT Act Notice

228

Section 10.14

Interest Rate Limitation

228

Section 10.15

Obligations Absolute

229

Section 10.16

No Advisory or Fiduciary Responsibility

229

Section 10.17

Intercreditor Agreement

230

Section 10.18

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

230

Section 10.19

Electronic Execution of Assignments and Certain Other Documents

231

 

iv


 

ANNEXES

 

 

 

 

 

Annex A

Commitments

 

 

 

 

SCHEDULES

 

 

 

 

 

Schedule 3.03

Governmental Approvals; Compliance with Laws

 

Schedule 3.07

Subsidiaries

 

Schedule 3.08

Litigation

 

Schedule 5.15

Post-Closing Deliveries

 

Schedule 6.01(b)

Existing Indebtedness

 

Schedule 6.02(c)

Existing Liens

 

Schedule 6.03(b)

Existing Investments

 

Schedule 6.07

Transactions with Affiliates

 

Schedule 6.11

Burdensome Agreements

 

 

 

 

EXHIBITS

 

 

 

 

 

Exhibit A

Form of Administrative Questionnaire

 

Exhibit B

Form of Assignment and Assumption

 

Exhibit C-1

Form of Borrowing Request

 

Exhibit C-2

Form of Prepayment Notice

 

Exhibit D

Form of Compliance Certificate

 

Exhibit E

Form of Interest Election Request

 

Exhibit F

Form of Joinder Agreement

 

Exhibit G

Form of LC Request

 

Exhibit H-1

Form of Term Loan Note

 

Exhibit H-2

Form of Revolving Note

 

Exhibit H-3

Form of Swing Line Note

 

Exhibit I

First Lien/Second Lien Intercreditor Term Sheet

 

Exhibit J

Reserved

 

Exhibit K

Form of Non-Bank Certificate

 

Exhibit L

Form of Solvency Certificate

 

Exhibit M

Pari Passu Intercreditor Term Sheet

 

 

v


 

CREDIT AGREEMENT

 

This CREDIT AGREEMENT (this “Agreement”), dated as of January 25, 2018, is made among Ping Identity Corporation, a Delaware corporation (“Ping” and the “Borrower”), Roaring Fork Intermediate, LLC, a Delaware limited liability company (“Holdings”), as a Guarantor, each of the other Guarantors (such terms and each other capitalized term used but not defined herein having the meaning given to it in Article I) party hereto upon becoming a party hereto, the Lenders and Issuing Banks from time to time party hereto, Goldman Sachs Bank USA, as administrative agent for the Lenders (in such capacity, together with its successors and assigns, the “Administrative Agent”), and as collateral agent for the Secured Parties (in such capacity, together with its successors and assigns, the “Collateral Agent”), as swing line lender (in such capacity, the “Swing Line Lender”) and as the Issuing Bank.

 

WITNESSETH:

 

WHEREAS, the Borrower, Holdings, the other guarantors party thereto, the lenders party thereto and Guggenheim Corporate Funding, LLC, as administrative agent, are party to that certain Credit Agreement, dated as of June 30, 2016 (as amended, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Existing Credit Agreement”);

 

WHEREAS, on the Closing Date, the Borrower intends to refinance in full all outstanding indebtedness under the Existing Credit Agreement and to terminate and release any and all security interests or guarantees in connection with the Existing Credit Agreement (the “Closing Date Refinancing”);

 

WHEREAS, on the Closing Date, the Borrower has requested that (a) the Term Loan Lenders extend credit in the form of Term Loans in an aggregate principal amount equal to $250,000,000 to fund the Closing Date Refinancing and to pay fees, costs and expenses in connection therewith, to fund working capital needs and for other general corporate purposes and (b) that the Revolving Lenders extend Revolving Loans at any time and from time to time prior to the Revolving Maturity Date, in an aggregate principal amount not in excess of $25,000,000.

 

NOW, THEREFORE, the Lenders are willing to (severally but not jointly) extend the credit described in the paragraph immediately above and make Revolving Loans from time to time to the Borrower and the Issuing Bank is willing to issue letters of credit for the account of the Borrower on the terms and subject to the conditions set forth herein. Accordingly, in consideration of the mutual covenants and agreements set forth herein and in the other Loan Documents, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I
DEFINITIONS

 

Section 1.01                             Defined Terms.  As used in this Agreement, the following terms shall have the meanings specified below:

 


 

ABR” when used in reference to any Loan or Borrowing, is used when such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

 

ABR Borrowing” shall mean a Borrowing comprised of ABR Loans.

 

ABR Loan” shall mean any ABR Term Loan or ABR Revolving Loan.

 

ABR Revolving Loan” shall mean any Revolving Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II.

 

ABR Term Loan” shall mean any Term Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II.

 

Additional Amount” shall have the meaning assigned to such term in Section 2.15(a).

 

Additional Borrower” shall mean any Wholly Owned Restricted Subsidiary incorporated under the laws of the United States, any state thereof or the District of Columbia that becomes a Borrower after the Closing Date pursuant to Section 2.24.

 

Additional Guarantor” shall mean any Wholly Owned Restricted Subsidiary that becomes a Guarantor after the Closing Date pursuant to Section 5.10.

 

Additional Lender” shall mean each Eligible Assignee that becomes a Lender.

 

Additional Revolving Commitment” shall have the meaning assigned to such term in Section 2.20(a).

 

Adjusted LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the greater of (i)(a) an interest rate per annum equal to the LIBO Rate for such Eurodollar Borrowing in effect for such Interest Period divided by (b) 1 minus the Statutory Reserves (if any) for such Eurodollar Borrowing for such Interest Period and (ii) with respect to Term Loans only, 1.00%.

 

Administrative Agent” shall have the meaning given to that term in the preamble hereto, and include each other person appointed as a successor pursuant to Article IX.

 

Administrative Agent Fee” shall have the meaning assigned to such term in Section 2.05(b).

 

Administrative Questionnaire” shall mean an Administrative Questionnaire in substantially the form of Exhibit A or in such other form as may be reasonably approved by the Administrative Agent.

 

2


 

Affiliate” shall mean, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the person specified; provided, however, that neither any Lender nor any Agent (nor any of their Affiliates) shall be deemed to be an Affiliate of Holdings, the Borrower or any of their respective Subsidiaries solely by virtue of its capacity as a Lender or Agent hereunder.

 

Affiliated Debt Fund” shall mean a debt fund or other investment vehicle that is an Affiliate of the Sponsor and that is primarily engaged in, or advises funds or other investment vehicles that are engaged in, making, purchasing, holding or otherwise investing in commercial loans, notes, bonds and similar extensions of credit or securities in the ordinary course of its business and whose managers have fiduciary duties to the investors therein independent of or in addition to their duties to the Sponsor or any of its Affiliates.

 

Agents” shall mean the Administrative Agent and the Collateral Agent; and “Agent” shall mean either of them.

 

Agreement” shall have the meaning assigned to such term in the preamble hereto.

 

Alternate Base Rate” shall mean, for any day, a rate per annum equal to the greatest of (a) the Base Rate in effect on such day, (b) the Federal Funds Rate in effect on such day plus 1/2 of 1.00%, and (c) the Adjusted LIBO Rate (only taking into account the 1.00% floor therein if in respect of Term Loans) for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1.00%.  Any change in the Alternate Base Rate due to a change in the Base Rate, the Federal Funds Rate or the Adjusted LIBO Rate shall be effective on the effective date of such change in the Base Rate, the Federal Funds Rate or the Adjusted LIBO Rate, as the case may be.

 

Antares Capital” means Antares Capital LP.

 

Anti-Terrorism Laws” shall have the meaning assigned to such term in Section 3.19.

 

Applicable Date of Determination” shall mean, for purposes of determining Consolidated Total Funded Indebtedness and Unrestricted Cash for purposes of calculating the First Lien Leverage Ratio, the Senior Secured Leverage Ratio or the Total Leverage Ratio for purposes of determining whether an incurrence test has been satisfied, subject to Section 1.06, the date of the transaction subject to such incurrence test.

 

Applicable ECF Percentage” shall mean, for any fiscal year of Holdings, (a) 50% if the First Lien Leverage Ratio (after giving effect to (i) any prepayments or buybacks described in Section 2.10(f)(B) and (ii) any such ECF Payment Amount assuming a 50% Applicable ECF Percentage) as of the last day of and for such fiscal year is greater than 5.00 to 1.00, (b) 25% if the First Lien Leverage Ratio (after giving effect to (i) any prepayments or buybacks described in Section 2.10(f)(B) and (ii) any such ECF Payment Amount assuming a 25% Applicable ECF Percentage) as of the last day of and for such fiscal year is greater than 4.50 to 1.00 but less than or equal to 5.00 to 1.00 and (c) 0% if the First Lien Leverage Ratio

 

3


 

(after giving effect to any prepayments or buybacks described in Section 2.10(f)(B) as of the last day of such fiscal year is less than or equal to 4.50 to 1.00. For the avoidance of doubt, if, after giving effect to the parenthetical phrases in any of the foregoing subclauses more than one of the preceding subclauses would be applicable, the subclause with the highest percentage shall apply.

 

Applicable Margin” shall mean a percentage per annum equal to,

 

(a)(i) with respect to Term Loans that are Eurodollar Loans, 3.75% and (ii) with respect to Term Loans that are ABR Loans, 2.75% and

 

(b) with respect to Revolving Loans, Swing Line Loans, LC Participation Fee and Commitment Fee, as set forth below for the appropriate level:

 

Level

 

First Lien
Leverage
Ratio

 

Applicable
Margin for
Eurodollar
Loans

 

Applicable
Margin for
ABR Loans
and Swing
Line Loans

 

Applicable
Margin for LC
Participation Fee

 

Commitment Fee

 

I

 

> 5.00 to 1.00

 

3.75

%

2.75

%

3.75

%

0.50

%

II

 

< 5.00 to 1.00 and > 4.50 to 1.00

 

3.50

%

2.50

%

3.50

%

0.375

%

III

 

< 4.50 to 1.00

 

3.25

%

2.25

%

3.25

%

0.25

%

 

provided that until a certified calculation of the First Lien Leverage Ratio is delivered for the first fiscal quarter for which financial statements are required to be delivered pursuant to Section 5.01(a) or (b), the Applicable Margin with respect to Revolving Loans and Swing Line Loans, the LC Participation Fee and the Commitment Fee shall be set at the margin in the row styled “Level I” in the applicable table.  Except as set forth in the foregoing proviso, the Applicable Margin with respect to Revolving Loans and Swing Line Loans, the LC Participation Fee and the Commitment Fee shall be re-determined quarterly on the first Business Day of the month following the date of delivery to the Administrative Agent of a certified calculation of the First Lien Leverage Ratio in accordance with Section 5.01(c); provided that if such certification is not provided in accordance with Section 5.01(c), the Applicable Margin with respect to Revolving Loans and Swing Line Loans, the LC Participation Fee and the Commitment Fee shall be set at the margin in the row styled “Level I” in the applicable table as of the first Business Day of the month following the end of the quarter for which the certification was not delivered until the date on which such certification is delivered (on which date, the Applicable Margin with respect to Revolving Loans and Swing Line Loans, the LC Participation

 

4


 

Fee and the Commitment Fee shall be set at the margin based upon the calculations disclosed by such certification).

 

In the event that the certified calculation of the First Lien Leverage Ratio previously delivered pursuant to Section 5.01(c) was inaccurate (and such inaccuracy is discovered while any Revolving Commitments are outstanding), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin for the Revolving Loans or Swing Line Loans, the LC Participation Fee or the Commitment Fee, as applicable, for any period (an “Applicable Period”) than the Applicable Margin for Revolving Loans or Swing Line Loans, the LC Participation Fee or the Commitment Fee, as applicable, applied for such Applicable Period, then, to the extent any Revolving Commitments are outstanding at such time, (i) the Borrower shall as soon as practicable deliver to the Administrative Agent the correct certified calculation of the First Lien Leverage Ratio for such Applicable Period, (ii) the Applicable Margin for Revolving Loans or Swing Line Loans, the LC Participation Fee or the Commitment Fee, as applicable, shall be determined as if the Level for such higher Applicable Margin for Revolving Loans or Swing Line Loans, the LC Participation Fee or the Commitment Fee, as applicable, were applicable for such Applicable Period, and (iii) the Borrower shall within ten Business Days of written demand therefor by the Administrative Agent pay to the Administrative Agent the accrued additional interest with respect to Revolving Loans or Swing Line Loans, the LC Participation Fee or the Commitment Fee owing as a result of such increased Applicable Margin for Revolving Loans or Swing Line Loans, the LC Participation Fee or the Commitment Fee for such Applicable Period, which payment shall be promptly applied by the Administrative Agent in accordance with this Agreement.

 

Notwithstanding the foregoing, the Applicable Margin in respect of any Extended Loan shall be the applicable percentages per annum set forth in the relevant Extension Amendment.

 

Applicable Net Cash Proceeds Percentage” shall mean, on the date on which the Borrower or any of the Borrower’s Restricted Subsidiaries receives the Net Cash Proceeds of any applicable Asset Sale or Casualty Event, (a) 100% if the First Lien Leverage Ratio as of such date and for the most recently ended Test Period, on a Pro Forma Basis, is greater than or equal to 5.00 to 1.00, (b) 50% if the First Lien Leverage Ratio as of such date and for the most recently ended Test Period, on a Pro Forma Basis, is greater than or equal to 4.50 to 1.00 but less than 5.00 to 1.00, and (c) 0% if the First Lien Leverage Ratio as of such date and for the most recently ended Test Period, on a Pro Forma Basis, is less than 4.50 to 1.00.

 

Applicable Other Indebtedness” shall have the meaning assigned to such term in Section 2.10(h).

 

Applicable Tax Laws” shall mean the Code and any other applicable Requirement of Law relating to Taxes, as in effect from time to time.

 

Application” shall have the meaning assigned to such term in Section 2.18(a).

 

5


 

Approved Fund” shall mean any Fund or managed account that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity, or an Affiliate of an entity, that administers, advises or manages a Lender.

 

Asset Sale” shall mean (a) any conveyance, sale, transfer or other disposition of any property pursuant to Section 6.05(b) and (b) any issuance or sale of any Equity Interest of any Group Member (other than Holdings, and other than to any Group Member (other than in the case of an issuance or sale of any Equity Interest of any Credit Party to any Group Member that is not a Credit Party)), and in any event “Asset Sales” shall exclude Casualty Events of any Group Member.

 

Asset Sale Threshold” shall have the meaning assigned to such term in Section 2.10(c)(i).

 

Assignment and Assumption” shall mean an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.04(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit B, or any other form (including electronic documentation generated by use of an electronic platform) approved by the Administrative Agent.

 

Attributable Indebtedness” shall mean, when used with respect to any Sale Leaseback Transaction, as at the time of determination, the present value (discounted at a rate equivalent to the Borrower’s then-current weighted average cost of funds for borrowed money as at the time of determination, compounded on a semi-annual basis) of the total obligations of the lessee for rental payments during the remaining term of the lease included in any such Sale Leaseback Transaction.

 

Audited Financial Statements” shall mean the audited consolidated balance sheets and related statements of income, and cash flows of Holdings and its Restricted Subsidiaries for the most recently completed fiscal year ended at least 120 days before the Closing Date.

 

Auto-Renewal Letter of Credit” shall have the meaning assigned to such term in Section 2.18(c)(ii).

 

Available Retained ECF Amount” shall mean, at any date of determination, the portion of Excess Cash Flow, determined on a cumulative basis for all fiscal years of Holdings (commencing with the fiscal year ending December 31, 2019) that was not required to be applied to prepay Term Loans pursuant to Section 2.10(f) or to prepay any other Indebtedness pursuant to Section 2.10(h) on account of Section 2.10(f); provided that in no event shall the “Available Retained ECF Amount” be less than $0.

 

Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

 

Bail-In Legislation” shall mean, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council

 

6


 

of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

 

Bankruptcy Code” shall mean the Federal Bankruptcy Reform Act of 1978, as heretofore and hereafter amended, and codified as 11 U.S.C. §§ 101 et seq. and the regulations issued thereunder.

 

Base Rate” shall mean a rate per annum equal to the rate last quoted by The Wall Street Journal as the “Prime Rate” in the United States or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as determined by the Administrative Agent).

 

Benefit Plan” means any of (a) an Employee Benefit Plan that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such Employee Benefit Plan or “plan”.

 

Board” shall mean the Board of Governors of the Federal Reserve System of the United States.

 

Board of Directors” shall mean, with respect to any person, (a) in the case of any corporation, the board of directors of such person, (b) in the case of any limited liability company, the board of managers, manager or managing member of such person, (c) in the case of any partnership, the general partner of such person and (d) in any other case, the functional equivalent of the foregoing.

 

Bona Fide Debt Fund” shall mean any debt Fund Affiliate of any Person described in clause (b) of the definition of Disqualified Institution that is primarily engaged in, or advises funds or other investment vehicles that are engaged in, making, purchasing, holding or otherwise investing in commercial loans, notes, bonds and similar extensions of credit or securities in the ordinary course of its business and whose managers have fiduciary duties to the investors therein independent of or in addition to their duties to such Person described in clause (b) of the definition of Disqualified Institution.

 

Borrower” shall have the meaning assigned to such term in the preamble hereto; provided that the term “Borrower” shall include any Additional Borrower.

 

Borrowing” shall mean (a) Loans of the same Class and Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect or (b) a Swing Line Loan.

 

Borrowing Request” shall mean a written request by the Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit C-1, or such other form (including any form on an electronic platform or electronic transmission system) as

 

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shall be approved by the Administrative Agent (which approval shall not be unreasonably withheld), appropriately completed and signed by a Responsible Officer of the Borrower.

 

Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Requirements of Law of, or are in fact closed in, the state where the Administrative Agent’s office set forth in Section 10.01 is located (as modified from time to time in accordance with Section 10.01) and, if such day relates to any Eurodollar Loan, shall mean any such day that is also a day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

 

Capital Assets” shall mean, with respect to any person, all equipment, rolling stock, aircraft, fixed assets and Real Property or improvements of such person, or replacements or substitutions therefor or additions thereto, that, in accordance with GAAP, have been or should be reflected as additions to property, plant or equipment on the balance sheet of such person.

 

Capital Expenditures” shall mean, for any period, the aggregate of, without duplication, (a) all expenditures (whether paid in cash or accrued as liabilities) by Holdings and its Restricted Subsidiaries during such period that, in conformity with GAAP, are or are required to be included as additions during such period to property, plant or equipment reflected in the consolidated balance sheet of Holdings and its Restricted Subsidiaries and (b) Capital Lease Obligations incurred by Holdings and its Restricted Subsidiaries during such period.

 

Capital Lease Obligations” shall mean, at the time any determination thereof is to be made, the amount of the liability in respect of a Capital Lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) prepared in accordance with GAAP.

 

Capital Leases” shall mean all leases that are required to be, in accordance with GAAP, recorded as capitalized leases; provided that the adoption or issuance of any accounting standards after the Closing Date will not cause any lease that was not or would not have been a Capital Lease prior to such adoption or issuance to be deemed a Capital Lease.

 

Cash Equivalents” shall mean, as to any person, (a) securities issued, or directly, unconditionally and fully guaranteed or insured, by the United States or any political subdivision, agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition by such person; (b) securities issued, or directly, unconditionally and fully guaranteed or insured, by any state of the United States or any political subdivision of any such state or any public instrumentality thereof (provided that the full faith and credit of such state is pledged in support thereof) having maturities of not more than one year from the date of acquisition by such person; (c) time deposits and certificates of deposit of any Lender or any commercial bank having, or which is the principal banking subsidiary of a bank holding company organized under the laws of the United States, any state thereof or the District of Columbia having, capital and surplus aggregating in excess of $500,000,000 and a rating of “A” (or such other similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) with maturities of not more

 

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than one year from the date of acquisition by such person, and securities with maturities of one year or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of this clause (c); (d) repurchase obligations for underlying securities of the types described in clause (a), (b) or (c) above entered into with any bank meeting the qualifications specified in clause (c) above; (e) commercial paper issued by any person incorporated in the United States rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s, and in each case maturing not more than one year after the date of acquisition by such person; (f) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (a) through (e) above, or that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated within the top three ratings categories by S&P or Moody’s and (iii) have portfolio assets of at least $500,000,000; (g) demand deposit accounts maintained in the ordinary course of business; (h) preferred stock issued by Persons with a rating of “A” or higher from S&P or “A-2” or higher from Moody’s, with maturities of less than one year from the date of acquisition; (i) marketable short-term money market and similar securities having a rating of at least “P-2” or “A-2” from either Moody’s or S&P, respectively (or, if at any time either Moody’s or S&P shall not be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by Holdings) and in each case maturing within one year after the date of creation or acquisition thereof; (j) investment funds investing at least 90% of their assets in Cash Equivalents of the types described in clauses (a) through (j) above and (k)(i) investments of the type and (to the extent applicable) maturity described in clauses (a) through (j) above of (or maintained with) a comparable foreign obligor, which investments or obligors (or the parent thereof) have ratings described in clause (c) or (e) above, if applicable, or equivalent ratings from comparable foreign rating agencies or (ii) investments of the type and maturity (to the extent applicable) described in clauses (a) through (j) above of (or maintained with) a foreign obligor (or the parent thereof), which investments or obligors (or the parents thereof) are not rated as provided in such clauses or in subclause (i) of this clause (k) but which are, in the reasonable judgment of the Borrower, comparable in investment quality to such investments and obligors (or the parents of such obligors).

 

Cash Management Agreement” shall mean any agreement to provide to any Group Member any cash management services, including treasury, depository, overdraft, credit or debit card, electronic funds transfer and other cash management arrangements.

 

Cash Management Bank” shall mean any Person that is a creditor under a Cash Management Agreement, in its capacity as a party to such Cash Management Agreement; provided that if such Person is not (or was not, at the time it entered into a Cash Management Agreement) a Lender, an Agent or a Lead Arranger, such person shall deliver to the Administrative Agent a letter agreement pursuant to which such person (i) appoints the Collateral Agent as its agent under the applicable Loan Documents and (ii) agrees to be bound by the provisions of Sections 9.03, 10.03 and 10.09 as if it were a Lender.

 

Casualty Event” shall mean any involuntary loss of title, any involuntary loss of, damage to or any destruction of, or any condemnation or other taking (including by any Governmental Authority) of, any property of any Group Member.  “Casualty Event” shall include but not be limited to any taking of all or any part of any Real Property of any Person or

 

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any part thereof, in or by condemnation or other eminent domain proceedings pursuant to any Requirement of Law, or by reason of the temporary requisition of the use or occupancy of all or any part of any Real Property of any Person or any part thereof by any Governmental Authority, civil or military, or any settlement in lieu thereof.

 

Casualty Event Threshold” shall have the meaning set forth in Section 2.10(e)(i).

 

CFC” shall mean a Foreign Subsidiary that is a controlled foreign corporation within the meaning of Section 957 of the Code.

 

CFC Holding Company” shall mean any Subsidiary substantially all of the assets of which are (a) Equity Interests (including any debt instrument treated as equity for U.S. federal income tax purposes) or (b) Equity Interests (including any debt instrument treated as equity for U.S. federal income tax purposes) and debt instruments, in the case of clauses (a) and (b), of one or more (x) Excluded Foreign Subsidiaries and (y) other Subsidiaries that are CFC Holding Companies pursuant to clause (x) of this definition.

 

Change in Law” shall mean (a) the adoption of, or taking effect of, any law, treaty, order, rule or regulation after the date hereof, (b) any change in any law, treaty, order, rule or regulation (including, for the avoidance of doubt, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith, and all requests rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III) or in the administration, interpretation, implementation or application thereof by any Governmental Authority after the date hereof or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) of any Governmental Authority (including, for the avoidance of doubt, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act or pursuant to Basel III) made or issued after the date hereof.

 

A “Change of Control” shall be deemed to have occurred if:

 

(a)                                 prior to an IPO, Permitted Holders (collectively) shall fail to own (directly or indirectly), or to have the power to vote or direct the voting of, directly or indirectly, Voting Stock of Holdings representing more than 50% of the voting power of the total outstanding Voting Stock of Holdings;

 

(b)                                 upon and following an IPO, the Permitted Holders (collectively) shall fail to own (directly or indirectly), or to have the power to vote or direct the voting of, directly or indirectly, Voting Stock of Holdings representing more than 35% of the voting power of the total outstanding Voting Stock of Holdings, unless Permitted Holders have, at such time, the right or ability by voting power, contract or otherwise, to elect or designate for election at least a majority of the Board of Directors of Holdings;

 

(c)                                  upon and following an IPO, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the

 

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Exchange Act, except that for purposes of this clause such person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of Voting Stock of Holdings representing more than the total Voting Stock of Holdings then held by the Permitted Holders (collectively);

 

(d)                                 Holdings shall cease to beneficially own and Control, directly or indirectly, 100% on a fully diluted basis of the economic and voting interests in the Equity Interests of the Borrower; or

 

(e)                                  a “Change of Control” (or equivalent term) as defined in the definitive debt documentation for any Indebtedness in excess of $10,000,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $13,400,000)  in aggregate principal amount secured by the Collateral on a pari passu basis with or a junior basis to the Secured Obligations, Unsecured Indebtedness, Permitted Junior Refinancing Debt, Permitted Pari Passu Refinancing Debt, Permitted Unsecured Refinancing Debt, Registered Equivalent Notes, Permitted Incremental Equivalent Debt or Indebtedness incurred pursuant to a Permitted Refinancing of any of the foregoing, shall occur.

 

For purposes of this definition, a person acquiring any Voting Stock shall not be deemed to have beneficial ownership of such Voting Stock subject to a stock purchase agreement, merger agreement or similar agreement, so long as such agreement contains a condition to the closing of the transactions contemplated thereunder that the Obligations (other than contingent indemnification obligations, unasserted expense reimbursement obligations, obligations and liabilities under Secured Cash Management Agreements and Secured Hedging Agreements with respect to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made, and Letters of Credit that have been (i) cash collateralized in accordance with the terms of this Agreement, (ii) backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or (iii) rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank) under this Agreement and the other Loan Documents shall be paid in full and terminated prior to (or contemporaneously with) the consummation of such transactions.

 

Class” subject to Section 2.21 and Section 2.22, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term Loans or Swing Line Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Revolving Commitment, Term Loan Commitment or Swing Line Commitment, in each case, under this Agreement as originally in effect or pursuant to Section 2.20.

 

Closing Date” shall mean the date of the initial Credit Extensions hereunder.

 

Closing Date Refinancing” shall have the meaning assigned to such term in the recitals hereto.

 

Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, unless otherwise specified.

 

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Collateral” shall mean, collectively, all of the Security Agreement Collateral and all other property of whatever kind and nature, whether now owned or hereinafter acquired, subject or purported to be subject from time to time to a Lien under any Security Document.

 

Collateral Agent” shall have the meaning assigned to such term in the preamble hereto, and include each other person appointed as a successor thereto pursuant to Article IX.

 

Commercial Letter of Credit” shall mean any letter of credit or similar instrument intended to serve as the means of payment in a purchase of goods or services.

 

Commitment” shall mean, with respect to any Lender, such Lender’s Revolving Commitment, Term Loan Commitment or Swing Line Commitment.

 

Commitment Fee” shall have the meaning assigned to such term in Section 2.05(a).

 

Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

 

Communications” shall have the meaning assigned to such term in Section 10.01(d).

 

Compliance Certificate” shall mean a certificate of a Financial Officer substantially in the form of Exhibit D.

 

Consolidated Amortization Expense” shall mean, for any period, the amortization expense of Holdings and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, and including, without limitation, amortization of goodwill, software and other intangible assets.

 

Consolidated Cash Interest Expense” shall mean, for any period, the Consolidated Interest Expense excluding any non-cash interest expense of Holdings and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

 

Consolidated Current Assets” shall mean, as at any date of determination, the total assets of Holdings and its Restricted Subsidiaries which may properly be classified as current assets (excluding deferred tax assets without duplication of amounts otherwise added in calculating Excess Cash Flow) on a consolidated balance sheet of Holdings and its Restricted Subsidiaries in accordance with GAAP, excluding cash and Cash Equivalents; provided that Consolidated Current Assets shall be calculated without giving effect to the impact of purchase accounting.

 

Consolidated Current Liabilities” shall mean, as at any date of determination, the total liabilities (excluding deferred taxes and taxes payable, in each case, without duplication of amounts otherwise deducted in calculating Excess Cash Flow) of Holdings and its Restricted Subsidiaries which may properly be classified as current liabilities (other than the current portion of any Indebtedness and other long term liabilities, and accrued interest thereon) on a

 

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consolidated balance sheet of Holdings and its Restricted Subsidiaries in accordance with GAAP; provided that Consolidated Current Liabilities shall be calculated without giving effect to the impact of purchase accounting.

 

Consolidated Depreciation Expense” shall mean, for any period, the depreciation expense of Holdings and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

 

Consolidated EBITDA” shall mean, for any period, Consolidated Net Income for such period, adjusted by (x) adding thereto, in each case only to the extent (and in the same proportion) deducted in determining such Consolidated Net Income (other than in respect of clauses (f), (o) and (r) below) and without duplication:

 

(a)                                 Consolidated Interest Expense;

 

(b)                                 Consolidated Amortization Expense;

 

(c)                                  Consolidated Depreciation Expense;

 

(d)                                 Consolidated Tax Expense;

 

(e)                                  Consolidated Transaction Costs;

 

(f)                                   (x) pro forma adjustments consistent with those previously identified in the “bank case” projection model delivered to the Administrative Agent on December 6, 2017, and (y) “run rate” cost savings, operating expense reductions, other operating improvements and initiatives and synergies projected by the Borrower to result from action either taken or expected to be taken in connection with, and within 36 months following, any acquisition (including the commencement of activities constituting a business) or material disposition (including the termination or discontinuance of activities constituting a business), in each case of business entities or of properties or assets constituting a division or line of business (including, without limitation, a product line), and/or any other operational change (including, to the extent applicable, in connection with the Transactions or any restructuring) (which will be added to Consolidated EBITDA as so projected until fully realized and calculated on a Pro Forma Basis as though such synergies, cost savings, operating expense reductions, other operating improvements and initiatives had been realized on the first day of such period), net of the amount of actual benefits realized during such period from such actions;

 

(g)                                  any charge, expense, cost, accrual, reserve, payment, fee, expense or loss of any kind (“Charges”) (including rationalization, legal, tax, structuring and other costs and expenses) (other than depreciation or amortization expense) related to any consummated, anticipated, unsuccessful or attempted equity offering (including an IPO), issuance or repurchase, other Equity Issuance, incurrence by Holdings or any of its Subsidiaries of Indebtedness (including an amendment thereto or a refinancing thereof, whether or not successful, and any costs of surety bonds incurred in connection with successful or unsuccessful financing activities), Dividend (including the amount of expenses relating to payments made to option holders of any direct or indirect parent of the Borrower in connection with, or as a result of, any distribution being made to equityholders of such Person, which payments are being made

 

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to compensate such option holders as though they were equityholders at the time of, and entitled to share in, such distribution, in each case to the extent permitted under this Agreement), Investment, acquisition (including the Original Acquisition and any Permitted Acquisition or other Investments) (including (x) bonuses paid to employees, severance and reorganization costs and expenses in connection with any Permitted Acquisition and other investments permitted hereunder, (y) fees, costs and expenses incurred in connection with the de-listing of public targets or compliance with public company requirements in connection any Permitted Acquisition or other Investment, and any Public Company Costs, and (z) to the extent arising in the context of “take private” Permitted Acquisitions or Investments, litigation expenses and settlement amounts), Asset Sale or other disposition, consolidations, restructurings, repayment of Indebtedness (including Restricted Debt Payments) or recapitalization or the breakage of any hedging arrangement permitted hereunder or the incurrence of Indebtedness permitted to be incurred hereunder (including a refinancing thereof) (in each case, whether or not successful), including such Charges related to (i) the offering, syndication, assignment and administration of the loans under the Loan Documents and any other credit facilities (including, and together with Charges of S&P, Moody’s or any other nationally recognized ratings agency in order to comply with the terms of Section 5.12) and (ii) any refinancing, extension, waiver, forbearance, amendment or other modification of the Loan Documents and any other credit facilities (in each case, whether consummated, anticipated, unsuccessful, attempted or otherwise);

 

(h)                                 (i) any non-cash Charges, impairment Charges (including bad debt expense), write-downs, write-offs, expenses, losses or items (including, without limitation, purchase accounting adjustments under ASC 805 or similar recapitalization accounting or acquisition accounting under GAAP or similar provisions under GAAP, or any amortization or write-off of any amounts thereof (including, without limitation, with respect to inventory, property and equipment, leases, software, goodwill, intangible assets, in-process research and development, deferred revenue, advanced billings and debt line items)) (including any (x) non-cash expense relating to the vesting of warrants, (y) non-cash asset retirement costs, and (z) non-cash increase in expenses resulting from the revaluation of inventory (including any impact of changes to inventory valuation policy methods (including changes in capitalization of variances)) or other inventory adjustments), including any such charges, impairment charges, write-downs, write-offs, expenses, losses or items pushed down to Holdings and its Restricted Subsidiaries, (ii) net unrealized or realized exchange, translation or performance losses relating to foreign currency transactions and foreign exchange adjustments including, without limitation, losses and expenses in connection with, and currency and exchange rate fluctuations and losses or other obligations from, hedging activities or other derivative instruments, and (iii) cash Charges resulting from the application of ASC 805 or similar provisions under GAAP (including with respect to Earn-Outs incurred by Holdings, the Borrower or any of their Restricted Subsidiaries in connection with any Permitted Acquisition or other Investment (including any acquisition or other Investment consummated prior to the Closing Date) and paid or accrued during the applicable period);

 

(i)                                     (i) the amount of management, advisory, monitoring, consulting, refinancing, subsequent transaction and exit fees (including termination fees) and similar fees and expenses and related indemnities and expenses paid or accrued to direct or indirect equity holders of Holdings (and their Affiliates), including any such fees, expenses and indemnities required to be paid pursuant to the Management Services Agreement and payments for any

 

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financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, to the extent such payments are permitted hereunder, and (ii) directors’ fees and expenses paid or accrued;

 

(j)                                    Charges that are covered by indemnification, reimbursement, guaranty, purchase price adjustment or other similar provisions in favor of Holdings or its Restricted Subsidiaries in any agreement entered into by Holdings or any of its Restricted Subsidiaries to the extent such expenses and payments have been reimbursed pursuant to the applicable indemnity, guaranty or acquisition agreement in such period (or are reasonably expected to be so paid or reimbursed within one year after the end of such period to the extent not accrued) or an earlier period if not added back to Consolidated EBITDA in such earlier period; provided that if such amount is not so reimbursed within such one year period, such expenses or losses shall be subtracted in the subsequent calculation period;

 

(k)                                 Insurance Loss Addbacks; provided that if such amount is both (i) added back to Consolidated EBITDA and (ii) not so reimbursed or received by the Borrower or its Restricted Subsidiaries within such one year period applicable thereto, then such Insurance Loss Addback shall be subtracted in the subsequent Test Period;

 

(l)                                     the aggregate amount of proceeds of business interruption insurance received by Holdings or one of its Restricted Subsidiaries during such period (or so long as such amount is reasonably expected to be received in a subsequent calculation period and within one year from the date of the underlying loss) to the extent not already included in Consolidated Net Income; provided that, if such amount is both (i) added back to Consolidated EBITDA and (ii) not so reimbursed or received by Holdings or such Restricted Subsidiary within such one year period, then such expenses or losses shall be subtracted in the subsequent calculation period;

 

(m)                             any exceptional, extraordinary, unusual or non-recurring expenses, losses or Charges incurred;

 

(n)                                 Charges attributable to or associated with any restructuring (including restructuring charges related to Permitted Acquisitions and other Investments permitted hereunder and adjustments to existing reserves), carve out, integration, implementation of new initiatives, business optimization activities, cost savings, cost rationalization programs, operating expense reductions, synergies and/or similar initiatives, retention, recruiting, relocation, rebranding, signing bonuses, Charges in connection with a single or one-time event (including without limitation, in connection with facility openings, pre-openings, closings, reconfigurations and/or consolidations), research and development, contract termination Charges, stock option and other equity-based compensation expenses, any Charges associated with any stock subscription or shareholder agreement or any employee benefit trust, severance costs, Charges associated with systems implementation, software development, project start-up and new operations (including, without limitation, any Charges in connection with entering into a new market), corporate development, any Charges associated with any modification of any pension or post-retirement employee benefit plan, indemnities and expenses, transaction fees and expenses, management fees and expenses, including, without limitation, any one time expense relating to enhanced accounting function or other transaction costs, including those associated with

 

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becoming a standalone entity or a public company (including, for the avoidance of doubt, Public Company Costs);

 

(o)                                 solely for purposes of determining compliance with Section 6.08 (and solely to the extent made in compliance with Section 8.03(a)), in respect of any period which includes a Cure Quarter, the Cure Amount in connection with an Equity Cure Contribution in respect of such Cure Quarter;

 

(p)                                 (i) compensation expenses resulting from the repurchase of Equity Interests of Holdings or any of its parent companies from employees, directors or consultants of Holdings or any of its Restricted Subsidiaries, in each case, to the extent permitted by this Agreement, (ii) non-cash costs and expenses relating to any equity-based compensation or equity-based incentive plan of Holdings (or its direct or indirect parent company) or any of its Restricted Subsidiaries and (iii) compensation payments resulting from payments to employees, directors or officers of Holdings and its Restricted Subsidiaries paid in connection with Dividends that are otherwise permitted hereunder to the extent such payments are not made in lieu of, or a substitution for, ordinary salary or ordinary payroll payments;

 

(q)                                 any net losses attributable to the early extinguishment or repayment of Indebtedness (and the termination of any associated hedging agreements) including, for the avoidance of doubt, any unamortized fees, costs and expenses paid in connection therewith;

 

(r)                                    other adjustments that are (i) contained in a quality of earnings report made available to the Administrative Agent prepared by financial advisors (which financial advisors are (A) nationally recognized or (B) reasonably acceptable to the Administrative Agent (it being understood and agreed that any of the “Big Four” accounting firms are acceptable)) and retained by a Credit Party, (ii) determined on a basis consistent with Article 11 of Regulation S-X promulgated under the Exchange Act and as interpreted by the staff of the SEC (or any successor agency), (iii) included in the definition of “Consolidated EBITDA” as set forth in the Existing Credit Agreement or (iv) approved by the Administrative Agent;

 

(s)                                   letter of credit fees;

 

(t)                                    net realized losses from Hedging Agreements, embedded derivatives or other derivatives resulting from actions outside of the ordinary course of trading (provided that, for the avoidance of doubt, losses resulting from ordinary course of trading Hedging Agreements or other derivatives shall not be added back pursuant to this clause (t));

 

(u)                                 the net amount, if any, of the difference between (to the extent the amount in the following clause (i) exceeds the amount in the following clause (ii)): (i) the deferred revenue related to subscription sales of such Person and its Restricted Subsidiaries as of the last day of such period (the “Determination Date”) and (ii) the deferred revenue related to subscription sales of such Person and its Restricted Subsidiaries as of the date that is twelve months prior to the Determination Date;

 

(v)                                 any net loss from disposed, abandoned, transferred, closed or discontinued operations (excluding held for sale discontinued operations until actually disposed of);

 

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(w)                               the amount of any loss or discount on any sale of (x) Receivables Assets and related assets in connection with a Receivables Facility or (y) Securitization Assets and related assets in connection with a Qualified Securitization Financing;

 

(x)                                 any net loss included in Consolidated Net Income attributable to non-controlling interests in any non-Wholly Owned Subsidiary or any joint venture;

 

(y)                                 all Charges attributable to, and payments of, legal settlements, fines, judgments or orders; and

 

(z)                                  all cash actually received (or any netting arrangements resulting in reduced cash expenditures) during the relevant period and not included in Consolidated Net Income in respect of any non-cash gain deducted in the calculation of Consolidated EBITDA (including any component definition) for any previous period and not added back during such period;

 

and (y) subtracting therefrom, in each case only to the extent (and in the same proportion) added in determining such Consolidated Net Income and without duplication, the aggregate amount of (A) all non-cash items increasing Consolidated Net Income for such period (other than the accrual of revenue or recording of receivables in the ordinary course of business), (B) any extraordinary, unusual or non-recurring gains increasing Consolidated Net Income for such period, (C) any net realized gains from Hedging Agreements, embedded derivatives or other derivatives resulting from actions outside of the ordinary course of trading (provided that, for the avoidance of doubt, gains resulting from ordinary course of trading Hedging Agreements or other derivatives shall not be subtracted pursuant to this clause (C)), (D) any net gain from disposed, abandoned, transferred, closed or discontinued operations (excluding held for sale discontinued operations until actually disposed of), (E) the net amount, if any, of the difference between (to the extent the amount in the following clause (i) exceeds the amount in the following clause (ii)): (i) the deferred revenue of such Person and its Restricted Subsidiaries as of the date that is twelve months prior to the Determination Date (as defined above) and (ii) the deferred revenue of such Person and its Restricted Subsidiaries as of the Determination Date; (G) the amount of any minority interest net income attributable to non-controlling interests in any non-Wholly Owned Subsidiary or any joint venture; (H) net unrealized or realized exchange, translation or performance income or gains relating to foreign currency transactions and foreign exchange adjustments including, without limitation, income or gains in connection with, and currency and exchange rate fluctuations and income or gains from, hedging activities or other derivative instruments; and (I) the amount of any income or gain on any sale of (x) Receivables Assets and related assets in connection with a Receivables Facility or (y) Securitization Assets and related assets in connection with a Qualified Securitization Financing.

 

Notwithstanding anything to the contrary, it is agreed that, for the purpose of calculating the First Lien Leverage Ratio, the Senior Secured Leverage Ratio, the Total Leverage Ratio and the Consolidated Interest Coverage Ratio for any period that includes the fiscal quarters ended on March 31, 2017, June 30, 2017, September 30, 2017 or December 31, 2017, Consolidated EBITDA shall be deemed to be $10,119,000, $6,653,000, $5,976,000 and $22,086,000 respectively, in each case, as adjusted on a Pro Forma Basis and to give effect to any adjustments in clauses (f) and (r) above that in each case may become applicable due to actions taken on or

 

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after the Closing Date, as applicable; it being agreed that for purposes of calculating any financial ratio or test in connection with a Subject Transaction, Consolidated EBITDA shall be calculated on a Pro Forma Basis in a manner consistent with Consolidated EBITDA for each quarterly period set forth above and the adjustments set forth above in this definition.  Other than for purposes of calculating Excess Cash Flow, Consolidated EBITDA shall be calculated on a Pro Forma Basis to give effect to any Subject Transaction as if it occurred on the first day of the reference period.

 

Consolidated Interest Coverage Ratio” shall mean, as of any date of determination, the ratio of (i) Consolidated EBITDA for the Test Period then most recently ended to (ii) Consolidated Cash Interest Expense for such Test Period.

 

Consolidated Interest Expense” shall mean, for any period, the total consolidated interest expense of Holdings and its Restricted Subsidiaries for such period with respect to Consolidated Total Funded Indebtedness determined on a consolidated basis in accordance with GAAP plus, without duplication:

 

(a)                                 imputed interest on Capital Lease Obligations and Attributable Indebtedness of Holdings and its Restricted Subsidiaries for such period;

 

(b)                                 commissions, discounts and other fees, costs and Charges owed by Holdings or any of its Restricted Subsidiaries with respect to letters of credit, bankers’ acceptance financings and receivables financings for such period;

 

(c)                                  amortization of costs in connection with the incurrence by Holdings or any of its Subsidiaries of Indebtedness, debt discount or premium and other financing fees and expenses incurred by Holdings or any of its Restricted Subsidiaries for such period;

 

(d)                                 cash contributions to any employee stock ownership plan or similar trust made by Holdings or any of its Restricted Subsidiaries to the extent such contributions are used by such plan or trust to pay interest or fees to any person (other than Holdings or any of its Restricted Subsidiaries) in connection with Indebtedness incurred by such plan or trust for such period;

 

(e)                                  all interest paid or payable with respect to discontinued operations of Holdings or any of its Restricted Subsidiaries for such period;

 

(f)                                   the interest portion of any deferred payment obligations of Holdings or any of its Restricted Subsidiaries for such period; and

 

(g)                                  all interest on any Indebtedness of Holdings or any of its Restricted Subsidiaries of the type described in clauses (f) or (i) of the definition of “Indebtedness” for such period;

 

provided that (a) to the extent directly related to the Transactions, debt issuance costs, debt discount or premium and other financing fees and expenses shall be excluded from the calculation of Consolidated Interest Expense, (b) commissions, discounts, yield, and other fees and Charges (including any interest expense) related to any Receivables Facility or any

 

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Securitization Facility shall be excluded from the calculation of Consolidated Interest Expense, and (c) Consolidated Interest Expense shall be calculated after giving effect to Hedging Agreements related to interest rates (including associated costs), but excluding unrealized gains and losses with respect to Hedging Agreements related to interest rates.

 

Consolidated Interest Expense shall be calculated on a Pro Forma Basis to give effect to any Indebtedness (other than Indebtedness incurred for ordinary course working capital needs under ordinary course revolving credit facilities) incurred, assumed or permanently repaid or prepaid or extinguished at any time on or after the first day of the Test Period and prior to the date of determination in connection with the Transactions, any Permitted Acquisitions, Asset Sales or other dispositions (other than any Asset Sales or other dispositions in the ordinary course of business), and discontinued division or line of business (including, without limitation, a product line) or operations as if such incurrence, assumption, repayment or extinguishing had been effected on the first day of such period in each case to the extent permitted by this Agreement.

 

Consolidated Net Income” shall mean, for any period, the consolidated net income (or loss) attributable to Holdings and its Restricted Subsidiaries determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein), without duplication:

 

(a)                                 the net income (or loss) of any person that is not a Restricted Subsidiary of Holdings, except to the extent that cash in an amount equal to any such income has actually been received by Holdings or (subject to clause (b) below) any of its Restricted Subsidiaries during such period;

 

(b)                                 the net income of any Restricted Subsidiary of Holdings during such period to the extent that the declaration or payment of Dividends or similar distributions by such Restricted Subsidiary of that income is not permitted by operation of the terms of its Organizational Documents or any agreement (other than this Agreement, any other Loan Document or any refinancings thereof), instrument, or Requirement of Law applicable to that Restricted Subsidiary or its equity holders during such period (unless such restriction or limitation has been waived), except that Holdings’ equity in the net loss of any such Restricted Subsidiary for such period shall be included in determining Consolidated Net Income;

 

(c)                                  any gain (or loss), together with any related provisions for taxes on any such gain (or the tax effect of any such loss), realized during such period by Holdings or any of its Restricted Subsidiaries upon any Asset Sale or other disposition by Holdings or any of its Restricted Subsidiaries which is not sold or otherwise disposed of in the ordinary course of business;

 

(d)                                 any foreign currency translation gains or losses (including losses related to currency remeasurements of Indebtedness);

 

(e)                                  non-cash gains and losses resulting from any reappraisal, revaluation or write-up or write-down of assets;

 

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(f)                                   unrealized gains and losses, and the impact of any revaluation, with respect to Hedging Obligations, embedded derivatives or other derivative transactions other than, in each case, unrealized gains or losses with respect to Hedging Obligations or other derivatives which are accounted for on a hedge accounting basis (which, for the avoidance of doubt, shall be included in net income) and provided, that, for the avoidance of doubt, realized gains or losses in respect of Hedging Obligations or other derivatives entered into for nonspeculative purposes shall be included in net income; and

 

(g)                                  gains or losses due solely to the cumulative effect of any change in accounting principles (effected either through cumulative effect adjustment or retroactive application, in each case, in accordance with GAAP) and changes as a result of the adoption or modification of accounting policies during such period.

 

Consolidated Tax Expense” shall mean, for any period, the tax expense (including, without limitation, federal, state, local, foreign, franchise, excise, property and foreign withholding and similar taxes) of Holdings and its Restricted Subsidiaries, including any penalties and interest relating therefrom or arising from any tax examinations for such period, determined on a consolidated basis in accordance with GAAP.

 

Consolidated Total Assets” shall mean, as of any date, the total property and assets of Holdings and its Restricted Subsidiaries, determined in accordance with GAAP, as set forth on the consolidated balance sheet of Holdings most recently delivered pursuant to Section 5.01(a) or (b), as applicable (on a Pro Forma Basis after giving effect to any Permitted Acquisitions or any Investments or dispositions permitted hereunder or by the other Loan Documents).

 

Consolidated Total Funded Indebtedness” shall mean, as of any date of determination, for Holdings and its Restricted Subsidiaries determined on a consolidated basis, the sum of, without duplication, (a) the aggregate principal amount of all funded Indebtedness for borrowed money, (b) all Purchase Money Obligations, (c) the principal portion of Capital Lease Obligations and (d) Letters of Credit (solely to the extent of any unreimbursed amounts thereunder that are not paid within one Business Day after the same become due and payable).  Notwithstanding the foregoing, in no event shall the following constitute “Consolidated Total Funded Indebtedness”: (i) obligations under any derivative transaction or other Hedging Agreement, (ii) undrawn Letters of Credit, (iii) Earn-Outs to the extent not then due and payable and if not recognized as debt on the balance sheet in accordance with GAAP and (iv) leases that would be characterized as operating leases in accordance with GAAP on the date hereof.

 

Consolidated Transaction Costs” shall mean the fees, premiums, costs, expenses, accruals and reserves (including rationalization, legal, tax, structuring and other costs and expenses) incurred by Holdings and its Restricted Subsidiaries, whether before or after the Closing Date, in connection with the Original Acquisition, the Transactions or the Closing Date Refinancing.

 

Contingent Obligation” shall mean, as to any person, any obligation or agreement of such person guaranteeing or intended to guarantee any Indebtedness, leases, Dividends or other obligations (“primary obligations”) of any other person (the “primary

 

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obligor”) in any manner, whether directly or indirectly, including any such obligation or agreement of such person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor; (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation; (d) with respect to bankers’ acceptances, letters of credit and similar credit arrangements, until a reimbursement obligation arises (which reimbursement obligation shall constitute Indebtedness); or (e) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided, however, that the term “Contingent Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary course of business or any product warranties or other similar contingent obligations incurred in the ordinary course of business, including indemnities. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such person may be liable, whether singly or jointly, pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such person is required to perform thereunder) as determined by such person in good faith.

 

Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” shall have meanings correlative thereto.

 

Controlled Investment Affiliate” shall mean, as to any person, any other person which directly or indirectly is in Control of, is Controlled by, or is under common Control with, such person and is organized by such person (or any person Controlling such person) primarily for making equity or debt investments in Holdings or its direct or indirect parent company or other portfolio companies of such person.

 

Credit Agreement Refinancing Indebtedness” shall mean (a) Permitted Pari Passu Refinancing Debt, (b) Permitted Junior Refinancing Debt, or (c) Permitted Unsecured Refinancing Debt obtained pursuant to a Refinancing Amendment, in each case, issued, incurred or otherwise obtained (including by means of the extension or renewal of existing Indebtedness) in exchange for, or to extend, renew, replace or refinance, in whole or part, existing Term Loans, Incremental Term Loans, Refinancing Term Loans, Revolving Loans, Incremental Revolving Loans or Refinancing Revolving Loans hereunder (including any successive Credit Agreement Refinancing Indebtedness) (“Refinanced Debt”); provided that (i) such extending, renewing or refinancing Indebtedness is in an original aggregate principal amount not greater than (A) the aggregate principal amount of the Refinanced Debt, plus (B) accrued and unpaid interest thereon, any fees, premiums, accrued interest associated therewith, or other reasonable amount paid, and fees, costs and expenses, commissions or underwriting discounts incurred in connection therewith, plus (C) an amount equal to any existing commitments unutilized under such Refinanced Debt not established in contemplated of such refinancing, plus (D) such additional

 

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amounts otherwise permitted to be incurred under the Loan Documents (with a corresponding reduction in the amount of any basket or carve-out (to the extent capped) used pursuant to this clause (D)), (ii) the terms applicable to such Credit Agreement Refinancing Indebtedness comply with the Required Debt Terms and (iii) such Refinanced Debt (other than unasserted contingent indemnification or reimbursement obligations and letters of credit that have been cash collateralized, rolled into another credit facility or backstopped in accordance with the terms thereof) shall be repaid, defeased or satisfied and discharged, and (unless otherwise agreed by all Lenders holding such Refinanced Debt) all accrued interest, fees and premiums (if any) in connection therewith shall be paid on the date such Credit Agreement Refinancing Indebtedness is issued, incurred or obtained.

 

Credit Extension” shall mean, as the context may require, (i) the making of a Loan by a Lender or (ii) the issuance of any Letter of Credit, or the extension or renewal of any existing Letter of Credit, by the Issuing Bank.

 

Credit Parties” shall mean the Borrower and the Guarantors; and “Credit Party” shall mean any one of them.

 

Cumulative Amount” shall mean, on any date of determination (the “Reference Date”), the sum of (without duplication):

 

(a)                                 an amount equal to the greater of (i) $15,000,000 and (ii) 35% of Consolidated EBITDA for the most recent Test Period; plus

 

(b)                                 the Available Retained ECF Amount; plus

 

(c)                                  an amount determined on a cumulative basis equal to the Net Cash Proceeds received by Holdings after the Closing Date (and contributed as common capital or Qualified Capital Stock to the Borrower) from Eligible Equity Issuances, to the extent Not Otherwise Applied; plus

 

(d)                                 an amount determined on a cumulative basis equal to the Net Cash Proceeds received by Holdings (and contributed as common capital or Qualified Capital Stock to the Borrower) from Indebtedness or Disqualified Capital Stock issued after the Closing Date and subsequently converted or exchanged into Qualified Capital Stock of Holdings or any direct or indirect parent company of Holdings, to the extent Not Otherwise Applied; plus

 

(e)                                  the aggregate amount of Retained Declined Proceeds and Retained Asset Sale Proceeds held by any Group Member during the period from the Business Day immediately following the Closing Date through and including the Reference Date; plus

 

(f)                                   to the extent not already included in the calculation of Consolidated Net Income of Holdings and its Restricted Subsidiaries, the aggregate amount of all cash dividends and other cash distributions received by any Group Member from any joint ventures or Unrestricted Subsidiaries during the period from the Business Day immediately following the Closing Date through and including the Reference Date solely to the extent the original Investment therein was made using the Cumulative Amount and solely up to the original amount of the Investment therein; plus

 

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(g)                                  to the extent not already included in the calculation of Consolidated Net Income of Holdings and its Restricted Subsidiaries, the aggregate amount of all Net Cash Proceeds received by any Group Member in connection with the sale, transfer or other disposition of its ownership interest in any joint venture or Unrestricted Subsidiary during the period from the Business Day immediately following the Closing Date through and including the Reference Date solely to the extent the original Investment therein was made using the Cumulative Amount and solely up to the original amount of the Investment therein; plus

 

(h)                                 the aggregate amount of all Net Cash Proceeds received by any Group Member in connection with the sale, transfer or other disposition of its ownership interest in, or cash amounts of any returns, dividends, profits, distributions and similar amounts received on, any Investment (including in any Unrestricted Subsidiary or a joint venture) made pursuant to Section 6.03(x), up to the amount of the original Investment, during the period from the Business Day immediately following the Closing Date through and including the Reference Date; plus

 

(i)                                     in the event that the Borrower re-designates any Unrestricted Subsidiary as a Restricted Subsidiary after the Closing Date (which, for purposes hereof, shall be deemed to also include (A) the merger, consolidation, liquidation or similar amalgamation of any Unrestricted Subsidiary into the Borrower or any Restricted Subsidiary, so long as the Borrower or such Restricted Subsidiary is the surviving Person, and (B) the transfer of any assets of an Unrestricted Subsidiary to the Borrower or any Restricted Subsidiary), the lower of (x) the fair market value (as determined in good faith by the Borrower) of the Investment in such Unrestricted Subsidiary or such transferred assets at the time of such re-designation and (y) the amount of the original Investment in such Unrestricted Subsidiary, in each case to the extent such Investment was made using the Cumulative Amount; minus

 

(j)                                    (i) the aggregate amount of Investments made pursuant to Section 6.03(x) using the Cumulative Amount, (ii) the aggregate amount of Dividends made pursuant to Section 6.06(f) using the Cumulative Amount and (iii) the aggregate amount of prepayments of indebtedness pursuant to Section 6.09(a) using the Cumulative Amount, in each case during the period from and including the Business Day immediately following the Closing Date through and including the Reference Date (without taking account of the intended usage of the Cumulative Amount on such Reference Date).

 

Cure Amount” shall have the meaning assigned to such term in Section 8.03(a).

 

Cure Expiration Date” shall have the meaning assigned to such term in Section 8.03(a).

 

Cure Quarter” shall have the meaning assigned to such term in Section 8.03(a).

 

Debt Issuance” shall mean the incurrence by Holdings or any of its Restricted Subsidiaries of any Indebtedness after the Closing Date (other than Indebtedness permitted by Section 6.01 to the extent not Credit Agreement Refinancing Indebtedness).

 

Debt Service” shall mean, for any period, Consolidated Interest Expense for such period plus principal amortization (and other mandatory prepayments and repayments (whether pursuant to this Agreement or otherwise)) of all Indebtedness for such period

 

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(including, without limitation, the implied principal component of payments made in respect of Capital Lease Obligations).

 

Debtor Relief Law” shall mean the Bankruptcy Code and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and any other matters which are set out as qualifications or reservations as to matters of law of general application in any legal opinion provided in connection with this Agreement.

 

Declined Proceeds” shall have the meaning assigned to such term in Section 2.10(i).

 

Default” shall mean any event, occurrence or condition which is, or upon notice, lapse of time or both would constitute, an Event of Default.

 

Default Excess” shall mean, with respect to any Defaulting Lender, the excess, if any, of such Defaulting Lender’s Pro Rata Percentage of the aggregate outstanding principal amount of Revolving Loans of all Revolving Lenders (calculated as if all Defaulting Lenders (including such Defaulting Lender) had funded all of their respective defaulted Revolving Loans) over the aggregate outstanding principal amount of Revolving Loans of such Defaulting Lender.

 

Default Rate” shall have the meaning assigned to such term in Section 2.06(c).

 

Defaulting Lender” shall mean any Lender, as reasonably determined by the Administrative Agent in a manner consistent with similar determinations by the Administrative Agent in respect of other Lenders, that (a) has failed to fund any portion of its Loans or Incremental Loans or participations in Letters of Credit required to be funded by it hereunder or under any commitment to fund an Incremental Loan within one Business Day of the date on which such amount is required to be funded by it hereunder or under any commitment to fund an Incremental Loan unless such Lender notifies the Administrative Agent, the Issuing Bank and the Borrower in writing that such failure is the result of such Lender’s reasonable and good faith determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, (b) has notified the Administrative Agent, the Issuing Bank, any Lender and/or the Borrower in writing that it does not intend to comply with any of its funding obligations under this Agreement or any documentation relating to an Incremental Facility or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under any Incremental Facility (unless such writing or public statement states that such position is based on such Lender’s reasonable and good faith determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within two Business Days after request by the Administrative Agent, the Issuing Bank or the Borrower, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans or Incremental Loans and participations in then outstanding Letters of Credit, (d) has otherwise failed to pay over to the Administrative Agent, the Issuing Bank or any other Lender any other amount required to be

 

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paid by it hereunder within one Business Day of the date when due, unless such payment is the subject of a good faith dispute, or (e) in the case of a Lender that has a Commitment or LC Exposure outstanding at such time, shall have, or shall be the Subsidiary of any person that shall have, (i) taken any action or been the subject of any action or proceeding of a type described in Section 8.01(g) or Section 8.01(h) (or any comparable proceeding initiated by a regulatory authority having jurisdiction over such Lender or such person) or (ii) become the subject of a Bail-In Action.  For the avoidance of doubt, a Lender shall not be deemed to be a Defaulting Lender solely by virtue of (i) the ownership or acquisition of any Equity Interest in such Lender or its parent by a Governmental Authority, unless such ownership interest results in or provides such person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such person (or such governmental authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such person or its parent entity or (ii) such Lender becoming subject to an Undisclosed Administration.

 

Designated Noncash Consideration” shall mean, as of any date of determination, the fair market value at the time received (as determined in good faith by the Borrower) of any non-cash consideration received by Holdings or a Restricted Subsidiary in connection with an Asset Sale that is designated in writing as Designated Noncash Consideration, less the amount of cash or Cash Equivalents received in connection with a subsequent payment, redemption, retirement, sale or other disposition of such Designated Noncash Consideration.  A particular item of Designated Noncash Consideration will no longer be considered to be outstanding when and to the extent it has been paid, redeemed or otherwise retired or sold or otherwise disposed of in compliance with Section 6.05.

 

Disqualified Capital Stock” shall mean any Equity Interest which, by its terms (or by the terms of any security or any other Equity Interests into which it is convertible or for which it is exchangeable) or upon the happening of any event or condition, would (i) mature or be mandatorily redeemable (other than solely for Qualified Capital Stock) pursuant to a sinking fund obligation or otherwise (except as a result of a customarily defined change of control or asset sale and only so long as any rights of the holders thereof after such change of control or asset sale shall be subject to the prior repayment in full of the Obligations (other than (i) contingent indemnification obligations and unasserted expense reimbursement obligations, (ii) obligations and liabilities under Secured Cash Management Agreements and Secured Hedging Agreements with respect to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made and (iii) Letters of Credit that have been (x) cash collateralized in accordance with the terms of this Agreement, (y) backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or (z) rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank) and the termination of the Commitments), (ii) be redeemable at the option of the holder thereof (other than solely for Qualified Capital Stock), in whole or in part, (iii) provide for scheduled payments of dividends in cash or (iv) be or become convertible into or exchangeable for Indebtedness or any other Disqualified Capital Stock, in whole or in part, in each case on or prior to the date that is 91 days after the Latest Maturity Date at the time of issuance.

 

Disqualified Institutions” shall mean (a) those Persons that are competitors of Holdings and its Subsidiaries to the extent identified by the Borrower or the Sponsor to the

 

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Administrative Agent by name in writing from time to time, (b) those banks, financial institutions and other Persons separately identified by name by the Borrower or the Sponsor to the Lead Arrangers in writing on or before December 7, 2017 or (c) in the case of clause (a) or (b), any of their respective Affiliates (other than, in the case of clause (b), Bona Fide Debt Funds) that are (x) readily identifiable as Affiliates on the basis of their name or (y) identified by name by the Borrower (or by the Sponsor, on the Borrower’s behalf) to the Administrative Agent in writing from time to time; provided that the foregoing shall not apply retroactively to disqualify any parties that have previously acquired an assignment or participation interest in the Loans to the extent such party was not a Disqualified Institution at the time of the applicable assignment or participation, as the case may be.

 

Dividend” shall mean, with respect to any person, that such person has declared or paid a dividend or returned any equity capital to the holders of its Equity Interests or authorized or made any other distribution, payment or delivery of property (other than Qualified Capital Stock of such person) or cash to the holders of its Equity Interests as such, or redeemed, retired, purchased or otherwise acquired, directly or indirectly, for consideration any of its Equity Interests outstanding (or any options or warrants issued by such person with respect to its Equity Interests), or set aside or otherwise reserved, directly or indirectly, any funds for any of the foregoing purposes.

 

Dollars,” “dollars” or “$” shall mean lawful money of the United States.

 

Domestic Subsidiary” shall mean any Subsidiary that is organized under the laws of the United States, any state thereof or the District of Columbia.

 

Earn-Outs” shall mean, with respect to a Permitted Acquisition or any other acquisition of any assets or Property by any Group Member, that portion of the purchase consideration therefor and that portion of all other payments and liabilities (whether payable in cash or by exchange of Equity Interests or of any Property or otherwise), directly or indirectly, payable by any Group Member in exchange for, or as part of, or in connection with, such Permitted Acquisition or such other acquisition, as the case may be, that is deferred for payment to a future time after the consummation of such Permitted Acquisition or such other acquisition, as the case may be, and includes any and all payments representing the purchase price and any assumptions of Indebtedness, Earn-Outs and other agreements to make any payment the amount of which is, or the terms of payment of which are, in any respect subject to or contingent upon the revenues, income, cash flow or profits (or the like) of any person or business.

 

ECF Payment Amount” shall have the meaning assigned to such term in Section 2.10(f).

 

EEA Financial Institution” shall mean (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

 

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EEA Member Country” shall mean any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

 

EEA Resolution Authority” shall mean any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

 

Effective Yield” shall mean, as of any date of determination, the sum of (i) the higher of (A) the Adjusted LIBO Rate (or comparable rate under any other applicable facility) on such date for a deposit in dollars with a maturity of three months and (B) the Adjusted LIBO Rate (or comparable rate under any other applicable facility) floor, if any, with respect thereto as of such date, (ii) the interest rate margins as of such date (with such interest rate margin and interest spreads to be determined by reference to the Adjusted LIBO Rate (or comparable rate under any other applicable facility)) and (iii) the amount of original issue discount and/or upfront fees paid and payable (which shall be deemed to constitute like amounts of original issue discount) by the Borrower to the Lenders in connection with the applicable facility (with original issue discount or upfront fees being equated to interest based on assumed four-year life to maturity (or, if less, the remaining life to maturity) and assuming that the applicable revolving commitments (including the initial Revolving Commitments, if applicable) were fully drawn) (it being understood that customary arrangement, commitment, structuring, underwriting, ticking, unused line and amendment fees paid or payable to any of the applicable arrangers (or their respective affiliates) in their respective capacities as such in connection with the applicable facility, as applicable (whether or not such fees are paid to or shared in whole or in part with any lenders thereunder), and any other fees that are not generally paid to all lenders (or their respective affiliates) ratably with respect to such loans or such facility and that are paid or payable in connection with such loans or such facility, shall be excluded).

 

Eligible Assignee” shall mean (a) if the assignment does not include the assignment of a Revolving Commitment, (i) any Lender, (ii) an Affiliate of any Lender, (iii) an Approved Fund, (iv) a Sponsor Investor to the extent permitted by Section 10.04(b)(v), (v) Affiliated Debt Funds, and (vi) any other person approved by the Administrative Agent and the Borrower (each such consent not to be unreasonably withheld or delayed; it being understood that the Borrower prohibiting assignments to Disqualified Institutions is reasonable) and (b) if the assignment includes the assignment of a Revolving Commitment, (i) any Revolving Lender, (ii) an Affiliate of any Revolving Lender, (iii) an Approved Fund with respect to a Revolving Lender and (iv) any other person approved by the Administrative Agent, the Issuing Bank, the Swing Line Lender and the Borrower (each such consent not to be unreasonably withheld or delayed; it being understood that the Borrower prohibiting assignments to Disqualified Institutions is reasonable); provided that, in the case of the foregoing clauses (a) and (b), (1) no approval of the Borrower (other than with respect to Disqualified Institutions) shall be required (A) during the continuance of a Default or Event of Default under Section 8.01(a), (b), (g) with respect to the Borrower or (h) with respect to the Borrower or (B) in connection with the primary syndication of the Revolving Commitments and Term Loans to persons (or any Affiliate or Approved Fund thereof) which the Borrower has previously consented to in writing (including by email), (2) to the extent the consent of the Borrower is required for any assignment, such consent shall be deemed to have been given (except with respect to Disqualified Institutions) if the Borrower has not responded within ten Business Days of a written request for such consent,

 

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(3) no approval of the Borrower shall be required with respect to any assignment of Term Loans to another Lender, an Affiliate of any Lender or an Approved Fund, (4) no approval of the Borrower shall be required with respect to any assignment of a Revolving Commitment to another Revolving Lender, an Affiliate of any Revolving Lender or an Approved Fund with respect to a Revolving Lender and (5) notwithstanding anything to the contrary herein, “Eligible Assignee” shall not include at any time any Disqualified Institutions (unless consented to in writing by the Borrower in its sole discretion), any Defaulting Lender, or any natural person.

 

Eligible Equity Issuance” shall mean an issuance and sale of Qualified Capital Stock of Holdings following the Closing Date (other than to the extent applied or to be applied as a Cure Amount) to the equity holders of Holdings.

 

Employee Benefit Plan” shall mean each “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) that is maintained or contributed to by a Group Member or with respect to which a Group Member has any liability (including on account of an ERISA Affiliate).

 

Environment” shall mean ambient air, surface water and groundwater (including potable water, navigable water and wetlands) and the land surface.

 

Environmental Claim” shall mean any claim, notice, demand, order, action, suit or proceeding relating to any investigation, remediation, removal, cleanup, response, corrective action, penalties or other costs (including damages, natural resources damages, contribution, indemnification, cost recovery, compensation or injunctive relief) resulting from, related to or arising out of (i) the presence, Release or threatened Release of Hazardous Material, (ii) any violation or alleged violation of any Environmental Law, or (iii) any actual or alleged exposure to Hazardous Materials.

 

Environmental Law” shall mean all applicable Requirements of Law relating to pollution or protection of the Environment, or to Hazardous Materials.

 

Environmental Permit” shall mean any permit, license, approval, registration, consent or other authorization required by or from a Governmental Authority under Environmental Law.

 

Equity Cure Contribution” shall have the meaning assigned to such term in Section 8.03(a).

 

Equity Funded Portion” shall mean an amount equal to (i) the working capital or other purchase price adjustment with respect to any acquisition or other Investment times (ii) the percentage of the consideration for such acquisition or other Investment that is financed solely with the proceeds of equity issuances by and equity contributions to Holdings, but solely to the extent such equity issuance or equity contribution, as applicable, does not otherwise increase Indebtedness, Investment, Dividend or Restricted Debt Payment capacity hereunder, including, without limitation, pursuant to an increase in the Cumulative Amount.

 

Equity Interest” shall mean, with respect to any person, any and all shares, interests, participations or other equivalents, including membership interests (however

 

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designated, whether voting or nonvoting), of equity of such person, including warrants, options and other rights to purchase and including, if such person is a limited liability company, membership interests or if such person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distributions of property of, such partnership, whether outstanding on the date hereof or issued after the Closing Date; provided that “Equity Interest” shall not include at any time (i) debt securities convertible or exchangeable into such equity or (ii) earn-outs.

 

Equity Investors” shall mean the Sponsor and its Controlled Investment Affiliates and limited partners.

 

Equity Issuance” shall mean, without duplication, (a) any issuance or sale by Holdings of any Equity Interests in Holdings (including any Equity Interests issued upon the exercise of any warrant or option or equity-based derivative) or any warrants or options or equity-based derivatives to purchase Equity Interests of Holdings or (b) any contribution to the capital of Holdings.

 

ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.

 

ERISA Affiliate” shall mean, with respect to any person, any trade or business (whether or not incorporated) that, together with such person, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 412 of the Code, Section 414(m) or (o) of the Code.

 

ERISA Event” shall mean (a) any “reportable event,” as defined in Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a Plan (other than an event for which the 30-day notice period is waived by regulation); (b) with respect to a Plan, the failure to satisfy the minimum funding standard of Section 412 or 430 of the Code and Section 302 or 303 of ERISA, whether or not waived; (c) the failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Plan or the failure to make any required contribution to a Multiemployer Plan; (d) the determination that any Plan is, or is expected to be, in “at risk” status (as defined in Section 430 of the Code or Section 303 of ERISA); (e) the incurrence by any Group Member or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (f) the receipt by any Group Member or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to the intention to terminate any Plan or Plans or Multiemployer Plan or Multiemployer Plans or to appoint a trustee to administer any Plan or Multiemployer Plan, or the occurrence of any event or condition which would reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan; (g) the incurrence by any Group Member or its ERISA Affiliates of liability resulting from the complete or partial withdrawal from any Multiemployer Plan; (h) the receipt by any Group Member or its ERISA Affiliates of any notice, concerning a determination that a Multiemployer Plan is, or is reasonably expected to be, insolvent (within the meaning of Section 4245 of ERISA) or in “critical” or “endangered” status, under Section 432 of the Code or Section 305 of ERISA; (i) the withdrawal of any Group Member or its ERISA Affiliates from a Plan subject to

 

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Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (j) the occurrence of a non-exempt prohibited transaction (within the meaning of Section 4975 of the Code or Section 406 of ERISA) which would reasonably be expected to result in liability to any Group Member; or (k) a Foreign Benefit Event.

 

EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

 

Eurodollar Borrowing” shall mean a Borrowing comprised of Eurodollar Loans.

 

Eurodollar Loan” shall mean any Eurodollar Revolving Loan or Eurodollar Term Loan.

 

Eurodollar Revolving Borrowing” shall mean a Borrowing comprised of Eurodollar Revolving Loans.

 

Eurodollar Revolving Loan” shall mean any Revolving Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Article II.

 

Eurodollar Term Loan” shall mean any Term Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Article II.

 

Event of Default” shall have the meaning assigned to such term in Section 8.01.

 

Excess Amount” shall have the meaning assigned to such term in Section 2.10(h).

 

Excess Cash Flow” shall mean, for any Excess Cash Flow Period, Consolidated EBITDA for such Excess Cash Flow Period, minus, without duplication:

 

(a)                                 Debt Service and other payments of Indebtedness (including, without limitation, related fees and expenses, to the extent paid in cash and to the extent such payments are permitted hereunder, but excluding (A) any required cash payments of principal with respect to the Loans under this Agreement (excluding amortization payments of Term Loans), and (B) voluntary prepayments of Loans pursuant to Section 2.10(a)) of Holdings and its Restricted Subsidiaries, in each case, to the extent made from sources other than the proceeds of long-term Indebtedness (other than revolving Indebtedness to the extent intended to be repaid from operating cash flow); provided that, in each case, payments of revolving Indebtedness shall not be deducted from Excess Cash Flow pursuant to this clause (a) unless accompanied by a permanent reduction in the relevant commitment;

 

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(b)                                 Capital Expenditures made from sources other than the proceeds of long-term Indebtedness (other than revolving Indebtedness to the extent intended to be repaid from operating cash flow) (excluding Capital Expenditures made in such Excess Cash Flow Period and subject to the second parenthetical of the following clause (c) with respect to the immediately preceding Excess Cash Flow Period was previously delivered) that are paid in cash;

 

(c)                                  Capital Expenditures made from sources other than the proceeds of long-term Indebtedness (other than revolving Indebtedness to the extent intended to be repaid from operating cash flow) that Holdings or any of its Restricted Subsidiaries shall, during such Excess Cash Flow Period, become obligated to make but that are not made during such Excess Cash Flow Period (limited to those committed to be made within the next six months after the end of such Excess Cash Flow Period);

 

(d)                                 the aggregate amount of payments made in cash (and made from sources other than the proceeds of long-term Indebtedness (other than revolving Indebtedness to the extent intended to be repaid from operating cash flow)) during such Excess Cash Flow Period (or committed to be paid in cash within the next six months after the end of such Excess Cash Flow Period) (other than Capital Expenditures) and capitalized or otherwise not expensed in accordance with GAAP during such Excess Cash Flow Period;

 

(e)                                  the aggregate amount of Consolidated Tax Expense (including any direct or indirect distributions for the payment of such Consolidated Tax Expense) paid or payable with respect to such Excess Cash Flow Period and, if payable, for which reserves have been established to the extent required under GAAP;

 

(f)                                   (x) the aggregate amount of consideration paid in cash during such Excess Cash Flow Period (or committed to be paid in cash within the next six months after the end of such Excess Cash Flow Period) with respect to Permitted Acquisitions or other Investments made from sources other than the proceeds of long-term Indebtedness (other than revolving Indebtedness to the extent intended to be repaid from operating cash flow) (including, without limitation, any purchase price adjustments (including working capital adjustments), deferred purchase consideration, Earn-Out payments (and payments of seller notes converted from Earn-Outs), holdback amounts and indemnity payments with respect thereto) but excluding intercompany Investments and Investments in cash or Cash Equivalents, to the extent paid in cash and (y) to the extent not deducted in determining Consolidated Net Income for such period, any amounts paid by Holdings and its Restricted Subsidiaries during such period that are reimbursable by the seller, or other unrelated third party, in connection with a Permitted Acquisition or other Investment permitted under Section 6.03(a), (b), (i), (l), (m), (r), (t), (v), (w), (x) (to the extent made in reliance on clause (a) of the definition of “Cumulative Amount”), (y), (bb), (cc), (ee) or (ff);

 

(g)                                  the absolute value of, if negative, (x) the amount of Net Working Capital at the end of the prior Excess Cash Flow Period (or the beginning of the Excess Cash Flow Period in the case of the first Excess Cash Flow Period) minus (y) the amount of Net Working Capital at the end of such Excess Cash Flow Period;

 

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(h)                                 the aggregate amount of cash items added back to Consolidated EBITDA in the calculation of Consolidated EBITDA for such period to the extent paid in cash by Holdings and its Restricted Subsidiaries during such period;

 

(i)                                     [reserved];

 

(j)                                    the aggregate amount added back to Consolidated EBITDA in the calculation of Consolidated EBITDA for such period pursuant to clauses (f) and (r) thereof;

 

(k)                                 any Insurance Loss Addback for such period;

 

(l)                                     the aggregate amount of non-cash adjustments to Consolidated EBITDA for periods prior to the beginning of the current Excess Cash Flow Period to the extent paid in cash by Holdings and its Restricted Subsidiaries during such Excess Cash Flow Period;

 

(m)                             the aggregate amount of Dividends and other payments made from sources other than the proceeds of long-term Indebtedness (other than revolving Indebtedness to the extent intended to be repaid from operating cash flow) permitted by Section 6.06 (other than clauses (a), (f) (solely to the extent any such Dividend thereunder is made in reliance on clause (b) of the Cumulative Amount or on clause (e) of the Cumulative Amount (solely as it relates to Retained Asset Sales Proceeds)) (g) and (i) of Section 6.06) during such Excess Cash Flow Period (or committed to be paid in cash within the next six months after the end of such Excess Cash Flow Period); and

 

(n)                                 to the extent added to determine Consolidated EBITDA pursuant to clause (j) or (l) of the definition of Consolidated EBITDA, such amounts with respect to which no cash payment to Holdings or any of its Restricted Subsidiaries was received during such Excess Cash Flow Period;

 

provided that any amount deducted pursuant to any of the foregoing clauses that will be paid after the close of such Excess Cash Flow Period shall not be deducted again in a subsequent Excess Cash Flow Period; plus, without duplication:

 

(i)                                     if positive, (x) the amount of Net Working Capital at the end of the prior Excess Cash Flow Period (or the beginning of the Excess Cash Flow Period in the case of the first Excess Cash Flow Period) minus (y) the amount of Net Working Capital at the end of such Excess Cash Flow Period;

 

(ii)                                  cash items of income during such Excess Cash Flow Period not included in calculating Consolidated EBITDA;

 

(iii)                               any permitted Capital Expenditures referred to in clause (c) above or permitted payments in cash referred to above in clause (d), (f) or (m) that are committed to be made within the next six months after the end of such Excess Cash Flow Period, to the extent not so made during such six month period;

 

(iv)                              any cash payment that was actually received by Holdings or any Restricted Subsidiary during such Excess Cash Flow Period with respect to which a

 

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deduction was taken pursuant to clause (n) above during the previous Excess Cash Flow Period; and

 

(v)                                 any reimbursement that was actually received in cash by Holdings or any of its Restricted Subsidiaries from a seller, or other unrelated third party, in connection with a Permitted Acquisition or other Investment permitted under Section 6.03(a), (b), (i), (l), (m), (r), (t), (v), (w), (x) (to the extent made in reliance on clause (a) of the definition of “Cumulative Amount”), (y), (bb), (cc), (ee) or (ff) during such Excess Cash Flow Period with respect to which a deduction was taken pursuant to clause (f)(y) above during the previous Excess Cash Flow Period.

 

For purposes of calculating Excess Cash Flow for any Excess Cash Flow Period, for each Permitted Acquisition or other Investment permitted hereunder consummated during such Excess Cash Flow Period, (x) the Consolidated EBITDA of a target of such Permitted Acquisition or other Investment shall be included in such calculation only from and after the first day of the first fiscal quarter to commence following the date of the consummation of such Permitted Acquisition or other Investment and (y) for the purposes of calculating Net Working Capital, the (A) total assets of a target of such Permitted Acquisition or other Investment (other than cash and Cash Equivalents), as calculated as at the date of consummation of the applicable Permitted Acquisition or other Investment, which may properly be classified as current assets on a consolidated balance sheet of Holdings and its Restricted Subsidiaries in accordance with GAAP (assuming, for the purpose of this clause (A), that such Permitted Acquisition or other similar acquisition has been consummated) and (B) the total liabilities of Holdings and its Restricted Subsidiaries, as calculated as at the date of consummation of the applicable Permitted Acquisition or other Investment, which may properly be classified as current liabilities (other than the current portion of any long term liabilities and accrued interest thereon) on a consolidated balance sheet of Holdings and its Restricted Subsidiaries in accordance with GAAP (assuming, for the purpose of this clause (B), that such Permitted Acquisition or Investment has been consummated), shall, in the case of both immediately preceding clauses (A) and (B), be used in calculating as the difference between the Net Working Capital at the end of the applicable Excess Cash Flow Period from the date of consummation of the Permitted Acquisition or other Investment.

 

Excess Cash Flow Period” shall mean each fiscal year of Holdings starting with the fiscal year ending December 31, 2019.

 

Excess Net Cash Proceeds” shall have the meaning assigned to such term in Section 2.10(c)(i).

 

Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

Excluded Equity Interests” shall mean Equity Interests (a) in excess of 65% of the Voting Stock issued by any Excluded Foreign Subsidiary or CFC Holding Company, in each case, owned directly by a Credit Party (but, for the avoidance of doubt, not including any Equity interests that are not Voting Stock issued by any such Excluded Foreign Subsidiary or CFC Holding Company), (b) in a joint venture which cannot be pledged without the consent of third parties, or the pledge of which is prohibited by the terms of, or would create a right of

 

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termination of one or more third parties under, any applicable Organizational Documents, joint venture agreement or shareholders’ agreement (by any agreement binding on such Equity Interests at the time of acquisition thereof (or on the Closing Date, as applicable) and not entered into in contemplation thereof (or in contemplation of the Transactions, as applicable) and unless such consent has been obtained) after giving effect to the applicable anti-assignment provisions of the Uniform Commercial Code or other applicable law, (c) in Persons other than Wholly Owned Restricted Subsidiaries, (d) in any Immaterial Subsidiary, Unrestricted Subsidiary, not-for-profit Subsidiary, captive insurance entity or special purpose entity (including for the avoidance of doubt any Receivables Subsidiary and any Securitization Subsidiary), (e) with respect to which the cost of obtaining a security interest therein exceeds the practical benefit to the Lenders afforded thereby, as mutually and reasonably determined by the Administrative Agent and the Borrower, (f) with respect to which a pledge therein is prohibited or restricted by applicable law (including any requirement to obtain the consent of any governmental authority (unless such consent has been obtained) or third party (by any agreement binding on such Equity Interests at the time of acquisition thereof (or on the Closing Date, as applicable) and not entered into in contemplation thereof (or in contemplation of the Transactions, as applicable) and unless such consent has been obtained)) or impossible or impracticable (as mutually and reasonably determined by the Administrative Agent and the Borrower) to obtain under applicable law and (g) with respect to which a pledge therein would result in adverse tax consequences to Holdings and its Restricted Subsidiaries or to any direct or indirect parent of Holdings on account of its direct or indirect ownership of Holdings and its Restricted Subsidiaries that are not de minimis as reasonably determined by the Borrower; provided that in each case set forth above, such equity will immediately cease to constitute Excluded Equity Interests when the relevant property ceases to meet this definition and, with respect to any such equity, a security interest under any applicable Security Document shall attach immediately and automatically without further action; provided, further, that in no event will any Equity Interests of the Borrower be Excluded Equity Interests.

 

Excluded Foreign Subsidiary” shall mean any Foreign Subsidiary that is a CFC and any Subsidiary of such CFC.

 

Excluded Property” shall have the meaning assigned to such term in the Security Agreement.

 

Excluded Subsidiary” shall mean (a) any Restricted Subsidiary that is not a Wholly Owned Subsidiary, (b) any Excluded Foreign Subsidiary, (c) any Immaterial Subsidiary, (d) any Unrestricted Subsidiary, (e) any not-for-profit Subsidiary, (f) any Excluded U.S. Subsidiary, (g) any captive insurance entity, (h) any special purpose entity (including, for the avoidance of doubt, any Receivables Subsidiary and any Securitization Subsidiary), (i) any merger Subsidiary formed in connection with a Permitted Acquisition so long as such merger Subsidiary is merged out of existence pursuant to such Permitted Acquisition within 60 days of its formation or such later date as permitted by the Administrative Agent in its reasonable discretion, (j) any Subsidiary to the extent a Guarantee or other guarantee of the Obligations is prohibited or restricted by any contractual obligation as in existence on the Closing Date or at the time such Person becomes a Subsidiary (in each case, not entered into in contemplation hereof and for so long as such prohibition or restriction remains in effect) or by applicable Requirements of Law (including any requirement to obtain Governmental Authority or third

 

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party consent, license or authorization unless such consent, license or authorization has been obtained), (k) any Restricted Subsidiary acquired pursuant to a Permitted Acquisition or other Investment that has assumed secured Indebtedness not incurred in contemplation of such Permitted Acquisition or other Investment and any Restricted Subsidiary thereof that guarantees such secured Indebtedness, in each case, to the extent (but only for so long as) such secured Indebtedness prohibits such Restricted Subsidiary from becoming a Guarantor, (l) any Subsidiary to the extent the Administrative Agent and the Borrower mutually and reasonably determine the cost, consequence and/or burden of obtaining a Guarantee outweigh the benefit thereof to the Lenders, and (m) any Subsidiary to the extent the Borrower reasonably determines that a Guarantee by such Subsidiary would result in adverse Tax consequences to Holdings or any of its Restricted Subsidiaries or to any direct or indirect parent of Holdings on account of its direct or indirect ownership of Holdings and its Restricted Subsidiaries that are not de minimis; provided that the Borrower shall not be an Excluded Subsidiary; provided further that Borrower may, in its sole discretion, designate any Subsidiary that otherwise qualifies as an “Excluded Subsidiary” pursuant to any one or more of clauses (a) through (m) above as not being an Excluded Subsidiary by written notice to the Administrative Agent and, following such designation, may (so long as at such time no Default or Event of Default shall have occurred and be continuing and such Subsidiary otherwise qualifies as an Excluded Subsidiary) re-designate such Subsidiary as an Excluded Subsidiary by written notice to the Administrative Agent, upon which re-designation such Subsidiary shall be automatically released from its Guarantee.

 

Excluded Swap Obligation” shall mean, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest pursuant to the Security Documents to secure, such Swap Obligation (or any guarantee thereof) is or would otherwise have become illegal or unlawful under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guarantee of such Guarantor or the grant of such security interest would otherwise have become effective with respect to such related Swap Obligation but for such Guarantor’s failure to constitute an “eligible contract participant” at such time. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal or unlawful 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).

 

Excluded Taxes” shall mean, with respect to any Recipient, any of the following Taxes imposed on or with respect to any payment to be made by or on account of any obligation of any Credit Party under any Loan Document to such Recipient: (a) Taxes imposed on or measured by such Recipient’s overall net income (however denominated), franchise Taxes imposed on it (in lieu of net income Taxes) and branch profits Taxes imposed on it, in each case, (i) by any jurisdiction (or any political subdivision thereof) as a result of the Recipient being organized or having its principal office or, in the case of any Lender, its applicable lending office, in such jurisdiction or (ii) as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such

 

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Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document or sold or assigned an interest in any Loan or Loan Document), (b) in the case of a Foreign Lender, any U.S. federal withholding Tax to the extent imposed on amounts payable to or for the account of such Foreign Lender under a law, rule, regulation or treaty in effect at the time such Foreign Lender becomes a party hereto (or designates a new lending office), except, in each case, (x) to the extent that such Foreign Lender (or its assignor, if any) was entitled, immediately prior to the designation of a new lending office (or assignment), to receive additional amounts or indemnity payments with respect to such withholding Tax pursuant to Section 2.15, or (y) if such Foreign Lender is an assignee pursuant to a request by the Borrower under Section 2.16, (c) any withholding Tax that is attributable to such Recipient’s failure to comply with Section 2.15(e), and (d) any U.S. federal withholding Tax imposed under FATCA.

 

Excluded U.S. Subsidiary” shall mean (a) any Domestic Subsidiary of an Excluded Foreign Subsidiary or (b) any CFC Holding Company; provided that the Borrower shall not be an Excluded U.S. Subsidiary.

 

Executive Order” shall have the meaning assigned to such term in Section 3.19.

 

Existing Credit Agreement” shall have the meaning assigned to such term in the preamble hereto.

 

Existing Lien” shall have the meaning assigned to such term in Section 6.02(c).

 

Existing Loans” shall have the meaning assigned to such term in Section 2.21(a).

 

Existing Tranche” shall have the meaning assigned to such term in Section 2.21(a).

 

Extended Loans” shall have the meaning assigned to such term in Section 2.21(a).

 

Extended Tranche” shall have the meaning assigned to such term in Section 2.21(a).

 

Extending Lender” shall have the meaning assigned to such term in Section 2.21(b).

 

Extension Amendment” shall have the meaning assigned to such term in Section 2.21(c).

 

Extension Date” shall have the meaning assigned to such term in Section 2.21(d).

 

Extension Election” shall have the meaning assigned to such term in Section 2.21(b).

 

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Extension Request” shall have the meaning assigned to such term in Section 2.21(a).

 

FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version thereof to the extent such version is substantively comparable and not materially more onerous to comply with), any current or future regulations or other official governmental interpretations thereof and any intergovernmental agreements entered into pursuant to the foregoing or any “FFI agreements” entered into pursuant to Section 1471(b)(1) of the Code.

 

Federal Funds Rate” shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System of the United States, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary to the next 1/100th of 1.00%) of the quotations for the day for such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.

 

Fee Letters” shall mean (a) the agency fee letter dated as of January 10, 2018, by and between Ping and GS and (ii ) the facilities fee letter, dated as of January 10, 2018, by and among Ping, GS, Antares Capital, Macquarie and VCO.

 

Fees” shall mean the Commitment Fees, the Administrative Agent Fees, the LC Participation Fees, the Fronting Fees and all other fees set forth in Section 2.05.

 

Financial Covenant” shall have the meaning assigned to such term in Section 8.03(a).

 

Financial Officer” of any person shall mean the chief financial officer, chief executive officer, vice president of finance, treasurer, assistant treasurer, controller, or, in each case, anyone acting in such capacity or any similar capacity.

 

Financial Statements” shall mean, collectively, (a) the Audited Financial Statements and (b) unaudited consolidated balance sheets and related unaudited statements of income, stockholders’ equity and cash flows of Holdings and its Subsidiaries for each fiscal quarter of Holdings (other than the fourth fiscal quarter of any fiscal year) ended after the date of the most recently delivered Audited Financial Statements and at least 60 days prior to the Closing Date.

 

First Lien Leverage Ratio” shall mean, at any date of determination, the ratio of (i)(x) Consolidated Total Funded Indebtedness of Holdings and its Restricted Subsidiaries on such date that is secured by a first priority Lien on the Collateral of Holdings and its Restricted Subsidiaries, minus (y) Unrestricted Cash of Holdings and its Restricted Subsidiaries on such date, to (ii) Consolidated EBITDA for the Test Period then most recently ended.

 

First Lien/Second Lien Intercreditor Agreement” shall mean a First Lien/Second Lien Intercreditor Agreement among the Administrative Agent, the Collateral Agent and one or more other Senior Representatives of Indebtedness, or any other party, as the

 

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case may be, and acknowledged and agreed to by the Borrower and the Guarantors, substantially on the terms set forth on Exhibit I (except to the extent otherwise reasonably agreed by the Borrower and the Administrative Agent), as the same may be amended, restated, supplemented, renewed, replaced or otherwise modified from time to time.

 

Fixed Incremental Amount” shall have the meaning assigned to such term in the definition of “Maximum Incremental Facilities Amount”.

 

Flood Insurance Laws” shall mean, collectively, (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statute thereto, (iii) the National Flood Insurance Reform Act of 1994 as now or hereafter in effect or any successor statute thereto and (iv) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto.

 

Foreign Benefit Event” shall mean, with respect to any Foreign Pension Plan, (a) the existence of unfunded liabilities in excess of the amount permitted under any applicable law, or in excess of the amount that would be permitted absent a waiver from a Governmental Authority, (b) the failure to make the required contributions or payments, under any applicable law, on or before the due date for such contributions or payments, (c) the receipt of a notice by a Governmental Authority relating to the intention to terminate any such Foreign Pension Plan or to appoint a trustee or similar official to administer any such Foreign Pension Plan, or alleging the insolvency of any such Foreign Pension Plan, (d) the incurrence of any liability by any Group Member under applicable law on account of the complete or partial termination of such Foreign Pension Plan or the complete or partial withdrawal of any participating employer therein, or (e) the occurrence of any transaction that is prohibited under any applicable law and that could reasonably be expected to result in the incurrence of any liability by any Group Member, or the imposition on any Group Member of any fine, excise tax or penalty resulting from any noncompliance with any applicable law.

 

Foreign Lender” shall mean any Recipient that is not a “United States person” as defined in Section 7701(a)(30) of the Code.

 

Foreign Pension Plan” shall mean any defined benefit pension plan maintained or contributed to by any Group Member with respect to employees employed outside the United States.

 

Foreign Plan” shall mean any employee benefit plan, program, policy, arrangement or agreement maintained or contributed to by any Group Member with respect to employees employed outside the United States.

 

Foreign Subsidiary” shall mean a Subsidiary that is organized under the laws of a jurisdiction other than the United States, any state thereof or the District of Columbia.

 

Fronting Fee” shall have the meaning assigned to such term in Section 2.05(d).

 

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Fund” shall mean any person that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

 

GAAP” shall mean generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, applied on a consistent basis.

 

“Governmental Authority” shall mean the government of the United States or any other nation, or of any political subdivision thereof, whether state, provincial, local or otherwise, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

Group Members” shall mean Holdings, the Borrower and their respective Restricted Subsidiaries; and “Group Member” shall mean any one of them.

 

GS” shall mean Goldman Sachs Bank USA.

 

Guaranteed Obligations” shall have the meaning assigned to such term in Section 7.01.

 

Guarantees” shall mean the guarantees issued pursuant to Article VII by Holdings and the Subsidiary Guarantors.

 

Guarantors” shall mean Holdings and each of the Subsidiary Guarantors.

 

Hazardous Materials” shall mean the following: toxic or hazardous substances; hazardous wastes; polychlorinated biphenyls (“PCBs”) or any substance or compound containing PCBs; friable asbestos or friable asbestos-containing materials; radon or any other radioactive materials including any source, special nuclear or by-product material; petroleum, crude oil or any fraction thereof; and any other pollutant or contaminant subject to regulation under any Environmental Laws due to their dangerous or deleterious properties or characteristics, or which can give rise to liability under any Environmental Laws due to their dangerous or deleterious properties or characteristics.

 

Hedge Bank” shall mean, in respect of any Hedging Agreement, each counterparty to a Hedging Agreement that is a Lender, an Agent or a Lead Arranger (or an Affiliate of a Lender, an Agent or a Lead Arranger) and each other Person if, at the date of entering into such Hedging Agreement, such Person was a Lender, an Agent or a Lead Arranger (or an Affiliate of a Lender, an Agent or a Lead Arranger); provided that if such Person ceases to be a Lender, an Agent or a Lead Arranger, such Person delivers to the Administrative Agent a letter agreement to the Administrative Agent pursuant to which such Person (i) appoints the Collateral Agent as its agent under the applicable Loan Documents and (ii) agrees to be bound by the provisions of Sections 9.03, 10.03 and 10.09 as if it were a Lender.

 

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Hedging Agreement” shall mean any swap, cap, collar, forward purchase or similar agreement or arrangement dealing with interest rates, currency exchange rates or commodity prices, either generally or under specific contingencies.

 

Hedging Obligations” shall mean obligations under or with respect to Hedging Agreements.

 

Holdings” shall have the meaning assigned to such term in the preamble hereof.

 

Immaterial Subsidiary” shall mean any Restricted Subsidiary of Holdings (other than the Borrower) that the Borrower designates in writing (including via e-mail) to the Administrative Agent as an “Immaterial Subsidiary”; provided that, as of the date of the last financial statements delivered pursuant to Section 5.01(a) or Section 5.01(b), neither (a) the Consolidated Total Assets attributable to all such Subsidiaries is in excess of 5% of Consolidated Total Assets as of such date nor (b) the total revenues attributable to all such Subsidiaries is in excess of 5% of total revenues of the Group Members on a consolidated basis as of such date; provided, further, that in each case, the Borrower may designate and re-designate a Subsidiary as an Immaterial Subsidiary at any time, subject to the limitations and requirements set forth in this definition.  If the Consolidated Total Assets or total revenues attributable to all Restricted Subsidiaries so designated by the Borrower as “Immaterial Subsidiaries” shall at any time exceed the limits set forth in the preceding sentence, then starting with the largest Restricted Subsidiary (or in such other order as the Borrower may elect in its sole discretion), the number of Restricted Subsidiaries that are at such time designated as Immaterial Subsidiaries shall automatically be deemed to no longer be designated as Immaterial Subsidiaries until the threshold amounts in the preceding sentence are no longer exceeded (as reasonably determined by the Borrower), with any Immaterial Subsidiaries at such time that are below such threshold amounts still being designated as (and remaining as) Immaterial Subsidiaries.

 

Increase Effective Date” shall have the meaning assigned to such term in Section 2.20(a).

 

Increase Joinder” shall have the meaning assigned to such term in Section 2.20(e).

 

Incremental Facilities” shall have the meaning assigned to such term in Section 2.20(a).

 

Incremental Reclassification Provision” shall have the meaning assigned to such term in the definition of Maximum Incremental Facilities Amount.

 

Incremental Revolving Loan” shall have the meaning assigned to such term in Section 2.20(c)(iii).

 

Incremental Revolving Loan Commitment” shall have the meaning assigned to such term in Section 2.20(a).

 

Incremental Revolving Loan Lender” shall mean a Lender with an Incremental Revolving Loan Commitment or an outstanding Incremental Revolving Loan.

 

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Incremental Term Loan Commitment” shall have the meaning assigned to such term in Section 2.20(a).

 

Incremental Term Loan Lender” shall mean a Lender with an Incremental Term Loan Commitment or an outstanding Incremental Term Loan.

 

Incremental Term Loans” shall have the meaning assigned to such term in Section 2.20(c)(i).

 

Incurrence Ratio” shall have the meaning assigned to such term in the definition of “Maximum Incremental Facilities Amount”.

 

Indebtedness” of any person shall mean, without duplication, (a) all obligations of such person for borrowed money or advances; (b) all obligations of such person evidenced by bonds, debentures, notes or similar instruments; (c) all obligations of such person under conditional sale or other title retention agreements relating to property purchased by such person; (d) all obligations of such person issued or assumed as the deferred purchase price of property or services; (e) all Indebtedness of others (excluding prepaid interest thereon) secured by any Lien on property owned or acquired by such person, whether or not the obligations secured thereby have been assumed, but limited to the lower of (x) fair market value of such property as determined by such person in good faith and (y) the amount of Indebtedness secured by such Lien; (f) all Capital Lease Obligations, Purchase Money Obligations and synthetic lease obligations of such person to the extent classified as indebtedness under GAAP (for the avoidance of doubt, lease payments under any operating leases (other than Capital Leases recorded as capitalized leases in accordance with GAAP as in effect on the Closing Date) shall not constitute Indebtedness); (g) all Hedging Obligations to the extent required to be reflected on the balance sheet of such person on a marked to market net value basis (or if any actual amount is due as a result of the termination or close out of such Hedging Agreement, such actual amount); (h) all Attributable Indebtedness of such person; (i) all obligations of such person for the reimbursement of any obligor in respect of letters of credit, letters of guaranty, bankers’ acceptances and similar credit transactions; and (j) all Contingent Obligations of such person in respect of Indebtedness or obligations of others of the kinds referred to in clauses (a) through (i) above. The Indebtedness of any person shall include the Indebtedness of any other entity (including any partnership in which such person is a general partner) to the extent such person is liable therefor as a result of such person’s ownership interest in or other relationship with such entity, except (other than in the case of general partner liability) to the extent that terms of such Indebtedness expressly provide that such person is not liable therefor.  Notwithstanding the foregoing or anything else herein to the contrary, Indebtedness shall not include: (a) trade accounts payable, (b) deferred obligations under any management services agreement (including the Management Services Agreement), (c) accrued obligations incurred in the ordinary course of business, including current tax accruals, (d) purchase price adjustments and Earn-Out obligations (until such obligations or adjustments become a liability on the balance sheet of such Person in accordance with GAAP and solely if not paid after becoming due and payable), (e) royalty payments made in the ordinary course of business in respect of licenses (to the extent such licenses are not prohibited hereby), (f) any accruals for payroll and other non-interest bearing liabilities accrued in the ordinary course of business, (g) deferred rent obligations, taxes and compensation, (h) obligations under or in respect of Receivables Facilities

 

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and Securitization Facilities, (i) customary payables with respect to money orders or wire transfers, (j) customary obligations under employment arrangements, (k) operating leases (including for the avoidance of doubt any lease, concession or license treated as an operating lease under GAAP), (l) pension-related or post-employment liabilities, (m) intra-day exposures, (n) Hedging Obligations except to the extent included in clause (g) above or (o) obligations in respect of any license, permit or other approval arising in the ordinary course of business.

 

Indemnified Taxes” shall mean (a) all Taxes imposed on or with respect to any payment made by or on account of any obligation of any Credit Party under any Loan Document other than Excluded Taxes and (b) to the extent not otherwise described in clause (a), Other Taxes.

 

Indemnitee” shall have the meaning assigned to such term in Section 10.03(b).

 

Information” shall have the meaning assigned to such term in Section 10.12.

 

Insurance Loss Addback” shall mean, with respect to any calculation period, the amount of any loss, costs or expenses incurred during such period for which there is insurance, indemnity or reimbursement coverage and for which a related insurance, indemnity or reimbursement recovery is not recorded in accordance with GAAP, but for which such insurance, indemnity or reimbursement recovery is reasonably expected to be received by Holdings or any of its Restricted Subsidiaries in a subsequent calculation period and within one year of the date of the underlying loss.

 

Intellectual Property” shall have the meaning assigned to such term in the Security Agreement.

 

Intercompany Subordination Agreement” shall mean an intercompany subordination agreement in form and substance reasonably acceptable to the Administrative Agent and the Borrower.

 

Intercreditor Agreement” shall mean, as the context may require, a First Lien/Second Lien Intercreditor Agreement and/or any Other Intercreditor Agreement.

 

Interest Election Request” shall mean a request by the Borrower to convert or continue a Revolving Borrowing or Term Loan Borrowing in accordance with Section 2.08(b), substantially in the form of Exhibit E or such other form (including any form on an electronic platform or electronic transmission system) as may be approved by the Administrative Agent, appropriately completed and signed by a Responsible Officer of the Borrower.

 

Interest Payment Date” shall mean (a) with respect to any ABR Loan (including Swing Line Loans), the last Business Day of each March, June, September and December to occur during any period in which such Loan is outstanding, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Loan with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period, (c) with respect to any Revolving Loan or Swing Line Loan, the Revolving Maturity Date or such earlier date on

 

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which the Revolving Commitments are terminated in accordance with the terms hereof, and (d) with respect to any Term Loan, the Term Loan Maturity Date.

 

Interest Period” shall mean, with respect to any Eurodollar Loan, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months (or, if agreed to by all relevant affected Lenders, twelve months or shorter than one month) thereafter, as the Borrower may elect; provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period and (c) no Interest Period shall extend beyond (i) in the case of any Eurodollar Revolving Loan, the Revolving Maturity Date, and (ii) in the case of any Eurodollar Term Loan, the Term Loan Maturity Date.  For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

 

Investments” shall have the meaning assigned to such term in Section 6.03.

 

IPO” shall mean an underwritten public offering by Holdings (or its direct or indirect parent company) of Equity Interests in Holdings (or in its direct or indirect parent company, as the case may be) after the Closing Date pursuant to a registration statement filed with the SEC in accordance with the Securities Act (whether alone or in connection with a secondary public offering).

 

IPO Reorganization Transactions” shall mean transactions taken in connection with and reasonably related to consummating an IPO, in each case, whether or not consummated.

 

IRS” shall mean the U.S. Internal Revenue Service.

 

ISP” shall mean, with respect to any Letter of Credit, the International Chamber of Commerce Publication No. 590 (or such later version thereof as may be in effect at the time of issuance).

 

Issuing Bank” shall mean, as the context may require, (a) GS, together with its permitted successors and assigns in such capacity; (b) any other Lender or Lenders that may become an Issuing Bank pursuant to Section 2.18(j) or (k) with respect to Letters of Credit issued by such Lender; and/or (c) collectively, all of the foregoing; provided that no Issuing Bank shall be required to issue Commercial Letters of Credit without its consent and the aggregate amount of all Letters of Credit issued by a Revolving Lender shall not exceed such Revolving Lender’s Revolving Commitment.  Any Issuing Bank may, at its discretion, arrange for one or more Letters of Credit to be issued by one or more Affiliates or designees of such Issuing Bank (and each such Affiliate or designee shall be deemed to be an “Issuing Bank” for all purposes of the Loan Documents).  In the event that there is more than one Issuing Bank at any time, references

 

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herein and in the other Loan Documents to the Issuing Bank shall be deemed to refer to the Issuing Bank in respect of the applicable Letter of Credit or to all Issuing Banks, as the context requires.

 

Joinder Agreement” shall mean a joinder agreement substantially in the form of Exhibit F, with such amendments as may be reasonably and mutually agreed between the Administrative Agent and the Borrower.

 

Junior Secured Indebtedness” shall mean senior Indebtedness of the Credit Parties for borrowed money that is secured by Liens on the Collateral (a) on a junior basis to the Liens securing the Secured Obligations and any Permitted Pari Passu Refinancing Debt (but not on a junior basis to any Indebtedness that is itself secured on a junior basis to the Secured Obligations), or (b) on a junior basis to any Indebtedness that is itself secured on a junior basis to the Secured Obligations, in the cause of clauses (a) and (b), in accordance with an Intercreditor Agreement.

 

Latest Maturity Date” as of any date of determination, shall mean the latest maturity or expiration date applicable to any Loan or Commitment hereunder at such time, including the latest maturity or expiration date of any Incremental Term Loan or any Incremental Revolving Loan, in each case that is governed by the terms of this Agreement and the other Loan Documents, any Refinancing Term Loan or any Refinancing Revolving Loan.

 

LC Commitment” shall mean the commitment of the Issuing Bank to issue Letters of Credit pursuant to Section 2.18.

 

LC Disbursement” shall mean a payment or disbursement made by the Issuing Bank pursuant to a drawing under a Letter of Credit.

 

LC Exposure” shall mean at any time the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time (including, without limitation, any and all Letters of Credit for which documents have been presented that have not been honored or dishonored) plus (b) the aggregate principal amount of all Reimbursement Obligations outstanding at such time.  The LC Exposure of any Revolving Lender at any time shall equal its Pro Rata Percentage of the aggregate LC Exposure at such time.

 

LC Extension” shall have the meaning assigned to such term in Section 2.18(c).

 

LC Obligations” shall mean, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all outstanding Reimbursement Obligations.  For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.12.  For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

 

LC Participation Fee” shall have the meaning assigned to such term in Section 2.05(c).

 

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LC Request” shall mean an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the Issuing Bank in accordance with the terms of Section 2.18(b) and substantially in the form of Exhibit G, appropriately completed and signed by a Responsible Officer of the Borrower.

 

LC Sublimit” shall mean $6,000,000.

 

LCT Election” shall mean the Borrower’s election to test the permissibility of a Limited Condition Transaction in accordance with the methodology set forth in Section 1.06.

 

LCT Test Date” shall have the meaning given to that term in Section 1.06.

 

Lead Arrangers” shall mean GS, Antares Capital and Macquarie, in their respective capacities as joint lead arrangers and joint bookrunners.

 

Leases” shall mean any and all leases, subleases, tenancies, options, concession agreements, rental agreements, occupancy agreements, access agreements and any other agreements (including all amendments, extensions, replacements, renewals, modifications and/or guarantees thereof), whether or not of record and whether now in existence or hereafter entered into, affecting the use or occupancy of all or any portion of any Real Property.

 

Lenders” shall mean (a) the financial institutions and other entities that have become a party hereto as lenders hereunder and (b) any financial institution or other entity that has become a party hereto pursuant to an Assignment and Assumption, other than, in each case, any such financial institution or other entity that has ceased to be a party hereto pursuant to an Assignment and Assumption.  Unless the context clearly indicates otherwise, the term “Lenders” shall include the Swing Line Lender and an Issuing Bank.

 

Letter of Credit” shall mean (i) any Standby Letter of Credit, and (ii) any Commercial Letter of Credit, in each case issued or to be issued by an Issuing Bank for the account of the Borrower or any Wholly Owned Restricted Subsidiary thereof pursuant to Section 2.18.

 

Letter of Credit Expiration Date” shall mean the date which is five Business Days prior to the Revolving Maturity Date then in effect (or, if such date is not a Business Day, the next succeeding Business Day), or such later date to the extent such Letter of Credit has been cash collateralized in an amount equal to 103% of the LC Exposure or backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank for such period after the Revolving Maturity Date.

 

LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the rate per annum equal to the London Interbank Offered Rate or a comparable or successor rate, which rate is approved by the Administrative Agent, as published on the applicable Bloomberg screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a

 

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term equivalent to such Interest Period (such rate, the “Eurodollar Screen Rate”); provided that to the extent a comparable or successor rate is approved by the Administrative Agent in connection herewith, the approved rate shall be applied in a manner consistent with market practice; provided further that to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent.  If the LIBO Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement.

 

Notwithstanding anything contained herein to the contrary, and without limiting the provisions of Section 2.11, in the event that the Administrative Agent shall have determined in good faith (which determination shall be final and conclusive and binding upon all parties hereto), in consultation with the Borrower, that there exists, at any time, a market convention for determining a rate of interest for syndicated loans in the United States that is widely recognized as the successor to interest rates based on the Eurodollar Screen Rate, and the Administrative Agent shall have given notice of such determination to the Borrower and each Lender (it being understood that the Administrative Agent may make such a determination of whether such market condition exists at any time, upon the reasonable request of the Borrower), then the Administrative Agent and the Borrower shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable consistent with market practice. Notwithstanding anything to the contrary in Section 10.02, such amendment shall become effective without any further action or consent of any other party to this Agreement so long as the Lenders shall have received at least five Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five Business Days of the date of such notice to the Lenders, a written notice from the Required Lenders stating that the Required Lenders object to such amendment. Until an alternate rate of interest shall be determined in accordance with this paragraph (but only to the extent the Eurodollar Screen Rate for the applicable Interest Period is not available or published at such time on a current basis), (x) no Loans may be made as, or converted to, Eurodollar Loans, and (y) any Borrowing Notice or Interest Election Request given by the Borrower with respect to Eurodollar Loans shall be deemed to be rescinded by the Borrower.

 

Lien” shall mean, with respect to any property, (a) any mortgage, deed of trust, lien, license, pledge, encumbrance, claim, charge, assignment for security, hypothecation, security interest or encumbrance of any kind or any arrangement to provide priority or preference, including any easement, right-of-way or other encumbrance on title to owned Real Property, in each of the foregoing cases whether voluntary or imposed by law; (b) the interest of a vendor or a lessor under any conditional sale agreement, Capital Lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such property; provided that in no event shall an operating lease be deemed to be a Lien; and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

 

Limited Condition Transaction” shall mean (i) any Investment, or any acquisition of any assets, business or person, permitted hereunder (subject to Section 1.06 and including, for the avoidance of doubt, any Permitted Acquisition) by Holdings or one or more of its Restricted Subsidiaries, including by way of merger or amalgamation, whose consummation is not conditioned on the availability of, or on obtaining, third party financing, or (ii) any

 

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redemption, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness requiring irrevocable notice in advance of such redemption, repurchase, defeasance, satisfaction and discharge or repayment.

 

Loan Documents” shall mean this Agreement, any amendments hereto, the Letters of Credit, the LC Requests, the Applications, any Intercreditor Agreement, the Notes (if any), the Security Documents, the Fee Letters (other than for purposes of Section 10.02) and intercreditor agreements and subordination agreements entered into pursuant to the terms hereof that any Credit Party is party to and any other document designated as such by the Borrower and the Administrative Agent, in each case as amended, amended and restated, restated, supplemented and/or modified from time to time.

 

Loans” shall mean, as the context may require, a Revolving Loan, Term Loan or Swing Line Loan.

 

Macquarie” means Macquarie Capital (USA) Inc.

 

Management Equityholders” shall mean any of (i) any current or former director, officer, employee or member of management of Holdings or any of its Subsidiaries or any direct or indirect parent company thereof who, on the Closing Date, is an equityholder in Holdings or any direct or indirect parent thereof, (ii) any trust, partnership, limited liability company, corporate body or other entity established by any such current or former director, officer, employee, or member of management of Holdings or any of its Subsidiaries or any direct or indirect parent thereof or any Person described in the succeeding clauses (iii) and (iv), as applicable, to hold an investment in Holdings or any direct or indirect parent thereof in connection with such Person’s estate or tax planning, (iii) any spouse, former spouse, parents or grandparents or any descendant (including adopted children and step-children) or spouse or former spouse of the foregoing, of any such current or former director, officer, employee or member of management of Holdings or any of its Subsidiaries or any direct or indirect parent thereof, who is transferred Equity Interests of Holdings or any direct or indirect parent thereof by any such director, officer, employee or member of management of Holdings or any of its Subsidiaries or any direct or indirect parent thereof (or by any vehicle described in clause (ii) above), in connection with such Person’s estate or tax planning, and (iv) any Person who acquires an investment in Holdings or any direct or indirect parent thereof by will or by the laws of intestate succession as a result of the death of any such current or former director, officer, employee or member of management of Holdings or any of its Subsidiaries or any direct or indirect parent thereof or of any person described in clause (iii) immediately above.

 

Management Services Agreement” shall mean that certain Amended and Restated Management Agreement, dated as of the Closing Date, by and among Vista Equity Partners Management, LLC, the Borrower and certain Affiliates of the Borrower from time to time party thereto, as amended, restated, amended and restated, supplemented and/or modified from time to time in a manner that is not materially adverse to the interests of the Lenders; provided that any amendment, restatement, amendment and restatement, supplement or other modification thereto to term out any fees under such Management Agreement in connection with an IPO shall not be considered materially adverse to the Lenders.

 

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Margin Stock” shall have the meaning assigned to such term in Regulation U.

 

Material Adverse Effect” shall mean a material adverse effect on (a) the business or financial condition or results of operations of Holdings and its Restricted Subsidiaries, taken as a whole, (b) the material rights and remedies (taken as a whole) of the Administrative Agent, the Collateral Agent or the Lenders under the Loan Documents (other than due to the action or inaction of the Administrative Agent, the Collateral Agent or the Lenders) or (c) the ability of the Borrower and the Guarantors, taken as a whole, to perform their payment obligations under the Loan Documents.

 

Material Disposition” shall mean a sale or other disposition of assets (including Equity Interests, and including by way of a merger or consolidation) accounting for greater than or equal to 33% of Consolidated EBITDA of Holdings and its Restricted Subsidiaries for the most recently ended Test Period.

 

Material Property” shall mean an individual Real Property owned in fee in the United States by any Credit Party, in each case, with a fair market value of $5,000,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $6,700,000) or more (such fair market value to be determined (x) in the case of any Real Property owned on the Closing Date, as of the Closing Date and (y) in the case of any Real Property acquired after the Closing Date, as of the date of acquisition thereof).

 

Maximum Accrual” shall have the meaning assigned thereto in Section 2.25.

 

Maximum Incremental Facilities Amount” shall mean an amount after the Closing Date equal to:

 

(i)                                     (A) an aggregate amount equal to the greater of (I) $45,000,000 and (II) 100% of Consolidated EBITDA for the most recent Test Period, plus (B) the amount of any voluntary prepayments of any Loans, any Incremental Facility or any Permitted Incremental Equivalent Debt (in the case of any Incremental Facility or Permitted Incremental Equivalent Debt, to the extent secured on a pari passu basis with the Obligations) (in the case of any prepayment of Revolving Loans and/or Incremental Revolving Loans, to the extent accompanied by a corresponding permanent reduction in the relevant commitment) (it being understood that any such voluntary prepayment financed with the proceeds of Credit Agreement Refinancing Indebtedness shall not increase the calculation of the amount under this clause (i)(B)), in each case to the extent financed with sources other than the proceeds of long-term Indebtedness (other than revolving Indebtedness to the extent intended to be repaid from operating cash flow) of Holdings or its Restricted Subsidiaries, plus (C) debt buybacks by Holdings and its Restricted Subsidiaries in accordance with Section 10.04(b)(viii), or any corresponding provision of any Permitted Incremental Equivalent Debt (in each case to the extent offered to all similarly-situated lenders or holders, as applicable, and, in the case of any Incremental Facility or Permitted Incremental Equivalent Debt, to the extent secured on a pari passu basis with the Obligations) (it being understood that (x) any such debt buybacks financed with the proceeds of Credit Agreement Refinancing Indebtedness shall not increase the calculation of the amount under this clause (i)(C) and (y) in the case

 

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of any such debt buyback that is consummated at a discount to par, the calculation of the amount under this clause (C) shall be limited to the actual cash expenditures in respect thereof), in each case to the extent financed with sources other than the proceeds of long-term Indebtedness (other than revolving Indebtedness to the extent intended to be repaid from operating cash flow) of Holdings or its Restricted Subsidiaries, plus (D) payments required by Sections 2.16(b)(B) or 10.02(f)(i) (or any corresponding provision of any Permitted Incremental Equivalent Debt) (in each case solely to the extent such payment is made in retirement of the applicable Loans, Incremental Term Loans, Incremental Revolving Loans or Permitted Incremental Equivalent Debt, as applicable and, in the case of any payment of Revolving Loans and/or Incremental Revolving Loans, to the extent accompanied by a corresponding permanent reduction in the relevant commitment), plus (E) in the case of an Incremental Facility that is being incurred using the Fixed Incremental Amount that serves to effectively extend the maturity of the Term Loans, the Revolving Loans and/or any other Incremental Facility, an amount equal to the portion of the Term Loans, the Revolving Loans and/or any other Incremental Facility to be replaced with such Incremental Facility (the “Fixed Incremental Amount”), plus

 

(ii)                                  an unlimited amount so long as, on a Pro Forma Basis as of the Applicable Date of Determination and for the applicable Test Period, determined after giving effect to the incurrence of any such Incremental Facility or any such Permitted Incremental Equivalent Debt and any Permitted Acquisition or other acquisition consummated in connection therewith, any Indebtedness repaid with the proceeds thereof and any Investment, disposition or debt incurrence in connection therewith and all other pro forma adjustments, with respect to any such Incremental Facility or Permitted Incremental Equivalent Debt that is (A) secured on a pari passu basis with the Secured Obligations, the First Lien Leverage Ratio shall not exceed the greater of (I) 5.50 to 1.00 and (II) if incurred in connection with a Permitted Acquisition or other Investment, the First Lien Leverage Ratio as of the Applicable Date of Determination and for the most recently ended Test Period immediately prior to such transactions; (B) secured on a junior basis to the Secured Obligations (but not on a junior basis to any Indebtedness that is itself secured on a junior basis to the Secured Obligations), the Senior Secured Leverage Ratio shall not exceed the greater of (I) 7.50 to 1.00 and (II) if incurred in connection with a Permitted Acquisition or other Investment, the Senior Secured Leverage Ratio as of the Applicable Date of Determination and for the most recently ended Test Period immediately prior to such transactions; or (C) unsecured or secured on a junior basis to any Indebtedness that is itself secured on a junior basis to the Secured Obligations, either (I) the Consolidated Interest Coverage Ratio is greater than or equal to either (x) 2.00 to 1.00 or (y) the Consolidated Interest Coverage Ratio for the most recently ended Test Period immediately prior to such transactions, or (II) the Total Leverage Ratio shall not exceed the greater of (x) 7.50 to 1.00 and (y) if incurred in connection with a Permitted Acquisition or other Investment, the Total Leverage Ratio as of the Applicable Date of Determination and for the most recently ended Test Period immediately prior to such transactions (the ratios in clauses (A), (B) and (C), collectively, or any such ratio individually, as applicable, the “Incurrence Ratio”); provided that, notwithstanding anything herein to the contrary, (v) the Borrower may in its sole discretion elect to use this clause (ii) regardless of whether at such time the Borrower has capacity under the Fixed Incremental Amount; (w) in the event that any Incremental

 

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Facilities or Permitted Incremental Equivalent Debt is incurred in reliance on the Fixed Incremental Amount concurrently with, or in a series of related transactions with, the incurrence of any Incremental Facility or Permitted Incremental Equivalent Debt pursuant to this clause (ii), the Borrower may elect to use this clause (ii) prior to using the Fixed Incremental Amount (in which case, for the avoidance of doubt, the Incurrence Ratio shall first be calculated without giving effect to any loans or commitments incurred or to be so incurred using the Fixed Incremental Amount but giving full pro forma effect to the use of proceeds of all such loans and commitments and other related transactions) and if the Incurrence Ratio and the Fixed Incremental Amount are available and the Borrower does not make an election, then the Borrower will be deemed to have elected to use the Incurrence Ratio prior to using any amount available under the Fixed Incremental Amount and thereafter, the incurrence portion of such loans or commitments to be incurred using the Fixed Incremental Amount shall be calculated; (x) for purposes of determining compliance with the foregoing Incurrence Ratio in this clause (ii), any Incremental Revolving Loan Commitments (and any other unfunded commitments) shall be deemed to be drawn in full and the cash proceeds of any such Incremental Term Loans, Incremental Revolving Loan Commitments and Permitted Incremental Equivalent Debt incurred substantially concurrently therewith, or in a series of related transactions therewith, shall not be cash netted, but any use thereof to prepay Indebtedness shall be given pro forma effect; (y) to the extent the proceeds of any Incremental Facility or Permitted Incremental Equivalent Debt are intended to be applied to finance a Limited Condition Transaction, if the Borrower has made an LCT Election with respect to such Limited Condition Transaction, Consolidated Total Funded Indebtedness, Unrestricted Cash, Consolidated EBITDA and Consolidated Cash Interest Expense, for purposes of determining compliance with the Incurrence Ratio, shall be determined instead, on a Pro Forma Basis, only (i) in the case of Consolidated Total Funded Indebtedness and Unrestricted Cash, as of the date, and (ii) with respect to Consolidated EBITDA and Consolidated Cash Interest Expense, for the Test Period most recently ended prior to the date, in each case on which the relevant agreement (or in the case of an LCT Transaction that involves some other manner of establishing a binding obligation under local law, such other binding obligation to consummate such transaction) with respect to such Limited Condition Transaction is entered into as if the Limited Condition Transaction had occurred on such date; and (z) the Borrower may at any time reclassify any Indebtedness originally incurred under the Fixed Incremental Amount as having been incurred under this clause (ii), so long as at such time, the Borrower would be permitted to incur under this clause (ii) the aggregate principal amount of the Indebtedness being so reclassified (for purposes of clarity, with any such reclassification having the effect of increasing the Borrower’s ability to incur Indebtedness under the Fixed Incremental Amount on and after the date of such reclassification by the amount of Indebtedness so re-designated) (the provisions of this clause (z), the “Incremental Reclassification Provision”).  For the avoidance of doubt and subject to the foregoing clause (z), any amounts incurred in reliance on the Fixed Incremental Amount as an Incremental Facility or Permitted Incremental Equivalent Debt shall thereafter reduce the amount of Permitted Incremental Equivalent Debt or Incremental Facilities that may be incurred in reliance thereon.

 

Maximum Rate” shall have the meaning assigned to such term in Section 10.14.

 

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Maximum Tender Condition” shall have the meaning assigned to such term in Section 2.23(b).

 

Minimum Borrowing Amount” shall mean

 

(a)                                 in the case of Eurodollar Loans, $250,000;

 

(b)                                 in the case of ABR Loans that are Term Loans, $250,000; and

 

(c)                                  in the case of ABR Loans that are Revolving Loans, the lesser of $250,000 and the Revolving Commitment at such time.

 

“Minimum Tender Condition” shall have the meaning assigned to such term in Section 2.23(b).

 

MNPI” shall have the meaning assigned to such term in Section 10.01(f).

 

Moody’s” shall mean Moody’s Investors Service Inc.

 

Mortgage” shall have the meaning assigned to such term in Section 5.10(c)(ii).

 

Multiemployer Plan” shall mean a “multiemployer plan” within the meaning of Section 4001(a)(3) or Section 3(37) of ERISA which is subject to Title IV of ERISA (a) to which any Group Member or any of its ERISA Affiliates is then making or accruing an obligation to make contributions, or (b) with respect to which any Group Member or any of its ERISA Affiliates has any liability.

 

Net Cash Proceeds” shall mean:

 

(a)                                 with respect to any Asset Sale (other than any issuance or sale of Equity Interests), the proceeds thereof in the form of cash, cash equivalents (including Cash Equivalents) and marketable securities (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable, or by the sale, transfer or other disposition of any non-cash consideration received in connection therewith or otherwise, but only as and when received) received by any Group Member, net of, without duplication, (i) fees and expenses (including brokers’ fees or commissions, discounts, legal, accounting and other professional and transactional fees, transfer and similar taxes and the Borrower’s good faith estimate of taxes paid or payable in connection with such sale or with the repatriation of such proceeds (after taking into account any available tax credits or deductions and any payments or payable amounts under tax sharing arrangements permitted under the Loan Documents) (provided that, to the extent and at the time that any such taxes are no longer required to be paid or payable, such amounts then constitute Net Cash Proceeds)), (ii) amounts provided as a reserve, in accordance with GAAP, against (x) any liabilities under any indemnification obligations, earn-out obligations or purchase price adjustments associated with such Asset Sale or (y) any other liabilities retained or payable by any Group Member associated with the Properties sold in such Asset Sale (provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds), (iii) the principal amount, premium or penalty, if any, interest and

 

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other amounts on any Indebtedness for borrowed money (other than the Loans) that is secured by a Lien on the Properties sold in such Asset Sale (so long as such Lien was permitted to encumber such Properties under the Loan Documents at the time of such sale and was not a pari passu or junior lien on the Collateral) and which is repaid with such proceeds (other than any such Indebtedness assumed by the purchaser of such Properties) and (iv) the Borrower’s good faith estimate of the amount of payments required to be made with respect to unassumed liabilities relating to the properties sold within 360 days of such Asset Sale (provided that to the extent such cash proceeds are not used to make payments in respect of such unassumed liabilities within 360 days after such Asset Sale, such cash proceeds shall constitute Net Cash Proceeds);

 

(b)                                 with respect to any Casualty Event, the cash insurance proceeds, condemnation awards and other compensation received by, or on behalf of, any Group Member in respect thereof, net of all costs and expenses incurred in connection with the collection of such proceeds, awards or other compensation in respect of such Casualty Event (including, in respect of any such Casualty Event, transfer and similar taxes and the Borrower’s good faith estimate of taxes paid or payable in connection with such Casualty Event or with the repatriation of such proceeds (after taking into account any available tax credits or deductions and any payments or payable amounts under tax sharing arrangements permitted under the Loan Documents) (provided that, to the extent and at the time that any such taxes are no longer required to be paid or payable, such amounts shall then constitute Net Cash Proceeds));

 

(c)                                  with respect to any issuance or sale of Equity Interests by Holdings or any of its Restricted Subsidiaries, the cash proceeds thereof, net of Taxes (including Taxes payable upon the repatriation of any such proceeds to a Group Member), fees, commissions, costs and other expenses incurred in connection therewith; and

 

(d)                                 with respect to any Debt Issuance by Holdings or any of its Restricted Subsidiaries, the cash proceeds thereof, net of Taxes (including Taxes payable upon repatriation of the proceeds to a Group Member), fees, commissions, costs and other expenses incurred in connection therewith.

 

Net Working Capital” shall mean, at any time, Consolidated Current Assets at such time minus Consolidated Current Liabilities at such time.

 

Non-Consenting Lender” shall mean any Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 10.02 and (ii) has been approved by the Required Lenders (or the Required Revolving Lenders, as applicable) or more than 50% of the affected Lenders, as applicable.

 

Non-Extending Lender” shall have the meaning assigned to such term in Section 2.21(e).

 

Not Otherwise Applied” shall mean, with reference to any amount of proceeds of any transaction or event, that such amount (a) was not required to be applied to prepay the Loans pursuant to Section 2.10, (b) was not previously applied in determining the permissibility of a transaction under the Loan Documents where such permissibility was contingent on receipt

 

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of such amount or utilization of such amount for a specified purpose, (c) in the case of Net Cash Proceeds from Eligible Equity Issuances or from Equity Cure Contributions, was not otherwise used for or in connection with (i) Investments made pursuant to Section 6.03(v) or (x), (ii) Dividends made pursuant to Section 6.06(f) or (i), (iii) prepayments of Indebtedness pursuant to Section 6.09(a)(A), (B) or (F), (iv) the inclusion thereof as an Equity Cure Contribution in the calculation of Consolidated EBITDA for purposes of determining compliance with the Financial Covenant, pursuant to Section 8.03(a) or (v) the incurrence of Indebtedness pursuant to Section 6.01(w), and (d) was not previously applied to increase the Cumulative Amount pursuant to the definition thereof.

 

Notes” shall mean any notes evidencing the Term Loans, Revolving Loans or Swing Line Loans issued pursuant to this Agreement, if any, substantially in the form of Exhibit H-1, H-2 or H-3, as applicable.

 

Notice of Intent to Cure” shall have the meaning assigned to such term in Section 8.03(a).

 

Obligations” shall mean obligations of the Borrower and the other Credit Parties from time to time arising under or in respect of the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by the Borrower and the other Credit Parties under this Agreement in respect of any Letter of Credit, when and as due, including payments in respect of Reimbursement Obligations with respect to Letters of Credit, interest thereon and obligations to provide cash collateral with respect thereto and (iii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including fees and other monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Borrower and the other Credit Parties under this Agreement and the other Loan Documents; provided that, notwithstanding anything to the contrary, the Obligations shall exclude any Excluded Swap Obligations.

 

OFAC” shall mean the U.S. Department of the Treasury, Office of Foreign Assets Control.

 

Offer Process” shall have the meaning assigned to such term in Section 10.04(b)(viii)(B).

 

Organizational Documents” shall mean, with respect to any person, (i) in the case of any corporation, the certificate of incorporation and by-laws (or similar documents) of such person, (ii) in the case of any limited liability company, the certificate of formation and operating agreement (or similar documents) of such person, (iii) in the case of any limited partnership, the certificate of limited partnership and limited partnership agreement (or similar documents) of such person, (iv) in the case of any general partnership, the partnership agreement

 

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(or similar document) of such person and (v) in any other case, the functional equivalent of the foregoing.

 

Original Acquisition” shall mean, collectively, on the Original Closing Date, the merger of Roaring Fork Merger Sub, Inc., a Delaware corporation (“Merger Sub”) with and into Ping, with Ping as the surviving entity of such merger pursuant to that certain Agreement and Plan of Merger, dated as of May 27, 2016, by and among Roaring Fork Holding, Inc., a Delaware corporation (“Parent”), Holdings, Merger Sub, Ping, André Durand, a stockholder of the Target, and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the shareholder representative.

 

Original Closing Date” shall mean June 30, 2016.

 

Other Intercreditor Agreement” shall mean any intercreditor agreement executed in connection with any transaction requiring such agreement to be executed pursuant to the terms hereof, or otherwise required to be executed pursuant to the terms hereof, among the Administrative Agent, the Collateral Agent and one or more other Senior Representatives of Indebtedness, or any other party, as the case may be, and acknowledged and agreed to by the Borrower and the Guarantors, substantially on terms set forth on Exhibit M (except to the extent otherwise reasonably agreed by the Borrower and the Administrative Agent), in each case, as amended, restated, amended and restated, supplemented, renewed, replaced, refinanced or otherwise modified from time to time.

 

Other Taxes” shall mean all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes or any other excise or property Taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or with respect to, this Agreement or any other Loan Document (and any interest, additions to tax or penalties applicable thereto), except for any such Taxes described in clause (a)(ii) of the definition of Excluded Taxes that are payable in connection with an assignment (other than an assignment made pursuant to Section 2.16).

 

Participant” shall have the meaning assigned to such term in Section 10.04(d)(i).

 

Participant Register” shall have the meaning assigned to such term in Section 10.04(d)(iii).

 

Patriot Act” shall have the meaning assigned to such term in Section 3.19.

 

PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA.

 

Permitted Acquisition” shall mean any transaction or series of related transactions by Holdings or any of its Restricted Subsidiaries for (a) the direct or indirect acquisition of all or substantially all of the property of any Person, or of any assets constituting a line of business, business unit, division or product line (including research and development and related assets in respect of any product) of any Person; (b) the acquisition (including by merger

 

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or consolidation) of the Equity Interests (other than director qualifying shares) of any Person that becomes a Restricted Subsidiary after giving effect to such transaction; or (c) a merger or consolidation or any other combination with any Person (so long as a Credit Party (including for the avoidance of doubt (except in the case of a merger, consolidation or other combination involving the Borrower), any such Person that becomes a Credit Party upon the consummation of such merger, consolidation or other combination), to the extent such Credit Party is a party to such merger, consolidation or other combination, is the surviving entity); provided that each of the following conditions shall be met or waived by the Required Lenders:

 

(i)                                     subject to Section 1.06 with respect to Limited Condition Transactions, no Event of Default under Section 8.01(a), (b), (g) or (h) has occurred and is continuing immediately before giving pro forma effect to such acquisition and immediately after giving effect to such acquisition; and

 

(ii)                                  immediately after giving effect to such transaction, Holdings and its Restricted Subsidiaries shall be in compliance with Section 6.12.

 

Notwithstanding anything to the contrary contained in the immediately preceding sentence, an acquisition which does not otherwise meet the requirements set forth above in the definition of “Permitted Acquisition” shall constitute a Permitted Acquisition if, and to the extent, the Required Lenders agree in writing, prior to the consummation thereof, that such acquisition shall constitute a Permitted Acquisition for purposes of this Agreement.

 

Permitted Debt Exchange” shall have the meaning given to that term in Section 2.23(a).

 

Permitted Debt Exchange Notes” shall have the meaning given to that term in Section 2.23(a).

 

Permitted Debt Exchange Offer” shall have the meaning given to that term in Section 2.23(a).

 

Permitted Holder” shall mean any of (i) the Sponsor, the Sponsor’s Affiliates (other than any portfolio company of the Sponsor) and the Management Equityholders and any “group” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing are members (provided, that the Sponsor, the Sponsor’s Affiliates and/or the Management Equityholders collectively comprise at least a majority in interest of such “group”); (ii) any direct or indirect parent of the Borrower not formed in connection with, or in contemplation of, a transaction (other than the Transactions) that, assuming such parent was not formed, after giving effect thereto would constitute a Change of Control; and (iii) any Person who is acting solely as an underwriter in connection with a public or private offering of Capital Stock of Holdings or any direct or indirect parent of Holdings, acting in such capacity.

 

Permitted Incremental Equivalent Debt” shall mean Indebtedness issued, incurred or otherwise obtained by the Borrower (which may be guaranteed by any other Credit Party) in respect of one or more series of senior unsecured notes, senior notes secured on a basis pari passu with or junior to the Secured Obligations, or subordinated notes (in each case issued

 

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in a public offering or a Rule 144A or other private placement or a bridge financing in lieu of the foregoing so long as the long-term debt into which such bridge financing is to be converted satisfies the provisions of this definition (and any Registered Equivalent Notes issued in exchange therefor)), loans that are secured on a basis pari passu with or junior to the Secured Obligations or loans that are unsecured, or notes or loans constituting secured or unsecured mezzanine Indebtedness, in each case that is or are issued or made in lieu of Incremental Facilities; provided that (i) the aggregate principal amount of all Permitted Incremental Equivalent Debt at the time of issuance or incurrence shall not exceed the Maximum Incremental Facilities Amount at such time, (ii) the terms applicable to such Permitted Incremental Equivalent Debt shall comply with the Required Debt Terms and (iii) subject to Section 1.06, and (solely if such Permitted Incremental Equivalent Debt is incurred in connection with a Limited Condition Transaction) unless (other than in the case of an Event of Default under Section 8.01(a), (b), (g) or (h)) waived by the lenders in respect of such Permitted Incremental Equivalent Debt, no Event of Default (or, in the case of any Permitted Incremental Equivalent Debt the proceeds of which will be used for a Permitted Acquisition or similar Investment, no Event of Default under Section 8.01(a), (b), (g) or (h)) shall have occurred and be continuing at the time of such issuance or incurrence or immediately after giving effect thereto.

 

Permitted Junior Refinancing Debt” shall mean secured Indebtedness incurred by the Borrower and guarantees with respect thereto by any Credit Party; provided that (i) such Indebtedness is secured by the Collateral on a junior basis to the Secured Obligations and the obligations in respect of any Permitted Pari Passu Refinancing Debt, in each case pursuant to a First Lien/Second Lien Intercreditor Agreement, and is not secured by any property or assets of Holdings and its Restricted Subsidiaries other than the Collateral, (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness in respect of Term Loans, Incremental Term Loans, Refinancing Term Loans, Revolving Loans, Incremental Revolving Loans, or Refinancing Revolving Loans, and (iii) a Senior Representative validly acting on behalf of the holders of such Indebtedness shall have become party to the a First Lien/Second Lien Intercreditor Agreement.  Permitted Junior Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.

 

Permitted Liens” shall have the meaning assigned to such term in Section 6.02.

 

Permitted Pari Passu Refinancing Debt” shall mean any secured Indebtedness incurred by the Borrower and guarantees with respect thereto by any Credit Party; provided that (i) such Indebtedness is secured by the Collateral on a pari passu basis (but without regard to the control of remedies) with the Secured Obligations and is not secured by any property or assets of Holdings or its Restricted Subsidiaries other than the Collateral, (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness in respect of Term Loans, Incremental Term Loans, Refinancing Term Loans, Revolving Loans, Incremental Revolving Loans, or Refinancing Revolving Loans, and (iii) a Senior Representative validly acting on behalf of the holders of such Indebtedness shall have become party to an Other Intercreditor Agreement.  Permitted Pari Passu Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.

 

Permitted Refinancing” shall mean, with respect to any Person, any modification, refinancing, refunding, renewal, replacement or extension of any Indebtedness of

 

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such Person; provided that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed, replaced or extended except by an amount equal to unpaid accrued interest and premium thereon plus other amounts paid, and fees, expenses, commissions, underwriting discounts and expenses incurred, in connection with such modification, refinancing, refunding, renewal, replacement or extension, and by an amount equal to any existing commitments unutilized thereunder, (b) other than with respect to a Permitted Refinancing of Indebtedness permitted pursuant to Section 6.01(e), such modification, refinancing, refunding, renewal, replacement or extension has a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being modified, refinanced, refunded, renewed, replaced or extended, (c) other than with respect to a Permitted Refinancing of Indebtedness permitted pursuant to Section 6.01(e), at the time thereof, no Event of Default shall have occurred and be continuing, (d) to the extent such Indebtedness being modified, refinanced, refunded, renewed, replaced or extended is subordinated in right of payment to the Obligations, such modification, refinancing, refunding, renewal, replacement or extension is subordinated in right of payment to the Obligations on terms, taken as a whole, at least as favorable (as reasonably determined by the Borrower) to the Lenders in all material respects as those contained in the documentation governing the subordination of the Indebtedness being modified, refinanced, refunded, renewed, replaced or extended, (e) neither Holdings nor any of its Restricted Subsidiaries shall be an obligor or guarantor of any such refinancings, replacements, refundings, renewals, replacements or extensions except to the extent that such Person was such an obligor or guarantor in respect of the applicable Indebtedness being modified, refinanced, refunded, renewed, replaced or extended, (f) such modification, refinancing, refunding, renewal, replacement or extension shall not be secured by any Lien on any asset other than the assets that secured such Indebtedness being modified, refinanced, refunded, renewed, replaced or extended and (g) such modification, refinancing, refunding, renewal, replacement or extension shall not (if secured) have a higher Lien priority than such Indebtedness being modified, refinanced, refunded, renewed, replaced or extended.

 

Permitted Reorganization” shall have the meaning assigned to such term in Section 6.03(gg).

 

Permitted Unsecured Refinancing Debt” shall mean unsecured Indebtedness incurred by the Borrower and guarantees with respect thereto by any Credit Party; provided that such Indebtedness constitutes Credit Agreement Refinancing Indebtedness in respect of Term Loans, Incremental Term Loans, Refinancing Term Loans, Revolving Loans, Incremental Revolving Loans, or Refinancing Revolving Loans.  Permitted Unsecured Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.

 

Person” or “person” shall mean any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

Ping” shall have the meaning assigned to such term in the preamble hereto.

 

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Plan” shall mean any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA) (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 or 430 of the Code or Section 302 of ERISA which is maintained or contributed to by any Group Member or any of its ERISA Affiliates or with respect to which any Group Member or any of its ERISA Affiliates has any liability.

 

Platform” shall have the meaning assigned to such term in Section 10.01(e).

 

Principal Office” shall mean New York City or such other location as the Administrative Agent may notify the Borrower from time to time.

 

Private Side Communications” shall have the meaning assigned to such term in Section 10.01(f).

 

Private Siders” shall have the meaning assigned to such term in Section 10.01(f).

 

Pro Forma Basis” shall mean, with respect to the calculation of all financial ratios and tests (including the First Lien Leverage Ratio, the Senior Secured Leverage Ratio, the Total Leverage Ratio, the Consolidated Interest Coverage Ratio and the amount of Consolidated Total Assets and Consolidated EBITDA) contained in this Agreement other than for purposes of calculating Excess Cash Flow, in each case as of any date, that such calculation shall give pro forma effect to the Transactions and all Subject Transactions (and the application of the proceeds from any such asset sale or debt incurrence) that have occurred during the relevant testing period for which such financial test or ratio is being calculated and during the period immediately following such period and prior to or substantially concurrently with the event for which the calculation of any such ratio is made, including pro forma adjustments arising out of events which are attributable to the Transactions, the proposed Subject Transaction and all other Subject Transactions that have been consummated during the relevant period, including giving effect to those specified in accordance with the definition of “Consolidated EBITDA,” in each case as certified on behalf of Holdings by a Financial Officer of Holdings, using, for purposes of determining such compliance with a financial test or ratio (including any incurrence test), the historical financial statements of all entities, divisions or lines or assets so acquired or sold and the consolidated financial statements of Holdings and/or any of its Restricted Subsidiaries, calculated as if the Transactions or such Subject Transaction, and all other Subject Transactions that have been consummated during the relevant period, and any Indebtedness incurred or repaid in connection therewith, had been consummated (and the change in Consolidated EBITDA resulting therefrom) and incurred or repaid at the beginning of such period, and Consolidated Total Assets shall be calculated after giving effect thereto.

 

Whenever pro forma effect is to be given to the Transactions or a Subject Transaction, the pro forma calculations shall be made in good faith by a Financial Officer of Holdings (as set forth in a certificate of such Financial Officer delivered to the Administrative Agent) (including adjustments for costs and Charges arising out of the Transactions, the proposed Subject Transaction and all other Subject Transactions that have been consummated during the relevant period, and the “run-rate” cost savings and synergies resulting from the Transactions or such Subject Transaction(s) that have been or are reasonably anticipated to be

 

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realizable (“run-rate” means the full recurring benefit for a test period that is associated with any action taken or expected to be taken or for which a plan for realization has been established (including any savings expected to result from the elimination of a public target’s compliance costs with public company requirements), net of the amount of actual benefits realized during such test period from such actions), and any such adjustments included in the initial pro forma calculations shall continue to apply to subsequent calculations of such financial ratios or tests, including during any subsequent test periods in which the effects thereof are expected to be realizable); provided that (i) such amounts are factually supportable and reasonably identifiable and are projected by the Borrower in good faith to be realizable within 36 months after the end of the test period in which the Transactions or the applicable Subject Transaction occurred, (ii) no amounts shall be added pursuant to this paragraph to the extent duplicative of any amounts that are otherwise added back in computing Consolidated EBITDA for such test period, and (iii) the provisions of this paragraph shall in no way limit the add-backs that may be made to Consolidated EBITDA pursuant to the definition thereof.

 

If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the applicable date of determination for the event for which the calculation is made had been the applicable rate for the entire test period (taking into account any interest hedging arrangements applicable to such Indebtedness).  Interest on a Capital Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a Financial Officer of Holdings to be the rate of interest implicit in such Capital Lease Obligation in accordance with GAAP.  Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate as the Borrower may designate.

 

Pro Rata Percentage” of any Revolving Lender at any time shall mean the percentage of the total Revolving Commitments of all Revolving Lenders represented by such Lender’s Revolving Commitment; provided that for purposes of Section 2.19(b), “Pro Rata Percentage” shall mean the percentage of the total Revolving Commitments (disregarding the Revolving Commitment of any Defaulting Lender to the extent its LC Exposure and Swing Line Exposure is reallocated to the non-Defaulting Lenders) represented by such Lender’s Revolving Commitment.  If the Revolving Commitments have terminated or expired, the Pro Rata Percentage shall be determined based upon the Revolving Commitments most recently in effect, after giving effect to any assignments.

 

Projections” shall have the meaning assigned to such term in Section 3.13(a).

 

Property” or “property” shall mean any right, title or interest in or to property or assets of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible and including Equity Interests or other ownership interests of any person and whether now in existence or owned or hereafter entered into or acquired, including all Real Property.

 

PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

 

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Public Company Costs” shall mean any costs, fees and expenses associated with, in anticipation of, or in preparation for, compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith and costs, fees and expenses relating to compliance with the provisions of the Securities Act and the Exchange Act (as applicable to companies with equity or debt securities held by the public), the rules of national securities exchanges for companies with listed equity or debt securities, directors’ or managers’ compensation, fees and expense reimbursements, Charges relating to investor relations, shareholder meetings and reports to shareholders and debtholders, directors’ and officers’ insurance and other executive costs, legal and other professional fees and listing fees.

 

Public Side Communications” shall have the meaning assigned to such term in Section 10.01(f).

 

Public Siders” shall have the meaning assigned to such term in Section 10.01(f).

 

Purchase Money Obligation” shall mean, for any Person, the obligations of such Person in respect of Indebtedness (including Capital Lease Obligations) incurred for the purpose of financing all or any part of the purchase price of any fixed or Capital Assets or the cost of installation, construction or improvement of any fixed or Capital Assets and any refinancing thereof; provided, however, that (i) such Indebtedness is incurred no later than 180 days after the acquisition, installation, construction, repair, replacement, exchange or improvement of such fixed or Capital Assets by such Person, (ii) the amount of such Indebtedness (excluding any costs, expenses and fees incurred in connection therewith) does not exceed 100% of the cost of such acquisition, installation, construction or improvement, as the case may be, and (iii) the Liens granted with respect thereto do not at any time encumber any property other than the property financed by such Indebtedness (with respect to Capital Lease Obligations, the Liens granted with respect thereto do not at any time extend to or cover any assets other than the assets subject to such Capital Lease Obligations).

 

Qualified Capital Stock” of any Person shall mean any Equity Interests of such person that are not Disqualified Capital Stock.

 

Qualified ECP Guarantor” shall mean, in respect of any Swap Obligation, each Guarantor that has total assets exceeding $10,000,000 at the time the relevant Guarantee or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

Qualified Securitization Financing” shall mean any Securitization Facility (and any guarantee of such Securitization Facility), as amended, supplemented, extended, renewed, restated, amended and restated, refunded, refinanced, replaced or otherwise modified from time to time, that meets the following conditions: (i) the Borrower shall have determined in good faith that such Securitization Facility (including financing terms, covenants, termination events and other provisions) is in the aggregate economically fair and reasonable to the Borrower and the

 

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Restricted Subsidiaries; (ii) all sales of Securitization Assets and related assets by the Borrower or any Restricted Subsidiary to the Securitization Subsidiary or any other Person are made at fair market value or otherwise on arms’ length terms (as determined in good faith by the Borrower); (iii) the financing terms, covenants, termination events and other provisions thereof shall be on market terms (as determined in good faith by the Borrower); and (iv) the obligations under such Securitization Facility are non-recourse (except for Standard Securitization Undertakings) to the Borrower or any Restricted Subsidiary (other than a Securitization Subsidiary).

 

Rate Charges” shall have the meaning assigned to such term in Section 10.14.

 

Real Property” shall mean, collectively, all right, title and interest (including any leasehold, mineral or other estate) in and to any and all parcels of or interests in real property owned, leased or operated by any person, whether by lease, license or other means, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures and equipment, all general intangibles and contract rights and other property and rights incidental to the ownership, lease or operation thereof.

 

Receivables Assets” shall mean (a) any accounts receivable owed to the Borrower or a Restricted Subsidiary subject to a Receivables Facility and the proceeds thereof, (b) any bank account into which any accounts receivable owed to the Borrower or a Restricted Subsidiary subject to a Receivables Facility are to be paid and (c) all collateral securing such accounts receivable and bank accounts, all contracts and contract rights, guarantees or other obligations in respect of such accounts receivable and bank accounts, all records with respect to such accounts receivable and bank accounts and any other assets customarily transferred together with accounts receivable in connection with a non-recourse accounts receivable factoring, invoice discounting or similar arrangement and which are sold, conveyed, assigned or otherwise transferred or pledged in connection with a Receivables Facility.

 

Receivables Facility” shall mean any of one or more receivables financing facilities (and any guarantee of any such financing facility), as amended, restated, amended and restated, supplemented, extended, renewed, refunded, refinanced, replaced or otherwise modified from time to time, the obligations of which are non-recourse (except for Standard Securitization Undertakings) to the Borrower and the Restricted Subsidiaries (other than a Receivables Subsidiary) pursuant to which the Borrower or any Restricted Subsidiary sells, directly or indirectly grants a security interest in or otherwise transfers its Receivables Assets to either (i) a Person that is not the Borrower or a Restricted Subsidiary or (ii) a Receivables Subsidiary that in turn funds such purchase by purporting to sell its accounts receivable to a Person that is not the Borrower or a Restricted Subsidiary or by borrowing from such a Person or from another Receivables Subsidiary that in turn funds itself by borrowing from such a Person.

 

Receivables Fee” shall mean distributions or payments made directly or by means of discounts with respect to any accounts receivable or participation interest issued or sold in connection with, and other fees paid to a Person that is not the Borrower or a Restricted Subsidiary in connection with, any Receivables Facility.

 

Receivables Subsidiary” shall mean (i) any Subsidiary formed for the purpose of facilitating or entering into one or more Receivables Facilities that engages only in activities

 

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reasonably related or incidental thereto or (ii) another Person formed for the purposes of engaging in a Receivables Facility in which any Subsidiary makes an Investment and to which any Subsidiary transfers accounts receivable and related assets.

 

Recipient” shall mean any Agent, any Lender and any Issuing Bank, as applicable.

 

Reference Date” shall have the meaning assigned to such term in the definition of “Cumulative Amount.”

 

Refinanced Debt” shall have the meaning assigned to such term in the definition of “Credit Agreement Refinancing Indebtedness.”

 

Refinancing Amendment” shall mean an amendment to this Agreement in form and substance reasonably satisfactory to the Administrative Agent and the Borrower executed by each of (a) the Borrower, (b) the Administrative Agent and (c) each Lender and Additional Lender that agrees to provide any portion of the Credit Agreement Refinancing Indebtedness being incurred pursuant thereto.

 

Refinancing Revolving Loan Commitments” shall mean one or more Tranches of revolving loan commitments hereunder that result from a Refinancing Amendment.

 

Refinancing Revolving Loans” shall mean one or more Tranches of Revolving Loans that result from a Refinancing Amendment.

 

Refinancing Term Commitments” shall mean one or more Tranches of Term Loan Commitments hereunder that result from a Refinancing Amendment.

 

Refinancing Term Loans” shall mean one or more Tranches of Term Loans that result from a Refinancing Amendment.

 

Register” shall have the meaning assigned to such term in Section 10.04(c).

 

Registered Equivalent Notes” shall mean, with respect to any notes originally issued in a Rule 144A or other private placement transaction under the Securities Act of 1933, substantially identical notes (having the same guarantee obligations) issued in a dollar-for-dollar exchange therefor pursuant to an exchange offer registered with the SEC.

 

Regulation D” shall mean Regulation D of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

Regulation S-X” shall mean Regulation S-X promulgated under the Securities Act.

 

Regulation T” shall mean Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

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Regulation U” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

Regulation X” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

Reimbursement Obligations” shall mean the Borrower’s obligations under Section 2.18(e) to reimburse LC Disbursements once such LC Disbursements have been made.

 

Rejection Notice” shall have the meaning assigned to such term in Section 2.10(i).

 

Related Parties” shall mean, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors, attorneys and representatives of such Person and of such Person’s Affiliates.

 

Release” shall mean any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing of any Hazardous Material into the Environment.

 

Repricing Event” shall mean, with respect to the initial Term Loans only, (i) any mandatory prepayment pursuant to Section 2.10(d) or voluntary prepayment (in each case, other than a prepayment of the initial Term Loans in connection with any transaction that would, if consummated, constitute an IPO, Change of Control, Material Disposition or Transformative Acquisition) of the initial Term Loans with the proceeds of loans under any broadly syndicated first lien secured bank credit facilities with a lower Effective Yield than the Effective Yield of the initial Term Loans disbursed on the Closing Date or (ii) any amendment (other than in connection with any transaction that would, if consummated, constitute an IPO, Change of Control, Material Disposition or Transformative Acquisition) that reduces the Effective Yield of the initial Term Loans disbursed on the Closing Date.

 

Required Debt Terms” shall mean in respect of any Indebtedness, the following requirements: (i) such Indebtedness (x) does not have a maturity date or (solely in the case of any such Indebtedness in the form of notes) have any mandatory prepayment or redemption features (other than customary asset sale events, insurance and condemnation proceeds events, change of control offers or events of default, AHYDO catch-up payments and, if secured, excess cash flow sweeps), in each case prior to the date that is the then Latest Maturity Date at the time such Indebtedness is incurred and (y) solely in the case of any such Indebtedness in the form of loans, does not have a shorter Weighted Average Life to Maturity than the Term Loans; provided that (x) the limitations in this clause (i) shall not apply to any Permitted Incremental Equivalent Debt consisting of a customary bridge facility so long as the long-term debt into which such customary bridge facility is to be converted satisfies the provisions of this clause and (y) such Indebtedness in the form of notes shall have no required amortization; provided further that (A) up to $70,000,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $93,800,000) of Indebtedness in the form of Permitted Incremental Equivalent Debt or Credit Agreement Refinancing Indebtedness, minus (B) the amount of any Incremental Facilities incurred pursuant to the second proviso to

 

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Section 2.20(c)(ii) may be incurred without regard to the limitations set forth in this clause (i), (ii) such Indebtedness is not guaranteed by any Persons that are not Guarantors, (iii) if such Indebtedness is secured by the Collateral, a Senior Representative acting on behalf of the holders of such Indebtedness has become party to (A) a First Lien/Second Lien Intercreditor Agreement if such Indebtedness is secured on a junior basis to the Secured Obligations or (B) an Other Intercreditor Agreement if such Indebtedness is secured on a pari passu basis with the Secured Obligations, (iv) to the extent secured, any such Indebtedness is not secured by assets not constituting Collateral, (v) any such Indebtedness that is payment subordinated shall be subject to a subordination agreement on terms that are reasonably acceptable to the Administrative Agent and the Borrower, and (vi) the terms and conditions of such Indebtedness (excluding pricing, interest rate margins, rate floors, discounts, premiums, fees, and prepayment or redemption terms and provisions which shall be determined by the Borrower) either, at the option of the Borrower, (A) reflect market terms and conditions (taken as a whole) at the time of incurrence, issuance or effectiveness (as determined by the Borrower in good faith) or are reasonably satisfactory to the Administrative Agent (except for covenants or other provisions applicable only to periods after the applicable Latest Maturity Date) or (B) are not materially more restrictive to Holdings and its Subsidiaries (when taken as a whole) than the terms and conditions of this Agreement (when taken as a whole) (except for covenants or other provisions applicable only to periods after the applicable Latest Maturity Date) (it being understood that (A) to the extent that any financial maintenance covenant is added for the benefit of any such Indebtedness, the terms and conditions of such Indebtedness will be deemed not to be more restrictive than the terms and conditions of this Agreement if such financial maintenance covenant is also added for the benefit of this Agreement and (B) no consent shall be required from the Administrative Agent for terms or conditions that are not market terms or are more restrictive than this Agreement if such terms are added to this Agreement); provided, further, that a certificate delivered to the Administrative Agent at least five Business Days prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the requirements of this definition, shall be conclusive evidence that such terms and conditions satisfy the requirements of this definition unless the Administrative Agent notifies the Borrower within such five Business Day period that it disagrees with such determination (including a reasonable description of the basis upon which it disagrees).

 

Required Lenders” shall mean Lenders having more than 50% of the sum of all Loans outstanding, LC Exposure and unused Revolving Commitments and Term Loan Commitments; provided that the Loans, LC Exposure and unused Commitments held or deemed held by any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders; provided, further, that for any Required Lenders’ vote, Affiliated Debt Funds may not, in the aggregate, account for more than 49.9% of the amounts included in determining whether the Required Lenders have consented to any amendment or waiver.

 

Required Revolving Lenders” shall mean Lenders having more than 50% of all Revolving Commitments or, after the Revolving Commitments have terminated, more than 50% of all Revolving Exposure; provided that the Revolving Commitments or Revolving Exposure held or deemed held by any Defaulting Lender shall be excluded for purposes of making a determination of the Required Revolving Lenders.

 

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Requirements of Law” shall mean, collectively, all international, foreign, federal, state and local laws (including common law), judgments, decrees, statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, or other requirements of, any Governmental Authority, in each case whether or not having the force of law.

 

Resignation Effective Date” shall have the meaning assigned to such term in Section 9.06(a).

 

Responsible Officer” of any person shall mean any executive officer (including, without limitation, the president, any vice president, secretary and assistant secretary), any authorized person or Financial Officer of such person and any other officer or similar official or authorized person thereof with responsibility for the administration of the obligations of such person in respect of this Agreement and, solely for purposes of notices given pursuant to Article II, any other officer or employee of the applicable Credit Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Credit Party designated in or pursuant to an agreement between the applicable Credit Party and the Administrative Agent.

 

Restricted Debt Payment” shall have the meaning assigned to such term in Section 6.09(a).

 

Restricted Subsidiary” shall mean each Subsidiary of Holdings other than any Unrestricted Subsidiary.

 

“Retained Asset Sale Proceeds” shall have the meaning assigned to such term in Section 2.10(c).

 

Retained Declined Proceeds” shall have the meaning assigned to such term in Section 2.10(i).

 

Revolving Availability Period” shall mean the period from and including the Original Closing Date to but excluding the earlier of (i) the Business Day immediately preceding the Revolving Maturity Date and (ii) the date of termination of the Revolving Commitments.

 

Revolving Borrowing” shall mean a Borrowing comprised of Revolving Loans.

 

Revolving Commitment” shall mean, with respect to each Lender, the commitment, if any, of such Lender to make Revolving Loans hereunder up to the amount set forth on Annex A hereto or in an Increase Joinder, or in any Assignment and Assumption pursuant to which such Lender assumed its Revolving Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.07 and (b) reduced or increased from time to time pursuant to Incremental Revolving Loan Commitments or assignments by or to such Lender pursuant to Section 2.16(b), Section 10.02(f) or Section 10.04.

 

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Revolving Commitment Increase” shall have the meaning assigned to such term in Section 2.20.

 

Revolving Exposure” shall mean, with respect to any Lender at any time, the aggregate principal amount at such time of all outstanding Revolving Loans of such Lender, plus the aggregate amount at such time of such Lender’s LC Exposure, plus the aggregate amount at such time of such Lender’s Swing Line Exposure.

 

Revolving Lender” shall mean a Lender with a Revolving Commitment or that holds a Revolving Loan.

 

Revolving Loan” shall mean a Loan made by Lenders to the Borrower pursuant to Section 2.01(b), including, unless the context shall otherwise require, any Incremental Revolving Loans made pursuant to Section 2.20 after the Closing Date.

 

Revolving Maturity Date” shall mean (x) with respect to any Revolving Commitments the maturity date of which has not been extended pursuant to Section 2.21, the date which is five years after the Closing Date or, if such date is not a Business Day, the first Business Day preceding such date and (y) with respect to any Extended Tranche of Revolving Commitments, the final maturity date specified in the applicable Extension Election accepted by the respective Lender or Lenders.

 

S&P” shall mean Standard & Poor’s Ratings Service, a subsidiary of S&P Global Inc.

 

Sale Leaseback Transaction” shall mean any arrangement, directly or indirectly, with any person whereby Holdings or any of its Restricted Subsidiaries shall sell, transfer or otherwise dispose of any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property being sold or transferred; provided that (a) no Event of Default shall have occurred and be continuing or would immediately result therefrom and (b) such Sale Leaseback Transaction is consummated within 180 days of the disposition of such property.

 

Sanctions” shall have the meaning assigned to such term in Section 3.20.

 

SEC” shall mean the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

 

Secured Cash Management Agreement” shall mean any Cash Management Agreement that is entered into by and between any Credit Party or any Restricted Subsidiary and any Cash Management Bank that is designated by Holdings as a “Secured Cash Management Agreement”.

 

Secured Hedging Agreement” shall mean any Hedging Agreement that is entered into by and between any Credit Party or any Restricted Subsidiary and any Hedge Bank, unless such Hedging Agreement is designated by Holdings not to be a “Secured Hedging Agreement”.

 

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Secured Obligations” shall mean (a) the Obligations and (b) the payment of all obligations of the Borrower and the other Credit Parties under each Secured Cash Management Agreement and Secured Hedging Agreement entered into with any counterparty that is a Secured Party; provided that, notwithstanding anything to the contrary, the Secured Obligations shall exclude any Excluded Swap Obligations.

 

Secured Parties” shall mean, collectively, (i) the Administrative Agent, (ii) the Collateral Agent, (iii) each other Agent, (iv) the Lenders, (v) each Cash Management Bank, (vi) each Hedge Bank; and (vii) each Issuing Bank.

 

Securities Act” shall mean the Securities Act of 1933, as amended.

 

Securitization Assets” shall mean (a) any accounts receivable or related assets and the proceeds thereof, in each case, subject to a Securitization Facility, (b) any bank accounts into which accounts receivable or related assets and the proceeds thereof, in each case, subject to a Securitization Facility are to be received or deposited and (c) all collateral securing such receivable, bank account or asset, all contracts and contract rights, guaranties or other obligations in respect of such receivable, bank account or assets, lockbox accounts and records with respect to such account, bank account or asset and any other assets customarily transferred (or in respect of which security interests are customarily granted), together with accounts or assets in a securitization financing and which in the case of clauses (a) and (b) above are sold, conveyed, assigned or otherwise transferred or pledged in connection with a Qualified Securitization Financing.

 

Securitization Facility” shall mean any transaction or series of transactions that may be entered into by the Borrower or any Restricted Subsidiary pursuant to which the Borrower or such Restricted Subsidiary may sell, convey or otherwise transfer, or may grant a security interest in, Securitization Assets to either (a) a Person that is not the Borrower or a Restricted Subsidiary or (b) a Securitization Subsidiary that in turn sells such Securitization Assets to a Person that is not the Borrower or a Restricted Subsidiary, or may grant a security interest in, any Securitization Assets of the Borrower or any of its Subsidiaries.

 

Securitization Fees” shall mean distributions or payments made directly or by means of discounts with respect to any Securitization Asset or participation interest therein issued or sold in connection with, and other fees and expenses (including reasonable fees and expenses of legal counsel) paid to a Person that is not the Borrower or a Restricted Subsidiary in connection with, any Qualified Securitization Financing.

 

Securitization Repurchase Obligation” shall mean any obligation of a seller (or any guaranty of such obligation) of (i) Receivables Assets under a Receivables Facility to repurchase Receivables Assets or (ii) Securitization Assets in a Qualified Securitization Financing to repurchase Securitization Assets, in either case, arising as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, offset or counterclaim of any kind as a result of any action taken by, any failure to take action by, or any other event relating to, the seller or the Receivables Assets or Securitization Assets, as applicable.

 

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Securitization Subsidiary” shall mean any Subsidiary of the Borrower, in each case formed for the purpose of, and that solely engages in, one or more Qualified Securitization Financings and other activities reasonably related thereto or another Person formed for the purposes of engaging in a Qualified Securitization Financing in which the Borrower or any Restricted Subsidiary makes an Investment and to which the Borrower or such Restricted Subsidiary transfers Securitization Assets and related assets.

 

Security Agreement” shall mean one or more security agreements by and among one or more of the Credit Parties and the Collateral Agent for the benefit of the Secured Parties with respect to Liens granted on the Collateral thereunder as security for the Secured Obligations.

 

Security Agreement Collateral” shall mean all property pledged or granted as collateral pursuant to a Security Agreement (a) on the Closing Date or (b) thereafter pursuant to Section 5.10 or Section 5.11 and in each case other than Excluded Property.

 

Security Documents” shall mean the Security Agreements, the Mortgages (if any) and each other security document or pledge agreement delivered in accordance with applicable local or foreign law to grant a valid, perfected security interest in any property as collateral for the Secured Obligations, and any other document or instrument utilized to pledge or grant or purport to pledge or grant a security interest in or lien on any property as collateral for the Secured Obligations.

 

Senior Representative” shall mean, with respect to any series of Permitted Pari Passu Refinancing Debt, Permitted Debt Exchange Notes, Senior Secured Indebtedness, Junior Secured Indebtedness, Permitted Junior Refinancing Debt, Permitted Unsecured Refinancing Debt or Permitted Incremental Equivalent Debt, the trustee, sole lender, administrative agent, collateral agent, security agent or similar agent under the indenture or agreement pursuant to which such Indebtedness is issued, incurred or otherwise obtained, as the case may be, and each of their successors in such capacities.

 

Senior Secured Indebtedness” shall mean senior Indebtedness of the Credit Parties for borrowed money that is secured on a pari passu basis with the Secured Obligations (without regard to the control of remedies).

 

Senior Secured Leverage Ratio” shall mean, at any date of determination, the ratio of (i)(x) Consolidated Total Funded Indebtedness of Holdings and its Restricted Subsidiaries on such date, other than Indebtedness that is unsecured or is secured by assets other than the Collateral, minus (y) Unrestricted Cash of Holdings and its Restricted Subsidiaries on such date, to (ii) Consolidated EBITDA of for the Test Period then most recently ended.

 

Specified Existing Tranche” shall have the meaning assigned to such term in Section 2.21(a).

 

Specified 2018 Acquisition” shall mean the acquisition by the Borrower and/or its Restricted Subsidiaries of an enterprise generating approximately $15.0 million of TTM EBITDA identified to the Lead Arrangers prior to the Closing Date.

 

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Sponsor” shall mean Vista Equity Partners Fund V, L.P., Vista Equity Partners Management, LLC and their respective Controlled Investment Affiliates.

 

Sponsor Investor” shall have the meaning assigned thereto in Section 10.04(b)(v).

 

Standard Securitization Undertakings” shall mean representations, warranties, covenants and indemnities entered into by the Borrower or any Restricted Subsidiary that the Borrower has determined in good faith to be customary in a Securitization Facility or a Receivables Facility, including, without limitation, those relating to the servicing of the assets of a Securitization Subsidiary or a Receivables Subsidiary, it being understood that any Securitization Repurchase Obligation shall be deemed to be a Standard Securitization Undertaking.

 

Standby Letter of Credit” shall mean any standby letter of credit or similar instrument providing for the payment of cash upon the honoring of a presentation thereunder.

 

Statutory Reserves” shall mean for any Interest Period for any Eurodollar Borrowing, the average maximum rate at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained during such Interest Period under Regulation D by member banks of the United States Federal Reserve System in New York City with deposits exceeding one billion dollars against “Eurocurrency liabilities” (as such term is used in Regulation D).  Eurodollar Borrowings shall be deemed to constitute Eurocurrency liabilities and to be subject to such reserve requirements without benefit of or credit for proration, exceptions or offsets which may be available from time to time to any Lender under Regulation D.

 

Subject Transaction” shall mean any (a) disposition of all or substantially all of the assets of or all of the Equity Interests of any Restricted Subsidiary or of any product line, business unit, line of business or division of the Borrower or any of the Restricted Subsidiaries for which historical financial statements are available, in each case to the extent otherwise permitted hereunder, (b) Permitted Acquisition, (c) other Investment that is permitted hereunder, (d) designation of any Restricted Subsidiary as an Unrestricted Subsidiary, or of any Unrestricted Subsidiary as a Restricted Subsidiary or (e) proposed incurrence of Indebtedness or making of a Dividend or a Restricted Debt Payment in respect of which compliance with any financial ratio is by the terms of this Agreement required to be calculated on a Pro Forma Basis.

 

Subordinated Debt Documents” shall mean any agreement, indenture or instrument pursuant to which any Subordinated Indebtedness is issued, in each case as amended to the extent permitted under the Loan Documents.

 

Subordinated Indebtedness” shall mean Indebtedness of the Borrower or any Guarantor that is by its terms subordinated in right of payment to the Obligations of the Borrower and such Guarantor, as applicable.

 

Subsidiary” shall mean, with respect to any Person (the “parent”) at any date, (i) any person the accounts of which would be consolidated with those of the parent’s in the parent’s consolidated financial statements if such financial statements were prepared in

 

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accordance with GAAP as of such date, (ii) any other corporation, limited liability company, association or other business entity of which securities or other ownership interests representing more than 50% of the voting power of all Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Board of Directors thereof are, as of such date, owned, controlled or held by the parent and/or one or more subsidiaries of the parent, (iii) any partnership (a) the sole general partner or the managing general partner of which is the parent and/or one or more subsidiaries of the parent or (b) the only general partners of which are the parent and/or one or more subsidiaries of the parent and (iv) any other Person that is otherwise Controlled by the parent and/or one or more subsidiaries of the parent.  Unless otherwise specified, references to “Subsidiary” or “Subsidiaries” herein shall refer to Subsidiaries of Holdings.

 

Subsidiary Guarantor” shall mean each Restricted Subsidiary of Holdings (other than the Borrower) that is, or becomes pursuant to Section 5.10, a party to this Agreement; provided that, notwithstanding anything to the contrary, no Excluded Subsidiary shall be a Subsidiary Guarantor.

 

Swap Obligation” shall mean, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

 

Swing Line Commitment” shall mean the commitment of the Swing Line Lender to make loans pursuant to Section 2.17, as the same may be reduced from time to time pursuant to Section 2.07.  The aggregate principal amount of the Swing Line Commitment shall be $3,000,000 on the Closing Date and the Swing Line Commitment shall in no event exceed the Revolving Commitment.

 

Swing Line Exposure” shall mean at any time the aggregate principal amount at such time of all outstanding Swing Line Loans.  The Swing Line Exposure of any Revolving Lender at any time shall equal its Pro Rata Percentage of the aggregate Swing Line Exposure at such time.

 

Swing Line Lender” shall have the meaning assigned to such term in the preamble hereto.

 

Swing Line Loan” shall mean any loan made by the Swing Line Lender pursuant to Section 2.17.

 

Tax Return” shall mean all returns, statements, declarations, filings, attachments and other documents or certifications required to be filed in respect of Taxes, including any amendments thereof.

 

Tax Withholdings” shall have the meaning assigned to such term in Section 2.15(a).

 

Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholdings), assessments, fees or other charges imposed by

 

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any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

Term Loan” shall mean a Loan made by Lenders to the Borrower pursuant to Section 2.01(a) and shall include, unless the context shall otherwise require, any Incremental Term Loans made pursuant to Section 2.20 after the Closing Date.

 

Term Loan Borrowing” shall mean a Borrowing comprised of Term Loans.

 

Term Loan Commitment” shall mean, with respect to any Lender, (a) its obligation to make its portion of Term Loans to the Borrower in the amount set forth on Annex A, and (b) unless the context shall otherwise require, any Incremental Term Loan Commitments made pursuant to Section 2.20 after the Closing Date.  The initial aggregate amount of the Term Loan Commitments as of the date hereof is $250,000,000.

 

Term Loan Lender” shall mean a Lender with a Term Loan Commitment or an outstanding Term Loan.

 

Term Loan Maturity Date” shall mean (x) with respect to any Term Loans the maturity date of which has not been extended pursuant to Section 2.21, the date which is seven years after the Closing Date or, if such date is not a Business Day, the first Business Day preceding such date, and (y) with respect to any Extended Tranche of Term Loans, the final maturity date specified in the applicable Extension Election accepted by the respective Lender or Lenders.

 

Term Loan Repayment Date” shall have the meaning assigned to such term in Section 2.09.

 

Test Period” shall mean, at any time, subject to Section 1.06, the four consecutive fiscal quarters of Holdings then last ended (in each case taken as one accounting period) for which financial statements have been or were required to be delivered pursuant to Section 5.01(a) or (b).

 

Total Leverage Ratio” shall mean, at any date of determination, the ratio of (i)(y) Consolidated Total Funded Indebtedness of Holdings and its Restricted Subsidiaries on such date minus (z) Unrestricted Cash of Holdings and its Restricted Subsidiaries on such date, to (ii) Consolidated EBITDA for the Test Period then most recently ended.

 

Tranche” shall mean each tranche of Loans or Commitments available hereunder.  On the Closing Date there shall be two tranches, one comprised of Term Loans and one comprised of the Revolving Loans and Revolving Commitments.

 

Transactions” shall mean, collectively, the transactions to occur on or prior to the Closing Date to effectuate the Closing Date Refinancing pursuant to the Loan Documents; the execution, delivery and performance of the Loan Documents and the initial Borrowings hereunder; and the payment of all fees, costs and expenses to be paid on or prior to the Closing Date and owing in connection with the foregoing.

 

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Transferred Guarantor” shall have the meaning assigned to such term in Section 7.09.

 

“Transformative Acquisition” shall mean any acquisition by Holdings or any of its Restricted Subsidiaries that (a) is not permitted by the terms of this Agreement (other than any such acquisition that would be prohibited solely by Section 6.10) immediately prior to the consummation of such acquisition, (b) if permitted by the terms of this Agreement immediately prior to the consummation of such acquisition, would not provide Holdings and its Restricted Subsidiaries with adequate flexibility under this Agreement for the continuation and/or expansion of their combined operations following such consummation, as determined by the Borrower acting in good faith, and/or (c) would result in an increase in Consolidated EBITDA of $20,000,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $26,800,000) or more, as determined on a Pro Forma Basis for the most recently ended Test Period.

 

Type” when used in reference to any Loan or Borrowing, shall mean a reference to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

 

UCC” shall mean the Uniform Commercial Code as in effect from time to time (except as otherwise specified) in any applicable state or jurisdiction.

 

UCP” shall mean, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce (“ICC”) Publication No. 600 (or such later version thereof as may be in effect at the time of issuance).

 

Undisclosed Administration” means in relation to a Lender or its direct or indirect parent company, the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender or such parent company is subject to home jurisdiction supervision, in each case to the extent applicable law requires that such appointment is not to be publicly disclosed.

 

United States” or “U.S.” shall mean the United States of America.

 

Unreimbursed Amount” shall have the meaning assigned to such term in Section 2.18(d).

 

Unrestricted Cash” shall mean, at any time, the aggregate amount of (i) unrestricted cash and Cash Equivalents held in accounts of Holdings and its Restricted Subsidiaries (whether or not held in an account pledged to the Administrative Agent or Collateral Agent) and (ii) cash and Cash Equivalents restricted in favor of lenders under credit facilities (which shall include any cash and Cash Equivalents securing other Indebtedness secured by a Lien on Collateral along with such credit facilities (provided that any such Liens are subordinated to or pari passu with the Liens in favor of the Administrative Agent or Collateral Agent), including any Indebtedness incurred under this Agreement and the other Loan Documents (including Indebtedness incurred pursuant to Section 2.20, Section 2.21, Section 2.22 and Section 2.23 hereof); provided, further, for the avoidance of doubt, the proceeds of an Equity

 

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Cure Contribution shall not be included in this definition of Unrestricted Cash as of the last day of the fiscal quarter with respect to which such Equity Cure Contribution was made for any calculation of the First Lien Leverage Ratio, Senior Secured Leverage Ratio or Total Leverage Ratio or for purposes of determining compliance with the Financial Covenant.

 

Unrestricted Subsidiary” shall mean (a) any Subsidiary of Holdings that is formed or acquired after the Closing Date; provided that at such time (or promptly thereafter) the Borrower designates such Subsidiary an Unrestricted Subsidiary in a notice to the Administrative Agent, (b) any Restricted Subsidiary subsequently designated as an Unrestricted Subsidiary by the Borrower in a written notice to the Administrative Agent, and (c) each Subsidiary of an Unrestricted Subsidiary; provided that in the case of clauses (a) and (b) above, (x) such designation shall be deemed to be an Investment on the date of such designation in an amount equal to the fair market value of the investment therein and such designation shall be permitted only to the extent permitted under Section 6.03 on the date of such designation, (y) no Event of Default shall have occurred and be continuing or would immediately result from such designation after giving pro forma effect thereto (including to the re-designation of Indebtedness and Liens on the assets of such Subsidiary as Indebtedness and Liens on assets of an Unrestricted Subsidiary), and (z) immediately after giving effect to any such designation, on a Pro Forma Basis (including, for the avoidance of doubt, giving pro forma effect to the re-designation of Indebtedness and Liens on the assets of such Subsidiary as Indebtedness and Liens on assets of an Unrestricted Subsidiary), the First Lien Leverage Ratio (determined on a Pro Forma Basis as of the Applicable Date of Determination and for the applicable Test Period) shall not exceed 5.50 to 1.00.  The Borrower may, by written notice to the Administrative Agent, re-designate any Unrestricted Subsidiary as a Restricted Subsidiary (which shall constitute a reduction in any outstanding Investment), and thereafter, such Subsidiary shall no longer constitute an Unrestricted Subsidiary, but only if (a) no Event of Default would immediately result from such re-designation (including the re-designation of Indebtedness and Liens on the assets of such Subsidiary as Indebtedness and Liens on assets of a Restricted Subsidiary) and (b) immediately after giving effect to any such redesignation (including the re-designation of Indebtedness and Liens on the assets of such Subsidiary as Indebtedness and Liens on assets of a Restricted Subsidiary and the deemed return on any Investment in such Unrestricted Subsidiary pursuant to clause (y)), the First Lien Leverage Ratio (determined on a Pro Forma Basis as of the Applicable Date of Determination and for the applicable Test Period) shall not exceed 5.50 to 1.00.  The designation of any Unrestricted Subsidiary as a Restricted Subsidiary shall constitute (x) the incurrence by such Restricted Subsidiary at the time of such designation of any Indebtedness or Liens of such Restricted Subsidiary outstanding at such time (after giving effect to, and taking into account, any payoff or termination of Indebtedness or any release or termination of Liens, in each case, occurring in connection or substantially concurrently therewith) and (y) constitute a return on any Investment by the Borrower in such Unrestricted Subsidiary in an amount equal to the fair market value at the date of such prior designation of such Restricted Subsidiary as an Unrestricted Subsidiary.  As of the Closing Date, none of the Subsidiaries of Holdings is an Unrestricted Subsidiary, and in no event shall the Borrower become an Unrestricted Subsidiary.

 

Unsecured Indebtedness” shall mean unsecured Indebtedness of the Credit Parties and their Restricted Subsidiaries for borrowed money.

 

VCO” means VCO Capital Markets, LLC.

 

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Voting Stock” shall mean, with respect to any person, any class or classes of Equity Interests pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the Board of Directors of such person.

 

Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing: (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by (ii) the then outstanding principal amount of such Indebtedness; provided that for purposes of determining the Weighted Average Life to Maturity of any Indebtedness or Disqualified Capital Stock that is being modified, refinanced, refunded, renewed, replaced or extended, the effects of any prepayments or amortization made on such Indebtedness or Disqualified Capital Stock prior to the date of the applicable modification, refinancing, refunding, renewal, replacement or extension shall be disregarded.

 

Wholly Owned Restricted Subsidiary” shall mean a Restricted Subsidiary of Holdings which is a Wholly Owned Subsidiary of Holdings, the Borrower or any Restricted Subsidiary.

 

Wholly Owned Subsidiary” shall mean, as to any Person, (a) any corporation 100% of whose capital stock (other than directors’ qualifying shares or other nominal issuance in order to comply with local laws) is at the time owned by such Person and/or one or more Wholly Owned Subsidiaries of such Person and (b) any partnership, association, joint venture, limited liability company or other entity in which such Person and/or one or more Wholly Owned Subsidiaries of such Person have a 100% equity interest at such time.

 

Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

 

Yield” shall have the meaning assigned to such term in Section 2.20(f).

 

Yield Differential” shall have the meaning assigned to such term in Section 2.20(f).

 

Section 1.02                             Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar Revolving Loan”).  Borrowings also may be classified and referred to by Class (e.g., a “Revolving Borrowing,” “Borrowing of Term Loans”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).

 

Section 1.03                             Terms Generally.

 

(a)                                 The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include

 

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the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise (i) any definition of or reference to any Loan Document, agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, amended and restated, supplemented, replaced or otherwise modified (subject to any restrictions on such amendments, supplements, replacements or modifications set forth herein), (ii) any reference herein to any person shall be construed to include such person’s successors and assigns (subject to any restrictions on assignments set forth herein), (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (iv) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (v) any reference to any law or regulation herein shall refer to such law or regulation as amended, modified or supplemented from time to time, (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights, and (vii) all references to the knowledge of any Group Member or facts known by any Group Member shall mean actual knowledge of any Responsible Officer of such Person.  Any Responsible Officer executing any Loan Document or any certificate or other document made or delivered pursuant hereto or thereto, so executes or certifies in his/her capacity as a Responsible Officer on behalf of the applicable Credit Party and not in any individual capacity.

 

(b)                                 The term “enforceability” and its derivatives when used to describe the enforceability of an agreement shall mean that such agreement is enforceable except as enforceability may be limited by any Debtor Relief Law and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

 

(c)                                  Any terms used in this Agreement that are defined in the UCC shall be construed and defined as set forth in the UCC unless otherwise defined herein; provided that to the extent that the UCC is used to define any term herein and such term is defined differently in different Articles of the UCC, the definition of such term contained in Article 9 of the UCC shall govern.

 

Section 1.04                             Accounting Terms; GAAP; Tax Laws.  Except as otherwise expressly provided herein, all financial statements to be delivered pursuant to this Agreement shall be prepared in accordance with GAAP as in effect from time to time and all terms of an accounting or financial nature shall be construed and interpreted in accordance with GAAP, as in effect on the date hereof.  If at any time any change in GAAP or Tax Change (as defined below) would affect the computation of any financial ratio, standard or term set forth in any Loan Document, and the Borrower or the Required Lenders shall so request, the Administrative Agent and the Borrower shall negotiate in good faith to amend such ratio, standard or term to preserve the original intent thereof in light of such change in GAAP or Tax Change (subject to approval by the Required Lenders and the Borrower); provided that, until so amended, such ratio or requirement shall continue to be computed in accordance with GAAP immediately prior to such change therein or, in the case of a Tax Change, as if the Applicable Tax Laws immediately prior to such change therein continued to apply, and the Borrower shall provide to the Administrative

 

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Agent and the Lenders within five days after delivery of each certificate or financial report required hereunder that is affected thereby a written statement of a Financial Officer of Holdings setting forth in reasonable detail the differences (including any differences that would affect any calculations relating to the Financial Covenant as set forth in Section 6.08) that would have resulted if such financial statements had been prepared giving effect to such change; provided, further that, to the extent any such change would have a negative impact on the Borrower with respect to any ratio, financial calculation, financial reporting items or requirement computation, the Borrower may (in its sole discretion) elect to compute or report such ratio, financial calculation, financial reporting item or requirement in accordance with GAAP and/or the Applicable Tax Laws, as the case may be, as changed and accordingly, if such an election is made, the Borrower shall not be required to deliver the written statement described in the immediately preceding proviso with respect thereto.  Notwithstanding anything to the contrary, for all purposes under this Agreement and the other Loan Documents, including negative covenants, financials covenants and component definitions, GAAP will be deemed to treat operating leases and Capital Leases in a manner consistent with their current treatment under GAAP as in effect on the Closing Date, notwithstanding any modifications or interpretive changes thereto that may occur thereafter.  “Tax Change” means any change in the Code or any other applicable Requirement of Law that would have the effect of changing the amount of Taxes due and payable by Holdings and its Restricted Subsidiaries for any taxable period, as compared to the amount of Taxes that would have been due and payable by Holdings and its Restricted Subsidiaries for such taxable period under the Code or any other Requirements of Law as in effect immediately prior to such change; provided for avoidance of doubt, that the calculation of a change in Taxes due and payable shall take into account all changes to the Code or any other Requirements of Law. Notwithstanding any other provision contained herein, (i) all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159 or FASB ASC 825 (or any other financial accounting standard having a similar result or effect) to value any Indebtedness or other liabilities of Holdings or any of its Restricted Subsidiaries at “fair value,” as defined therein and (ii) the financial ratios and related definitions set forth in the Loan Documents shall be computed to exclude the application of Financial Accounting Standards No. 133, 150 or 123(R) or any other financial accounting standard having a similar result or effect (to the extent that the pronouncements in Financial Accounting Standards No. 123(R) result in recording an equity award as a liability on a consolidated balance sheet of Holdings and its Restricted Subsidiaries in the circumstance where, but for the application of the pronouncements, such award would have been classified as equity).

 

Notwithstanding anything to the contrary herein, all financial ratios and tests (including the First Lien Leverage Ratio, the Senior Secured Leverage Ratio, the Total Leverage Ratio, the Consolidated Interest Coverage Ratio and the amount of Consolidated Total Assets and Consolidated EBITDA) contained in this Agreement other than for purposes of calculating Excess Cash Flow that are calculated with respect to any Test Period during which any Subject Transaction occurs shall be calculated with respect to such Test Period and such Subject Transaction on a Pro Forma Basis.  Further, if since the beginning of any such Test Period and on or prior to the date of any required calculation of any financial ratio or test (x) any Subject Transaction shall have occurred or (y) any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into Holdings or any of its

 

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Restricted Subsidiaries since the beginning of such Test Period shall have consummated any Subject Transaction, then, in each case, any applicable financial ratio or test shall be calculated on a Pro Forma Basis for such Test Period as if such Subject Transaction had occurred at the beginning of the applicable Test Period (it being understood, for the avoidance of doubt, that solely for purposes of calculating quarterly compliance with Section 6.08, the date of the required calculation shall be the last day of the Test Period, and no Subject Transaction occurring thereafter shall be taken into account).

 

Other than as provided in Section 1.06, for purposes of determining the permissibility of any action, change, transaction or event that by the terms of the Loan Documents requires a calculation of any financial ratio or test (including the First Lien Leverage Ratio, the Senior Secured Leverage Ratio, the Total Leverage Ratio, the Consolidated Interest Coverage Ratio and the amount of Consolidated EBITDA and Consolidated Total Assets), (x) such financial ratio or test shall be calculated at the time such action is taken, such change is made, such transaction is consummated or such event occurs, as the case may be, and no Default or Event of Default shall be deemed to have occurred solely as a result of a change in such financial ratio or test occurring after the time such action is taken, such change is made, such transaction is consummated or such event occurs, as the case may be and (y) such financial ratio or test shall be calculated (on a Pro Forma Basis if applicable) using the most recent financial statements which have been delivered by the Credit Parties in accordance with Section 5.01(a) or 5.01(b) hereof or, at the option of the Borrower, such other unaudited financial statements provided to the Administrative Agent and reasonably sufficient for determining such compliance.

 

Notwithstanding anything to the contrary herein, to the extent compliance with a financial ratio or test is calculated prior to the date financial statements are first delivered under Section 5.01(a) or (b), such calculation shall use the latest financial statements delivered pursuant to Section 3.04(a).

 

Notwithstanding anything to the contrary herein, the defined terms “First Lien Leverage Ratio”, “Senior Secured Leverage Ratio”, “Total Leverage Ratio”, “Consolidated Interest Coverage Ratio”, “Consolidated Total Assets” and “Consolidated EBITDA” when used in this Agreement or any other Loan Document shall be deemed to refer to such ratio or amount with respect to the Group unless otherwise expressly set forth herein or therein.

 

Section 1.05                             Resolution of Drafting Ambiguities.  Each party hereto acknowledges and agrees that it was represented by counsel in connection with the execution and delivery of the Loan Documents to which it is a party, that it and its counsel reviewed and participated in the preparation and negotiation hereof and thereof and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation hereof or thereof.

 

Section 1.06                             Limited Condition Transaction.  Notwithstanding anything to the contrary herein, for purposes of (i) measuring the relevant ratios (including the First Lien Leverage Ratio (including, without limitation, for purposes of determining pro forma compliance with the Financial Covenant as a condition to effecting any such transaction), the Senior Secured Leverage Ratio, the Total Net Leverage Ratio and the Interest Coverage Ratio) and baskets (including baskets measured as a percentage of Consolidated EBITDA or Consolidated Total

 

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Assets) with respect to the incurrence of any Indebtedness (including any Incremental Facilities and Permitted Incremental Equivalent Debt but excluding Revolving Loans (provided that, for the avoidance of doubt, the term “Revolving Loans” shall not, for purposes of this sentence, include loans made pursuant to any Additional Revolving Commitment) or Liens or the making of any Permitted Acquisitions or other similar Investments, Dividends, Restricted Debt Payments, Asset Sales or other sales or dispositions of assets or fundamental changes or the designation of any Restricted Subsidiaries or Unrestricted Subsidiaries, or (ii) determining compliance with representations and warranties or the occurrence of any Default or Event of Default, in the case of clauses (i) and (ii), in connection with a Limited Condition Transaction, if the Borrower has made an LCT Election with respect to such Limited Condition Transaction, the date of determination of whether any such action is permitted hereunder (including, in the case of calculating Consolidated EBITDA, the reference date for determining which Test Period shall be the most recently ended Test Period for purposes of making such calculation) shall be deemed to be the date the definitive agreements for (or in the case of an LCT Transaction that involves some other manner of establishing a binding obligation under local law, such other binding obligations to consummate) such Limited Condition Transaction are entered into (the “LCT Test Date”), and if, after giving pro forma effect to such Limited Condition Transaction and the other transactions to be entered into in connection therewith as if they had occurred (with respect to income statement items) at the beginning of, or (with respect to balance sheet items) on the last day of, the most recent Test Period ending prior to the LCT Test Date, the Group Members could have taken such action on the relevant LCT Test Date in compliance with such ratio, basket, representation and warranty, or Event of Default “blocker” such ratio, basket, or representation and warranty or Event of Default “blocker” shall be deemed to have been complied with (and no Default or Event of Default shall be deemed to have arisen thereafter with respect to such Limited Condition Transaction from any such failure to comply with such ratio, basket, or representation and warranty).  For the avoidance of doubt, if the Borrower has made an LCT Election and any of the ratios, baskets, Default or Event of Default “blockers” or representations and warranties for which compliance was determined or tested as of the LCT Test Date would thereafter have failed to have been satisfied as a result of fluctuations in any such ratio or basket, including due to fluctuations in Consolidated EBITDA, Unrestricted Cash, Consolidated Total Funded Indebtedness or Consolidated Total Assets or otherwise, at or prior to the consummation of the relevant transaction or action, such baskets, ratios or representations and warranties will not be deemed to have failed to have been satisfied as a result of such fluctuations or otherwise.  If the Borrower has made an LCT Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio or basket on or following the relevant LCT Test Date and prior to the earlier of (i) the date on which such Limited Condition Transaction is consummated or (ii) the date that the definitive agreement for (or in the case of an LCT Transaction that involves some other manner of establishing a binding obligation under local law, such other binding obligations to consummate) such Limited Condition Transaction is terminated or expires, or the date for redemption, repurchase, defeasance, satisfaction and discharge or repayment specified in an irrevocable notice for such Limited Condition Transaction expires or passes, in each case without consummation of such Limited Condition Transaction, any such ratio (other than the Financial Covenant under Section 6.08) or basket shall be calculated on a Pro Forma Basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) have been consummated.

 

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Notwithstanding the foregoing provisions of this paragraph or any other provision of this Agreement, any unfunded Commitments outstanding at any time in respect of any individual Incremental Facility pursuant to Section 2.20 established to finance an LCT Transaction may be terminated only by the lenders holding more than 50% of the aggregate amount of the Commitments in respect of such Incremental Facility (or by the Administrative Agent acting at the request of such Lenders), and not, for the avoidance of doubt, automatically or by the Required Lenders or any other Lenders (or by the Administrative Agent acting at the request of the Required Lenders or any other Lenders).

 

Section 1.07                             Times of Day.  Unless otherwise specified, all references herein to times of day shall be references to New York City time.

 

Section 1.08                             Deliveries.  Notwithstanding anything herein to the contrary, whenever any document, agreement or other item is required by any Loan Document to be delivered or completed on a day that is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day.

 

Section 1.09                             Schedules and Exhibits.  All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference.

 

Section 1.10                             Currency Generally.  For purposes of determining compliance with Section 6.01, 6.02, 6.03, 6.04, 6.05, 6.06, 6.07 or 6.09, with respect to any Indebtedness, Liens, Investments, liquidations, dissolutions, mergers, consolidations, Asset Sales or other dispositions, Dividends, affiliate transactions or Restricted Debt Payments in a currency other than Dollars, no Default or Event of Default shall be deemed to have occurred solely as a result of changes in rates of currency exchange occurring after the time Holdings or one of its Restricted Subsidiaries shall (or, solely in connection with a Limited Condition Transaction, shall enter into a contractual obligation to) incur, enter into, make or acquire such Indebtedness, Liens, Investments, liquidations, dissolutions, mergers, consolidations, Asset Sales or other dispositions, Dividends, affiliate transactions or Restricted Debt Payments (so long as, at the time of incurring, entering into, making or acquiring (or, solely in connection with a Limited Condition Transaction, at the time of entering into the contract to incur, enter into, make or acquire) such Indebtedness, Liens, Investments, liquidations, dissolutions, mergers, consolidations, Asset Sales or other dispositions, Dividends, affiliate transactions or Restricted Debt Payments, such transaction was permitted hereunder) and once incurred, entered into, made or acquired (or, solely in connection with a Limited Condition Transaction, contractually obligated to be incurred, entered into, made or acquired), the amount of such Indebtedness, Liens, Investments, liquidations, dissolutions, mergers, consolidations, Asset Sales or other dispositions, Dividends, affiliate transactions or Restricted Debt Payments, shall be always deemed to be at the Dollar amount on such date, regardless of later changes in currency exchange rates.

 

Section 1.11                             Basket Amounts and Application of Multiple Relevant Provisions.  Notwithstanding anything to the contrary, (a) unless specifically stated otherwise herein, any dollar, number, percentage or other amount available under any carve-out, basket, exclusion or exception to any affirmative, negative or other covenant in this Agreement or the other Loan Documents may be accumulated, added, combined, aggregated or used together by any Credit

 

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Party and its Subsidiaries without limitation for any purpose not prohibited hereby, and (b) any action or event permitted by this Agreement or the other Loan Documents need not be permitted solely by reference to one provision permitting such action or event but may be permitted in part by one such provision and in part by one or more other provisions of this Agreement and the other Loan Documents.  For purposes of determining compliance with Article VI, in the event that any Lien, Investment, liquidation, dissolution, merger, consolidation, Indebtedness (whether at the time of incurrence or upon application of all or a portion of the proceeds thereof), disposition, Dividend, Affiliate transaction, contractual requirement or prepayment of Indebtedness meets the criteria of one, or more than one, of the “baskets” or categories of transactions then permitted pursuant to any clause or subsection of Article VI, such transaction (or any portion thereof) at any time shall be permitted under one or more of such “baskets” or categories at the time of such transaction or any later time from time to time, in each case, as determined by the Borrower in its sole discretion at such time and thereafter may be reclassified or divided among such baskets or categories (as if incurred at such later time) by the Borrower in any manner not expressly prohibited by this Agreement, and such Lien, Investment, liquidation, dissolution, merger, consolidation, Indebtedness, disposition, Dividend, Affiliate transaction, contractual requirement or prepayment of Indebtedness (or any portion thereof) shall be treated as having been incurred or existing pursuant to only such “basket” or category of transactions or “baskets” or categories of transactions (or any portion thereof) without giving pro forma effect to such item (or portion thereof) when calculating the amount of Liens, Investments, liquidations, dissolutions, mergers, consolidations, Indebtedness, dispositions, Dividends, Affiliate transactions, contractual requirements or prepayments of Indebtedness, as applicable, that may be incurred pursuant to any other “basket” or category of transactions.

 

For the avoidance of doubt, with respect to any amounts incurred or transactions entered into (or consummated) in reliance on a provision of the Loan Documents (including, for the avoidance of doubt, the Fixed Incremental Amount) under a specific covenant that does not require compliance with a financial ratio or test (including a test based on the Consolidated Interest Coverage Ratio, the First Lien Leverage Ratio, the Senior Secured Leverage Ratio and/or the Total Leverage Ratio) (any such amounts, the “Fixed Amounts”) substantially concurrently with any amounts incurred or transactions entered into (or consummated) in reliance on a provision of the Loan Documents (including, for the avoidance of doubt, the Incurrence Ratio) under the same covenant that requires compliance with a financial ratio or test (including a test based on the Consolidated Interest Coverage Ratio, the First Lien Leverage Ratio, the Senior Secured Leverage Ratio and/or the Total Leverage Ratio) (any such amounts, the “Incurrence-Based Amounts”), it is understood and agreed that (a) the Fixed Amounts shall be disregarded in the calculation of the financial ratio or test applicable to the Incurrence-Based Amounts, and (b) except as provided in clause (a), pro forma effect shall be given to the entire transaction.  In addition, for the avoidance of doubt, any Indebtedness (and associated Liens, subject to the applicable priorities required pursuant to the applicable Incurrence-Based Amounts), Investments, liquidations, dissolutions, mergers, consolidations, Dividends, or any prepayments of Indebtedness incurred or otherwise effected in reliance on Fixed Amounts may be reclassified at any time, as the Borrower may elect from time to time, as incurred under the applicable Incurrence-Based Amounts if the Borrower subsequently meets the applicable ratio for such Incurrence-Based Amounts on a pro forma basis.

 

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Section 1.12                             Letter of Credit Amounts.  Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any LC Request or other letter of credit application related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such times.

 

ARTICLE II
THE CREDITS

 

Section 2.01                             Commitments.  Subject to the terms and conditions herein set forth, each Lender agrees, severally and not jointly:

 

(a)                                 Term Loans.  To make a Term Loan to the Borrower on the Closing Date in the principal amount of its Term Loan Commitment; and

 

(b)                                 Revolving Loans.  To make Revolving Loans to the Borrower at any time and from time to time on or after the Closing Date until the earlier of the Revolving Maturity Date and the termination of the Revolving Commitment of such Lender in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that will not result in such Lender’s Revolving Exposure exceeding such Lender’s Revolving Commitment.

 

Amounts paid or prepaid in respect of Term Loans may not be reborrowed. Within the limits set forth in clause (b) above and subject to the terms, conditions and limitations set forth herein, the Borrower may borrow, pay or prepay and reborrow Revolving Loans.

 

Section 2.02                             Loans.

 

(a)                                 Each Loan (other than Swing Line Loans) shall be made as part of a Borrowing consisting of Loans made by the applicable Lenders ratably in accordance with their applicable Commitments; provided that the failure of any Lender to make its Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender).  Except for Loans deemed made pursuant to Section 2.18(e)(ii) and Swing Line Loans, (x) ABR Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $100,000 and not less than the Minimum Borrowing Amount or (ii) equal to the remaining available balance of the applicable Commitments and (y) the Eurodollar Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $100,000 and not less than the Minimum Borrowing Amount or (ii) equal to the remaining available balance of the applicable Commitments.

 

(b)                                 Subject to Sections 2.11 and 2.12, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request pursuant to Section 2.03.  Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such

 

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option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.  More than one Borrowing may be incurred on any day, but at no time shall there be outstanding more than, in the case of Loans maintained as Eurodollar Loans, ten Borrowings of such Loans in the aggregate.  For purposes of the foregoing, Borrowings having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Borrowings.

 

(c)                                  Except with respect to Loans deemed made pursuant to Section 2.18(e)(ii), Swing Line Loans and Loans made on the Closing Date, each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to such account as the Administrative Agent may designate not later than 1:00 p.m. New York City time, and following receipt of all funds expected to be received, the Administrative Agent shall promptly credit the amounts so received to an account as directed by the Borrower in the applicable Borrowing Request or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders.  The Swing Line Lender shall make each Swing Line Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds not later than 3:00 p.m., New York City time in the manner specified in Section 2.17(b).

 

(d)                                 Unless the Administrative Agent shall have received notice from a Lender prior to the date (in the case of any Eurodollar Borrowing), and at least two hours prior to the time (in the case of any ABR Borrowing), of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent at the time of such Borrowing in accordance with clause (c) above, and the Administrative Agent may, in its sole discretion, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If the Administrative Agent shall have so made funds available, then, to the extent that such Lender shall not have made such portion available to the Administrative Agent, each of such Lender and the Borrower severally agrees to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent at (i) in the case of the Borrower, the interest rate applicable at the time to the Loans comprising such Borrowing and (ii) in the case of such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender’s Loan as part of such Borrowing for the purposes of this Agreement, and the Borrower’s obligation to repay the Administrative Agent such corresponding amount pursuant to this Section 2.02(d) shall cease.

 

(e)                                  Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Revolving Maturity Date or the Term Loan Maturity Date, as applicable.

 

Section 2.03                             Borrowing Procedure.  To request a Revolving Borrowing or Term Loan Borrowing, the Borrower shall deliver, by hand delivery, facsimile or email, a duly

 

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completed and executed Borrowing Request to the Administrative Agent (i) in the case of a Eurodollar Borrowing, not later than 2:00 p.m., New York City time (or such later time on such Business Day as may be reasonably acceptable to the Administrative Agent), three Business Days before the date of the proposed Borrowing (or, in the case of Eurodollar Borrowings that are Term Loan Borrowings to be made on the Closing Date, not later than 12:00 p.m., New York City time, one Business Day before the date of the proposed Borrowing) or (ii) in the case of an ABR Borrowing, not later than 12:00 noon., New York City time (or such later time on such Business Day as may be reasonably acceptable to the Administrative Agent), on the Business Day prior to the proposed Borrowing.  Each Borrowing Request shall be irrevocable and shall specify the following information in compliance with Section 2.02:

 

(a)                                 whether the requested Borrowing is to be a Borrowing of Revolving Loans or Term Loans;

 

(b)                                 the aggregate amount of such Borrowing;

 

(c)                                  the date of such Borrowing, which shall be a Business Day;

 

(d)                                 whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

 

(e)                                  in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”;

 

(f)                                   the location and number of the account to which funds are to be disbursed; and

 

(g)                                  with respect to each Credit Extension, that the conditions set forth in Section 4.02(b) and Section 4.02(c) will be satisfied or waived as of the date the requested Borrowing is made.

 

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be a Eurodollar Borrowing with an Interest Period of one month’s duration.  If the Borrower requests a Eurodollar Borrowing but fails to specify an Interest Period, the Borrower will be deemed to have specified an Interest Period of one month’s duration.  Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

 

Section 2.04                             Evidence of Debt; Repayment of Loans.

 

(a)                                 Promise to Repay.  The Borrower unconditionally promises to pay to the Administrative Agent (i) for the account of each Term Loan Lender, the principal amount of each Term Loan of such Term Loan Lender as provided in Section 2.09, (ii) for the account of each Revolving Lender, the then unpaid principal amount of each Revolving Loan of such Revolving Lender on the Revolving Maturity Date, and (iii) for the account of the Swing Line

 

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Lender, the then unpaid principal amount of each Swing Line Loan on the earlier of the Revolving Maturity Date and the date ten Business Days after such Swing Line Loan is made.

 

(b)                                 Lender and Administrative Agent Records.  Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.  The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type and Class thereof and the Interest Period applicable thereto; (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder; and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.  The entries made in the accounts maintained pursuant to this paragraph shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrower to repay the Loans in accordance with their terms.  In the event of any conflict between the records maintained by any Lender and the records of the Administrative Agent in respect of such matters, the records of the Administrative Agent shall control in the absence of manifest error.

 

(c)                                  Promissory Notes.  Any Lender by written notice to the Borrower (with a copy to the Administrative Agent) may request that Loans of any Class made by it be evidenced by a promissory note.  In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to such Lender or its registered assigns in the form of Exhibit H-1, H-2 or H-3, as the case may be.  Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 10.04) be represented by one or more promissory notes in such form payable to the payee named therein or its registered assigns.

 

Section 2.05                             Fees.

 

(a)                                 Commitment Fee.  The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender (subject to Section 2.19, in the case of a Defaulting Lender) a commitment fee (a “Commitment Fee”) equal to the applicable percentage set forth in the definition of “Applicable Margin” per annum on the actual daily unused amount of the Revolving Commitment of such Revolving Lender during the period from and including the Closing Date to but excluding the date on which such Revolving Commitment terminates.  Accrued Commitment Fees shall be payable in arrears (A) on the last Business Day of each March, June, September and December of each year, commencing on the first such date to occur after the Closing Date, and (B) on the date on which such Commitment terminates.  Commitment Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  For purposes of computing Commitment Fees with respect to Revolving Commitments, a Revolving Commitment of a Revolving Lender shall be deemed to be used to the extent of the outstanding Revolving Loans and LC Exposure of such Revolving Lender; provided that for the purpose of calculations and payments pursuant to this Section 2.05, the Revolving Commitment of each Defaulting Lender shall be deemed equal to $0.

 

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(b)                                 Administrative Agent Fees.  The Borrower agrees to pay to the Administrative Agent, for its own account, the administrative fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent (the “Administrative Agent Fee”).

 

(c)                                  LC Participation Fees.  The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a participation fee (“LC Participation Fee”), with respect to its participations in Letters of Credit, which shall accrue at a rate equal to the Applicable Margin from time to time for LC Participation Fees on the actual daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to Reimbursement Obligations) during the period from and including the Closing Date to but excluding the later of the date on which such Lender’s Revolving Commitment terminates and the date on which such Lender ceases to have any LC Exposure. Accrued LC Participation Fees shall be payable in arrears (i) on the last Business Day of each March, June, September and December of each year, commencing on the first such date to occur after the Closing Date, and (ii) on the date on which the Revolving Commitments terminate (or, if later, when the Lenders’ obligations (in their capacities as such) in respect of all Letters of Credit have been terminated).  Any such fees accruing after the date on which the Revolving Commitments terminate shall be payable promptly on written demand.  All LC Participation Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.12.

 

(d)                                 Fronting Fees.  The Borrower agrees to pay to the Administrative Agent on behalf of the applicable Issuing Bank a fronting fee (“Fronting Fee”), which shall accrue at 0.125% on the actual daily amount of the LC Exposure (excluding any portion thereof attributable to Reimbursement Obligations) during the period from and including the Closing Date to but excluding the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any LC Exposure, as well as such Issuing Bank’s reasonable customary fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Accrued Fronting Fees shall be payable in arrears (i) on the last Business Day of each March, June, September and December of each year, commencing on the first such date to occur after the Closing Date, and (ii) on the date on which the Revolving Commitments terminate (or, if later, when all Letters of Credit of such Issuing Bank have been terminated).  Any such fees accruing after the date on which the Revolving Commitments terminate shall be payable promptly on written demand.  Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within ten Business Days after written demand therefor.  All Fronting Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.12.

 

(e)                                  Fee Letters.  Without duplication of any other fees set forth in this Section 2.05, the Borrower agrees to pay the fees set forth in the Fee Letters at the times and in the manner set forth therein.

 

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(f)                                   All Fees shall be paid on the dates due, in Dollars in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the applicable Lenders.  Once paid when due and payable, none of the Fees shall be refundable under any circumstances.

 

Section 2.06                             Interest on Loans.

 

(a)                                 ABR Loans.  Subject to the provisions of Section 2.06(c), the Loans comprising each ABR Borrowing, including each Swing Line Loan, shall bear interest at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin in effect from time to time.

 

(b)                                 Eurodollar Loans.  Subject to the provisions of Section 2.06(c), the Loans comprising each Eurodollar Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin in effect from time to time.

 

(c)                                  Default Rate.  Notwithstanding the foregoing, upon the occurrence and during the existence of an Event of Default under Sections 8.01(a), (b), (g) or (h), the overdue Obligations shall bear interest, at a per annum rate equal to (i) in the case of principal on any Loan, 2.00% plus the rate otherwise applicable to such Loan as provided in Section 2.06(a) and Section 2.06(b) or (ii) in the case of any other such Obligations, 2.00% plus the rate applicable to ABR Loans as provided in Section 2.06(a) (in either case, the “Default Rate”).

 

(d)                                 Interest Payment Dates.  Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan; provided that (i) additional interest accrued pursuant to Section 2.06(c) shall be payable on written demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Loan without a permanent reduction in Revolving Commitments or Swing Line Commitments), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

 

(e)                                  Interest Calculation.  All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Base Rate in clause (a) of the definition of “Alternate Base Rate” shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent in accordance with the provisions of this Agreement and such determination shall be deemed presumptively correct absent manifest error.

 

Section 2.07                             Termination and Reduction of Commitments.

 

(a)                                 Termination of Commitments.  The Term Loan Commitments shall automatically terminate at 5:00 p.m., New York City time (or such later time as may be reasonably determined by the Administrative Agent), on the Closing Date.  The Revolving

 

 

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Commitments, the Swing Line Commitments and the LC Commitment shall automatically terminate on the Revolving Maturity Date.

 

(b)                                 Optional Terminations and Reductions.  At its option, the Borrower may at any time terminate, or from time to time, without premium or penalty (except as provided in Section 2.13 with respect to any concurrent prepayment of Revolving Loans), permanently reduce, the Commitments of any Class; provided that (i) each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $100,000 and not less than $250,000 and (ii) the Revolving Commitments shall not be terminated or reduced if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.10, the aggregate amount of Revolving Exposures would exceed the aggregate amount of Revolving Commitments.

 

(c)                                  Borrower Notice.  The Borrower shall notify the Administrative Agent in writing in substantially the form attached as Exhibit C-2, of any election to terminate or reduce the Commitments under Section 2.07(b) by 12:00 p.m. New York City time at least one Business Day (or, in the case of a prepayment of Eurodollar Loans, three Business Days) (or in each case such shorter period as the Administrative Agent may agree in its sole discretion) prior to the effective date of such termination or reduction, specifying such election and the effective date thereof.  Promptly following receipt of any such notice, the Administrative Agent shall advise the applicable Lenders of the contents thereof.  Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of any other credit facilities or the closing of any securities offering, or the occurrence of any other event specified therein, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.  With respect to the effectiveness of any such other credit facilities or the closing of any such securities offering, the Borrower may extend the date of termination at any time with the consent of the Administrative Agent (which consent shall not be unreasonably withheld or delayed).  Any termination or reduction of the Commitments of any Class shall be permanent.  Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class.

 

Section 2.08                             Interest Elections.

 

(a)                                 Generally.  Each Revolving Borrowing and Term Loan Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request.  Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.08.  The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.  This Section 2.08 shall not apply to Swing Line Borrowings, which may not be converted or continued.

 

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(b)                                 Interest Election Notice.  To make an election pursuant to this Section, the Borrower shall deliver, by hand delivery, facsimile or email, a duly completed and executed Interest Election Request to the Administrative Agent not later than the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Revolving Borrowing or Term Loan Borrowing of the Type resulting from such election to be made on the effective date of such election. Each Interest Election Request shall be irrevocable.  Each Interest Election Request shall specify the following information in compliance with Section 2.02:

 

(i)                                     the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, or if outstanding Borrowings are being combined, allocation to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below, as applicable, shall be specified for each resulting Borrowing);

 

(ii)                                  the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

 

(iii)                               whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

 

(iv)                              if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period.”

 

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

 

Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

 

(c)                                  Automatic Conversion.  If an Interest Election Request with respect to a Eurodollar Borrowing is not timely delivered prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid or prepaid as provided herein, at the end of such Interest Period such Borrowing shall be continued as a Eurodollar Borrowing with an Interest Period of one month’s duration.  Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing, the Administrative Agent or the Required Lenders may require, by notice to the Borrower, that (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing, and (ii) unless repaid or prepaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

 

Section 2.09                             Amortization of Term Loan Borrowings. The Borrower shall pay to the Administrative Agent, for the ratable account of the Term Loan Lenders, on the last Business Day of each March, June, September and December, commencing with the last Business Day of September 2018 (each such date, a “Term Loan Repayment Date”), an amount equal to one quarter of one percent (0.25%) of the original principal amount of such

 

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Term Loans made on the Closing Date, as adjusted from time to time pursuant to Section 2.10(h), as reduced by the principal amount of Loans contributed or assigned to Holdings or any of its Restricted Subsidiaries pursuant to Section 10.04(b)(vi) or (viii), and as adjusted in connection with the making of any Incremental Term Loans pursuant to Section 2.20 hereof, together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment.  To the extent not previously paid, all Term Loans made on the Closing Date shall be due and payable by the Borrower on the Term Loan Maturity Date.

 

Section 2.10                             Optional and Mandatory Prepayments of Loans.

 

(a)                                 Optional Prepayments.  The Borrower shall have the right at any time and from time to time to prepay Revolving Loans and Term Loans, without premium or penalty (except as and to the extent provided in Section 2.10(j) or Section 2.13), subject to the requirements of this Section 2.10; provided that (i) each prepayment of Eurodollar Loans shall be in an aggregate principal amount that is an integral multiple of $100,000 and not less than $250,000 or, if less, the entire principal amount thereof then outstanding and (ii) each prepayment of ABR Loans shall be in an aggregate principal amount that is an integral multiple of $100,000 and not less than $250,000 or, if less, the entire principal amount thereof then outstanding.

 

(b)                                 Revolving Loan Prepayments.

 

(i)                                     In the event of the termination of all of the Revolving Commitments in accordance with the terms hereof, the Borrower shall, on the date of such termination, repay or prepay all of its outstanding Revolving Borrowings and Swing Line Loans and, at the Borrower’s option, (x) cash collateralize all outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(i), (y) backstop all outstanding Letters of Credit with one or more back to back letters of credit in a manner reasonably acceptable to the applicable Issuing Bank or (z) roll all outstanding Letters of Credit into another credit facility to the sole satisfaction of the applicable Issuing Bank.

 

(ii)                                  In the event of any partial reduction of the Revolving Commitments in accordance with the terms hereof, then (x) at or prior to the effective date of such reduction, the Administrative Agent shall notify the Borrower and the Revolving Lenders of the sum of the Revolving Exposures after giving effect thereto and (y) if the sum of the Revolving Exposures would exceed the aggregate amount of Revolving Commitments after giving effect to such reduction, then the Borrower shall, on the date of such reduction, first, repay or prepay Swing Line Loans, second, repay or prepay Revolving Borrowings and third, at the Borrower’s option, (1) cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(i), (2) backstop outstanding Letters of Credit with one or more back to back letters of credit in a manner reasonably acceptable to the applicable Issuing Bank or (3) roll outstanding Letters of Credit into another credit facility to the sole satisfaction of the applicable Issuing Bank, in an aggregate amount sufficient to eliminate such excess.

 

(iii)                               In the event that the sum of all Lenders’ Revolving Exposures exceeds the Revolving Commitments then in effect, the Borrower shall, without notice or

 

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demand, immediately first, repay or prepay Swing Line Loans, second, repay or prepay Revolving Borrowings, and third, at the Borrower’s option, (1) cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(i), (2) backstop outstanding Letters of Credit with one or more back to back letters of credit in a manner reasonably acceptable to the applicable Issuing Bank or (3) roll outstanding Letters of Credit into another credit facility to the sole satisfaction of the applicable Issuing Bank, in an aggregate amount sufficient to eliminate such excess.

 

(iv)                              In the event that at any time the aggregate LC Exposure exceeds the LC Sublimit then in effect, the Borrower shall, without notice or demand, immediately, at the Borrower’s option, (1) cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(i), (2) backstop outstanding Letters of Credit with one or more back to back letters of credit in a manner reasonably acceptable to the applicable Issuing Bank or (3) roll outstanding Letters of Credit into another credit facility to the sole satisfaction of the applicable Issuing Bank, in an aggregate amount sufficient to eliminate such excess.

 

(c)                                  Asset Sales.  Not later than ten Business Days following the receipt of any Net Cash Proceeds of any Asset Sale by any Group Member (other than any issuance or sale of Equity Interests to or from Holdings, the Borrower or a Subsidiary Guarantor), the Borrower shall apply an aggregate amount equal to the Applicable Net Cash Proceeds Percentage of such Net Cash Proceeds to make prepayments in accordance with Section 2.10(h) and Section 2.10(i); provided that:

 

(i)                                     no such prepayment shall be required under this clause (c) (A) with respect to any disposition of property which constitutes a Casualty Event or (B) to the extent the Net Cash Proceeds of any Asset Sales or series of related Asset Sales do not result in more than $2,500,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $3,350,000) per Asset Sale or series of related Asset Sales or an aggregate amount of Net Cash Proceeds of more than $5,000,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $6,800,000) in any twelve month period (the “Asset Sale Threshold” and the Net Cash Proceeds in excess of the Asset Sale Threshold, the “Excess Net Cash Proceeds”; and such Net Cash Proceeds not subject to prepayment on account of the Applicable Net Cash Proceeds Percentage being less than 100%, the “Retained Asset Sale Proceeds”);

 

(ii)                                  such proceeds with respect to any such Asset Sale shall not be required to be so applied on such date to the extent that the Borrower shall have notified the Administrative Agent on or prior to such date stating that such Excess Net Cash Proceeds are expected to be reinvested in assets used or useful in the business of any Group Member (including pursuant to a Permitted Acquisition, Investment or Capital Expenditure) or to be contractually committed to be so reinvested, within 18 months (or within 24 months following receipt thereof if a contractual commitment to reinvest is entered into within 18 months following receipt thereof) following the date of such Asset Sale; and

 

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(iii)                               if all or any portion of such Excess Net Cash Proceeds that are subject of clause (ii) immediately above is neither reinvested nor contractually committed to be so reinvested within such 18 month period (and actually reinvested within 24 months of the receipt of the Net Cash Proceeds related thereto), such unused portion shall be applied within five Business Days after the last day of such period as a mandatory prepayment as provided in this Section 2.10(c).

 

(d)                                 Debt Issuance.  Not later than one Business Day following the receipt of any Net Cash Proceeds of any Debt Issuance by any Group Member (or concurrently with the receipt thereof in the case of a Debt Issuance pursuant to Section 2.22), the Borrower shall make prepayments in accordance with Section 2.10(h) and (i) in an aggregate principal amount equal to 100% of such Net Cash Proceeds.

 

(e)                                  Casualty Events. Not later than ten Business Days following the receipt of any Net Cash Proceeds from a Casualty Event by any Group Member, the Borrower shall apply an amount equal to the Applicable Net Cash Proceeds Percentage of such Net Cash Proceeds to make prepayments in accordance with Section 2.10(h) and (i); provided that

 

(i)                                     such Net Cash Proceeds shall not be required to be so applied on such date to the extent that (A) such Net Cash Proceeds shall be less than $2,500,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $3,350,000) per Casualty Event or an aggregate amount of Net Cash Proceeds are less than $5,000,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $6,800,000) in any twelve month period (the “Casualty Event Threshold”), or (B) in the event that such Net Cash Proceeds exceed the Casualty Event Threshold, the Borrower shall have notified the Administrative Agent on or prior to such date stating that such proceeds in excess of the Casualty Event Threshold are expected to be (x) used to repair, replace or restore any Property in respect of which such Net Cash Proceeds were paid or to reinvest in other fixed or Capital Assets or assets that are otherwise used or useful in the business of the Group Members (including pursuant to a Permitted Acquisition, Investment or Capital Expenditure), or (y) contractually committed to be so reinvested, in each case, no later than 18 months (or within 24 months following receipt thereof if such contractual commitment to reinvest has been entered into within 18 months following receipt thereof) following the date of receipt of such proceeds; and

 

(ii)                                  if all or any portion of such Net Cash Proceeds is contractually committed within such 18 month period to be so reinvested within such 24 month period but is not actually reinvested within 24 months of the receipt of the Net Cash Proceeds related thereto, such unused portion shall be applied within ten Business Days after the last day of such period as a mandatory prepayment as provided in this Section 2.10(e).

 

(f)                                   Excess Cash Flow.  No later than ten Business Days after the date on which the financial statements with respect to each fiscal year of Holdings, commencing with the first full fiscal year ending after the Closing Date, in which an Excess Cash Flow Period occurs are required to be delivered pursuant to Section 5.01(a) (each such date, an “ECF Payment Date”), the Borrower shall, if and to the extent Excess Cash Flow for such Excess Cash Flow

 

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Period exceeds $2,500,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $3,350,000), make prepayments of Term Loans in accordance with Section 2.10(h) and (i) in an aggregate amount equal to (A) the Applicable ECF Percentage of the amount equal to (x) Excess Cash Flow for the Excess Cash Flow Period then ended (for the avoidance of doubt, including the dollar floor referenced above) minus (y) $2,500,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $3,350,000) minus (B) at the option of the Borrower, the aggregate principal amount of (x) any Term Loans, Incremental Term Loans, Permitted Incremental Equivalent Debt, Senior Secured Indebtedness, Junior Secured Indebtedness, Revolving Loans or Incremental Revolving Loans, in each case secured on a pari passu basis with the Obligations or on a junior basis to the Secured Obligations (but not on a junior basis to any such Indebtedness that is itself secured on a junior basis to the Secured Obligations) (or, in each case, any Credit Agreement Refinancing Indebtedness or Permitted Refinancing in respect thereof or Permitted Debt Exchange Notes issued in exchange therefor, in each case, to the extent secured on secured on a pari passu basis with the Obligations or on a junior basis to the Secured Obligations (but not on a junior basis to any such Indebtedness that is itself secured on a junior basis to the Secured Obligations)), in each case prepaid pursuant to Section 2.10(a), Section 2.16(b)(B) or Section 10.02(f)(i) or pursuant to the corresponding provisions of the documentation governing any such Permitted Incremental Equivalent Debt, Senior Secured Indebtedness, Junior Secured Indebtedness, Credit Agreement Refinancing Indebtedness in respect thereof or Permitted Debt Exchange Notes (in the case of any prepayment of Revolving Loans and/or Incremental Revolving Loans, to the extent accompanied by a corresponding permanent reduction in the Revolving Commitment), during the applicable Excess Cash Flow Period (or, at the option of the Borrower and without duplication, after such Excess Cash Flow Period and prior to such subsequent ECF Payment Date) and (y) the amount actually paid in cash pursuant to any assignment made in accordance with Section 10.04(b)(viii) of this Agreement (to the extent such assignment was offered to all Lenders of the applicable Class) or the corresponding provisions of the documentation governing any Permitted Incremental Equivalent Debt, Incremental Facility, Senior Secured Indebtedness or Junior Secured Indebtedness, in each case secured on a pari passu basis with the Obligations or on a junior basis to the Secured Obligations (but not on a junior basis to any such Indebtedness that is itself secured on a junior basis to the Secured Obligations) (or, in each case, any Credit Agreement Refinancing Indebtedness or Permitted Refinancing or Permitted Debt Exchange Notes offered in exchange therefor, in each case, to the extent secured on a pari passu basis with Obligations or on a junior basis to the Secured Obligations (but not on a junior basis to any such Indebtedness that is itself secured on a junior basis to the Secured Obligations)) (in each case to the extent such assignment was offered to all lenders or holders of the applicable class thereof) during the applicable Excess Cash Flow Period (or, at the option of the Borrower, and without duplication, after such Excess Cash Flow Period and prior to such subsequent ECF Payment Date) (and the First Lien Leverage Ratio shall be recalculated for purposes of determining the Applicable ECF Percentage to give pro forma effect to all such voluntary prepayments), and in the case of all such prepayments or buybacks, to the extent that such prepayments or buybacks were financed with sources other than the proceeds of long-term Indebtedness (other than revolving Indebtedness to the extent intended to be repaid from operating cash flow) of Holdings or its Restricted Subsidiaries (such payment, the “ECF Payment Amount”).

 

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(g)                                  Notwithstanding the foregoing, mandatory prepayments made pursuant to clauses (c), (e) and (f) above by or with respect to Foreign Subsidiaries shall be limited to the extent that the Borrower reasonably determines that such prepayment or the obligation to make such prepayment could reasonably be expected to result in adverse tax consequences to Holdings or its Restricted Subsidiaries or to any direct or indirect parent of Holdings on account of its direct or indirect ownership of Holdings and its Restricted Subsidiaries that are not de minimis (including the imposition of any withholding tax) related to the repatriation of funds or could reasonably be expected to be prohibited, restricted or delayed by applicable law.  All prepayments referred to in clauses (c), (e) and (f) above are subject to permissibility under (in the case of any such payments made by or with respect to Foreign Subsidiaries) local law (including without limitation, financial assistance, corporate benefit, thin capitalization, capital maintenance, foreign exchange controls and similar legal principles, restrictions on upstreaming of cash intra-group, and the fiduciary and statutory duties of the directors of the relevant Restricted Subsidiaries), under any applicable Organizational Documents (including as a result of minority ownership, but other than with respect to any immaterial restrictions therein), and under any other material agreements to which Holdings or any of its Subsidiaries is party (so long as any such reasonably expected prohibition is not created in contemplation of such mandatory prepayment requirement).  Further, with respect to mandatory prepayments made pursuant to clauses (c), (e) and (f) above by or with respect to Foreign Subsidiaries there will be no requirement to make any prepayment where by doing so Holdings and its Restricted Subsidiaries or to any direct or indirect parent of Holdings on account of its direct or indirect ownership of Holdings and its Restricted Subsidiaries could reasonably be expected to suffer adverse tax consequences that are not de minimis (including the imposition of any withholding tax) as a result of upstreaming cash to make such prepayments (including the imposition of withholding taxes).  The non-application of any such prepayment amounts as a result of the foregoing provisions will not constitute a Default or an Event of Default, and such amounts shall be available for working capital purposes of Holdings and the applicable Restricted Subsidiaries as long as not required to be prepaid in accordance with the following provisions.  The Borrower will undertake to use commercially reasonable efforts for a period of no greater than one year to overcome or eliminate any such restriction and/or minimize any such costs of prepayment and/or use the other cash resources of the Borrower and its Restricted Subsidiaries (subject to the considerations above and as determined in the Borrower’s reasonable business judgment) to make the relevant payment.  If at any time within one year of a mandatory prepayment pursuant to clauses (c), (e) or (f) being forgiven due to such restrictions, such restrictions are removed, any relevant proceeds will at the end of the then current interest period be applied in prepayment in accordance with Section 2.10(h).  Notwithstanding the foregoing, any prepayments made after application of the above provision shall be net of any costs, expenses or taxes incurred by Holdings and its Restricted Subsidiaries or any of its Affiliates (or direct or indirect equityholders) and arising as a result of compliance with the preceding sentence, and Holdings and its Restricted Subsidiaries shall be permitted to make, directly or indirectly, a dividend or distribution to its Affiliates or direct or indirect equityholders in an amount sufficient to cover such tax liability, costs or expenses.

 

(h)                                 Application of Prepayments.  Prior to any optional or mandatory prepayment hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to Section 2.10(i), subject to the provisions of this Section 2.10(h).  Any prepayments pursuant to Section 2.10(c), (d), (e)

 

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and (f) shall be applied pro rata amongst each Tranche of outstanding Term Loans and, within each Tranche, first, to accrued interest and fees with respect to Term Loans being prepaid and second, to reduce remaining scheduled payments required under Section 2.09 (or any equivalent provision applicable to any Tranche of Term Loans extended hereunder after the Closing Date) as directed by the Borrower (or, in the case of no direction, in direct order of maturity).  Any prepayment of Term Loans pursuant to Section 2.10(a) shall be applied as directed by the Borrower (or, in the case of no direction, in direct order of maturity).  After application of mandatory prepayments of Term Loans described above in this Section 2.10(h) and to the extent there are mandatory prepayment amounts remaining after such application, such amounts shall be applied as directed by the Borrower.

 

Amounts to be applied pursuant to Section 2.10(h) to the prepayment of Loans shall be applied, first to reduce outstanding ABR Loans, if any.  Any amounts remaining after each such application shall be applied to prepay Eurodollar Loans, if any.  Notwithstanding the foregoing, if the amount of any prepayment of Loans required under this Section 2.10 shall be in excess of the amount of the ABR Loans at the time outstanding (an “Excess Amount”), only the portion of the amount of such prepayment as is equal to the amount of such outstanding ABR Loans shall be immediately prepaid and, at the election of the Borrower, the Excess Amount shall be either (A) deposited in an escrow account and applied to the prepayment of Eurodollar Loans on the last day of the then next-expiring Interest Period for Eurodollar Loans; provided that (i) interest in respect of such Excess Amount shall continue to accrue thereon at the rate provided hereunder for the Loans which such Excess Amount is intended to repay until such Excess Amount shall have been used in full to repay such Loans and (ii) at any time while an Event of Default has occurred and is continuing, the Administrative Agent may, and upon written direction from the Required Lenders shall, apply any or all proceeds then on deposit to the payment of such Loans in an amount equal to such Excess Amount or (B) prepaid immediately, together with any amounts owing to the Lenders under Section 2.13.

 

Notwithstanding anything herein to the contrary, with respect to any prepayment under Section 2.10(c), (e) or (f), the Borrower may use a portion of the Net Cash Proceeds to prepay or repurchase Permitted Incremental Equivalent Debt, Permitted Pari Passu Refinancing Debt and any other senior Indebtedness in each case secured by the Collateral on a pari passu basis with the Liens securing the Obligations (the “Applicable Other Indebtedness”) to the extent required pursuant to the terms of the documentation governing such Applicable Other Indebtedness, in which case, the amount of the prepayment required to be offered with respect to such Net Cash Proceeds pursuant to Section 2.10(c), (e) or (f) shall be deemed to be the amount equal to the product of (x) the amount of such Net Cash Proceeds multiplied by (y) a fraction, the numerator of which is the outstanding principal amount of Term Loans required to be prepaid pursuant to Section 2.10(c), (e) or (f) and the denominator of which is the sum of the outstanding principal amount of such Applicable Other Indebtedness and the outstanding principal amount of Term Loans required to be prepaid pursuant to Section 2.10(c), (e) or (f).

 

(i)                                     Notice of Prepayment.  The Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swing Line Loan, the Swing Line Lender) by written notice in substantially the form attached as Exhibit C-2 of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 1:00 p.m., New York City time, three Business Days before the date of prepayment (or such later time as may be agreed by the

 

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Administrative Agent in its sole discretion), (ii) in the case of prepayment of an ABR Borrowing, not later than 1:00 p.m., New York City time, on the date of prepayment (or such later time as may be agreed by the Administrative Agent in its sole discretion), and (iii) in the case of prepayment of Swing Line Loans, not later than 1:00 p.m., New York City time, on the date of prepayment (or such later time as may be agreed upon by the Administrative Agent in its sole discretion).  Each such notice shall be irrevocable; provided that a notice of an optional prepayment pursuant to Section 2.10(a) delivered by the Borrower may state that such notice is conditioned upon the effectiveness of any such other credit facilities or the closing of any such securities offering, or the occurrence of any other event specified therein, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.  With respect to the effectiveness of any such other credit facilities or the closing of any such securities offering, the Borrower may extend the date of the optional prepayment pursuant to Section 2.10(a) at any time with the consent of the Administrative Agent (which consent shall not be unreasonably withheld or delayed).  Each such notice shall specify the Borrowing to be repaid, the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment.  Promptly following receipt of any such notice (other than a notice relating solely to Swing Line Loans), the Administrative Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of a Credit Extension of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment.  Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing and otherwise in accordance with this Section 2.10.  Prepayments shall be accompanied by accrued interest to the extent required by Section 2.06.  Notwithstanding the foregoing, each Lender may reject all or a portion of its pro rata share of any mandatory prepayment (such declined amounts, the “Declined Proceeds”) of Term Loans required to be made pursuant to clauses (c), (d) (other than mandatory prepayments with the proceeds of Credit Agreement Refinancing Indebtedness), (e) and (f) of this Section 2.10 by providing written notice (each, a “Rejection Notice”) to the Administrative Agent and the Borrower no later than 5:00 p.m. one Business Day prior to such prepayment.  Each Rejection Notice from a given Lender shall specify the principal amount of the mandatory prepayment of Term Loans to be rejected by such Lender.  If a Lender fails to deliver a Rejection Notice to the Administrative Agent within the time frame specified above or such Rejection Notice fails to specify the principal amount of the Term Loans to be rejected, any such failure will be deemed an acceptance of the total amount of such mandatory repayment of Term Loans.  Any Declined Proceeds shall be applied as directed by the Borrower (any such proceeds that are not applied by the Borrower to prepay other Indebtedness shall be referred to herein as “Retained Declined Proceeds”).

 

(j)                                    Loan Call Protection. At the time of the effectiveness of any Repricing Event that is consummated on or prior to the date that is six months after the Closing Date, the primary purpose of which is to lower the Effective Yield on the initial Term Loans, the Borrower agrees to pay on the date of effectiveness of such Repricing Event to the Administrative Agent, for the ratable account of each applicable Term Loan Lender, 1.00% of the portion of the principal amount of the initial Term Loans held by such Term Loan Lender at the time of such Repricing Event that is affected by such Repricing Event in the manner set forth in the definition of Repricing Event.

 

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Section 2.11                             Alternate Rate of Interest.  If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

 

(a)                                 the Administrative Agent determines in good faith and in its reasonable discretion (which determination shall be deemed presumptively correct absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate for such Interest Period;

 

(b)                                 the Administrative Agent determines in good faith and in its reasonable discretion or is advised in writing by the Required Lenders (which determination shall be deemed presumptively correct absent manifest error) that Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Loan; or

 

(c)                                  the Administrative Agent determines in good faith and in its reasonable discretion or is advised in writing by the Required Lenders that the Adjusted LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;

 

then the Administrative Agent shall give written notice thereof to the Borrower and the Lenders as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist (which notice shall be delivered by the Administrative Agent promptly after such situation ceases to exist), (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and the obligation of the Lenders to make or maintain Eurodollar Loans shall be suspended (to the extent of the affected Eurodollar Loans or Interest Periods), and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing; provided that the Borrower may revoke any such Borrowing Request (without penalty) prior to such Borrowing upon written notice to the Administrative Agent

 

Section 2.12                             Yield Protection.

 

(a)                                 Increased Costs Generally.  If any Change in Law shall:

 

(i)                                     impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in, by any Lender (except any reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank;

 

(ii)                                  subject the Administrative Agent, any Lender or the Issuing Bank to any Tax of any kind whatsoever (except for Indemnified Taxes indemnified under Section 2.15 and any Excluded Tax) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, or change the basis of taxation of payments to such Administrative Agent or Lender or the Issuing Bank in respect thereof; or

 

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(iii)                               impose on any Lender or the Issuing Bank or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to such Lender of making, converting or maintaining any Eurodollar Loan or any other Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender, the Issuing Bank or such Lender’s or the Issuing Bank’s holding company, if any, of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by the Administrative Agent, such Lender or the Issuing Bank hereunder (whether of principal, interest or any other amount), then, upon written request of the Administrative Agent, such Lender or the Issuing Bank, as applicable, the Borrower will pay to the Administrative Agent, such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate the Administrative Agent, such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

 

(b)                                 Capital Requirements.  If any Lender or the Issuing Bank determines (in good faith, in its reasonable discretion) that any Change in Law affecting such Lender or the Issuing Bank or any lending office of such Lender or such Lender’s or the Issuing Bank’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Swing Line Loans held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company, if any, would have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company, if any, with respect to capital adequacy or liquidity requirements), then from time to time the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company, if any, for any such reduction suffered.

 

(c)                                  Certificates for Reimbursement.  A certificate of the Administrative Agent, a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate the Administrative Agent, such Lender or the Issuing Bank or its holding company, as the case may be, as specified in clause (a) or (b) of this Section 2.12, and setting forth in reasonable detail the calculation of the amount owed and the basis for the claim shall be delivered to the Borrower and shall be deemed presumptively correct absent manifest error.  The Borrower shall pay the Administrative Agent, such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within ten Business Days after receipt thereof.

 

(d)                                 Delay in Requests.  Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section 2.12 shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided that the

 

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Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section 2.12 for any increased costs incurred or reductions suffered more than 180 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions pursuant to the certificate to be delivered in clause (c) above and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180 day period referred to above shall be extended to include the period of retroactive effect thereof).

 

Section 2.13                             Funding Losses.  Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

 

(a)                                 any continuation, conversion, payment or prepayment of any Eurodollar Loan on a day other than the last day of the Interest Period for such Loan; or

 

(b)                                 any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan (other than an ABR Loan) on the date or in the amount notified by the Borrower including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained.

 

For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 2.13, each Lender shall be deemed to have funded each Eurodollar Loan made by it at the LIBO Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Loan was in fact so funded.

 

Section 2.14                             Payments Generally; Pro Rata Treatment; Sharing of Setoffs.

 

(a)                                 Payments Generally.  The Borrower shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal, interest, fees or Reimbursement Obligations, or of amounts payable under Sections 2.12, 2.13, 2.15 or 10.03, or otherwise) on or before the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 2:00 p.m., New York City time), on the date when due, in immediately available funds, free and clear of, and without condition or deduction for, recoupment or setoff. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon.  All such payments shall be made to the Administrative Agent at its Principal Office except payments to be made directly to the Issuing Bank or Swing Line Lender as expressly provided herein and except that payments pursuant to Sections 2.12, 2.13, 2.15 and 10.03 shall be made directly to the persons entitled thereto and payments pursuant to other Loan Documents shall be made to the persons specified therein.  The Administrative Agent shall distribute any such payments received by it for the account of any other person to the appropriate recipient promptly following receipt thereof.  If any payment under any Loan Document shall be due on a day that is not a Business Day, unless specified otherwise, the date for payment shall be extended to the next succeeding

 

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Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.  All payments under each Loan Document shall be made in Dollars.  For the avoidance of doubt, notwithstanding any other provision of any Loan Document to the contrary, no payment received directly or indirectly from any Credit Party that is not a Qualified ECP Guarantor shall be applied directly or indirectly by the Administrative Agent or otherwise to the payment of any Excluded Swap Obligations.

 

(b)                                 Pro Rata Treatment.

 

(i)                                     Other than as permitted by Section 2.20, Section 2.21, Section 2.22, Section 2.23, Section 2.16(b), Section 10.02(f) and Section 10.04, and subject to the express provisions of this Agreement which require, or permit, differing payments to be made to non-Defaulting Lenders as opposed to Defaulting Lenders, each payment by the Borrower of interest in respect of the Loans shall be applied to the amounts of such obligations owing to the Lenders pro rata according to the respective amounts then due and owing to the Lenders.

 

(ii)                                  Other than as permitted by Section 2.20, Section 2.21, Section 2.22, Section 2.23, Section 2.16(b), Section 10.02(f) and Section 10.04, and subject to the express provisions of this Agreement which require, or permit, differing payments to be made to non-Defaulting Lenders as opposed to Defaulting Lenders, (A) each payment by the Borrower on account of principal of the Term Loans shall be allocated among the Term Loan Lenders pro rata based on the principal amount of the Term Loans held by the Term Loan Lenders; (B) each payment by the Borrower on account of principal of the Revolving Borrowings shall be made pro rata according to the respective outstanding principal amounts of the Revolving Loans then held by the Revolving Lenders; and (C) each permanent reduction in Revolving Commitments shall be pro rata according to the respective Revolving Commitments then held by the Revolving Lenders.

 

(c)                                  Insufficient Funds.  If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, Reimbursement Obligations, interest and fees then due hereunder, such funds shall be applied (i) first, toward payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, toward payment of principal and Reimbursement Obligations then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and Reimbursement Obligations then due to such parties. It is understood that the foregoing does not apply to any adequate protection payments under any federal, state or foreign bankruptcy, insolvency, receivership or similar proceeding, and that the Administrative Agent may, subject to any applicable federal, state or foreign bankruptcy, insolvency, receivership or similar orders, distribute any adequate protection payments it receives on behalf of the Lenders to the Lenders in its sole discretion (i.e., whether to pay the earliest accrued interest, all accrued interest on a pro rata basis or otherwise).

 

(d)                                 Sharing of Setoff.  Subject to the terms of any Intercreditor Agreement, if any Lender (and/or the Issuing Bank, which shall be deemed a “Lender” for purposes of this Section 2.14(d)) shall, by exercising any right of setoff or counterclaim or otherwise, obtain

 

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payment in respect of any principal of or interest on any of its Loans or other Obligations resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other Obligations greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that:

 

(i)                                     if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

 

(ii)                                  the provisions of this paragraph shall not be construed to apply to any payment (x) made by the Borrower pursuant to and in accordance with the express terms of this Agreement or (y) obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant).

 

Each Credit Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable Requirements of Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Credit Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Credit Party in the amount of such participation.  If under applicable bankruptcy, insolvency or any similar law any Secured Party receives a secured claim in lieu of a setoff or counterclaim to which this Section 2.14(d) applies, such Secured Party shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights to which the Secured Party is entitled under this Section 2.14(d) to share in the benefits of the recovery of such secured claim.

 

(e)                                  Borrower Default.  Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

 

(f)                                   Obligations of Lenders Several.  The obligations of the Lenders hereunder to make Loans, to fund participations in Letters of Credit and Swing Line Loans and to make payments pursuant to Section 10.03(c) are several and not joint.  The failure of any Lender to

 

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make any Loan, to fund any such participation or to make any payment under Section 10.03(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loans, to purchase its participation or to make its payment under Section 10.03(c).

 

Section 2.15                             Taxes.

 

(a)                                 Payments Free of Taxes.  Any and all payments by or on account of any obligation of the Credit Parties hereunder or under any other Loan Document shall be made free and clear of and without reduction, deduction or withholding for any Taxes (“Tax Withholdings”) except as required by any applicable Requirements of Law; provided that if any Taxes are required by any applicable Requirements of Law to be withheld or deducted in respect of any such payments by any applicable withholding agent (as determined in the good faith discretion of an applicable withholding agent), then (i) in the case of Indemnified Taxes, the sum payable by the relevant Credit Party shall be increased as necessary so that after all such Tax Withholdings have been made (including deductions or withholdings applicable to additional sums payable under this Section 2.15), each Recipient receives an amount equal to the sum it would have received had no such Tax Withholdings been made (including such Tax Withholdings applicable to additional sums payable under this Section 2.15) (such additional sums being the “Additional Amount”), (ii) the applicable withholding agent shall make such Tax Withholdings, and (iii) the applicable withholding agent shall timely pay the full amount of the Tax Withholdings to the relevant Governmental Authority.

 

(b)                                 Payment of Other Taxes by the Borrower.  Without limiting the provisions of clause (a) above, the Credit Parties shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable Requirements of Law, or at the option of the Administrative Agent timely reimburse it for the payment of any Other Taxes.

 

(c)                                  Indemnification by the Borrower.  The Credit Parties shall indemnify and hold harmless (on a joint and several basis) each Recipient, within ten days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.15) payable or paid by such Recipient or required to be withheld and deducted from a payment to such Recipient, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower by a Recipient (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Recipient, shall be conclusive absent manifest error.

 

(d)                                 Evidence of Payments.  As soon as practicable after any payment of Taxes by any Credit Party pursuant to this Section 2.15 to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the Tax Return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

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(e)                                  Status of Lenders.

 

(i)                                     Each Recipient shall deliver to the Borrower and to the Administrative Agent, whenever reasonably requested by the Borrower or the Administrative Agent, such properly completed and duly executed documentation prescribed by applicable Requirements of Law and such other reasonably requested information as will permit the Borrower or the Administrative Agent, as the case may be, (x) to determine whether or not any payments made under any Loan Document are subject to Tax Withholdings or information reporting requirements, (y) to determine, if applicable, the required rate of Tax Withholdings, and (z) to establish such Recipient’s entitlement to any available exemption from, or reduction in the rate of, Tax Withholdings, in respect of any payments to be made to such Recipient by any Credit Party pursuant to any Loan Document or otherwise establish such Recipient’s status for withholding Tax purposes in an applicable jurisdiction.  Notwithstanding anything to the contrary in the preceding sentence, the completion, execution and submission of such documentation and information (other than such documentation set forth in Section 2.15(e)(ii)(A)(1)-(4), Section 2.15(e)(ii)(B) and Section 2.15(e)(ii)(C) below) shall not be required if in the Recipient’s reasonable judgment such completion, execution or submission would subject such Recipient to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Recipient.

 

(ii)                                  Without limiting the generality of the foregoing:

 

(A)                               each Foreign Lender shall deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Recipient under this Agreement (and from time to time thereafter upon the request of the Borrower or the Administrative Agent) whichever of the following is applicable:

 

(1)                                 properly completed and duly executed copies of IRS Form W-8BEN or W-8BEN-E (or any successor form) claiming eligibility for benefits of an income tax treaty to which the United States is a party,

 

(2)                                 properly completed and duly executed copies of IRS Form W-8ECI (or any successor form),

 

(3)                                 in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit K-1 and (y) properly completed and duly executed copies of IRS Service Form W-8BEN or W-8BEN-E (or any successor form),

 

(4)                                 to the extent a Foreign Lender is not the beneficial owner (for example, where the Foreign Lender is a partnership or a participating Lender granting a participation), properly completed and duly executed copies of IRS Form W-8IMY, accompanied by a Form W-8ECI, W-8BEN, W-8BEN-E, a certificate substantially in the form of

 

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Exhibit K-2 or Exhibit K-3, Form W-9, and/or other certification documents from each beneficial owner, as applicable (provided that if the Foreign Lender is a partnership for U.S. federal income tax purposes and one or more direct or indirect partners are claiming the portfolio interest exemption, the certificate substantially in the form of Exhibit K-4 may be provided by such Foreign Lender on behalf of such direct or indirect partners), or

 

(5)                                 any other form prescribed by applicable Requirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable Requirements of Law to permit the Borrower and the Administrative Agent to determine any withholding or deduction required to be made;

 

(B)                               each Recipient that is not a Foreign Lender shall deliver to the Borrower and the Administrative Agent two properly completed and duly executed copies of IRS Form W-9 (or any successor or other applicable form) certifying that such Recipient is exempt from United States federal backup withholding;

 

(C)                               if a payment made to a Recipient under any Loan Document would be subject to United States federal withholding tax imposed by FATCA if such Recipient were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Recipient shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by applicable Requirements of Law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable Requirements of Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA, to determine whether such Recipient has complied with such Recipient’s obligations under FATCA or to determine the amount (if any) to deduct and withhold from such payment. Solely for purposes of this clause (C), “FATCA” shall include any amendments made to FATCA after the date of this Agreement;

 

(D)                               notwithstanding any other provision of this Section 2.15(e), a Recipient shall not be required to deliver any documentation or information that such Recipient is not legally eligible to deliver; and

 

(E)                                each such Recipient shall, from time to time after the initial delivery by such Recipient of any form or certificate, whenever a lapse in time or change in such Recipient’s circumstances renders such form or certificate (including any specific form or certificate required in this Section 2.15(e)) so delivered obsolete, expired or inaccurate in any material respect, promptly

 

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(i) update such form or certificate or (ii) notify the Borrower and the Administrative Agent in writing of its legal ineligibility to do so.

 

(f)                                   Treatment of Certain Refunds.  If the Administrative Agent or a Lender determines, in its sole discretion exercised in good faith, that it has received a refund of any Indemnified Taxes as to which it has been indemnified by the Credit Parties or on account of which the Credit Parties have paid Additional Amounts pursuant to this Section 2.15, it shall pay to the Credit Parties an amount equal to such refund (but only to the extent of indemnity payments made, or Additional Amounts paid, by the Credit Parties under this Section with respect to the Indemnified Taxes giving rise to such refund), net of any Taxes thereon and of all out-of-pocket expenses of the Administrative Agent or such Lender, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Credit Parties, upon the request of the Administrative Agent or such Lender, agrees to repay any such amount paid over to the Credit Parties to the Administrative Agent or such Lender (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this clause (f), in no event will the Administrative Agent or a Lender be required to pay any amount to the Credit Parties pursuant to this clause (f), the payment of which would place the Administrative Agent or a Lender, as applicable, in a less favorable net after-Tax position than it would have been in if the Tax subject to indemnification (or the payment of Additional Amounts) and giving rise to such refund had not been deducted, withheld or imposed and the indemnification payments (or Additional Amounts) with respect to such Tax had never been paid.  Nothing herein contained shall interfere with the right of a Recipient to arrange its tax affairs in whatever manner it thinks fit nor obligate any Recipient to claim any tax refund or to make available its Tax Returns or disclose any information relating to its tax affairs or any computations in respect thereof or require any Recipient to do anything that would prejudice its ability to benefit from any other refunds, credits, reliefs, remissions or repayments to which it may be entitled.  Unless required by Requirements of Law, at no time shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender, or have any obligation to pay to any Lender, any refund of Taxes withheld or deducted from funds paid for the account of such Lender, as the case may be.

 

(g)                                  Survival.  The obligations of the Credit Parties under this Section 2.15 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.  For purposes of this Section 2.15, any payments by the Administrative Agent to a Lender of any amounts received by the Administrative Agent from any Credit Party on behalf of such Lender shall be treated as a payment from such Credit Party to such Lender.

 

(h)                                 For the avoidance of doubt, for the purposes of this Section 2.15, the term “Lender” shall include the Swing Line Lender and the Issuing Bank.

 

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Section 2.16                             Mitigation Obligations; Replacement of Lenders.

 

(a)                                 Designation of a Different Lending Office.  If any Lender requests compensation under Section 2.12 or requires the Borrower to pay any Additional Amount to any Lender or any Governmental Authority (other than with respect to Other Taxes) for the account of any Lender pursuant to Section 2.15, or if any event gives rise to the operation of Section 2.26, then, in each such case, such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates or to file any certificate or document reasonably required by the Borrower, if, in the reasonable judgment of such Lender, such designation or assignment or filing (i) would eliminate or reduce amounts payable pursuant to Section 2.12 or 2.15, or avoid the consequences of the event giving rise to the operation of Section 2.26, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.  A certificate setting forth in reasonable detail the calculation of such costs and expenses submitted by such Lender to the Borrower shall be deemed presumptively correct absent manifest error.

 

(b)                                 Replacement of Lenders.  If (v) any Lender or the Administrative Agent requests compensation under Section 2.12, (w) any Lender or the Administrative Agent is affected in the manner described in Section 2.26 and as a result thereof any of the actions described in such Section is required to be taken, (x) the Borrower is required to pay any Additional Amount to any Lender or the Administrative Agent or any Governmental Authority (other than with respect to Other Taxes) for the account of any Lender or the Administrative Agent pursuant to Section 2.15, and such Lender or the Administrative Agent declined or is unable to designate a different lending office in accordance with Section 2.16(a), (y) any Lender or the Administrative Agent is a Defaulting Lender or (z) the Borrower exercises its replacement rights under Section 10.02(f), then the Borrower may, at its sole expense and effort and option, upon notice to such Lender and the Administrative Agent, (A) require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.04), all of its interests, rights (other than its existing rights to payments pursuant to Section 2.12 or 2.15 arising with respect to any period prior to such assignment) and obligations under this Agreement and the other Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), (B) pay off in full all of the Loans and any other Obligations owed to such Lender, (C) if applicable, terminate such Lender’s Commitments or (D) if applicable, upon at least ten (10) days prior notice, require the Administrative Agent to resign in accordance with Section 9.06; provided that:

 

(i)                                     unless waived by the Administrative Agent, the Borrower shall have paid to the Administrative Agent the processing and recordation fee specified in Section 10.04(b), if any,

 

(ii)                                  such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts (including any amount pursuant to Section 2.10(j) if a Repricing Event has occurred) payable to it hereunder and under the other Loan Documents (including any amounts under Sections 2.12 and 2.15, assuming

 

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for this purpose (in the case of a Lender being replaced as the result of a claim or payment under Sections 2.12 or 2.15) that the Loans of such Lender were being prepaid) from the assignee or the Borrower;

 

(iii)                               in the case of any such assignment resulting from a claim for compensation under Section 2.12 or payments required to be made pursuant to Section 2.15, such assignment will result in a reduction in such compensation or payments thereafter; and

 

(iv)                              such assignment does not conflict with applicable Requirements of Law.

 

Each Lender agrees that, if the Borrower elects to replace such Lender in accordance with this Section 2.16(b), it shall promptly execute and deliver to the Administrative Agent an Assignment and Assumption to evidence the assignment and shall deliver to the Administrative Agent any Note (if Notes have been issued in respect of such Lender’s Loans) subject to such Assignment and Assumption; provided that the failure of any such Lender to execute an Assignment and Assumption shall not render such assignment invalid and such assignment shall be in full force and effect and shall be recorded in the Register.

 

Section 2.17                             Swing Line Loans.

 

(a)                                 Swing Line Commitment.  Subject to the terms and conditions set forth herein, the Swing Line Lender, in reliance upon the agreements of the other Revolving Lenders set forth in this Section 2.17, agrees to make Swing Line Loans to the Borrower from time to time on any Business Day during the Revolving Availability Period, in an aggregate principal amount at any time outstanding that will not result in (and upon each such Borrowing of Swing Line Loans, the Borrower shall be deemed to represent and warrant that such Borrowing will not result in) (i) the aggregate principal amount of outstanding Swing Line Loans exceeding the Swing Line Commitment, or (ii) the sum of the total Revolving Exposures exceeding the total Revolving Commitments; provided that the Swing Line Lender shall not be required to make a Swing Line Loan to refinance, in whole or in part, an outstanding Swing Line Loan.  Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, repay and reborrow Swing Line Loans.  Immediately upon the making of a Swing Line Loan, each Revolving Lender shall be deemed to, and hereby does, irrevocably and unconditionally agree to purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Revolving Lender’s Pro Rata Percentage times the amount of such Swing Line Loan.

 

(b)                                 Swing Line Loans.  To request a Swing Line Loan, the Borrower shall deliver, by hand delivery or facsimile transmission (or transmit by other electronic transmission if arrangements for doing so have been approved in writing by the Administrative Agent), a duly completed and executed Borrowing Request to the Administrative Agent and the Swing Line Lender, not later than 12:00 p.m., New York City time (or such later time as the Administrative Agent may agree in its sole discretion), on the Business Day of a proposed Swing Line Loan.  Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and the amount of the requested Swing Line Loan.  Each Swing Line Loan shall

 

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be an ABR Loan.  The Swing Line Lender shall make each Swing Line Loan available to the Borrower by means of a credit to the general deposit account of the Borrower with the Swing Line Lender, if any, or otherwise to an account as directed by the Borrower in the applicable Borrowing Request (or, in the case of a Swing Line Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.18(e), by remittance to the Issuing Bank).  The Swing Line Lender shall fund each Swing Line Loan by 3:00 p.m., New York City time on the requested date of such Swing Line Loan.  The Borrower shall not request a Swing Line Loan if at the time of or immediately after giving effect to the Credit Extension contemplated by such request a Default or Event of Default has occurred and is continuing or would immediately thereafter result therefrom.  Swing Line Loans shall be made in minimum amounts of $50,000 and integral multiples of $50,000 above such amount.

 

(c)                                  Prepayment.  The Borrower shall have the right at any time and from time to time to repay, without prepayment or penalty, any Swing Line Loan, in whole or in part, upon giving written notice (or notice by electronic transmission if arrangements for doing so have been approved in writing (including via email) by the Administrative Agent) from the Borrower to the Swing Line Lender and the Administrative Agent before 1:00 p.m., New York City time, on the proposed date of repayment.

 

(d)                                 Participations.  The Swing Line Lender may at any time in its sole discretion, by written notice given to the Administrative Agent not later than 11:00 a.m., New York City time, on the next succeeding Business Day following such notice, require the Revolving Lenders to acquire participations on such Business Day in all or a portion of the Swing Line Loans then outstanding.  Such notice shall specify the aggregate amount of Swing Line Loans in which Revolving Lenders will participate.  Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Revolving Lender, specifying in such notice such Lender’s Pro Rata Percentage of such Swing Line Loan or Loans.  Each Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swing Line Lender, such Lender’s Pro Rata Percentage of such Swing Line Loan or Loans.  Each Revolving Lender acknowledges and agrees that its obligation to acquire participations in Swing Line Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or Event of Default or a reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.  Each Revolving Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.02(c) with respect to Loans made by such Lender (and Section 2.02 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Swing Line Lender the amounts so received by it from the Revolving Lenders; provided that the Revolving Lender who is the Swing Line Lender shall be deemed to have funded its Pro Rata Percentage automatically without further funding.  The Administrative Agent shall notify the Borrower of any participations in any Swing Line Loan acquired by the Revolving Lenders pursuant to this paragraph, and thereafter payments in respect of such Swing Line Loan shall be made to the Administrative Agent and not to the Swing Line Lender.  Any amounts received by the Swing Line Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swing Line Loan after receipt by the Swing Line Lender of the proceeds of a sale of participations therein shall be promptly remitted

 

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to the Administrative Agent.  Any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Revolving Lenders that shall have made their payments pursuant to this paragraph, as their interests may appear.  The purchase of participations in a Swing Line Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.

 

(e)                                  Resignation or Removal of the Swing Line Lender.  The Swing Line Lender may resign as Swing Line Lender hereunder at any time upon at least 30 days’ prior written notice to the Lenders, the Administrative Agent and the Borrower.  Following such notice of resignation from the Swing Line Lender, the Swing Line Lender may be replaced at any time by written agreement among the Borrower (with the Borrower’s agreement not to be unreasonably withheld, delayed or conditioned), the Administrative Agent and the successor Swing Line Lender.  The Administrative Agent shall notify the Lenders of any such replacement of the Swing Line Lender.  At the time any such resignation or replacement shall become effective, the Borrower shall pay all unpaid fees and interest accrued for the account of the replaced Swing Line Lender.  From and after the effective date of any such resignation or replacement, (i) the successor Swing Line Lender shall have all rights and obligations of the Swing Line Lender under this Agreement with respect to Swing Line Loans to be made by it thereafter and (ii) references herein and in the other Loan Documents to the term “Swing Line Lender” shall be deemed to refer to such successor or to any previous Swing Line Lenders, or to such successor and all previous Swing Line Lenders, as the context shall require.  After the resignation or replacement of the Swing Line Lender hereunder, the replaced Swing Line Lender shall remain a party hereto and shall continue to have all the rights and obligations of the Swing Line Lender under this Agreement with respect to Swing Line Loans made by it prior to such resignation or replacement, but shall not be required to make additional Swing Line Loans.

 

(f)                                   Payments of Principal and Interest.  Subject to Section 2.17(d), the Borrower shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Administrative Agent on behalf of the Swing Line Lender.

 

(g)                                  Provisions Related to Extended Tranches of Revolving Commitments.  If the maturity date shall have occurred in respect of any tranche of Revolving Commitments at a time when another tranche or tranches of Revolving Commitments is or are in effect with a longer maturity date, then on the earliest occurring maturity date all then outstanding Swing Line Loans shall be repaid in full on such date (and there shall be no adjustment to the participations in such Swing Line Loans as a result of the occurrence of such maturity date); provided that if on the occurrence of such earliest maturity date (after giving effect to any repayments of Swing Line Loans and Revolving Loans and any reallocation of participations as contemplated in Section 2.18(p)), there shall exist sufficient unutilized non-terminating Revolving Commitments so that the respective outstanding Swing Line Loans could be incurred pursuant to the Revolving Commitments which will remain in effect after the occurrence of such maturity date, then there shall be an automatic adjustment on such date of the participations in such Swing Line Loans and the same shall be deemed to have been incurred solely pursuant to the relevant non-terminating Revolving Commitments, and such Swing Line Loans shall not be so required to be repaid in full on such earliest maturity date.

 

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Section 2.18                             Letters of Credit.

 

(a)                                 General.  Subject to the terms and conditions set forth herein, the Borrower may request the Issuing Bank, and the Issuing Bank agrees from time to time on any Business Day during the period from the Closing Date until the date that is 30 days prior to the Letter of Credit Expiration Date, to issue Letters of Credit denominated in Dollars for the account of the Borrower or any Wholly Owned Restricted Subsidiary of the Borrower in a form reasonably acceptable to the Borrower (with the Borrower’s agreement not to be unreasonably withheld, delayed or conditioned), the Administrative Agent and the Issuing Bank, or to amend, renew or extend any Letter of Credit, at any time and from time to time prior to the Letter of Credit Expiration Date (provided that the Borrower shall be a co-applicant, and be jointly and severally liable, with respect to each Letter of Credit issued for the account of any Wholly Owned Restricted Subsidiary of Holdings) upon delivery to the relevant Issuing Bank and the Administrative Agent (at least three Business Days in advance of the requested date of issuance, amendment, renewal or extension) of an LC Request requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the requested date of issuance of such Letter of Credit (which shall be a Business Day) and, as applicable, specifying the date of amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire, whether such Letter of Credit is to be a Standby Letter of Credit or a Commercial Letter of Credit, the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit, as applicable.  The Issuing Bank shall have no obligation to issue, and the Borrower shall not request the issuance of, any Letter of Credit at any time if after giving effect to such issuance the LC Exposure would exceed the LC Sublimit or the total Revolving Exposure would exceed the total Revolving Commitments.  If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit (the “Application”); provided that in the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. Notwithstanding anything in this Section 2.18 or otherwise herein to the contrary, GS (i) shall not be obligated to issue any commercial or trade (as opposed to standby) Letter of Credit and (ii) shall not be required to have outstanding more than ten Letters of Credit.

 

(b)                                 Request for Issuance, Amendment, Renewal, Extension; Certain Conditions and Notices.  To request the issuance of a Letter of Credit or the amendment, renewal or extension of an outstanding Letter of Credit, the Borrower shall deliver by hand, or telecopier (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank), an LC Request to the Issuing Bank and the Administrative Agent not later than 11:00 a.m. New York City time on the third Business Day preceding the requested date of issuance, amendment, renewal or extension (or such later date and time as is acceptable to the Issuing Bank).

 

A request for an issuance of a Letter of Credit shall specify, in form and detail reasonably satisfactory to the Issuing Bank:

 

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(i)                                     the proposed issuance date of the requested Letter of Credit (which shall be a Business Day) and whether such Letter of Credit is to be a Standby Letter of Credit or a Commercial Letter of Credit;

 

(ii)                                  the stated or “face” amount thereof;

 

(iii)                               the expiry date thereof (which shall not be later than the close of business on the Letter of Credit Expiration Date or as otherwise extended pursuant to an LC Extension);

 

(iv)                              the name and address of the beneficiary thereof;

 

(v)                                 whether the Letter of Credit is to be issued for the Borrower’s own account, or the account of one of Holdings’ Wholly Owned Restricted Subsidiaries (provided that the Borrower shall be the applicant, and therefore jointly and severally liable, with respect to each Letter of Credit issued for the account of any of Holdings’ Wholly Owned Restricted Subsidiaries);

 

(vi)                              the documents to be presented by such beneficiary in connection with any drawing thereunder;

 

(vii)                           the full text of any certificate to be presented by such beneficiary in connection with any drawing thereunder; and

 

(viii)                        such other matters as the Issuing Bank may reasonably require.

 

A request for an amendment, renewal or extension of any outstanding Letter of Credit shall specify in form and detail reasonably satisfactory to the Issuing Bank:

 

(i)                                     the Letter of Credit to be amended, renewed or extended;

 

(ii)                                  the proposed date of amendment, renewal or extension thereof (which shall be a Business Day);

 

(iii)                               the nature of the proposed amendment, renewal or extension; and

 

(iv)                              such other matters as the Issuing Bank reasonably may require.

 

A Letter of Credit shall be issued, amended, renewed or extended only if (and, upon issuance, amendment, renewal or extension of each Letter of Credit, the Borrower shall be deemed to represent and warrant that) after giving effect to such issuance, amendment, renewal or extension, (i) the LC Exposure shall not exceed the LC Sublimit, (ii) the total Revolving Exposures shall not exceed the total Revolving Commitments and (iii) the conditions set forth in Article IV in respect of such issuance, renewal or extension shall have been satisfied, provided, however that an Issuing Bank may permit renewal of an Auto-Renewal Letter of Credit in accordance with Section 2.18(c)(ii) below. Unless the Issuing Bank shall agree otherwise, no Letter of Credit shall be in an initial amount less than $100,000, in the case of a Commercial

 

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Letter of Credit, or $100,000 (or such lesser amount as approved by the Issuing Bank), in the case of a Standby Letter of Credit.

 

Upon the issuance of any Letter of Credit or amendment, renewal, extension or modification of a Letter of Credit, the Issuing Bank shall promptly notify the Administrative Agent (and in the case of an issuance of a new Letter of Credit, or an increase or decrease in the amount available to be drawn under an existing Letter of Credit, the Administrative Agent shall promptly notify each Revolving Lender), which notice shall be accompanied by a copy of such Letter of Credit or amendment, renewal, extension or modification to a Letter of Credit (and in the case of an issuance of a new Letter of Credit, or an increase or decrease in the amount available to be drawn under an existing Letter of Credit, the notice to each Revolving Lender shall include a copy of such Letter of Credit and the amount of each such Revolving Lender’s respective participation in such Letter of Credit pursuant to Section 2.18(d)).

 

(c)                                  Expiration Date.

 

(i)                                     Each Letter of Credit shall expire at or prior to the close of business on the earlier of (x) the date which is one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after the then-current expiration date at the time of such extension) and (y) the Letter of Credit Expiration Date; provided, however, the Issuing Bank, in its sole discretion, may agree to extend such Letter of Credit beyond the Letter of Credit Expiration Date (an “LC Extension”) upon the Borrower either (i) providing the Issuing Bank funds equal to 103% of the LC Exposure with respect to such Letter of Credit for deposit in a cash collateral account which cash collateral account will be held by the Issuing Bank as a pledged cash collateral account, and the Borrower hereby grants to the Collateral Agent a security interest in all cash and credit support now or hereafter deposited to any such collateral account, and applied to reimbursement of all drawings presented under such outstanding Letter of Credit, or (ii) delivering to the Issuing Bank one or more letters of credit in favor of the Issuing Bank, issued by a bank reasonably acceptable to the Issuing Bank in its sole discretion, each in form and substance reasonably acceptable to the Issuing Bank in its sole discretion, unless the applicable Issuing Bank notifies the beneficiary thereof at least 30 days (or such longer period as may be specified in such Letter of Credit) prior to the then-applicable expiration date that such Letter of Credit will not be renewed.

 

(ii)                                  If the Borrower so requests in any LC Request for a Standby Letter of Credit, the Issuing Bank may, in its sole and absolute discretion, agree to issue a Standby Letter of Credit that has automatic renewal provisions (each, an “Auto-Renewal Letter of Credit”); provided that any such Auto-Renewal Letter of Credit must permit the Issuing Bank to prevent any such renewal at least once in each twelve month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day in each such twelve month period to be agreed upon at the time such Standby Letter of Credit is issued.  Once an Auto-Renewal Letter of Credit has been issued, unless otherwise directed by the Issuing Bank, the Borrower shall not be required to make a specific request to the Issuing Bank for any such renewal.  Once an Auto-Renewal Letter of Credit has been issued, the Revolving Lenders shall be

 

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deemed to have authorized (but may not require) the Issuing Bank to permit the renewal of such Standby Letter of Credit at any time to an expiry date not later than the earlier of (i) one year from the date of such renewal and (ii) the Letter of Credit Expiration Date, unless otherwise extended pursuant to an LC Extension; provided that the Issuing Bank shall not permit any such renewal if (x) the Issuing Bank has determined that it would have no obligation at such time to issue such Standby Letter of Credit in its renewed form under the terms hereof (by reason of the provisions of Section 2.18(m) or otherwise), or (y) it has received notice on or before the day that is seven Business Days before the date which has been agreed upon pursuant to the proviso of the first sentence of this paragraph, from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 4.02 are not then satisfied.

 

(d)                                 Participations.  By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby irrevocably grants to each Revolving Lender, and each Revolving Lender hereby acquires and is deemed to have purchased from the Issuing Bank, a participation in such Letter of Credit equal to such Revolving Lender’s Pro Rata Percentage of the aggregate amount available to be drawn under such Letter of Credit in Dollars.  In consideration and in furtherance of the foregoing (regardless of whether the conditions set forth in Section 4.02 shall have been satisfied), each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Revolving Lender’s Pro Rata Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in Section 2.18(e) (the “Unreimbursed Amount”), or of any reimbursement payment required to be refunded to the Borrower for any reason.  Each Revolving Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default, or any of the circumstances set forth in Section 2.18(f) or reduction or termination of the Commitments, or expiration, termination or cash collateralization of any Letter of Credit and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

 

(e)                                  Reimbursement.

 

(i)                                     If the Issuing Bank shall make any LC Disbursement in Dollars, the Borrower shall reimburse such LC Disbursement by paying to the Issuing Bank an amount equal to such LC Disbursement in Dollars not later than 1:00 p.m., New York City time, on the Business Day immediately following the day that the Borrower receives notice of such LC Disbursement; provided that the Borrower may, subject to the conditions to Borrowing set forth herein, request in accordance with Section 2.03 that such payment be financed with ABR Revolving Loans in an equal amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Loans.

 

(ii)                                  If the Borrower fails to make such payment when due, the Issuing Bank shall notify the Administrative Agent in writing, and the Administrative Agent shall

 

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notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Revolving Lender’s Pro Rata Percentage (based on the total aggregate amount of Revolving Commitments) thereof.  Each Revolving Lender shall pay by wire transfer of immediately available funds to the Administrative Agent not later than 12:00 p.m., New York City time, on such date (or, if such Revolving Lender shall have received such notice later than 12:00 p.m., New York City time, on any day, not later than 11:00 a.m., New York City time, on the immediately following Business Day), an amount equal to such Revolving Lender’s Pro Rata Percentage (based on the total aggregate amount of Revolving Commitments) of the unreimbursed LC Disbursement in the same manner as provided in Section 2.02(c) with respect to Revolving Loans made by such Revolving Lender, and the Administrative Agent will promptly pay to the Issuing Bank the amounts so received by it from the Revolving Lenders. Any amounts received by the Issuing Bank from the Borrower pursuant to the above paragraph prior to, concurrently with or after any Revolving Lender makes any payment pursuant to the preceding sentence will be promptly remitted by the Issuing Bank to the Administrative Agent and by the Administrative Agent to the Revolving Lenders that shall have made such payments.

 

(iii)                               If any Revolving Lender shall not have made its Pro Rata Percentage of such LC Disbursement available as provided above, each of such Revolving Lender and the Borrower severally agree to pay interest on such amount, for each day from and including the date such amount is required to be paid in accordance with the foregoing to but excluding the date such amount is paid, to the Administrative Agent for the account of the Issuing Bank at (i) in the case of the Borrower, the rate per annum set forth in clause (h) below and (ii) in the case of such Lender, at a rate determined by the Administrative Agent in accordance with banking industry rules or practices on interbank compensation.

 

(f)                                   Obligations Absolute.  The Reimbursement Obligation of the Borrower and the Revolving Lenders as provided in Section 2.18(d) and (e) shall be absolute, unconditional and irrevocable, and shall be paid and performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein or herein; (ii) any draft or other document presented under a Letter of Credit being proved to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that fails to comply with the terms of such Letter of Credit; (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.18(f), constitute a legal or equitable discharge of, or provide a right of setoff against, the obligations of the Borrower hereunder; (v) the fact that a Default shall have occurred and be continuing; or (vi) any material adverse change in the business, property, results of operations, prospects or condition, financial or otherwise, of Holdings and its Restricted Subsidiaries. None of the Agents, the Lenders, the Issuing Bank or any of their Affiliates shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or

 

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delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms, any error in translation or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable Requirements of Law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, in the absence of bad faith, gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction (that is not subject to appeal)), the Issuing Bank shall be deemed to have exercised care in each such determination.  In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its reasonable discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

 

(g)                                  Disbursement Procedures.  The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit.  The Issuing Bank shall promptly give written notice to the Administrative Agent of such demand for payment if the Issuing Bank has made or will make an LC Disbursement thereunder, and the Administrative Agent shall promptly give the Borrower written notice of such demand for payment upon receiving such notice from the Issuing Bank; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its Reimbursement Obligation to the Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement (other than with respect to the timing of such Reimbursement Obligation set forth in Section 2.18(e)).

 

(h)                                 Interim Interest.  If the Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest payable on demand, for each day from and including the date such LC Disbursement has been made to but excluding the date that the Borrower reimburses such LC Disbursement, at the Alternate Base Rate plus the Applicable Margin from the date of such LC Disbursement until the date that is three Business Days from the date of such LC Disbursement, and thereafter at the rate per annum determined pursuant to Section 2.06(c) .  Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to Section 2.18(e) to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment.

 

(i)                                     Cash Collateralization.  If (1) any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding

 

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the deposit of cash collateral pursuant to this paragraph, (2) as of the Letter of Credit Expiration Date, any LC Obligation for any reason remains outstanding (other than any LC Obligation that is (x) backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or (y) rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank) or (3) there shall exist a Defaulting Lender, the Borrower shall immediately (and in the case of clause (3), upon the reasonable request of the Administrative Agent, solely to the extent of the LC Exposure of such Defaulting Lender, and solely to the extent such LC Exposure has not been reallocated to other Lenders pursuant to Section 2.19(b)(i) or cash collateralized pursuant to Section 2.19(b)(ii)) deposit on terms and in accounts satisfactory to the Collateral Agent, in the name of the Collateral Agent and for the benefit of the Revolving Lenders, an amount in cash equal to 103% of the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence and during the continuance of any Event of Default with respect to the Borrower described in Section 8.01(g) or (h).  Funds so deposited shall be applied by the Collateral Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of outstanding Reimbursement Obligations or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy other Obligations of the Borrower under this Agreement. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the existence of an Event of Default, such amount plus any accrued interest or realized profits with respect to such amounts (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived.

 

(j)                                    Additional Issuing Banks.  The Borrower may, at any time and from time to time, designate one or more additional Revolving Lenders (subject to the consent of each such Revolving Lender in its sole discretion) reasonably acceptable to the Administrative Agent to act as an issuing bank with respect to Letters of Credit under the terms of this Agreement.  Any Revolving Lender designated as an issuing bank with respect to Letters of Credit pursuant to this clause (j) shall have all the rights and obligations of the Issuing Bank under the Loan Documents with respect to Letters of Credit issued or to be issued by it, and all references in the Loan Documents to the term “Issuing Bank” shall, with respect to such Letters of Credit, be deemed to refer to such Revolving Lender in its capacity as the Issuing Bank, as the context shall require.  If at any time there is more than one Issuing Bank hereunder, the Borrower may, in its discretion and subject to the terms and conditions set forth herein, select which Issuing Bank to request to issue any particular Letter of Credit.

 

(k)                                 Resignation or Removal of the Issuing Bank.  The Issuing Bank may resign as Issuing Bank hereunder at any time upon at least 30 days’ prior written notice to the Lenders, the Administrative Agent and the Borrower.  The Issuing Bank may be replaced at any time by the Borrower. The Borrower shall notify the Administrative Agent and then the Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank.  At the time any such resignation or replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.05(d).  From and after the effective date of any such resignation or replacement, as applicable, (i) the

 

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successor Issuing Bank shall have all of the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued by it thereafter and (ii) references herein and in the other Loan Documents to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require.  After the resignation or replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all of the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such resignation or replacement, but shall not be required to issue additional Letters of Credit.

 

(l)                                     Issuing Bank.  The Issuing Bank shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the Issuing Bank shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article IX with respect to any acts taken or omissions suffered by the Issuing Bank in connection with Letters of Credit issued by it or proposed to be issued by it and documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article IX included the Issuing Bank with respect to such acts or omissions, and (B) as additionally provided herein with respect to the Issuing Bank.  The Issuing Bank may, but shall not be obligated to, send a Letter of Credit or conduct any communication to or from the beneficiary via a Society for Worldwide Interbank Financial Telecommunication message or overnight courier, or any other commercially reasonable means of communicating with a beneficiary.

 

(m)                             Other.  The Issuing Bank shall be under no obligation to issue any Letter of Credit if:

 

(i)                              any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Issuing Bank from issuing such Letter of Credit, or any Requirement of Law applicable to the Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Issuing Bank shall prohibit, or request that the Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Bank is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date, for which the Issuing Bank is not otherwise compensated hereunder, and which the Issuing Bank in good faith deems material to it; or

 

(ii)                           the issuance of such Letter of Credit would violate one or more policies of general application of the Issuing Bank now or hereafter applicable.

 

The Issuing Bank shall be under no obligation to amend any Letter of Credit if (A) the Issuing Bank would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.  Unless otherwise expressly agreed by the Issuing Bank and the Borrower when a Letter of Credit is issued, (i)  each Standby Letter of Credit shall

 

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state that it is subject to the ISP and (ii) each Commercial Letter of Credit shall state that it is subject to the UCP.  Notwithstanding the foregoing, the Issuing Bank shall not be responsible to the Borrower for, and the Issuing Bank’s rights and remedies against the Borrower shall not be impaired by, any action or inaction of the Issuing Bank required or permitted under any law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the Requirements of Law or any order of a jurisdiction where the Issuing Bank or the beneficiary is located, the practice stated in the ISP or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade (BAFT), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.

 

(n)                                 Letters of Credit Issued for Wholly Owned Subsidiaries of Holdings.  Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Wholly Owned Restricted Subsidiary of Holdings that is a Guarantor hereunder, the Borrower and each other applicant under such Letter of Credit shall be obligated to reimburse the Issuing Bank hereunder for any and all drawings under such Letter of Credit.  The Borrower hereby acknowledges that the issuance of Letters of Credit for the account of Wholly Owned Subsidiaries of Holdings inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of any such Wholly Owned Subsidiaries of Holdings.

 

(o)                                 [Reserved].

 

(p)                                 Provisions Related to Extended Tranches of Revolving Commitments.  If the maturity date in respect of any tranche of Revolving Commitments occurs prior to the expiration of any Letter of Credit, then (i) if one or more other tranches of Revolving Commitments in respect of which the maturity date shall not have occurred are then in effect, (x) the outstanding Swing Line Loans and Revolving Loans shall be repaid pursuant to Section 2.10(b)(ii) on such maturity date to the extent and in an amount sufficient to permit the reallocation of the LC Exposure relating to the outstanding Letters of Credit contemplated by clause (y) below and (y) such Letters of Credit shall automatically be deemed to have been issued (including for purposes of the obligations of the Revolving Lenders to purchase participations therein and to make payments in respect thereof pursuant to Section 2.18(d)) under (and ratably participated in by Revolving Lenders pursuant to) the Revolving Commitments in respect of such non-terminating tranches up to an aggregate amount not to exceed the aggregate principal amount of the Revolving Commitments in respect of such non-terminating tranches at such time (it being understood that (1) the participations therein of Revolving Lenders under the maturing tranche shall be correspondingly released and (2) no partial face amount of any Letter of Credit may be so reallocated) and (ii) to the extent not reallocated pursuant to the immediately preceding clause (i), but without limiting the obligations with respect thereto, the Borrower shall provide the Issuing Bank with either (x) funds equal to 103% of the LC Exposure with respect to each such Letter of Credit for deposit in a cash collateral account which cash collateral account will be held by the Issuing Bank as a pledged cash collateral account (and the Borrower hereby grants to the Collateral Agent a security interest in all cash and credit support now or hereafter deposited to any such collateral account, and applied to reimbursement of all drafts submitted under any such Letter of Credit) or (y) one or more letters of credit, issued by a bank reasonably acceptable to the Issuing Bank in its sole discretion, for the benefit of the Issuing Bank with

 

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aggregate face amounts equal to 103% of the LC Exposure with respect to each such Letter of Credit, each in form and substance reasonably acceptable to the Issuing Bank in its sole discretion, which may be drawn by the Issuing Bank to satisfy any obligations of the Borrower in respect of each such Letter of Credit.  If, for any reason, such cash collateral or backstop letters of credit are not provided or the reallocation does not occur, the Revolving Lenders under the maturing tranche shall continue to be responsible for their participating interests in the Letters of Credit; provided that, notwithstanding anything to the contrary contained herein, upon any subsequent repayment of the Revolving Loans, the reallocation set forth in clause (i) shall automatically and concurrently occur to the extent of such repayment (it being understood that no partial amount available to be drawn under any Letter of Credit may be so reallocated).  Except to the extent of reallocations of participations pursuant to clause (i) of the second preceding sentence, the occurrence of a maturity date with respect to a given tranche of Revolving Commitments shall have no effect upon (and shall not diminish) the percentage participations of the Revolving Lenders in any Letter of Credit issued before such maturity date.  Commencing with the maturity date of any tranche of Revolving Commitments, the LC Sublimit under any tranche of Revolving Commitments that has not so then matured shall be in an amount agreed between such Revolving Lenders, the Issuing Bank and the Borrower; provided that in no event shall such sublimit be less than the sum of (x) the LC Exposure with respect to the Revolving Lenders under such extended tranche immediately prior to such maturity date and (y) the amount available to be drawn under the Letters of Credit reallocated to such tranche of Revolving Commitments pursuant to clause (i) of the second preceding sentence above (assuming Swing Line Loans and Revolving Loans are repaid in accordance with clause (i)(x)).

 

Section 2.19                             Defaulting Lenders.  Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

 

(a)                                 the Commitment Fee shall cease to accrue on the Commitment of such Lender so long as it is a Defaulting Lender (except to the extent such amount is payable to the Issuing Bank pursuant to clause (b)(v) below) and such Defaulting Lender shall not be entitled to receive any Commitment Fee pursuant to Section 2.05(a);

 

(b)                                 if any Swing Line Exposure or LC Exposure exists at the time a Lender becomes a Defaulting Lender then:

 

(i)                                     all or any part of such Defaulting Lender’s participation in Swing Line Exposure and LC Exposure shall be reallocated among the non-Defaulting Lenders in accordance with their respective Pro Rata Percentages, but only to the extent that (y) such reallocation does not cause the aggregate Revolving Exposure of any non-Defaulting Lender to exceed such non-Defaulting Lender’s Revolving Commitment and (z) to the extent requested in writing by the Administrative Agent, the Borrower shall confirm that the conditions set forth in Section 4.02 are satisfied at the time of such reallocation and if the Borrower cannot confirm such conditions have been satisfied (which shall not constitute a Default or an Event of Default) and such conditions have not otherwise been waived by the Required Revolving Lenders, then clause (ii) below shall apply;

 

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(ii)                                  if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within one Business Day following notice by the Administrative Agent, (a) prepay such Swing Line Exposure of such Defaulting Lender and (b) cash collateralize such Defaulting Lender’s LC Exposure (in each case after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.18(i) for so long as such LC Exposure is outstanding;

 

(iii)                               if any portion of such Defaulting Lender’s LC Exposure is cash collateralized pursuant to clause (ii) above, the Borrower shall not be required to pay the LC Participation Fee with respect to such portion of such Defaulting Lender’s LC Exposure so long as it is cash collateralized;

 

(iv)                              if any portion of such Defaulting Lender’s LC Exposure is reallocated to the non-Defaulting Lenders pursuant to clause (i) above, then the LC Participation Fee with respect to such portion shall be allocated among the non-Defaulting Lenders in accordance with their Pro Rata Percentages;

 

(v)                                 if any portion of such Defaulting Lender’s LC Exposure is neither cash collateralized nor reallocated pursuant to this Section 2.19(b), then, without prejudice to any rights or remedies of the Issuing Bank or any Lender hereunder, the Commitment Fee that otherwise would have been payable to such Defaulting Lender (with respect to the portion of such Defaulting Lender’s Revolving Commitment that was utilized by such LC Exposure) and the LC Participation Fee payable with respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing Bank until such LC Exposure is cash collateralized and/or reallocated;

 

(vi)                              so long as any Lender is a Defaulting Lender, the Swing Line Lender shall not be required to fund any Swing Line Loan and the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, in each case unless it is satisfied that the related exposure will be 100% covered by the Revolving Commitments of the non-Defaulting Lenders and/or cash collateralized in accordance with this Section 2.19(b), and participations in any such newly issued or increased Letter of Credit or newly made Swing Line Loan shall be allocated among non-Defaulting Lenders in accordance with their respective Pro Rata Percentages (and Defaulting Lenders shall not participate therein); and

 

(vii)                           any amount payable to such Defaulting Lender hereunder (whether on account of principal, interest, fees or otherwise and including any amount that would otherwise be payable to such Defaulting Lender pursuant to Section 2.14(d) but excluding Section 2.16(b)) may, in lieu of being distributed to such Defaulting Lender, be retained by the Administrative Agent in a segregated non-interest bearing account and, subject to any applicable Requirements of Law, be applied at such time or times as may be determined by the Administrative Agent (i) first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder, (ii) second, pro rata, to the payment of any amounts owing by such Defaulting Lender to the Issuing Bank or Swing Line Lender hereunder, (iii) third, to the funding of any Loan or the

 

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funding or cash collateralization of any participation in any Letter of Credit in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent, (iv) fourth, if so determined by the Administrative Agent and the Borrower, held in such account as cash collateral for future funding obligations of the Defaulting Lender under this Agreement, (v) fifth, pro rata, to the payment of any amounts owing to the Borrower, the Issuing Bank, the Swing Line Lender or the Lenders as a result of any judgment of a court of competent jurisdiction obtained by the Borrower, the Issuing Bank, the Swing Line Lender or any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement and (vi) sixth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if such payment is (x) a prepayment of the principal amount of any Loans or Reimbursement Obligations in respect of LC Disbursements which a Defaulting Lender has funded in respect of its participation obligations and (y) made at a time when the conditions set forth in Section 4.02 are satisfied, such payment shall be applied solely to prepay the Loans of, and Reimbursement Obligations owed to, all non-Defaulting Lenders pro rata prior to being applied to the prepayment of any Loans, or Reimbursement Obligations owed to, any Defaulting Lender.

 

(c)                                  such Defaulting Lender shall be deemed not to be a “Lender,” and the amount of such Defaulting Lender’s Revolving Commitment and Revolving Loans and/or Term Loan Commitments and Term Loans and/or Swing Line Commitments and Swing Line Loans shall be excluded, for purposes of voting, and the calculation of voting, on any matters (including the granting of any consents or waivers) with respect to any of the Loan Documents, except as otherwise set forth in Section 10.02(b).

 

(d)                                 to the extent permitted by applicable Requirements of Law, until such time as the Default Excess with respect to such Defaulting Lender shall have been reduced to zero, (A) any voluntary prepayment of the Loans pursuant to Section 2.10(a) shall, if the Borrower so directs at the time of making such voluntary prepayment, be applied to the Loans of other Lenders in accordance with Section 2.10(a) as if such Defaulting Lender had no Loans outstanding and the Revolving Exposure of such Defaulting Lender were zero, and (B) any portion of any mandatory prepayment of the Loans pursuant to Section 2.10 that would be applied to the Loans of any Defaulting Lender if such Defaulting Lender had funded all of its defaulted Revolving Loans shall, if the Borrower so directs at the time of making such mandatory prepayment, be (i) applied to the Loans of other Lenders (but not to the Loans of such Defaulting Lender) in accordance with Section 2.10 as if such Defaulting Lender had no Loans outstanding and the Revolving Exposure of such Defaulting Lender were zero or (ii) retained by the Administrative Agent in a segregated non-interest-bearing account.

 

(e)                                  Subject to Section 10.18, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a non-Defaulting Lender as a result of such non-Defaulting Lender’s increased exposure following such reallocation.

 

In the event that the Administrative Agent or the Issuing Bank, as the case may be, and the Borrower each agrees in writing (provided that the Borrower’s agreement shall not be

 

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unreasonably withheld) that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swing Line Exposure and the LC Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders (except for Swing Line Loans) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Pro Rata Percentage.  The rights and remedies against a Defaulting Lender under this Section 2.19 are in addition to other rights and remedies that the Borrower, the Administrative Agent, the Issuing Bank, and the non-Defaulting Lenders may have against such Defaulting Lender.  The operation of this Section 2.19 shall not be construed to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder.  Any failure by a Defaulting Lender to fund amounts that it was obligated to fund hereunder shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle the Borrower, at its option, to arrange for a substitute Lender to replace such Defaulting Lender pursuant to Section 2.16(b).  The arrangements permitted or required by this Section 2.19 shall be permitted under this Agreement, notwithstanding any limitation on Liens or the pro rata sharing provisions hereof or otherwise.

 

Section 2.20                             Increase in Commitments.

 

(a)                                 Borrower Request.  The Borrower may by written notice to the Administrative Agent elect to request the establishment of one or more new Term Loan Commitments under a new term facility or under the existing term facility or any increase under an existing tranche of Term Loans (each, an “Incremental Term Loan Commitment”) and/or one or more new Revolving Loan Commitments under a new revolving facility (an “Additional Revolving Commitment”) or under the then existing revolving facility (a “Revolving Commitment Increase” and together with any Additional Revolving Commitment, each an “Incremental Revolving Loan Commitment” and together with any Incremental Term Loan Commitment, the “Incremental Facilities”), in an aggregate amount not to exceed the Maximum Incremental Facilities Amount (the date of establishment of any such Incremental Facility, an “Increase Effective Date”).  Any existing Lender approached to provide all or a portion of such Incremental Term Loan Commitments or Incremental Revolving Loan Commitments may elect or decline, in its sole discretion, to provide such Incremental Term Loan Commitment or Incremental Revolving Loan Commitment, and, to the extent any such Incremental Term Loan Commitments or Incremental Revolving Loan Commitments are not provided by existing Lenders, each Lender providing such commitments shall otherwise constitute an Eligible Assignee hereunder; provided that (i) the Administrative Agent shall have consented to such Eligible Assignee providing such Incremental Term Loan Commitment or Incremental Revolving Loan Commitment, as applicable, if such consent would be required under Section 10.04 for an assignment of such type of Loans or Commitments, as applicable, to such Eligible Assignee and (ii) any Incremental Facilities to be provided by Sponsor Investors shall be subject to the terms of Section 10.04(b) as if such Incremental Facilities were being assigned to such Sponsor Investor; provided further that, for the avoidance of doubt, the Borrower shall not be required to offer the opportunity to participate in any Incremental Facility to any existing Lenders.

 

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(b)                                 Conditions.  Such Incremental Term Loan Commitments and Incremental Revolving Loan Commitments shall become effective as of such Increase Effective Date; provided that:

 

(i)                                     subject to Section 1.06, and (solely in the case of any Incremental Facility (other than any Revolving Commitment Increase) incurred in connection with a Limited Condition Transaction) unless (other than in the case of an Event of Default under Section 8.01(a), (b), (g) or (h)) waived by the lenders in respect of such Incremental Facility, no Event of Default (or, in the case of an Incremental Facility (other than a Revolving Commitment Increase) the proceeds of which will be used for a Permitted Acquisition or similar Investment, no Event of Default under Section 8.01(a), (b), (g) or (h)) shall have occurred and be continuing at the time of funding or immediately after giving effect thereto; provided that any Limited Condition Transaction remains subject to the terms of Section 1.06 hereof;

 

(ii)                                  the proceeds of the Incremental Term Loans and/or Incremental Revolving Loans may be used for working capital needs and other general corporate purposes (including Capital Expenditures, acquisitions and other Investments, working capital and/or purchase price adjustments, Dividends, prepayments of Indebtedness (including Restricted Debt Payments) and related fees and expenses) and for any other purpose not prohibited by the Loan Documents;

 

(iii)                               the Borrower shall deliver or cause to be delivered any customary amendments to the Loan Documents or other documents reasonably requested by the Administrative Agent or any Incremental Term Loan Lender or Incremental Revolving Loan Lender in connection with any such transaction;

 

(iv)                              any such Incremental Term Loans shall be in an aggregate amount of at least $5,000,000 and integral multiples of $1,000,000 above such amount (except, in each case, such minimum amount and integral multiples amount shall not apply when the Borrower uses all of the Incremental Term Loan Commitments available at such time);

 

(v)                                 any Incremental Facilities may be (A) secured on a pari passu basis with the Term Loans, (B) secured on a junior basis to the Term Loans, or (C) unsecured and, in the case of clauses (B) and (C), shall be established as a separate facility from the then existing Term Loans or Revolving Loans, as applicable; provided that any such separate facility (x) subject to the proviso contained in Section 2.20(c)(ii) does not mature (and does not require any mandatory redemptions, sinking funds or similar payments or offers to purchase (excluding customary asset sale and change of control provisions and similar provisions and, if applicable, AHYDO catch-up payments)) on or prior to the date that is 91 days after the Latest Maturity Date of, or have a shorter Weighted Average Life to Maturity than, any existing Term Loans or Revolving Loans, as applicable, and (y) to the extent secured, shall be subject to intercreditor terms reasonably agreed among the agent under such facility, the Borrower and the Administrative Agent.  No Incremental Facility shall be secured by a Lien on any assets of the Borrower or any Guarantor not constituting Collateral or incurred or guaranteed by any person other than the Borrower or the Guarantors; and

 

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(vi)                              subject (other than in the case of any Revolving Commitment Increase) to customary “SunGard” limitations (to the extent agreed to by the lenders providing the applicable Incremental Facility and to the extent the proceeds of the applicable Incremental Facility are being used to finance a Permitted Acquisition or other Investment), each of the representations and warranties made by any Credit Party set forth in Article III hereof or in any other Loan Document shall be true and correct in all material respects (except that any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) on and as of the date of such credit extension (or, if incurred in connection with a Limited Condition Transaction, the LCT Test Date) with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) as of such earlier date.

 

(c)                                  Terms of New Term Loans and Commitments.  The terms and provisions of Loans made pursuant to such Incremental Term Loan Commitments shall be subject to Section 2.20(f) and as follows:

 

(i)                                     the terms and provisions of Loans made pursuant to Incremental Term Loan Commitments (“Incremental Term Loans”) shall be, except as otherwise set forth herein (including Section 2.20(f)), on terms and pursuant to documentation to be determined by the Borrower and the lenders providing such Incremental Term Loans; provided that, to the extent such terms and documentation are not consistent with the existing Term Loans (but excluding any terms applicable only after the applicable Term Loan Maturity Date), they shall either, at the option of the Borrower, (A) reflect market terms and conditions (taken as a whole) at the time of (subject to Section 1.06) incurrence or effectiveness (as determined by the Borrower in good faith) or (B) be reasonably satisfactory to the Administrative Agent (it being understood that no consent shall be required from the Administrative Agent for any terms or conditions that are not market terms if the Lenders under the Term Loans existing on the date of incurrence of such Incremental Term Loans receive the benefit of such terms or conditions through their addition to the Loan Documents);

 

(ii)                                  the maturity date of any Incremental Term Loans shall be no earlier than the Latest Maturity Date applicable to the Term Loans and the Weighted Average Life to Maturity of such Incremental Term Loans shall be no shorter than the then remaining Weighted Average Life to Maturity of the Term Loans; provided that the limitations in this clause (ii) shall not apply to any customary bridge facility so long as the long-term debt into which such customary bridge facility is to be converted satisfies the provisions of this clause; provided further that (A) up to $70,000,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $93,800,000) of Indebtedness under Incremental Facilities, minus (B) the aggregate amount of any Permitted Incremental Equivalent Debt or Credit Agreement Refinancing Indebtedness incurred in reliance on the second proviso to

 

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clause (i) of the definition of Required Debt Terms, may be incurred without regard to the limitations set forth in this Section 2.20(c)(ii); and

 

(iii)                               any Incremental Term Loans that are pari passu in right of payment and security with the Term Loans may participate on a pro rata basis, greater than pro rata basis or less than pro rata basis in any voluntary prepayment of Term Loans hereunder and may participate on a pro rata basis or less than pro rata basis (but not on a greater than pro rata basis) in any mandatory prepayments of Term Loans hereunder.

 

(d)                                 Terms of New Revolving Loans and Commitments.  (i) Any Additional Incremental Revolving Loan Commitments shall be, except as otherwise set forth herein (including Section 2.20(f)), on terms and pursuant to documentation to be determined by the Borrower and the lenders providing such Additional Incremental Revolving Commitments; provided that, to the extent such terms and documentation are not consistent with the existing Term Loans (but excluding any terms applicable only after the applicable Revolving Maturity Date, they shall either (A) reflect (as determined by the Borrower in good faith) market terms and conditions (taken as a whole) at the time of (subject to Section 1.06) incurrence or effectiveness or (B) be reasonably satisfactory to the Administrative Agent (except, in the case of either clause (A) or (B), for covenants or other provisions applicable only to periods after the applicable Revolving Maturity Date) (except for covenants or other provisions applicable only to periods after the Revolving Maturity Date) (it being understood that no consent shall be required from the Administrative Agent for any terms or conditions if the Lenders under the Revolving Commitments existing on the date of incurrence of such Incremental Revolving Commitments receive the benefit of such terms or conditions through their addition to the Loan Documents) and (ii)(A) in the case of a Revolving Commitment Increase, (I) the maturity date of such Revolving Commitment Increase shall be the same as the Revolving Maturity Date applicable to the Revolving Commitments subject to such increase, such Revolving Commitment Increase shall require no scheduled amortization or mandatory commitment reduction prior to the final Revolving Maturity Date applicable to the Revolving Commitments subject to such increase, and the Revolving Commitment Increase shall be on the exact same terms and pursuant to the exact same documentation applicable to the Revolving Commitments subject to such increase (it being understood that, if required to consummate a Revolving Commitment Increase, the pricing, interest rate margins, rate floors and undrawn fees on the Revolving Commitments being increased may be increased for all Revolving Lenders under the Revolving Commitments being increased, and additional upfront or similar fees may be payable to the Lenders participating in the Revolving Commitment Increase without any requirement to pay such amounts to any Revolving Lenders that do not participate in such increase), and (II) each of the applicable Revolving Lenders shall be deemed to have assigned to each Lender with Incremental Revolving Loan Commitments in respect of a Revolving Incremental Increase, and each such Lender shall be deemed to have purchased from each of the applicable Revolving Lenders, at the principal amount thereof (together with accrued interest), such interests in the applicable Revolving Loans outstanding on the effective date of such increase as shall be necessary in order that, immediately after giving effect to all such assignments and purchases, such Revolving Loans will be held by existing applicable Revolving Lenders and Incremental Revolving Loan Lenders in respect of such Revolving Incremental Increase ratably in accordance with their Revolving Commitments after giving effect to the addition of such Incremental Revolving Loan Commitments to the

 

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Revolving Commitments and (B) in the case of an Additional Revolving Commitment, the maturity date of such Additional Revolving Commitment shall be no earlier than the Revolving Maturity Date and such Additional Revolving Commitment shall require no scheduled amortization or mandatory commitment reduction prior to the final Revolving Maturity Date; provided, that the Administrative Agent’s, the Issuing Bank’s, the Swing Line Lender’s and the Borrower’s consent shall be required to each Person providing any portion of an Incremental Revolving Loan Commitment to the same extent, and in the same manner, as if such Person had taken assignment of Revolving Commitments pursuant to Section 10.04. Each Incremental Revolving Loan Commitment shall be deemed for all purposes a Revolving Commitment and each Loan made thereunder (an “Incremental Revolving Loan”) shall be deemed, for all purposes, a Revolving Loan.

 

(e)                                  Joinder.  Such Incremental Term Loan Commitments and Incremental Revolving Loan Commitments shall be effected by a joinder agreement (the “Increase Joinder”) executed by the Borrower, the Administrative Agent and each lender making such Incremental Term Loan Commitment or Incremental Revolving Loan Commitment, in form and substance reasonably satisfactory to each of them.  The Increase Joinder may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents (i) as may be necessary or appropriate (which may be in the form of an amendment and restatement of this Agreement) (including with respect to pro rata payments, repayments, borrowings and commitment reductions of Revolving Commitments (and Revolving Loans thereunder) and Incremental Revolving Loan Commitments (and loans thereunder)), in the opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section 2.20 and (ii) so long as such amendments are not adverse to the Lenders, such other changes as may be necessary, as reasonably determined by the Borrower and the Administrative Agent, to maintain the fungibility of any Incremental Term Loans with any Tranche of then-outstanding Term Loans.  This Section 2.20(e) shall supersede any provisions in Section 10.02 to the contrary.

 

(f)                                   Yield.  If the initial Yield (as defined below) on any Incremental Term Loans (not including Permitted Incremental Equivalent Debt) that (a) are incurred under the Incurrence Ratio (for the avoidance of doubt, Incremental Term Loans that are initially incurred under the Fixed Incremental Amount and later reclassified pursuant to the Incremental Reclassification Provision as having been incurred under the Incurrence Ratio shall not be deemed for purposes of this sentence to have been incurred under the Incurrence Ratio on or prior to the six month anniversary of the Closing Date), (b) are secured on a pari passu basis with the Secured Obligations, (c) have an outside maturity date on the latest maturity date of the initial Term Loans, (d) are denominated in Dollars and (e) that provide for the payment of interest at a floating rate, exceeds the then applicable Yield on the Term Loans by more than 50 basis points (the amount of such excess above 50 basis points being referred to herein as the “Yield Differential”), then, solely to the extent the aggregate principal amount of all such Incremental Term Loans exceeds $70,000,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $93,800,000) solely to the extent the Required Lenders have not waived the provisions of this clause (f), the Applicable Margin then in effect for such tranche of Term Loans shall automatically be increased by the Yield Differential.  “Yield” shall mean, with respect to any credit facility, the then “effective yield” on such facility consistent with generally accepted financial practice, it

 

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being understood that (x) customary arrangement, commitment, structuring, underwriting, ticking, unused line and amendment fees paid or payable to one or more arrangers (or their Affiliates) (regardless of whether such fees are paid to or shared in whole or in part with any lender) in their respective capacities as such in connection with the applicable facility and any other fees that are not generally payable to all lenders (or their Affiliates) ratably with respect to any such facility and that are paid or payable in connection with such facility shall be excluded, (y) original issue discount and upfront fees paid or payable to the lenders thereunder shall be included (with original issue discount and upfront fees being equated to interest based on assumed four-year life to maturity (or, if less, the remaining life to maturity) without any present value discount) and (z) to the extent that the Adjusted LIBO Rate for a three month interest period on the closing date of any such Incremental Term Loan Commitment is less than the interest rate floor, if any, applicable to any such Incremental Term Loan Commitments, the amount of such difference shall be deemed added to the interest rate margins for the Loans under such Incremental Term Loan Commitment.

 

(g)                                  Equal and Ratable Benefit.  Subject to Section 2.20(b)(v), the Loans and Commitments established pursuant to this Section 2.20 shall constitute Loans and Commitments under, and shall be entitled to all the benefits afforded by, this Agreement and the other Loan Documents.  The Borrower and the other Credit Parties shall take any actions reasonably required by the Administrative Agent to ensure and/or demonstrate that the Lien and security interests granted by the Security Documents continue to be perfected under the UCC or otherwise after giving effect to the establishment of any such Class of Incremental Term Loans or Incremental Revolving Loans or any such Incremental Term Loan Commitments or Incremental Revolving Loan Commitments.

 

Section 2.21                             Extension Amendments.

 

(a)                                 The Borrower may at any time and from time to time request that all or a portion, including one or more Tranches, of the Loans (including any Extended Loans), in each case existing at the time of such request (each such Tranche of existing Loans, an “Existing Tranche” and the Loans of any such Tranche, the “Existing Loans”) be converted to extend the termination date thereof and/or the scheduled maturity date(s) of any payment of principal with respect to all or a portion of any such Existing Tranche (any such Existing Tranche or portion thereof which has been so extended, an “Extended Tranche” and the Loans of such Tranche or portion thereof, the “Extended Loans”) and to provide for other terms consistent with this Section 2.21.  In order to establish any Extended Tranche, the Borrower shall provide a notice to the Administrative Agent (who shall provide a copy of such notice to each of the Lenders of the applicable Existing Tranche) (an “Extension Request”) setting forth the proposed terms of the Extended Tranche to be established, which terms (other than as provided in clause (C) below) shall be (taken as a whole) substantially similar to, or (taken as a whole) no more favorable (as reasonably determined by the Borrower) to the Lenders providing the Loans that are being extended or replaced (in each case, other than terms applicable only to periods after the Latest Maturity Date of the Existing Loans) to those applicable to the Existing Tranche from which they are to be extended (the “Specified Existing Tranche”), except (w) the final maturity date of the Extended Tranche may be later than the final maturity date of the Specified Existing Tranche, (x)(A) the interest margins with respect to the Extended Tranche may be higher or lower than the interest margins for the Specified Existing Tranche, (B) subject to clause (3) of the following

 

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proviso, the prepayment terms may be different and/or (C) additional pricing and fees may be payable to the Lenders providing the Extended Tranche in addition to or in lieu of any increased margins contemplated by the preceding clause (A), (y) the commitment fee, if any, with respect to the Extended Tranche may be higher or lower than the commitment fee, if any, for the Specified Existing Tranche and (z) the provisions for optional and mandatory prepayments may provide for such payments to be directed first to the Specified Existing Tranche prior to being applied to the Extended Tranche, in each case to the extent provided in the applicable Extension Amendment; provided that, notwithstanding anything to the contrary in this Section 2.21 or otherwise, (1) the Extended Tranche shall not be, (y) in the case of any Extended Tranche relating to Term Loans, in an amount less than $5,000,000 and (z) in the case of any Extended Tranche relating to Revolving Loans hereunder, in an amount less than $1,000,000, (2) no Extended Tranche shall be secured by or receive the benefit of any collateral, credit support or security that does not secure or support the Existing Tranches, (3) the mandatory prepayment or the commitment reduction of any of Loans or Commitments under the Extended Tranches shall be made on a pro rata basis with all other outstanding Loans or Commitments respectively; provided that Extended Loans may, if the Extending Lenders making such Extended Loans so agree, participate on a less than pro rata basis in any mandatory prepayment or commitment reductions hereunder, (4) the final maturity of any Extended Tranche shall not be earlier than, and, if such Extended Tranche is a term facility, shall not have a Weighted Average Life to Maturity shorter than, the applicable Specified Existing Tranche, and, if such Extended Tranche is a revolving facility, shall not have any scheduled amortization or mandatory commitment reduction prior to the final maturity of the applicable Specified Existing Tranche, (5) each Lender in the Specified Existing Tranche shall be permitted to participate in the Extended Tranche in accordance with its pro rata share of the Specified Existing Tranche and (6) assignments and participations of Extended Tranches shall be governed by the same assignment and participation provisions applicable to Loans and Commitments hereunder as set forth in Section 10.04.  No Lender shall have any obligation to agree to have any of its Existing Loans or, if applicable, commitments of any Existing Tranche converted into an Extended Tranche pursuant to any Extension Request.  Any Extended Tranche shall constitute a separate Tranche of Loans (and, if applicable, commitments) from the Specified Existing Tranches, from any other Existing Tranches, and from any other Extended Tranches so established on or after such date.

 

(b)                                 The Borrower shall provide the applicable Extension Request at least five Business Days (or such shorter period as may be agreed by the Administrative Agent in its sole discretion) prior to the date on which Lenders under the applicable Existing Tranche or Existing Tranches are requested to respond.  Any Lender (an “Extending Lender”) wishing to have all or a portion of its Specified Existing Tranche converted into an Extended Tranche shall notify the Administrative Agent (an “Extension Election”) on or prior to the date specified in such Extension Request of the amount of its Specified Existing Tranche that it elects to convert into an Extended Tranche.  In the event that the aggregate amount of the Specified Existing Tranche subject to Extension Elections exceeds the amount of Extended Tranches requested pursuant to the Extension Request, the Specified Existing Tranches subject to Extension Elections shall be converted to Extended Tranches on a pro rata basis based on the amount of Specified Existing Tranches included in each such Extension Election.

 

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(c)                                  Extended Tranches shall be established pursuant to an amendment (an “Extension Amendment”) to this Agreement (which may include amendments to provisions related to maturity, interest margins, fees or prepayments and which, except to the extent expressly contemplated by the penultimate sentence of this Section 2.21(c) and notwithstanding anything to the contrary set forth in Section 10.02, shall not require the consent of any Lender other than the Extending Lenders with respect to the Extended Tranches established thereby) executed by the Credit Parties, the Administrative Agent, and the Extending Lenders.  It is understood and agreed that each Lender has consented for all purposes requiring its consent, and shall at the effective time thereof be deemed to consent to each amendment to this Agreement and the other Loan Documents authorized by this Section 2.21 and the arrangements described above in connection therewith.  This Section 2.21(c) shall supersede any provisions in Section 10.02 to the contrary.

 

(d)                                 Notwithstanding anything to the contrary contained in this Agreement, (A) on any date on which any Existing Tranche is converted to extend the related scheduled maturity date(s) in accordance with clause (a) above (an “Extension Date”), in the case of the Specified Existing Tranche of each Extending Lender, the aggregate principal amount of such Specified Existing Tranche shall be deemed reduced by an amount equal to the aggregate principal amount of such Specified Existing Tranche so converted by such Lender into an Extended Tranche or Extended Tranches on such date, and such Extended Tranche or Extended Tranches shall be established as a separate Tranche or Tranches from the Specified Existing Tranche and from any other Existing Tranches and any other Extended Tranches so established on or after such date, and (B) if, on any Extension Date, any Revolving Loans of any Extending Lender are outstanding under the applicable Specified Existing Tranches, such loans (and any related participations) shall be deemed to be allocated as Extended Loans (and related participations) and Existing Loans (and related participations) in the same proportion as such Extending Lender’s applicable Specified Existing Tranches to the applicable Extended Tranches so converted by such Lender on such date.

 

(e)                                  If, in connection with any proposed Extension Amendment, any Lender declines to consent to the applicable extension on the terms and by the deadline set forth in the applicable Extension Request (each such Lender, a “Non-Extending Lender”) then the Borrower may, on notice to the Administrative Agent and the Non-Extending Lender, (A) replace such Non-Extending Lender by causing such Lender to (and such Lender shall be obligated to) assign pursuant to Section 10.04 (with the assignment fee, if any, and any other costs and expenses to be paid by the Borrower in such instance) all of its rights and obligations under this Agreement to one or more assignees; provided that neither the Administrative Agent nor any Lender shall have any obligation to the Borrower to obtain a replacement Lender; provided, further, that the applicable assignee shall have agreed to provide Loans and/or a commitment on the terms set forth in such Extension Amendment; and provided, further, that all Obligations (other than contingent indemnity obligations, unasserted expense reimbursement obligations, and Letters of Credit that have been (i) cash collateralized in accordance with the terms of this Agreement, (ii) backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or (iii) rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank) of the Borrower owing to the Non-Extending Lender relating to the Loans and participations so assigned shall be paid in full at par to such Non-Extending Lender concurrently with such Assignment and Assumption by the assignee

 

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Lender (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) or (B) prepay the Loans and all other Obligations owing to and, at the Borrower’s option, if applicable, terminate the Commitments of, such Non-Extending Lender, in whole or in part, subject to breakage costs, without premium or penalty.  In connection with any such replacement under this Section 2.21, if the Non-Extending Lender does not execute and deliver to the Administrative Agent a duly completed Assignment and Assumption and/or any other documentation necessary to reflect such replacement by the later of (a) the date on which the replacement Lender executes and delivers such Assignment and Assumption and/or such other documentation and (b) the date as of which all Obligations (other than contingent indemnity obligations, unasserted expense reimbursement obligations, and Letters of Credit that have been (i) cash collateralized in accordance with the terms of this Agreement, (ii) backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or (iii) rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank) of the Borrower owing to the Non-Extending Lender relating to the Loans and participations so assigned shall be paid in full in cash to such Non-Extending Lender by the assignee Lender (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts), then such Non-Extending Lender shall be deemed to have executed and delivered such Assignment and Assumption and/or such other documentation as of such date and the Borrower shall be entitled (but not obligated) to execute and deliver such Assignment and Assumption and/or such other documentation on behalf of such Non-Extending Lender.  This Section 2.21(e) shall supersede any provisions in Section 10.02 to the contrary.

 

Section 2.22                             Refinancing Facilities.

 

(a)                                 At any time after the Closing Date, the Borrower may obtain, from any Lender or any Additional Lender (to the extent agreed to by such Lender or Additional Lender in its sole discretion), Credit Agreement Refinancing Indebtedness in respect of all or any portion of the Term Loans or Revolving Loans then outstanding under this Agreement (which will be deemed to include any then outstanding Incremental Term Loans under any Incremental Term Loan Commitments or any Incremental Revolving Loan Commitments then outstanding under this Agreement) or any then outstanding Refinancing Term Loans in the form of Refinancing Term Loans or Refinancing Term Commitments or any then outstanding Refinancing Revolving Loans in the form of Refinancing Revolving Loans or Refinancing Revolving Loan Commitments, in each case, pursuant to a Refinancing Amendment, together with any applicable Intercreditor Agreement or other customary subordination agreement; provided that such Credit Agreement Refinancing Indebtedness (i) will, to the extent secured, rank pari passu or junior in right of payment and of security with the other Loans and Commitments hereunder (but for the avoidance of doubt, such Credit Agreement Refinancing Indebtedness may be unsecured), (ii) will, to the extent permitted by the definition of “Credit Agreement Refinancing Indebtedness,” have such pricing, interest rate margins, rate floors, discounts, fees, premiums and prepayment or redemption provisions and terms as may be agreed by the Borrower and the Lenders or Additional Lenders with respect thereto and (iii) will, to the extent in the form of Refinancing Revolving Loans or Refinancing Revolving Loan Commitments, participate in the payment, borrowing, participation and commitment reduction provisions herein on a pro rata basis with any then outstanding Revolving Loans and Revolving Commitments, except that the Borrower shall be permitted to permanently repay and terminate commitments of any such Class

 

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on a better than a pro rata basis as compared to any other Class with a later maturity date than such Class. The effectiveness of any Refinancing Amendment shall be subject to, to the extent reasonably requested by the Administrative Agent, receipt by the Administrative Agent of board resolutions, officers’ certificates and/or reaffirmation agreements consistent with those delivered on the Closing Date.  The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Refinancing Amendment.  Each of the parties hereto hereby agrees that, upon the effectiveness of any Refinancing Amendment, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Credit Agreement Refinancing Indebtedness incurred pursuant thereto (including any amendments necessary to treat the Loans and Commitments subject thereto as Refinancing Term Loans, Refinancing Revolving Loans, Refinancing Term Loan Commitments or Refinancing Revolving Loan Commitments, as applicable) and any Indebtedness being replaced or refinanced with such Credit Agreement Refinancing Indebtedness shall be deemed permanently reduced and satisfied in all respects.  Any Refinancing Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, to effect the provisions of this Section.

 

(b)                                 This Section 2.22 shall supersede any provisions in Section 10.02 to the contrary.

 

Section 2.23                             Permitted Debt Exchanges.

 

(a)                                 Notwithstanding anything to the contrary contained in this Agreement, pursuant to one or more offers (each, a “Permitted Debt Exchange Offer”) made from time to time by the Borrower to all Lenders (other than, with respect to any Permitted Debt Exchange Offer that constitutes an offering of securities, any Lender that, if requested by the Borrower, is unable to certify that it is (i) a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act), (ii) an institutional “accredited investor” (as defined in Rule 501 under the Securities Act) or (iii) not a “U.S. person” (as defined in Rule 902 under the Securities Act)) with outstanding Term Loans of a particular Class, the Borrower may from time to time consummate one or more exchanges of such Term Loans for Indebtedness (in the form of senior secured, senior unsecured, senior subordinated, or subordinated notes or loans) (such Indebtedness, “Permitted Debt Exchange Notes” and each such exchange, a “Permitted Debt Exchange”), so long as the following conditions are satisfied:

 

(i)                                     each such Permitted Debt Exchange Offer shall be made on a pro rata basis to the applicable Term Loan Lenders (other than, with respect to any Permitted Debt Exchange Offer that constitutes an offering of securities, any Lender that, if requested by the Borrower, is unable to certify that it is (i) a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act), (ii) an institutional “accredited investor” (as defined in Rule 501 under the Securities Act) or (iii) not a “U.S. person” (as defined in Rule 902 under the Securities Act)) of each applicable Class based on their respective aggregate principal amounts of outstanding Term Loans under such Class;

 

(ii)                                  the aggregate principal amount (calculated on the face amount thereof) of such Permitted Debt Exchange Notes shall not exceed the aggregate principal amount (calculated on the face amount thereof) of Term Loans so refinanced, except by

 

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an amount equal to any accrued and unpaid interest thereon, and any fees, expenses, commissions, underwriting discounts and premiums payable in connection with such Permitted Debt Exchange;

 

(iii)                               (x) the sole borrower in respect of such Indebtedness shall be the Borrower and (y) no Person shall be a guarantor with respect to such Indebtedness unless such Person is a Guarantor which shall have previously or substantially concurrently Guaranteed the Obligations;

 

(iv)                              (x) other terms and conditions of such Permitted Debt Exchange Notes otherwise comply with the Required Debt Terms and (y) the Permitted Debt Exchange Notes shall not have a higher Lien priority than the facility that is being refinanced by the issuance of any such Permitted Debt Exchange Notes;

 

(v)                                 [reserved];

 

(vi)                              subject to Section 1.06, no Default or Event of Default shall have occurred and be continuing at the time of funding or immediately after giving effect to such Permitted Debt Exchange;

 

(vii)                           the aggregate principal amount (calculated on the face amount thereof) of all Term Loans exchanged under each applicable Class by the Borrower pursuant to any Permitted Debt Exchange shall automatically be cancelled and retired by the Borrower on date of the settlement thereof (and, if requested by the Administrative Agent, any applicable exchanging Lender shall execute and deliver to the Administrative Agent an Assignment and Assumption, or such other form as may be reasonably requested by the Administrative Agent, in respect thereof pursuant to which the respective Lender assigns its interest in the Term Loans being exchanged pursuant to the Permitted Debt Exchange to the Borrower for immediate cancellation), and accrued and unpaid interest on such Term Loans shall be paid to the exchanging Lenders on the date of consummation of such Permitted Debt Exchange, or, if agreed to by the Borrower and the Administrative Agent, the next scheduled Interest Payment Date with respect to such Term Loans (with such interest accruing until the date of consummation of such Permitted Debt Exchange);

 

(viii)                        if the aggregate principal amount of all Term Loans (calculated on the face amount thereof) of a given Class tendered by Lenders in respect of the relevant Permitted Debt Exchange Offer (with no Lender being permitted to tender a principal amount of Term Loans which exceeds the principal amount of the applicable Class actually held by it) shall exceed the maximum aggregate principal amount of Term Loans of such Class offered to be exchanged by the Borrower pursuant to such Permitted Debt Exchange Offer, then the Borrower shall exchange Term Loans under the relevant Class tendered by such Lenders ratably up to such maximum based on the respective principal amounts so tendered, or, if such Permitted Debt Exchange Offer shall have been made with respect to multiple Classes without specifying a maximum aggregate principal amount offered to be exchanged for each Class, and the aggregate principal amount of all Term Loans (calculated on the face amount thereof) of all Classes tendered by Lenders in

 

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respect of the relevant Permitted Debt Exchange Offer (with no Lender being permitted to tender a principal amount of Term Loans which exceeds the principal amount thereof actually held by it) shall exceed the maximum aggregate principal amount of Term Loans of all relevant Classes offered to be exchanged by the Borrower pursuant to such Permitted Debt Exchange Offer, then the Borrower shall exchange Term Loans across all Classes subject to such Permitted Debt Exchange Offer tendered by such Lenders ratably up to such maximum amount based on the respective principal amounts so tendered;

 

(ix)                              all documentation in respect of such Permitted Debt Exchange shall be consistent with the foregoing and reasonably acceptable to the Administrative Agent and the Borrower, and all written communications generally directed to the Lenders in connection therewith shall be in form and substance consistent with the foregoing and made in consultation with the Borrower and the Administrative Agent;

 

(x)                                 any applicable Minimum Tender Condition or Maximum Tender Condition, as the case may be, shall be satisfied or waived by the Borrower; and

 

(xi)                              notwithstanding anything to the contrary herein, no Lender shall have any obligation to agree to have any of its Loans or Commitments exchanged pursuant to any Permitted Debt Exchange Offer.

 

(b)                                 With respect to all Permitted Debt Exchanges effected by the Borrower pursuant to this Section 2.23, such Permitted Debt Exchange Offer shall be made for not less than $5,000,000 in aggregate principal amount of Term Loans; provided that subject to the foregoing the Borrower may at its election specify (A) as a condition (a “Minimum Tender Condition”) to consummating any such Permitted Debt Exchange that a minimum amount (to be determined and specified in the relevant Permitted Debt Exchange Offer in the Borrower’s discretion) of Term Loans of any or all applicable Classes be tendered and/or (B) as a condition (a “Maximum Tender Condition”) to consummating any such Permitted Debt Exchange that no more than a maximum amount (to be determined and specified in the relevant Permitted Debt Exchange Offer in the Borrower’s discretion) of Term Loans of any or all applicable Classes will be accepted for exchange.  The Administrative Agent and the Lenders hereby acknowledge and agree that the provisions of Section 2.07 and Section 2.10 do not apply to the Permitted Debt Exchange and the other transactions contemplated by this Section 2.23 and hereby agree not to assert any Default or Event of Default in connection with the implementation of any such Permitted Debt Exchange or any other transaction contemplated by this Section 2.23.

 

(c)                                  In connection with each Permitted Debt Exchange, the Borrower shall provide the Administrative Agent at least five Business Days’ (or such shorter period as may be agreed by the Administrative Agent) prior written notice thereof, and the Borrower and the Administrative Agent, acting reasonably, shall mutually agree to such procedures as may be necessary or advisable to accomplish the purposes of this Section 2.23; provided that the terms of any Permitted Debt Exchange Offer shall provide that the date by which the relevant Lenders are required to indicate their election to participate in such Permitted Debt Exchange shall be not less than five Business Days following the date on which the Permitted Debt Exchange Offer is made.  The Borrower shall provide the final results of such Permitted Debt Exchange to the Administrative Agent no later than three Business Days prior to the proposed date of

 

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effectiveness for such Permitted Debt Exchange (or such shorter period agreed to by the Administrative Agent in its sole discretion), and the Administrative Agent shall be entitled to conclusively rely on such results.

 

(d)                                 The Borrower shall be responsible for compliance with, and hereby agrees to comply with, all applicable securities and other laws in connection with each Permitted Debt Exchange, it being understood and agreed that (i) neither the Administrative Agent nor any Lender assumes any responsibility in connection with the Borrower’s compliance with such laws in connection with any Permitted Debt Exchange and (ii) each Lender shall be solely responsible for its compliance with any applicable “insider trading” laws and regulations to which such Lender may be subject under the Exchange Act.

 

Section 2.24                             Designation of Borrowers.  (a)  The Borrower may from time to time designate one or more Additional Borrowers organized in a jurisdiction within the U.S. for purposes of this Agreement by delivering to the Administrative Agent:

 

(i)                                     written notice (including via email) of election to become an Additional Borrower (an “Election to Participate”) duly executed on behalf of such Restricted Subsidiary and the Borrower two Business Days prior to the proposed effectiveness of such election,

 

(ii)                                  all documentation and other information with respect to such Subsidiary required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the Patriot Act, no later than two Business Days prior to the date of such notice (or such later date as may be agreed by the Administrative Agent);

 

(iii)                               (A) all documents, updated schedules, instruments, certificates and agreements, and all other actions and information, then required by or in respect of such Additional Borrower by Section 5.10 or by the Security Agreement (without giving effect to any grace periods for delivery of such items, the updating of such information or the taking of such actions), (B) a legal opinion of counsel to the Additional Borrower relating to such Additional Borrower, in form and substance consistent with that delivered in respect of the initial Borrower on the Closing Date (provided that such legal opinion may be modified in form or substance in a manner satisfactory to the Administrative Agent in its sole discretion), and (C) a customary secretary’s certificate attaching such documents as were delivered by the original Borrower on the Closing Date;

 

(iv)                              documentation reasonably satisfactory to the Administrative Agent pursuant to which (i) each then-existing Borrower unconditionally Guarantees the Borrowings of the Additional Borrower on terms substantially consistent with the Guarantors’ Guarantee of the initial Borrower’s obligations hereunder and (ii) each Additional Borrower unconditionally Guarantees the Borrowings of each then-existing Borrower on terms substantially consistent with the Guarantors’ Guarantee of the initial Borrower’s obligations hereunder;

 

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(v)                                 a certificate of a Responsible Officer of the Borrower stating that, as of the date the Additional Borrower joins this Agreement as such, no Default or Event of Default has occurred and is continuing;

 

(vi)                              promissory notes in respect of such Additional Borrower in favor of any Lender requesting such promissory notes, in form and substance consistent with the Notes set forth in Exhibit H-1, Exhibit H-2 and Exhibit H-3 (modified to reflect such Additional Borrower); and

 

(vii)                           a customary joinder agreement whereby the Additional Borrower becomes party hereto as a Borrower and appoints the Borrower as a “Borrower Agent” hereunder and under the other Loan Documents, in form and substance reasonably satisfactory to the Administrative Agent.

 

(b)                                 After such deliveries, the appointment of the Additional Borrower shall be effective upon the effectiveness of an amendment to this Agreement and any applicable Loan Document necessary (in the reasonable judgment of the Administrative Agent) to give effect to the appointment of such Additional Borrower (in form and substance reasonably acceptable to the Administrative Agent), including amendments to disambiguate certain uses of the word “Borrower” and related terms hereunder; provided, that, for the avoidance of doubt, the Administrative Agent shall not have any right to consent to the designation of any Additional Borrower and shall not be required to approve the addition of such Additional Borrower to the extent the requirements of Section 2.24(a) have been met.

 

Section 2.25                             AHYDO Prepayment.  Notwithstanding the provisions of this Article II or any other provision in any Loan Document, if at the end of any accrual period (as defined in Section 1272(a)(5) of the Code) ending after the fifth anniversary of the initial issuance of a Loan, the aggregate amount of accrued and unpaid interest and original issue discount (as defined in Code Section 1273(a)(1)) on such Loan would, but for this paragraph, exceed an amount equal to the product of such Loan’s issue price (as defined in Code Sections 1273(b) and 1274(a)) multiplied by the yield to maturity (as defined in Treasury Regulation Section 1.1272-1(b)(1)(i)) (the “Maximum Accrual”), all accrued and unpaid interest and original issue discount on such Loan as of the end of such accrual period in excess of the Maximum Accrual shall be prepaid by the Borrower.  The immediately preceding sentence shall be interpreted in accordance with the provisions of Code Section 163 so that none of the Loans is an “applicable high yield discount obligation”.

 

Section 2.26                             Illegality.  If any Lender determines that any Requirement of Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its lending office to perform any of its obligations hereunder or make, maintain or fund or charge interest with respect to any Credit Extension or to determine or charge interest rates based upon the LIBO Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, (i) any obligation of such Lender to issue, make, maintain, fund or charge interest with respect to any such Credit Extension or continue Eurodollar Loans or convert ABR Loans to Eurodollar Loans shall be suspended, and (ii) if such notice asserts the illegality of such

 

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Lender making or maintaining ABR Loans the interest rate on which is determined by reference to the Adjusted LIBO Rate component of the Alternate Base Rate, the interest rate on such ABR Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted LIBO Rate component of the Alternate Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, (x) the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Loans of such Lender to ABR Loans (the interest rate on which ABR Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted LIBO Rate component of the Alternate Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the LIBO Rate, the Administrative Agent shall during the period of such suspension compute the Alternate Base Rate applicable to such Lender without reference to the Adjusted LIBO Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the LIBO Rate.  Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES

 

Each Credit Party represents and warrants to the Administrative Agent, the Collateral Agent, the Issuing Bank and each of the Lenders on the Closing Date and on each other date set forth in Section 4.02 (in the case of such other date, to the extent set forth in Section 4.02) that (it being understood that for purposes of this Article III, “Credit Parties” and “Group Member” shall exclude Holdings for purposes of Section 3.11):

 

Section 3.01                             Organization; Powers.  Each Credit Party (a) is duly incorporated, organized or formed and validly existing under the laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority to carry on its business as now conducted and to own and lease its property, in each case except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect, and (c) is qualified and in good standing (to the extent such concept is applicable in the applicable jurisdiction) to do business in every jurisdiction where such qualification is required, except in such jurisdictions where the failure to so qualify or be in good standing, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

 

Section 3.02                             Authorization; Enforceability.  The Loan Documents to be entered into by each Credit Party are within such Credit Party’s powers and have been duly authorized by all necessary action on the part of such Credit Party.  This Agreement has been duly executed and delivered by each Credit Party and constitutes, and each other Loan Document to which any Credit Party is to be a party, when executed and delivered by such Credit Party, will constitute, a legal, valid and binding obligation of such Credit Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting

 

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creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

Section 3.03                             No Conflicts.  Except as set forth on Schedule 3.03, the execution, delivery and performance by the Credit Parties of the Loan Documents to which they are a party and the Credit Extensions contemplated by the Loan Documents (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except (i) such as have been obtained or made and are in full force and effect, (ii) filings necessary to perfect Liens created by the Loan Documents and (iii) consents, approvals, registrations, filings, permits or actions the failure to obtain or perform which would not reasonably be expected to result in a Material Adverse Effect, (b) will not violate or require consent not obtained under the Organizational Documents of any Group Member, except as would not reasonably be expected to result in a Material Adverse Effect, (c) will not violate or result in a default under any indenture or other material agreement or instrument binding upon any Group Member or any of their assets, or give rise to a right thereunder to require any payment, repurchase or redemption to be made by any Group Member, or give rise to a right of, or result in, termination, cancellation or acceleration of any obligation thereunder, except, in each case, individually or in the aggregate, as would not reasonably be expected to result in a Material Adverse Effect, and (d) will not violate any Requirement of Law except, individually or in the aggregate, as would not reasonably be expected to result in a Material Adverse Effect.

 

Section 3.04                             Financial Statements; Projections.

 

(a)                                 Historical Financial Statements.  On the Closing Date, the Borrower shall have delivered to the Administrative Agent and made available to the Lenders the Financial Statements.  The financial statements in the immediately preceding sentence have been prepared in accordance with GAAP and present fairly in all material respects the financial condition and the results of operations and cash flows of the applicable entities to which they relate as of the dates and for the periods to which they relate.  All financial statements delivered pursuant to Section 5.01(a) and Section 5.01(b) have been prepared in accordance with GAAP and present fairly in all material respects the financial condition and results of operations and cash flows of Holdings and its consolidated Restricted Subsidiaries as of the dates and for the periods to which they relate, except as indicated in any notes thereto and, in the case of any such unaudited financial statements, the absence of footnote disclosures and audit adjustments.

 

(b)                                 Absence of Material Adverse Effect.  Since the Closing Date, there has been no event, change, circumstance or occurrence that, individually or in the aggregate, has had or would reasonably be expected to result in a Material Adverse Effect.

 

(c)                                  Restatements.  Each Lender and the Administrative Agent hereby acknowledge and agree that Holdings and its Subsidiaries may be required to restate historical financial statements as the result of the implementation of changes in GAAP, or the respective interpretation thereof, and that such restatements will not result in a Default or Event of Default under the Loan Documents.

 

Section 3.05                             Properties.  Each Group Member (i) has good title to, or valid leasehold interests in, all of its Property (other than Intellectual Property, which is subject to

 

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Section 3.06 and not this Section 3.05) material to its business, except to the extent of any irregularities or deficiencies that would not be reasonably expected to result in a Material Adverse Effect, and (ii) owns its Collateral and any Material Property, if any, in each case, free and clear of all Liens except for Permitted Liens and any Liens and privileges arising mandatorily by Law, and in each case, except where the failure to have such title or other interest could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 3.06                             Intellectual Property.  Each Credit Party owns, or is licensed (or authorized) to use, all Intellectual Property material to the conduct of its business as currently conducted.  To the knowledge of each Credit Party, the operation of such Credit Party’s business and the use of Intellectual Property owned by such Credit Party or licensed by such Credit Party do not infringe, misappropriate, dilute or otherwise violate the Intellectual Property rights of any person, except to the extent such violations, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  No claim or litigation regarding any Intellectual Property owned by a Credit Party is pending or, to the knowledge of any Credit Party, threatened in writing against any Credit Party or Subsidiary, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.  The Borrower has taken (and caused its Subsidiaries to take) all commercially reasonable steps to maintain, enforce and protect the material owned Intellectual Property of the Credit Parties and maintain the Credit Parties’ rights in any material licensed Intellectual Property.

 

Section 3.07                             Equity Interests and Restricted Subsidiaries.  As of the Closing Date, neither the Borrower nor any other Credit Party has any Subsidiaries other than those specifically disclosed on Schedule 3.07, and all of the outstanding Equity Interests in the Borrower and its Subsidiaries have been validly issued, are fully paid and nonassessable (other than Equity Interests consisting of limited liability company interests or partnership interests which, pursuant to the relevant organizational or formation documents, cannot be fully paid and nonassessable) and, on the Closing Date, all Equity Interests owned directly or indirectly by Holdings or any other Credit Party are owned free and clear of all Liens except (i) those created under the Security Documents, and (ii) those Liens permitted under Section 6.02.  As of the Closing Date, Schedule 3.07 sets forth (a) the name and jurisdiction of organization or incorporation of each Subsidiary, (b) the ownership interest of Holdings, the Borrower and any of their respective Subsidiaries in each of their respective Subsidiaries, including the percentage of such ownership by class (if applicable) and (c) all outstanding options, warrants, rights of conversion or purchase and similar rights with respect to the equity of the Borrower or its Subsidiaries.

 

Section 3.08                             Litigation.  Except as set forth on Schedule 3.08, there are no actions, suits or proceedings at law or in equity by or before any Governmental Authority now pending or, to the knowledge of the Borrower, threatened in writing against or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against Holdings, the Borrower or any Restricted Subsidiary or against any of their properties or revenues that either individually or in the aggregate, could reasonably be expected, if adversely determined, to have a Material Adverse Effect.

 

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Section 3.09                             Federal Reserve Regulations.  No Credit Party is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock.  No part of the proceeds of any Loan and no Letter of Credit will be used for any purpose that violates Regulation U or Regulation X.

 

Section 3.10                             Investment Company Act.  No Credit Party is an “investment company” under the Investment Company Act of 1940, as amended.

 

Section 3.11                             Use of Proceeds.  The Borrower will (or will direct a Credit Party to) use the proceeds of the Term Loans on the Closing Date to finance (i) the Closing Date Refinancing, (ii) the other Transactions, (iii) the payment of related fees, costs and expenses (including any upfront fees and original issue discount) related to the foregoing transactions, and (iv) working capital and general corporate purposes.  The Borrower will (or will direct a Credit Party to) use the proceeds of the Revolving Loans and Swing Line Loans on or after the Closing Date for working capital and general corporate purposes (including to effect Permitted Acquisitions, Investments, working capital and/or purchase price adjustments, Capital Expenditures, Dividends, prepayments of, and other payments with respect to, Indebtedness (including, without limitation Restricted Debt Payments), any other transaction not prohibited under this Agreement, and, in each case, any related fees and expenses).  Proceeds of the Incremental Facilities may be used for working capital and general corporate purposes, including, without limitation, to finance Permitted Acquisitions and other Investments (including refinancing the existing Indebtedness of acquired businesses), Capital Expenditures, for working capital and/or purchase price adjustments, Dividends and prepayments of, and other payments with respect to, Indebtedness (including, without limitation, Restricted Debt Payments) permitted hereunder, for any other purposes not prohibited by this Agreement, and to pay related fees, costs and expenses in connection with any such transactions.

 

Section 3.12                             Taxes.  Each Group Member has (a) timely filed or caused to be timely filed all federal Tax Returns and all material state, local and foreign Tax Returns required to have been filed by it, and (b) duly and timely paid or remitted or caused to be duly and timely paid or remitted all Taxes due and payable or remittable by it and all assessments received by it, except (i) Taxes that are being contested in good faith by appropriate proceedings and for which such Group Member has set aside on its books adequate reserves in accordance with GAAP, or (ii) Taxes which would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.  Each Group Member is unaware of any proposed or pending Tax assessments, deficiencies or audits that would be reasonably expected to, individually or in the aggregate, result in a Material Adverse Effect.

 

Section 3.13                             No Material Misstatements.

 

(a)                                 No written information, report, financial statement, certificate, Borrowing Request, LC Request, exhibit or schedule (in each case other than forecasts, projections and other forward looking statements (collectively, “Projections”) and information of a general economic or industry nature) furnished by or on behalf of any Group Member to the Administrative Agent or any Lender in connection with any Loan Document or included therein or delivered pursuant thereto, taken as a whole and when furnished, contained or contains any material misstatement of fact or omitted or omits to state any material fact necessary to make the

 

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statements therein, in the light of the circumstances under which they were or are made, not materially misleading when taken as a whole as of the date such information, report, financial statement, certificate, Borrowing Request, LC Request, exhibit or schedule is dated or certified.

 

(b)                                 With respect to any Projections delivered pursuant to the terms hereof, each Group Member represents only that on the date of delivery thereof it acted in good faith and utilized assumptions believed by it to be reasonable when made in light of the then current circumstances (it being understood that Projections are predictions as to future events and are not to be viewed as facts and are subject to significant uncertainties and contingencies, which are beyond the control of Holdings and its Restricted Subsidiaries, and that no assurance or guarantee can be given that any Projections will be realized, that actual results may differ and such differences may be material).

 

Section 3.14                             Labor Matters.  (i) There are no strikes, lockouts, or slowdowns against any Group Member pending or, to the knowledge of any Credit Party, threatened in writing, and (ii) the consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which any Group Member is bound, other than to the extent that any of the foregoing matters in preceding clauses (i) and (ii), individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

 

Section 3.15                             Solvency.  On the Closing Date and after giving effect to the Transactions, Holdings and its Subsidiaries, on a consolidated basis, (a) have property with a fair value greater than the total amount of their debts and liabilities, contingent, subordinated or otherwise, (b) have assets with present fair saleable value not less than the amount that will be required to pay their liability on their debts as they become absolute and matured, (c) will be able generally to pay their debts and liabilities, subordinated, contingent and otherwise, as they become absolute and matured and (d) are not engaged in business or transactions, and are not about to engage in business or transactions, for which their property would constitute an unreasonably small amount of capital.  For the purposes hereof, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

Section 3.16                             Employee Benefit Plans.

 

With respect to each Employee Benefit Plan, each Group Member is in compliance in all respects with the applicable provisions of ERISA and the Code and the regulations and published interpretations thereunder, except as would not reasonably be expected to result in a Material Adverse Effect.  No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other ERISA Events, would reasonably be expected to result in a Material Adverse Effect or the imposition of a Lien on any of the property of any Group Member.  The present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for financial reporting purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the property of all such underfunded Plans by an amount that would reasonably be expected to result in a Material Adverse Effect.

 

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Using actuarial assumptions and computation methods consistent with Section 4211 of ERISA, the aggregate liabilities of each Group Member or its ERISA Affiliates to all Multiemployer Plans in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each such Multiemployer Plan, would not reasonably be expected to result in a Material Adverse Effect.  As of the date hereof, no Group Member has been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is insolvent (within the meaning of Section 4245 of ERISA), and no such Multiemployer Plan is reasonably expected by any Group Member to be insolvent, except, in each case, as would not reasonably be expected to result in a Material Adverse Effect.

 

Except as would not reasonably be expected to result in a Material Adverse Effect, (i) each Foreign Plan has been maintained in compliance with its terms and with the requirements of any and all applicable Requirements of Law and has been maintained, where required, in good standing with applicable regulatory authorities and (ii) no Group Member has incurred any obligation in connection with the termination of or withdrawal from any Foreign Plan. The present value of the accrued benefit liabilities (whether or not vested) under each Foreign Plan which is funded, determined as of the end of the most recently ended fiscal year of the respective Group Member on the basis of actuarial assumptions, each of which is reasonable, did not exceed the current value of the property of such Foreign Plan by an amount that would reasonably be expected to result in a Material Adverse Effect, and for each Foreign Plan which is not funded, the obligations of such Foreign Plan are properly accrued in accordance with GAAP in all material respects.

 

Section 3.17                             Environmental Matters.

 

(a)                                 Except as, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect:

 

(i)                                     The Group Members and their businesses, operations and Real Property are in compliance with all Environmental Laws;

 

(ii)                                  The Group Members have obtained all Environmental Permits required for the conduct of their businesses and operations, and the ownership, operation and use of their Real Property;

 

(iii)                               There has been no Release or threatened Release of Hazardous Material caused by the Group Members, or to the knowledge of the Group Members by any other person, on, at, under or from any Real Property presently, or to the knowledge of the Group Members, formerly owned, leased or operated by the Group Members;

 

(iv)                              There is no Environmental Claim pending or, to the knowledge of the Group Members, threatened against the Group Members; and

 

(v)                                 No Lien has been recorded, or to the knowledge of any Group Member, threatened under any Environmental Law with respect to any Real Property currently owned, operated or leased by the Group Members.

 

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(b)                                 This Section 3.17 contains the sole and exclusive representations and warranties of the Group Members with respect to any matters arising under Environmental Laws or relating to Environmental Claims or Hazardous Materials.

 

Section 3.18                             Security Documents.  Subject to Section 4.01(l), each Security Document delivered pursuant to Article IV, Section 5.10, and Section 5.11 will, upon execution and delivery thereof, be effective to create in favor of the Collateral Agent, for its benefit and the benefit of the Secured Parties, legal, valid and enforceable Liens on, and security interests in, all of the Credit Parties’ right, title and interest in and to the Collateral thereunder under applicable U.S. state and federal law, except as such enforceability may be limited by Debtor Relief Laws and by general principles of equity and capital maintenance rules and (i) when appropriate filings or recordings are made in the appropriate offices as may be required under applicable Requirements of Law (to the extent required hereunder and thereunder), and (ii) upon the taking of possession, control or other action by the Collateral Agent of such Collateral with respect to which a security interest may be perfected only by possession, control or other action (which possession, control or other action shall be given to the Collateral Agent or taken by the Collateral Agent to the extent required by any Security Document), the Liens in favor of Collateral Agent will, to the extent required by the Loan Documents (including the Security Documents) constitute fully perfected Liens on, and security interests in, all right, title and interest of the Credit Parties in such Collateral, in each case under applicable U.S. state and federal law, subject to no Liens other than the applicable Permitted Liens.

 

Section 3.19                             Anti-Terrorism Law.  No Credit Party is in material violation of any applicable Requirement of Law relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224, effective September 24, 2001 (the “Executive Order”), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, signed into law October 26, 2001 (the “Patriot Act”).  The use of proceeds of the Loans will not violate the Trading With the Enemy Act (50 U.S.C. §§ 1-44, as amended) or any applicable foreign asset control regulations of the United States Treasury Department (31 C.F.R. Subtitle B, Chapter V).

 

Section 3.20                             OFAC.  None of Holdings, the Borrower, any Subsidiary nor, to the knowledge of the Borrower, any director, officer, employee, or agent of Holdings, the Borrower or any Restricted Subsidiary is the subject or target of any U.S. sanctions administered by OFAC or the U.S. Department of State or any similar laws or regulations enacted by Canada, the European Union or the United Kingdom (collectively, “Sanctions”).  The Borrower shall not use the proceeds of the Loans or use the Letters of Credit, directly or, to the Borrower’s knowledge, indirectly, or otherwise would make available such proceeds to any Person, for the purpose of financing activities of or with any Person that is the subject or target of any applicable Sanctions, or in any country that, at the time of such financing is, or whose government is, the subject or target of any Sanctions, in each case, except to the extent licensed by OFAC or otherwise authorized under U.S. law, or in any other manner that would result in a violation of applicable Sanctions by any Person.

 

Section 3.21                             Foreign Corrupt Practices Act.  No part of the proceeds of the Loans will be used directly or, to the Borrower’s knowledge, indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for

 

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political office, or any other Person acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

Section 3.22                             Compliance with Law.  Each of Holdings, the Borrower and each Restricted Subsidiary is in compliance with all Requirements of Law and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such Requirements of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

ARTICLE IV
CONDITIONS

 

Section 4.01                             Conditions to Initial Credit Extension.  The obligation of each Lender and, if applicable, the Issuing Bank, to fund the initial Credit Extensions on the Closing Date requested to be made by the Borrower shall be subject to the prior or concurrent satisfaction or waiver (by the Lead Arrangers) of only the conditions precedent set forth in this Section 4.01 (the making of such initial Credit Extensions by a Lender being conclusively deemed to be its satisfaction or waiver of the conditions precedent):

 

(a)                                 Loan Documents.  There shall have been delivered to the Administrative Agent from Holdings, the Borrower and each other Credit Party an executed counterpart of each of the Loan Documents to which each is a party to be entered into on the Closing Date.

 

(b)                                 [Reserved].

 

(c)                                  Corporate Documents.  The Administrative Agent shall have received:

 

(i)                                     a certificate of the secretary or assistant secretary (or equivalent officer) on behalf of each Credit Party dated the Closing Date, certifying (A) that attached thereto is a true and complete copy of each Organizational Document of such Credit Party and, with respect to the articles or certificate of incorporation or organization (or similar document) certified (to the extent applicable) as of a recent date by the Secretary of State (or other applicable Governmental Authority) of the state of its organization, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors and/or equityholders (as applicable) of such Credit Party authorizing the execution, delivery and performance of the Loan Documents to which such person is a party and, in the case of the Borrower, the Borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect as of the date of such certificate, and (C) as to the incumbency and specimen signature of each officer or authorized person executing any Loan Document or any other document delivered in connection herewith on behalf of such Credit Party (together with a certificate of another officer or authorized person as to the incumbency and specimen signature of the officer or authorized person executing the certificate in this clause (i));

 

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(ii)                                  to the extent available, a certificate as to the good standing of each Credit Party as of a recent date, from such Secretary of State (or other applicable Governmental Authority) of its jurisdiction of organization; and

 

(iii)                               the Administrative Agent shall have received a certificate dated the Closing Date and signed by a Responsible Officer of Holdings, confirming compliance with the conditions precedent set forth in Sections 4.01(g) and 4.02(c).

 

(d)                                 Closing Date Refinancing and Other Transactions.  The Closing Date Refinancing shall have occurred, and all security and guarantees in respect of the Existing Credit Agreement shall be released and discharged, concurrently with the initial Credit Extension.

 

(e)                                  Opinion of Counsel. The Administrative Agent shall have received, on behalf of itself, the Collateral Agent and the Lenders, a customary opinion of Kirkland & Ellis LLP, special counsel for the Credit Parties, dated as of the Closing Date and addressed to the Agents, the Issuing Bank and the Lenders (including the Swing Line Lender).

 

(f)                                   Solvency Certificate.  The Administrative Agent shall have received a solvency certificate in the form of Exhibit L dated the Closing Date and signed by the chief financial officer (or other officer with reasonably equivalent duties) of Holdings.

 

(g)                                  No Material Adverse Effect.  Since December 31, 2016, no Material Adverse Effect shall have occurred and be continuing.

 

(h)                                 Fees.  The Lead Arrangers, the Lenders and the Administrative Agent shall have received all fees and other amounts due and payable to them by the Borrower on or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all reasonable and documented out-of-pocket fees and expenses (including the legal fees and expenses of Latham & Watkins LLP, special counsel to the Agents) required to be reimbursed or paid by the Borrower under this Agreement; provided that, in the case of fees, costs and expenses, an invoice for all such fees, costs and expenses shall be received by the Borrower at least three Business Days prior to the Closing Date for payment to be required as a condition to the Closing Date.

 

(i)                                     Patriot Act.  So long as reasonably requested by the Administrative Agent or a Lead Arranger at least ten Business Days prior to the Closing Date, the Administrative Agent and Lead Arrangers shall have received, at least two Business Days prior to the Closing Date, all documentation and other information with respect to the Credit Parties that is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act, which shall include, for the avoidance of doubt, a duly executed IRS Form W-9 or other applicable tax form.

 

(j)                                    [Reserved].

 

(k)                                 [Reserved].

 

(l)                                     Creation and Perfection of Security Interests.  Notwithstanding anything to the contrary in this Section 4.01, with respect to the Secured Obligations, all actions necessary to

 

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establish that the Collateral Agent will have a perfected first priority security interest (subject to Permitted Liens) in the Collateral under the Loan Documents shall have been taken, in each case, to the extent such Collateral (including the creation or perfection of any security interest) is required to be provided on the Closing Date.

 

(m)                             Notice. The Administrative Agent shall have received a Borrowing Request as required by Section 2.03 for any Loans to be made on the Closing Date or, in the case of the issuance of a Letter of Credit on the Closing Date, the Issuing Bank and the Administrative Agent shall have received an LC Request as required by Section 2.18(b) or, in the case of the Borrowing of a Swing Line Loan made on the Closing Date, the Swing Line Lender and the Administrative Agent shall have received a Borrowing Request as required by Section 2.17(b).

 

(n)                                 Financial Statements. The Administrative Agent and the Lead Arrangers shall have received the Financial Statements.

 

In determining the satisfaction of the conditions specified in this Section 4.01, (y) to the extent any item is required to be satisfactory to any Lender, such item shall be deemed satisfactory to each Lender which has not notified the Administrative Agent in writing prior to the occurrence of the Closing Date that the respective item or matter does not meet its satisfaction and (z) in determining whether any Lender is aware of any fact, condition or event that has occurred and which would reasonably be expected to have a Material Adverse Effect, each Lender which has not notified the Administrative Agent in writing prior to the occurrence of the Closing Date of such fact, condition or event shall be deemed not to be aware of any such fact, condition or event on the Closing Date. Upon the Administrative Agent’s good faith determination that the conditions specified in this Section 4.01 have been met (after giving effect to the preceding sentence), then the Closing Date shall have been deemed to have occurred, regardless of any subsequent determination that one or more of the conditions thereto had not been met.

 

Without limiting the generality of Section 9.03(a)(iii), for purposes of determining compliance with the conditions specified in this Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required hereunder or thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received written notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

 

Section 4.02                             Conditions to All Credit Extensions.  The obligation of each Lender and each Issuing Bank to make any Credit Extension (including the Credit Extensions on the Closing Date) with respect to any Term Loan or Revolving Loan under Section 2.03, Swing Line Loan under Section 2.17 or Letter of Credit under Section 2.18 shall be subject to the satisfaction, or waiver, of each of the conditions precedent set forth below.

 

(a)                                 Notice. The Administrative Agent shall have received a Borrowing Request as required by Section 2.03 (or such notice shall have been deemed given in accordance with Section 2.03) if Loans are being requested or, in the case of the issuance, extension or

 

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renewal of a Letter of Credit, the Issuing Bank and the Administrative Agent shall have received an LC Request as required by Section 2.18(b) or, in the case of the Borrowing of a Swing Line Loan, the Swing Line Lender and the Administrative Agent shall have received a Borrowing Request as required by Section 2.17(b).

 

(b)                                 No Default. At the time of and immediately after giving effect to such Credit Extension, no Default or Event of Default shall have occurred and be continuing on such date.

 

(c)                                  Representations and Warranties.  Each of the representations and warranties made by any Credit Party set forth in Article III hereof or in any other Loan Document shall be true and correct in all material respects (except that any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) on and as of the date of such Credit Extension with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date in which case such representations and warranties shall be true and correct in all material respects (except that any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) as of such earlier date.

 

Each of the delivery of a Borrowing Request or an LC Request and the acceptance by the Borrower of the proceeds of such Credit Extension shall constitute a representation and warranty by the Borrower and each other Credit Party that on the date of such Credit Extension (both immediately before and immediately after giving effect to such Credit Extension) the conditions contained in this Article IV have been satisfied or waived.

 

ARTICLE V
AFFIRMATIVE COVENANTS

 

The Borrower and the Subsidiary Guarantors (and Holdings with respect to Sections 5.01, 5.02, 5.03, 5.05, 5.06, 5.07, 5.10, 5.11, 5.13, and 5.14) warrant, covenant and agree with each Lender that at all times after the Closing Date, so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document shall have been paid in full (other than contingent indemnification obligations and unasserted expense reimbursement obligations) and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full (except to the extent cash collateralized in accordance with the terms of this Agreement or to the extent backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank), the Borrower and the Subsidiary Guarantors (and Holdings, with respect to Sections 5.01, 5.02, 5.03, 5.05, 5.06, 5.07, 5.10, 5.11, 5.13, and 5.14) will, and will cause each of their respective Restricted Subsidiaries to:

 

Section 5.01                             Financial Statements, Reports, etc.  Furnish to the Administrative Agent for distribution to each Lender:

 

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(a)                                 Annual Reports.  Within 120 days after the last day of each fiscal year of Holdings (or 150 days for the fiscal year ending December 31, 2018), a copy of the consolidated balance sheet of Holdings and its Restricted Subsidiaries as of the last day of the fiscal year then ended and the consolidated statements of income and cash flows of Holdings and its Restricted Subsidiaries for the fiscal year then ended, and accompanying notes thereto, each in reasonable detail showing (for fiscal years of Holdings ending December 31, 2018 and thereafter) in comparative form the figures for the previous fiscal year, audited and accompanied in the case of the consolidated financial statements by an opinion of (i) an independent public accounting firm of recognized national standing selected by the Borrower or (ii) any other accounting firm reasonably acceptable to the Administrative Agent (which opinion shall be unqualified as to scope, subject to the proviso below) to the effect that the consolidated financial statements have been prepared and present fairly, in all material respects, in accordance with GAAP the consolidated financial condition of Holdings and its Restricted Subsidiaries as of the close of such fiscal year; provided that such financial statements shall not contain a “going concern” qualification or statement, except to the extent that such a “going concern” qualification or statement (A) is solely a consequence of an impending stated final maturity date or (B) relates to any potential inability to satisfy the Financial Covenant or any other financial covenants under any other Indebtedness on a future date or in a future period; in each case, such financial statements shall be accompanied by a customary management discussion and analysis (in form reasonably acceptable to the Administrative Agent) of the financial performance of Holdings and its Restricted Subsidiaries;

 

(b)                                 Quarterly Reports.  Commencing with the first full fiscal quarter ending after the Closing Date, within 60 days after the last day of each of the first three fiscal quarters of each fiscal year of Holdings (or 75 days for the first three fiscal quarters ending after the Closing Date for which financial statements are required to be delivered), a copy of the unaudited consolidated balance sheet of Holdings and its Restricted Subsidiaries as of the last day of such fiscal quarter and the unaudited consolidated statements of income and cash flows of Holdings and its Restricted Subsidiaries for the fiscal quarter and for the fiscal year-to-date period then ended, each in reasonable detail and showing in comparative form the figures for the corresponding date and period in the previous fiscal year of Holdings (starting with the first full fiscal quarter ending after the Closing Date), prepared by Holdings in accordance with GAAP (subject to the absence of footnote disclosures and year-end audit adjustments) and certified on behalf of Holdings by a Financial Officer as prepared in accordance with GAAP (subject to the absence of footnote disclosures and year-end audit adjustments) and fairly reflecting the financial condition and results of operations of Holdings and its Restricted Subsidiaries in all material respects;

 

(c)                                  Financial Officer’s Certificate.  Concurrently with any delivery of financial statements under Section 5.01(a) or (b), a Compliance Certificate (i) certifying on behalf of Holdings that, to its knowledge, no Default or Event of Default has occurred and is continuing or, if any such known Default or Event of Default has occurred and is continuing, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto; provided that, if such Compliance Certificate demonstrates that an Event of Default has occurred and is continuing due to a failure to comply with any covenant under Section 6.08 that has not been cured prior to such time, the Borrower may deliver, to the extent and within the time period permitted by Section 8.03, prior to, after or together with such

 

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Compliance Certificate, a Notice of Intent to Cure such Event of Default, (ii) setting forth the computation of the First Lien Leverage Ratio (whether or not the Financial Covenant is then required to be tested) and, (iii) setting forth, in the case of each Compliance Certificate delivered concurrently with any delivery of financial statements under Section 5.01(a) above, the Borrower’s calculation of Excess Cash Flow starting with the first full fiscal year after the Closing Date; provided that, for the avoidance of doubt, no Compliance Certificate shall “bring down” any representations and warranties made herein or in any other Loan Document;

 

(d)                                 Budgets.  Prior to the consummation of an IPO, commencing with the fiscal year beginning January 1, 2019, within 120 days after the beginning of each fiscal year, an annual budget (on a quarterly basis) in form customarily prepared with regard to Holdings and its Restricted Subsidiaries by Holdings; and

 

(e)                                  Other Information.  Promptly, from time to time, and upon the reasonable written request of the Administrative Agent, other reasonably requested information of the Group Members regarding the operations, business affairs and financial condition (including information required under the Patriot Act); provided that nothing in this Section 5.01(e) shall require any Group Member to take any action that would violate any third party customary confidentiality agreement (other than any such confidentiality agreement entered into in contemplation of this Agreement) with any Person that is not an Affiliate (and, in all events, so long as such confidentiality agreement does not relate to information regarding the financial affairs of any Group Member or the compliance with the terms of any Loan Document) or waive any attorney-client or similar privilege.

 

Documents required to be delivered pursuant to Section 5.01(a) through Section 5.01(e) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which such documents are sent via e-mail to the Administrative Agent for posting on the Borrower’s behalf on IntraLinks/IntraAgency or another relevant website, if any, established on its behalf by the Administrative Agent and to which each Lender and the Administrative Agent have access or the date on which the Borrower has posted such documents on its own website to which each Lender and the Administrative Agent have access and notified the Administrative Agent of such posting.  Notwithstanding anything contained herein, at the reasonable written request of the Administrative Agent, the Borrower shall thereafter promptly be required to provide paper copies of any documents required to be delivered pursuant to Section 5.01.  Each Lender shall be solely responsible for timely accessing posted documents or requesting delivery of paper copies of such documents from the Administrative Agent and maintaining its copies of such documents.  If the delivery of any of the foregoing documents required under this Section 5.01 shall fall on a day that is not a Business Day, such deliverable shall be due on the next succeeding Business Day.

 

Section 5.02                             Litigation and Other Notices.  Furnish to the Administrative Agent written notice of the following promptly (and, in any event, within five Business Days or such later date as may be agreed by the Administrative Agent in its reasonable discretion) of a Responsible Officer of the Borrower obtaining actual knowledge thereof:

 

(a)                                 any Default or Event of Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto;

 

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(b)                                 any litigation or governmental proceeding pending against Holdings, the Borrower or any of their Subsidiaries that could reasonably be expected to be determined adversely and, if so determined, to result in a Material Adverse Effect;

 

(c)                                  the occurrence of any ERISA Event that could, when taken either alone or together with all such other ERISA Events, reasonably be expected to have a Material Adverse Effect; and

 

(d)                                 any other development that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect.

 

Section 5.03                             Existence; Properties.

 

(a)                                 Do or cause to be done all things necessary to preserve, renew and maintain in full force and effect its legal existence, except as otherwise permitted under Sections 6.04 or 6.05 or, in the case of any Restricted Subsidiary, where the failure to perform such obligations could not reasonably be expected to result in a Material Adverse Effect.

 

(b)                                 Do or cause to be done all things reasonably necessary to obtain, preserve, renew, extend and keep in full force and effect the rights, licenses, permits, privileges, franchises, authorizations and Intellectual Property which are necessary and material to the conduct of its business (except where the failure to do so could not be reasonably expected to have a Material Adverse Effect); and comply with all applicable Requirements of Law and decrees and orders of any Governmental Authority applicable to it or to its business or property, except to the extent failure to comply therewith, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

 

(c)                                  Except to the extent that the failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, maintain, preserve and protect all of its properties and equipment material to the operation of its business in good working order, repair and condition, ordinary wear and tear excepted and casualty or condemnation excepted.

 

Section 5.04                             Insurance.

 

(a)                                 Keep its insurable property adequately insured at all times by financially sound and reputable insurers; maintain such other insurance, in each case, to such extent and against such risks as is customary with companies in the same or similar businesses operating in the same or similar locations.  Any such insurance (excluding business interruption insurance) maintained in the United States shall name the Collateral Agent as mortgagee, additional insured or loss payee, as applicable, in a manner reasonably acceptable the Collateral Agent, subject to Section 5.15.

 

(b)                                 From and after ninety days after the Closing Date (or such later date as the Administrative Agent may agree), the Credit Parties shall use commercially reasonable efforts to cause all such insurance with respect to the Credit Parties and property constituting Collateral to provide that no cancellation, material reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by the Collateral Agent of written notice

 

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thereof (or if such cancellation is by reason of nonpayment of premium, at least ten days’ prior written notice) (unless it is such insurer’s policy not to provide such a statement).

 

(c)                                  If at any time the buildings and other improvements (as described in the applicable Mortgage) on a Material Property that is encumbered by a Mortgage required by this Agreement are located in an area identified by the Federal Emergency Management Agency (or any successor agency) as a special flood hazard area with respect to which flood insurance has been made available under the National Flood Insurance Act of 1968 (as now or hereafter in effect or successor act thereto), then, solely to the extent required by applicable Requirements of Law, the Borrower shall, or shall cause the applicable Credit Party, to maintain, with a financially sound and reputable insurer, flood insurance in an amount and otherwise sufficient to comply with all applicable rules and regulations promulgated pursuant to the Flood Insurance Laws and deliver to the Administrative Agent evidence of such compliance in form and substance reasonably acceptable to the Administrative Agent.

 

Section 5.05                             Taxes. Pay and discharge promptly when due all Taxes imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent, or in default; provided that such payment and discharge shall not be required with respect to any such Tax so long as (x)(i) the validity or amount thereof shall be contested in good faith by appropriate proceedings and the applicable Group Member shall have set aside on its books adequate reserves or other appropriate provisions with respect thereto in accordance with GAAP and (ii) such contest operates to suspend collection of the contested Tax and enforcement of a Lien (other than a Permitted Lien) or (y) the failure to pay would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

 

Section 5.06                             Employee Benefits.

 

(a)                                 With respect to any Employee Benefit Plan or Foreign Plan, comply in all respects with the applicable provisions of ERISA, the Code and applicable foreign law except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect; and

 

(b)                                 furnish to the Administrative Agent (x) as soon as reasonably practicable after, and in any event within ten days (or such later date as may be agreed to by the Administrative Agent in its sole discretion) after any Responsible Officer of any Group Member knows that any ERISA Event or any failures to meet funding or other applicable legal requirements with respect to Foreign Plans has occurred that, alone or together with any other ERISA Event or such noncompliance event with respect to Foreign Plans, would reasonably be expected to result in liability of the Group Members which would reasonably be expected to have a Material Adverse Effect or the imposition of a Lien on any property of any Credit Party, a statement of a Responsible Officer of the Borrower setting forth details as to such ERISA Event or such noncompliance event with respect to Foreign Plans and the action, if any, that the Group Members propose to take with respect thereto, and (y) upon reasonable request by the Administrative Agent, copies of (i) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by any Group Members with the IRS with respect to each Plan; (ii) the most recent actuarial valuation report for each Plan; (iii) all notices received by any Group Member or any ERISA Affiliate from a Multiemployer Plan sponsor or any Governmental

 

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Authority concerning an ERISA Event or such noncompliance event with respect to Foreign Plans; and (iv) such other documents or governmental reports or filings relating to any Plan or Foreign Plan, in each case, that is sponsored, maintained or contributed to by a Group Member, as the Administrative Agent shall reasonably request.

 

Section 5.07                             Maintaining Records; Access to Properties and Inspections.  Maintain a system of accounting that enables Holdings to produce financial statements in accordance with GAAP.  Each Group Member will permit any representatives designated by the Administrative Agent to visit during its regular business hours and with reasonable advance written notice thereof and inspect the financial records and the property of such Group Member at reasonable times up to one time per calendar year (but without frequency limit during the continuance of an Event of Default) and to make extracts from and copies of such financial records, and permit any representatives designated by the Administrative Agent to discuss the affairs, finances, accounts and condition of any Group Member with the officers and employees thereof and advisors therefor (including independent accountants); provided that the Administrative Agent shall give any Group Member an opportunity for its representatives to participate in any such discussions; provided, further, that so long as no Event of Default has occurred and is then continuing, the Borrower shall not bear the cost of more than one such inspection per calendar year by the Administrative Agent and Lenders (or their respective representatives).  Notwithstanding anything to the contrary in this Section 5.07, no Group Member will be required to disclose or permit the inspection or discussion of, any document, information or other matter (i) that constitutes confidential Intellectual Property, including trade secrets or other confidential proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by Requirements of Law or any binding agreement (not entered into in contemplation hereof), or (iii) that is subject to attorney client or similar privilege or constitutes attorney work product.

 

Section 5.08                             Use of Proceeds.  Use the proceeds of the Loans only for the purposes set forth in Section 3.11.

 

Section 5.09                             Compliance with Environmental Laws; Environmental Reports.

 

(a)                                 Except as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (i) comply with all Environmental Laws and Environmental Permits applicable to its operations and Real Property; (ii) obtain and renew all Environmental Permits applicable to its operations and owned Real Property and, to the extent the Group Members are required to obtain such Environmental Permits under the applicable lease, leased Real Property; and (iii) comply with all lawful orders of a Governmental Authority required of the Group Members by, and in accordance with, Environmental Laws; provided that no Group Member shall be required to comply with such orders to the extent that its obligation to do so is being contested in good faith and by proper proceedings.

 

(b)                                 If an Event of Default caused by reason of a breach of Section 3.17 or 5.09(a) shall have occurred and be continuing for more than 30 days without the Group Members commencing activities reasonably likely to cure such Event of Default in accordance with Environmental Laws, at the reasonable written request of the Administrative Agent or the

 

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Required Lenders through the Administrative Agent, which written request will describe the nature and subject of the Event of Default, the Borrower shall provide to the Administrative Agent within 60 days after such request (or by such later date as may be agreed to by the Administrative Agent in its sole discretion), at the expense of the Borrower, an environmental assessment report regarding the matters which are the subject of such Event of Default; provided, however, notwithstanding anything to the contrary contained herein or in any other Loan Document, under no other circumstances shall any environmental assessment report (or any other environmental report) be required under any Loan Document.

 

Section 5.10                             Additional Collateral; Additional Guarantors.

 

(a)                                 Subject to the terms of the Security Documents and Section 3.18, Section 4.01(l) and Section 5.15, with respect to any personal property acquired after the Closing Date by any Credit Party that constitutes “Collateral” under any of the Security Documents or is intended to be subject to the Liens created by any Security Document but is not so subject to a Lien thereunder, but in any event subject to the terms, conditions and limitations thereunder, within 60 days after the acquisition thereof, or such longer period as the Administrative Agent may approve in each case in its sole discretion, (i) execute and deliver to the Administrative Agent and the Collateral Agent such amendments or supplements to the relevant Security Documents or such other New York law governed (except in the case of certain mortgages of Material Property) documents as the Administrative Agent or the Collateral Agent shall reasonably deem necessary to grant to the Collateral Agent, for its benefit and for the benefit of the other Secured Parties, a Lien under applicable U.S. state and federal law on such Collateral subject to no Liens other than Permitted Liens, and (ii) take all actions reasonably necessary to cause such Lien to be duly perfected to the extent required by such Security Document in accordance with all applicable U.S. state and federal law, including the filing of financing statements and intellectual property security agreements in such U.S. jurisdictions as may be reasonably requested by the Administrative Agent or the Collateral Agent.  The Borrower and the other Credit Parties shall otherwise take such actions and execute and/or deliver to the Collateral Agent (or its non-fiduciary agent or designee pursuant to any Intercreditor Agreement) such New York law governed (except in the case of certain mortgages of Material Property) documents as the Administrative Agent or the Collateral Agent shall reasonably require to confirm the validity, perfection and priority of the Lien of the Security Documents on such after-acquired Collateral.

 

(b)                                 Subject to the terms of the Security Documents and Section 5.15, upon the formation or acquisition of, or the re-designation of an Unrestricted Subsidiary as, a Restricted Subsidiary that is a Wholly Owned Restricted Subsidiary (other than any Excluded Subsidiary) after the Closing Date (other than a merger Subsidiary formed in connection with a Permitted Acquisition so long as such merger Subsidiary is merged out of existence pursuant to such Permitted Acquisition, or otherwise merged out of existence or dissolved, within 60 days of its formation (or such later date as permitted by the Administrative Agent in its sole discretion)) or upon any Excluded Subsidiary ceasing to constitute an Excluded Subsidiary, within 60 days after such formation, acquisition, designation or cessation, or such longer period as the Administrative Agent may approve in its reasonable discretion, the Borrower shall:

 

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(i)                                     deliver to the Collateral Agent the certificates, if any, representing all of the Equity Interests of such Wholly Owned Restricted Subsidiary that constitute Collateral and that are “certificated securities” (as defined in Article 8 of the UCC), together with undated Equity Interest powers or other appropriate instruments of transfer executed and delivered in blank by a duly authorized officer of the holder(s) of such Equity Interests, and all intercompany notes owing from such Wholly Owned Restricted Subsidiary to any Credit Party required to be delivered pursuant to the Security Agreement or other applicable Security Document and not previously so delivered, together with instruments of transfer executed and delivered in blank by a duly authorized officer of such Credit Party or Additional Guarantor, as applicable, and all other Collateral that is required to be delivered pursuant to the Security Agreements or other applicable Security Document and not previously so delivered; and

 

(ii)                                  cause any such new Wholly Owned Restricted Subsidiary (except Excluded Subsidiaries), (A) to execute and deliver a Joinder Agreement or such comparable documentation to become a Subsidiary Guarantor or, to the extent the Borrower elects to join such Subsidiary as a co-borrower, in compliance with Section 2.24 hereof, a joinder agreement to the Security Agreement, substantially in the form annexed thereto, and (B) to take all actions reasonably necessary to cause the Lien created on the Collateral (which shall exclude Excluded Property and be subject to the limitations set forth herein and the applicable Security Documents) by the applicable Security Documents to be duly perfected under U.S. federal and applicable state law to the extent required by such agreements in accordance with all applicable Requirements of Law, including the filing of financing statements and intellectual property security agreements in such U.S. jurisdictions as may be reasonably requested by the Administrative Agent or the Collateral Agent; provided that, (y) no pledge of Excluded Equity Interests shall be required, and (z) no perfection actions by “control” (except with respect to Equity Interests and certain debt instruments), leasehold mortgages, landlord waivers or collateral access agreements shall be required to be entered into.

 

(c)                                  Subject to the terms of the Security Documents and Section 5.15, upon the acquisition of any new Material Property:

 

(i)                                     within fifteen Business Days after such acquisition (as such period may be extended by the Administrative Agent in its sole discretion), the applicable Credit Party shall furnish to the Collateral Agent a description of such Material Property in detail reasonably satisfactory to the Collateral Agent; and

 

(ii)                                  within ninety days after such acquisition (as such period may be extended by the Administrative Agent in its sole discretion), the applicable Credit Party shall grant to the Collateral Agent a security interest in such Material Property and deliver a mortgage, deed of trust or deed to secure debt in a form reasonably satisfactory to the Collateral Agent (a “Mortgage”) as additional security for the Obligations (which, if reasonably requested by the Administrative Agent, shall be accompanied by a customary legal opinion) and deliver to the Administrative Agent, a completed “Life-of-Loan” Federal Emergency Management Agency standard flood hazard determination,

 

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together with a notice executed by such Credit Party about special flood hazard area status, if applicable, in respect of such Mortgage.

 

Section 5.11                             Security Interests; Further Assurances.  Promptly upon reasonable request by the Administrative Agent or the Collateral Agent (i) correct any material defect or error that may be discovered in the execution, acknowledgment, filing or recordation of any Security Document or other document or instrument relating to any Collateral, and (ii) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent or the Collateral Agent may reasonably request from time to time in order to carry out more effectively the purposes of this Agreement and the Security Documents; provided that, notwithstanding anything else contained herein or in any other Loan Document to the contrary, (x) the foregoing shall not apply to any Excluded Subsidiary or Property of any Excluded Subsidiary or any Excluded Property or any Excluded Equity Interests, (y) any such documents and deliverables (other than certain mortgages of Material Property) shall be governed by New York law and (z) no perfection actions by “control” (except with respect to Equity Interests and certain debt instruments), leasehold mortgages or landlord waivers, estoppels or collateral access letters shall be required to be entered into hereunder or under any other Loan Document.  Notwithstanding the foregoing or anything else herein or in any other Loan Document to the contrary, in no event shall (A) the assets of any Excluded U.S. Subsidiary or Excluded Foreign Subsidiary (including the Equity Interests of any Subsidiary thereof) constitute security or secure, or such assets or the proceeds of such assets be required to be available for, payment of the Obligations, (B) more than 65% of the Voting Stock of and 100% of the Equity Interests that are not Voting Stock of any CFC Holding Company or Excluded Foreign Subsidiary, in each case, owned directly by a Credit Party be required to be pledged to secure the Obligations or (C) any Equity Interests of any Subsidiary owned by an Excluded Foreign Subsidiary or Excluded U.S. Subsidiary (or any Subsidiary of any Excluded Foreign Subsidiary or Excluded U.S. Subsidiary) be required to be pledged to secure the Obligations.

 

Section 5.12                             Maintenance of Ratings. Use commercially reasonable efforts to maintain (i) a public corporate credit rating (but not any specific rating) from S&P and a public corporate family rating (but not any specific rating) from Moody’s, in each case, in respect of the Borrower, and (ii) a public rating (but not any specific rating) in respect of each Class of Term Loans from each of S&P and Moody’s, unless a given Class has waived the requirement to maintain any rating for such Class pursuant to the applicable Loan Documents.

 

Section 5.13                             Compliance with Law.  Comply with all Requirements of Law and all orders, writs, injunctions and decrees applicable to Holdings, the Borrower or any Subsidiary Guarantor or to their business or property, except to the extent that the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

 

Section 5.14                             Anti-Terrorism Law; Anti-Money Laundering; Foreign Corrupt Practices Act.

 

(a)                                 Not directly or indirectly, (i) knowingly deal in, or otherwise knowingly engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order or any other applicable Anti-Terrorism Law in violation of any applicable

 

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Anti-Terrorism Law or applicable Sanctions, or (ii) knowingly engage in or conspire to engage in any transaction that violates or attempts to violate, any of the material prohibitions set forth in any applicable Anti-Terrorism Law or applicable Sanctions;

 

(b)                                 (i) Not repay the Loans, or make any other payment to any Lender, using funds or properties of Holdings, the Borrower or any Restricted Subsidiaries that are, to the knowledge of the Borrower, the property of any Person that is the subject or target of applicable Sanctions or that are, to the knowledge of the Borrower, beneficially owned, directly or indirectly, by any Person that is the subject or target of applicable Sanctions, in each case, in violation of Anti-Terrorism Laws or applicable Sanctions or any other applicable Requirement of Law or (ii) to the knowledge of Borrower, not permit any Person that is the subject of Sanctions to have any direct or indirect interest, in Holdings, the Borrower or any of the Subsidiaries, with the result that the investment in Holdings, the Borrower or any of the Subsidiaries (whether directly or indirectly) or the Loans made by the Lenders would be in violation of any applicable Sanctions.

 

(c)                                  Each Credit Party will within 100 days of the Closing Date, maintain in effect and enforce policies and procedures that are reasonably designed to ensure compliance by the Credit Parties and their respective directors, officers, employees and agents with the Foreign Corrupt Practices Act of 1977, as amended.

 

Section 5.15                             Post-Closing Deliveries.

 

(a)                                 The Borrower hereby agrees to deliver, or cause to be delivered, to the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent, the items described on Schedule 5.15 hereof, if any, on or before the dates specified with respect to such items, or such later dates as may be agreed to by, or as may be waived by, the Administrative Agent in its sole discretion.

 

(b)                                 All representations and warranties contained in this Agreement and the other Loan Documents shall be deemed modified to the extent necessary to effect the foregoing (and to permit the taking of the actions described above within the time periods required above and in Schedule 5.15, rather than as elsewhere provided in the Loan Documents); provided that (x) to the extent any representation and warranty would not be true because the foregoing actions were not taken on the Closing Date or, following the Closing Date, prior to the date by which such action is required to be taken by Section 5.15(a), the respective representation and warranty shall be required to be true and correct in all material respects (except that any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) at the time the respective action is taken (or was required to be taken) in accordance with the foregoing provisions of this Section 5.15 (and Schedule 5.15) and (y) all representations and warranties relating to the assets set forth on Schedule 5.15 pursuant to the Security Documents shall be required to be true and correct in all material respects (except that any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) immediately after the actions required to be taken under this Section 5.15 (and Schedule 5.15) have been taken (or were required to be taken), except to the extent any such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except

 

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that any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects) as of such earlier date.

 

ARTICLE VI
NEGATIVE COVENANTS

 

Each of the Credit Parties warrants, covenants and agrees with each Lender that at all times after the Closing Date, so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document shall have been paid in full (other than contingent indemnification obligations and unasserted expense reimbursement obligations) and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full (except to the extent cash collateralized in accordance with the terms of this Agreement, backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank), none of the Credit Parties will, nor will permit any of its Restricted Subsidiaries to (it being understood that for purposes of this Article VI (other than Sections 6.06, 6.10, 6.11 and 6.13), “Credit Parties” and “Group Members” shall exclude Holdings):

 

Section 6.01                             Indebtedness.  Incur, create, assume or permit to exist, directly or indirectly, any Indebtedness, except:

 

(a)                                 Indebtedness incurred under this Agreement and the other Loan Documents (including Indebtedness incurred pursuant to Section 2.20, Section 2.21, Section 2.22 and Section 2.23 hereof), any Permitted Incremental Equivalent Debt and, in each case, any Permitted Refinancing thereof;

 

(b)                                 (x) Indebtedness in existence on the Closing Date and, with respect to any such Indebtedness in excess of $2,500,000 in aggregate principal amount, set forth on Schedule 6.01(b) and (y) Permitted Refinancings thereof;

 

(c)                                  [reserved];

 

(d)                                 Indebtedness under Hedging Obligations with respect to interest rates, foreign currency exchange rates or commodity prices not entered into for speculative purposes;

 

(e)                                  Indebtedness in respect of Purchase Money Obligations or Capital Lease Obligations, Indebtedness incurred in connection with financing Real Property (regardless of when initially acquired) and Indebtedness incurred in connection with Sale Leaseback Transactions, and any Permitted Refinancings of any of the foregoing, in an aggregate amount for all such Indebtedness under this clause (e) not to exceed, at any time outstanding, the greater of $5,000,000 and 12.5% of Consolidated EBITDA for the most recently ended Test Period, plus any additional amount so long as the First Lien Leverage Ratio as of the Applicable Date of Determination and for the applicable Test Period does not exceed 4.75 to 1.00;

 

(f)                                   Indebtedness in respect of (x) appeal bonds or similar instruments and (y) payment, bid, performance or surety bonds, or other similar bonds, completion guarantees, or

 

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similar instruments, workers’ compensation claims, health, disability or other employee benefits, self-insurance obligations, letters of credit, and bankers acceptances issued for the account of any Group Member, in each case listed under this clause (y), in the ordinary course of business, and including guarantees or obligations of any Group Member with respect to letters of credit supporting such appeal, payment, bid, performance or surety or other similar bonds, completion guarantees, or similar instruments, workers’ compensation claims, health, disability or other employee benefits, self-insurance obligations and bankers acceptances (in each case other than for an obligation for money borrowed);

 

(g)                                  (i) Contingent Obligations in respect of Indebtedness otherwise permitted to be incurred by such Group Member under this Section 6.01 (provided that (x) the foregoing shall not permit a non-Credit Party to guarantee Indebtedness that it could not otherwise incur under this Section 6.01 and (y) if any such Indebtedness is subordinated (including as to lien or collateral priority) to the Obligations, such Contingent Obligation shall be subordinated on terms at least as favorable to the Lenders) and (ii) Indebtedness constituting Investments permitted under Section 6.03 (other than Section 6.03(n));

 

(h)                                 Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of incurrence;

 

(i)                                     Indebtedness arising in connection with the endorsement of instruments for deposit in the ordinary course of business;

 

(j)                                    Indebtedness in respect of netting services or overdraft protection or otherwise in connection with deposit or securities accounts in the ordinary course of business;

 

(k)                                 Indebtedness consisting of (i) the financing of insurance premiums or (ii) take or pay obligations contained in supply arrangements, in each case, in the ordinary course of business;

 

(l)                                     unsecured Indebtedness of Holdings to its Subsidiaries at such times and in such amounts necessary to permit Holdings to receive any Dividend permitted to be made to Holdings pursuant to Section 6.06, so long as, as of the applicable date of determination, a Dividend for such purposes would otherwise be permitted to be made pursuant to Section 6.06; provided that any such Indebtedness shall be deemed to utilize on a dollar-for-dollar basis (but without duplication of any corresponding dollar-for-dollar reduction pursuant to Section 6.03(q), and solely for so long as such Indebtedness remains outstanding) the relevant basket under Section 6.06);

 

(m)                             subject to Section 6.03(f), intercompany Indebtedness owing (i) by and among the Credit Parties, (ii) by Restricted Subsidiaries that are not Credit Parties to Restricted Subsidiaries that are not Credit Parties, (iii) by Restricted Subsidiaries that are not Credit Parties to Credit Parties; provided that outstanding Indebtedness under this clause (m)(iii) (together (but without duplication) with Investments made pursuant to Section 6.03(f)(iii)) shall not exceed the greater of $10,000,000 and 15% of Consolidated EBITDA at any time, and (iv) by Credit Parties

 

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to Subsidiaries that are not Credit Parties; provided that Indebtedness under this clause (m)(iv) shall be unsecured and shall be subordinated to the Obligations pursuant to the terms of the Intercompany Subordination Agreement or other subordination terms reasonably acceptable to the Administrative Agent;

 

(n)                                 unsecured Indebtedness owing to employees, former employees, officers, former officers, directors, former directors (or any spouses, ex-spouses, or estates of any of the foregoing) of any Group Member in connection with the repurchase of Equity Interests of Holdings or any of its direct or indirect parent companies issued to any of the aforementioned employees, former employees, officers, former officers, directors, former directors (or any spouses, ex-spouses, or estates of any of the foregoing) of any Group Member not to exceed the sum of (i) $2,500,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $3,350,000) in the case of Indebtedness that does not constitute Subordinated Indebtedness plus (ii) $5,000,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $6,700,000) in the case of Subordinated Indebtedness, in each case, at any time outstanding;

 

(o)                                 Indebtedness arising as a direct result of judgments, orders, awards or decrees against Holdings or any Restricted Subsidiaries, in each case not constituting an Event of Default;

 

(p)                                 unsecured Indebtedness representing any Taxes to the extent such Taxes are being contested by any Group Member in good faith by appropriate proceedings and adequate reserves are being maintained by the Group Members in accordance with GAAP;

 

(q)                                 Indebtedness assumed in connection with any Permitted Acquisition, other permitted Investment or, to the extent not constituting a Purchase Money Obligation or a Capital Lease Obligation, Capital Expenditure; provided that such Indebtedness was not incurred in contemplation of such Permitted Acquisition, other such Investment or such Capital Expenditure;

 

(r)                                    at any time, Indebtedness in an amount not to exceed the amount of Dividends that may be paid at such time pursuant to Section 6.06(f), (j), (o), (q) and/or (r); provided that any such Indebtedness shall be deemed to utilize on a dollar for dollar basis such corresponding basket under Section 6.06;

 

(s)                                   Indebtedness of Restricted Subsidiaries that are not Credit Parties and any joint ventures (but only to the extent non-recourse to the Credit Parties), and any guarantees thereof by Restricted Subsidiaries that are not Credit Parties, in aggregate principal amount not to exceed the greater of $13,500,000 and 30% of Consolidated EBITDA for the most recently ended Test Period at any time outstanding;

 

(t)                                    [reserved];

 

(u)                                 Senior Secured Indebtedness, Junior Secured Indebtedness and Unsecured Indebtedness, in each case incurred for any purpose (including to finance a Permitted Acquisition, other permitted Investment or, to the extent not constituting a Purchase Money Obligation or a Capital Lease Obligation, Capital Expenditure), and in each case subject to compliance with the Required Debt Terms; provided that on a Pro Forma Basis immediately

 

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after giving effect to each such incurrence and the application of the proceeds therefrom (including pursuant to any Permitted Acquisition or other Investment consummated in connection therewith or the repayment or prepayment of any Indebtedness with the proceeds thereof), and any disposition, incurrence of Indebtedness, or other appropriate pro forma adjustments in connection therewith (but without, for the avoidance of doubt, giving effect to any amounts incurred in connection therewith under the Fixed Incremental Amount or the Revolving Commitments (and, in each case, for the avoidance of doubt, for purposes of calculating the Consolidated Interest Coverage Ratio, without giving effect to any interest expense attributable to any such Indebtedness incurred in connection therewith under the Fixed Incremental Amount or the Revolving Commitments, but otherwise excluding the cash proceeds of any such Indebtedness from cash and Cash Equivalents)), (i) in the case of Senior Secured Indebtedness, the First Lien Leverage Ratio as of the Applicable Date of Determination and for the applicable Test Period shall not be greater than the greater of (A) 5.50 to 1.00 and (B) the First Lien Leverage Ratio as of the Applicable Date of Determination and for the applicable Test Period immediately prior to the incurrence thereof; (ii) in the case of Junior Secured Indebtedness described in clause (a) of the definition thereof, the Senior Secured Leverage Ratio as of the Applicable Date of Determination and for the applicable Test Period is not greater than the greater of (A) 7.50 to 1.00 and (B) the Senior Secured Leverage Ratio as of the Applicable Date of Determination for the applicable Test Period immediately prior to the incurrence thereof; and (iii) in the case of Junior Secured Indebtedness described in clause (b) of the definition thereof or Unsecured Indebtedness, either (A) the Consolidated Interest Coverage Ratio computed on a Pro Forma Basis as of the Applicable Date of Determination and for the most recently ended Test Period is no less than the lesser of (I) 2.00 to 1.00 and (II) the Consolidated Interest Coverage Ratio for the most recently ended Test Period immediately prior to the incurrence thereof, or (B) the Total Leverage Ratio as of the Applicable Date of Determination and for the applicable Test Period is not greater than the greater of (I) 7.50 to 1.00 and (II) the Total Leverage Ratio as of the Applicable Date of Determination and for the applicable Test Period immediately prior to the incurrence thereof; provided further that the aggregate principal amount of Indebtedness incurred pursuant to this clause (u) by Restricted Subsidiaries that are not Credit Parties shall not exceed the greater of $10,000,000 and 22% of Consolidated EBITDA for the most recently ended Test Period at any time outstanding;

 

(v)                                 Indebtedness in an aggregate amount not to exceed the greater of $15,000,000 and 25% of Consolidated EBITDA for the most recently ended Test Period incurred in connection with any accounts receivable factoring facility in compliance with Section 6.05(q);

 

(w)                               unsecured Indebtedness in the amount equal to the product of (1) two and (2) the amount of the of the aggregate cash equity contributions (excluding in respect of Disqualified Capital Stock) made to the Borrower by Holdings or any direct or indirect parent thereof after the Closing Date to the extent Not Otherwise Applied;

 

(x)                                 additional Indebtedness of the Borrower and the Restricted Subsidiaries; provided that, immediately after giving effect to any of incurrence of Indebtedness under this clause (x), the sum of the aggregate principal amount of Indebtedness outstanding under this clause (x) shall not exceed the greater of $20,000,000 and 40% of Consolidated EBITDA for the most recently ended Test Period at such time;

 

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(y)                                 to the extent constituting Indebtedness, advances in respect of transfer pricing or shared services agreements that are permitted by Section 6.03(z);

 

(z)                                  to the extent constituting any Indebtedness, any contingent liabilities arising in connection with any stock options;

 

(aa)                          Indebtedness pursuant to commercial letters of credit in an aggregate amount not to exceed the greater of $10,000,000 and 20% of Consolidated EBITDA for the most recently ended Test Period;

 

(bb)                          unsecured Indebtedness (i) incurred in a Permitted Acquisition, any other Investment or any Asset Sale, in each case to the extent constituting indemnification obligations or obligations in respect of purchase price (including Earn-Outs and any other contingent consideration obligations or deferred purchase price obligations or any Indebtedness incurred to finance such obligations) or other similar adjustments, or (ii) outstanding at any time to the seller of any business or assets permitted to be acquired by Holdings or any Restricted Subsidiary hereunder;

 

(cc)                            Indebtedness under Cash Management Agreements and other Indebtedness in respect of netting services, automatic clearinghouse arrangements, overdraft protections and similar arrangements, in each case, incurred in the ordinary course of business;

 

(dd)                          Indebtedness representing deferred compensation or other similar arrangements incurred in the ordinary course of business or in connection with a Permitted Acquisition or a similar permitted Investment;

 

(ee)                            all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (a) through (dd) above; and

 

(ff)                              customary indemnities contained in mandate, engagement and commitment letters, facility agreements, purchase agreements and indentures, in each case entered into in respect of Indebtedness permitted pursuant to this Section 6.01 and any Refinancing Debt in respect thereof.

 

The accrual of interest, the accretion of accreted value and the payment of interest in the form of additional Indebtedness shall not be deemed to be an incurrence of Indebtedness for purposes of this Section 6.01.

 

Section 6.02                             Liens.  Create, incur, assume or permit to exist, directly or indirectly, any Lien on any property now owned or hereafter acquired by it or on any income or revenues or rights in respect of any thereof, except the following (collectively, the “Permitted Liens”):

 

(a)                                 Liens for Taxes not yet due and payable and Liens for Taxes that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP;

 

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(b)                                 Liens in respect of property of any Group Member imposed by Requirements of Law, (i) which were incurred in the ordinary course of business and do not secure Indebtedness for borrowed money, such as carriers’, warehousemen’s, materialmen’s, landlords’, workmen’s, suppliers’, repairmen’s and mechanics’ Liens and other similar Liens arising in the ordinary course of business or otherwise pertaining to Indebtedness permitted under Section 6.01(f) and (h) which do not in the aggregate materially detract from the value of the property of the Group Members, taken as a whole, and do not materially impair the use thereof in the operation of the business of the Group Members, taken as a whole, and which, if they secure obligations that are then more than 30 days overdue and unpaid, are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, or (ii) arising mandatorily on the assets of any Foreign Subsidiary;

 

(c)                                  any Lien in existence on the Closing Date and set forth on Schedule 6.02(c) and any Lien granted as a replacement or substitute therefor; provided that any such replacement or substitute Lien (i) does not secure an aggregate amount of Indebtedness, if any, greater than the amount of such Indebtedness secured on the Closing Date or any Permitted Refinancing thereof and (ii) does not encumber any property in a material manner other than the property subject thereto on the Closing Date and any proceeds therefrom (any such Lien, an “Existing Lien”);

 

(d)                                 easements, rights-of-way, restrictions (including zoning restrictions), covenants, conditions, licenses, encroachments, protrusions and other similar charges or encumbrances, and title deficiencies on or other irregularities with respect to any Real Property, in each case whether now or hereafter in existence, not (i) securing Indebtedness or (ii) individually or in the aggregate materially interfering with the ordinary conduct of the business and operations of the Group Members at such Real Property and the value, use and occupancy thereof;

 

(e)                                  Liens to the extent arising out of judgments, orders, attachments, decrees or awards not resulting in an Event of Default;

 

(f)                                   Liens (x) imposed by Requirements of Law or deposits made in connection therewith in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security legislation, (y) incurred to secure the performance of appeal bonds or incurred in the ordinary course of business to secure the performance of tenders, statutory obligations (other than excise taxes), surety, stay, customs bonds and statutory bonds, bids, leases (including deposits with respect thereto), government contracts, trade contracts, performance and return of money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) or (z) arising by virtue of deposits made in the ordinary course of business to secure liability for premiums to insurance carriers; provided that (i) with respect to subclauses (x), (y) and (z) of this clause (f), such Liens are for amounts not yet due and payable or, to the extent such amounts are so due and payable, such amounts are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, which proceedings or orders entered in connection with such proceedings have the effect of preventing the forfeiture or sale of the property subject to any such Lien and (ii) to the extent such Liens are not imposed

 

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by Requirements of Law, such Liens shall in no event encumber any property other than cash and cash equivalents (including Cash Equivalents);

 

(g)           Leases, subleases, licenses and sublicenses of any Property (other than Intellectual Property) of any Group Member granted by such Group Member to third parties, in each case entered into in the ordinary course of such Group Member’s business;

 

(h)           any interest or title of a lessor, sublessor, licensor, sublicensor, licensee or sublicensee under any lease, sublease, license or sublicense not prohibited by this Agreement or the other Security Documents;

 

(i)            Liens which may arise as a result of municipal and zoning codes and ordinances, building and other land use laws imposed by any Governmental Authority which are not violated in any material respect by existing improvements or the present use or occupancy of any real property, or in the case of any Material Property subject to a Mortgage, encumbrances disclosed in the title insurance policy issued to, and reasonably approved by, the Administrative Agent;

 

(j)            Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by any Group Member in the ordinary course of business in accordance with the past practices of such Group Member;

 

(k)           Liens securing Indebtedness incurred pursuant to Section 6.01(e); provided that (other than with respect to any Sale Leaseback Transaction) any such Liens attach only to the property being financed pursuant to such Indebtedness;

 

(l)            bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by any Group Member, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements; provided that, unless such Liens are non-consensual and arise by operation of law, in no case shall any such Liens secure (either directly or indirectly) the repayment of any Indebtedness;

 

(m)          Liens on property or assets of a person existing at the time such person or asset is acquired or merged with or into or consolidated with any Group Member to the extent not prohibited hereunder (and not created in anticipation or contemplation thereof); provided that such Liens do not extend to property not subject to such Liens at the time of acquisition (other than improvements thereon or pursuant to an after-acquired property clause in the applicable security documents) and are no more favorable (as reasonably determined by the Borrower) to the lienholders than such existing Lien;

 

(n)           (i) Liens granted pursuant to the Security Documents to secure the Secured Obligations (including Indebtedness incurred pursuant to Section 2.20, Section 2.21, Section 2.22 and Section 2.23 hereof) and (ii) any Liens securing Permitted Incremental Equivalent Debt, Permitted Pari Passu Refinancing Debt and Permitted Junior Refinancing Debt (in each case, to the extent permitted pursuant to the terms of such definition); provided, in each

 

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case, that such Liens are subject to any subordination or intercreditor requirements set forth in the applicable definitions referenced above in this Section 6.02(n);

 

(o)           licenses and sublicenses of Intellectual Property granted by any Group Member in the ordinary course of business or not interfering in any material respect with the ordinary conduct of business of the Group Members;

 

(p)           the filing of UCC (or equivalent) financing statements solely as a precautionary measure in connection with operating leases or consignment of goods;

 

(q)           [reserved];

 

(r)            [reserved];

 

(s)            Liens attaching solely to cash earnest money deposits in connection with an Investment permitted by Section 6.03 (other than Section 6.03(j));

 

(t)            Liens of a collecting bank arising in the ordinary course of business under Section 4-208 of the UCC in effect in the relevant jurisdiction covering only the items being collected upon;

 

(u)           Liens granted by a Restricted Subsidiary (i) that is not a Credit Party in favor of any other Restricted Subsidiary in respect of Indebtedness or other obligations owed by such Restricted Subsidiary to such other Restricted Subsidiary or (ii) in favor of any Credit Party;

 

(v)           Liens on insurance policies and the proceeds thereof granted in the ordinary course of business to secure the financing of insurance premiums with respect thereto under Section 6.01(k);

 

(w)          Liens (i) incurred in the ordinary course of business in connection with the purchase or shipping of goods or assets (or the related assets and proceeds thereof), which Liens are in favor of the seller or shipper of such goods or assets and only attach to such goods or assets, and (ii) in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

 

(x)           Liens of any Group Member with respect to Indebtedness and other obligations that do not in the aggregate exceed the greater of $10,000,000 and 15% of Consolidated EBITDA for the most recently ended Test Period  at any time;

 

(y)           Liens on assets or property of Restricted Subsidiaries that are not Credit Parties securing Indebtedness and other obligations of such Restricted Subsidiary that is not a Credit Party permitted to be incurred pursuant to Section 6.01 (so long as such Liens do not extend to the assets of any Credit Parties);

 

(z)           Liens on (A) Receivables Assets and related assets incurred in connection with a Receivables Facility and (B) Securitization Assets and related assets arising in connection with a Qualified Securitization Financing, in each case, in compliance with Section 6.05(q);

 

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(aa)         Liens securing Indebtedness incurred pursuant to Section 6.01(q) (so long as such Liens secure only the same assets (and any after acquired assets pursuant to any after-acquired property clause in the applicable security documents) and the same Indebtedness that such Liens secured, immediately prior to the assumption of such Indebtedness, and so long as such Liens were not created in contemplation of such assumption) and (u) (to the extent permitted to be secured, and on the lien priorities described, by the terms thereof);

 

(bb)         Liens on cash advances in favor of the seller of any property to be acquired in an Investment permitted pursuant to Section 6.03 to be applied against the purchase price for such Investment;

 

(cc)         Liens on Equity Interests (i) deemed to exist in connection with any options, put and call arrangements, rights of first refusal and similar rights relating to Investments in Persons that are not Restricted Subsidiaries of Holdings or (ii) of any joint venture or similar arrangement pursuant to any joint venture or similar arrangement; and

 

(dd)         restrictions on dispositions of assets to be disposed of pursuant to merger agreements, stock or asset purchase agreements and similar agreements, in each case, solely to the extent such disposition would be permitted pursuant to the terms hereof.

 

Section 6.03          Investments, Loans and Advances.  Directly or indirectly, lend money or credit (by way of guarantee or otherwise) or make advances to any person, or purchase or acquire any Equity Interests, bonds, notes, debentures, guarantees or other securities of, or make any capital contribution to, or acquire assets constituting all or substantially all of the assets of, or acquire assets constituting a line of business, business unit or division of, any other person (all of the foregoing, collectively, “Investments”), except that the following shall be permitted:

 

(a)           the Group Members may consummate the Transactions in accordance with the provisions of the Loan Documents;

 

(b)           (i) Investments outstanding, contemplated or made pursuant to binding commitments in effect on the Closing Date and (to the extent in excess of $2,500,000 individually) identified on Schedule 6.03(b) and (ii) Investments consisting of any modification, replacement, renewal, reinvestment or extension of any Investment described in clause (i) above; provided that the amount of any Investment permitted pursuant to this clause (ii) is not increased from the amount of such Investment on the Closing Date except pursuant to the terms of such Investment as of the Closing Date or as otherwise permitted by this Section 6.03;

 

(c)           the Group Members may (i) acquire and hold accounts receivable owing to any of them if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary terms, (ii) invest in, acquire and hold cash and Cash Equivalents, and other cash equivalent Investments, (iii) endorse negotiable instruments held for collection or deposit in the ordinary course of business or (iv) make lease, utility and other similar deposits in the ordinary course of business;

 

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(d)           Hedging Obligations permitted by Section 6.01(d) or otherwise in connection with non-speculative Hedging Agreements or similar arrangements (including in connection with the terminations or unwinding thereof);

 

(e)           loans and advances (x) to directors, employees and officers of any Group Member in the ordinary course of business, or otherwise for bona fide business purposes in an aggregate amount not to exceed the greater of $5,000,000 and 7.5% of Consolidated EBITDA for the most recently ended Test Period at any time outstanding, (y) to directors, employees and officers of any Group Member (whether or not currently serving as such) to purchase Equity Interests of Holdings or any of its direct or indirect parent companies (provided that, in the case of this clause (y), any such amount loaned or advanced is simultaneously used to purchase such Equity Interests; to the extent paid in cash, such amounts shall be contributed to a Credit Party; and such loans shall not exceed in the aggregate, in any fiscal year of Holdings, the greater of $10,000,000 and 20% of Consolidated EBITDA for the most recently ended Test Period, provided, further, that such amount may be increased, by up to an aggregate amount equal to (i) the greater of $5,000,000 and 7.5% of Consolidated EBITDA for the most recently ended Test Period, solely to the extent unutilized in the immediately preceding fiscal year and (ii) the greater of $5,000,000 and 7.5% of Consolidated EBITDA for the most recently ended Test Period solely to the extent that any additional amount utilized pursuant to this clause (ii) shall reduce the amount of Investments permitted pursuant to this Section 6.03(e) in the subsequent fiscal year on a dollar-for-dollar basis), and (z) consisting of commissions advanced to producers that may not be earned through personal production and that are earned over time or written off by the Borrower as unearned salary;

 

(f)            Investments (i) by any Group Member in a Credit Party, (ii) by any Group Member that is not a Credit Party in any other Group Member and (iii) by any Credit Party in any Restricted Subsidiary that is not a Subsidiary Guarantor; provided that Investments under this clause (f)(iii) (together (without duplication) with outstanding intercompany Indebtedness outstanding under Section 6.01(m)(iii)) by the Borrower or a Subsidiary Guarantor in any other Subsidiary that is not a Subsidiary Guarantor (including any joint venture that constitutes a Restricted Subsidiary) shall not exceed, at any time outstanding, (A) $10,000,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $13,400,000) plus (B) any additional amounts to the extent that such amounts are applied substantially concurrently by such Subsidiary that is not a Subsidiary Guarantor to make a Permitted Acquisition or other permitted Investment under clause (i), (l), (r), (s), (v), (w), (x), (y), (bb) or (ff) of this Section 6.03;

 

(g)           Investments in securities or other assets of trade creditors or customers in the ordinary course of business received in settlement of bona fide disputes or upon foreclosure or pursuant to any plan of reorganization or liquidation or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers;

 

(h)           Investments held by any Group Member as a result of consideration received in connection with an Asset Sale or other disposition made in compliance with Section 6.05 (other than Section 6.05(e));

 

(i)            Permitted Acquisitions;

 

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(j)            any Group Member may make pledges and deposits permitted under Section 6.02;

 

(k)           any Group Member may make a loan that could otherwise be made as a distribution permitted under Section 6.06 (with a commensurate dollar-for-dollar reduction of their ability to make additional distributions under such Section, for so long as such loan remains outstanding);

 

(l)            Investments consisting of earnest money deposits required in connection with a Permitted Acquisition or other permitted Investment;

 

(m)          Investments of any Person existing at the time such Person becomes a Restricted Subsidiary or consolidates, amalgamates or merges with any Group Member (including in connection with a Permitted Acquisition) so long as such investments were not made in contemplation of such Person becoming a Restricted Subsidiary or of such consolidation, amalgamation or merger;

 

(n)           Contingent Obligations and other Indebtedness permitted by Section 6.01 (other than Section 6.01(g)(ii)), performance guarantees, and transactions permitted under Section 6.04 (other than Section 6.04(b));

 

(o)           acquisitions of Term Loans by any Group Member pursuant to Section 10.04(b)(viii), and of any Permitted Incremental Equivalent Debt (or any Credit Agreement Refinancing Indebtedness in respect of any of the foregoing) and any Indebtedness incurred pursuant to Section 6.01(u), pursuant to the corresponding provision of the documents governing such Indebtedness;

 

(p)           (x) Investments in deposit and investment accounts (including, for the avoidance of doubt, eurocurrency investment accounts) opened in the ordinary course of business with financial institutions and (y) any Investment in any Subsidiary or any joint venture in connection with intercompany cash management arrangements or related activities arising in the ordinary course of business or consistent with past practice;

 

(q)           unsecured intercompany advances by any Group Member to Holdings for purposes and in amounts that would otherwise be permitted to be made as Dividends to Holdings pursuant to Section 6.06; provided that the principal amount of any such loans shall, for so long as such loans remain outstanding, reduce dollar-for-dollar (but without duplication of any corresponding dollar-for-dollar reduction pursuant to Section 6.01(l)) the amounts that would otherwise be permitted to be paid for such purpose in the form of Dividends pursuant to such Section;

 

(r)            Investments to the extent constituting the reinvestment of the Net Cash Proceeds arising from any Asset Sale (or other disposition) or Casualty Events to repair, replace or restore any property in respect of which such Net Cash Proceeds were paid or to reinvest in other fixed or Capital Assets or assets that are otherwise used or useful in the business of the Group Members (including pursuant to a Permitted Acquisition, Investment or Capital Expenditure);

 

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(s)            Investments in Unrestricted Subsidiaries in an aggregate amount not to exceed the greater of $10,000,000 and 15% of Consolidated EBITDA for the most recently ended Test Period at any time outstanding;

 

(t)            purchases and other acquisitions of inventory, materials, equipment, intangible property and other assets in the ordinary course of business;

 

(u)           (i) leases and subleases of real or personal property and (ii) licenses and sublicenses of Intellectual Property permitted under Section 6.02(o) and other personal property in the ordinary course of business;

 

(v)           Investments to the extent that payment for such Investments is made solely with cash contributions from the issuance of Equity Interests (other than Disqualified Capital Stock) of Holdings or Holdings’ Equity Interests which are contributed as cash common equity to any Credit Party and Not Otherwise Applied;

 

(w)          Investments in joint ventures of any Group Member; provided that the aggregate amount of such Investments outstanding at any time under this clause (w) shall not exceed the greater of $5,000,000 and 10% of Consolidated EBITDA for the most recently ended Test Period;

 

(x)           so long as (i) to the extent any such Investment is made in reliance on clause (a) or (b) of the definition of “Cumulative Amount”, no Event of Default under Section 8.01(a), (b), (g) or (h), or (ii) in all other cases, no Event of Default, shall have occurred and be continuing at the time of the making of such Investment or would immediately result therefrom, Investments in an aggregate amount not to exceed the Cumulative Amount; provided that any Limited Condition Transaction remains subject to the terms of Section 1.06 hereof;

 

(y)           other Investments in an aggregate amount at any time not to exceed the greater of (i) $15,000,000 and (ii) 25% of Consolidated EBITDA for the most recently ended Test Period at any time outstanding, plus the aggregate total of all other amounts available as a Restricted Debt Payment under Section 6.09(a)(I), plus the aggregate total of all other amounts available as a Dividend under Section 6.06(j), which the Borrower may, from time to time, elect to re-allocate to the making of Investments pursuant to this Section 6.03(y);

 

(z)           to the extent constituting Investments, advances in respect of transfer pricing and cost-sharing arrangements (i.e., “cost-plus” arrangements) that are (A) in the ordinary course of business and consistent with the Group Members’ historical practices and (B) funded not more than 120 days in advance of the applicable transfer pricing and cost-sharing payment;

 

(aa)         advances of payroll payments to employees in the ordinary course of business;

 

(bb)         unlimited additional Investments; provided that (i) at the time of making such Investment, (A) if such Investment is made as or in connection with a Limited Condition Transaction, no Event of Default under Section 8.01(a), (b), (g) or (h), or (B) in each other case, no Event of Default, shall have occurred and be continuing or would immediately result

 

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therefrom and (ii) on a Pro Forma Basis, the First Lien Ratio as of the Applicable Date of Determination and for the most recently ended Test Period shall be no greater than 5.00 to 1.00; further provided that any Limited Condition Transaction remains subject to the terms of Section 1.06 hereof;

 

(cc)         Investments in the ordinary course of business (x) consisting of customary trade arrangements with customers consistent with past practices and (y) in connection with obtaining, maintaining or renewing client contracts and loans or advances made to distributors;

 

(dd)         (a)  any Investment in a Receivables Subsidiary or a Securitization Subsidiary in order to effectuate a Receivables Facility or Qualified Securitization Financing, respectively, or any Investment by a Receivables Subsidiary or Securitization Subsidiary in any other Person in connection with a Receivables Facility or a Qualified Securitization Financing, respectively; provided, however, that any such Investment in a Receivables Subsidiary or a Securitization Subsidiary is in the form of a contribution of additional Receivables Assets or Securitization Assets, as applicable, or as equity or subordinated loan, and (b) distributions or payments of Receivables Fees or Securitization Fees and purchases of Receivables Assets or Securitization Assets pursuant to a Securitization Repurchase Obligation in connection with a Receivables Facility or a Qualified Securitization Financing, respectively;

 

(ee)         Investments resulting from the exercise of drag-along rights, put-rights, call-rights or similar rights under joint venture or similar documents;

 

(ff)          Investments in similar businesses in an aggregate amount outstanding at any time not to exceed the greater of $40,000,000 and 25% of Consolidated EBITDA for the most recently ended Test Period; and

 

(gg)         (i) IPO Reorganization Transactions and (ii) reorganizations and other activities related to tax planning and other reorganizations; provided, in the case of this clause (ii) that, in the reasonable business judgment of the Borrower, after giving effect to any such reorganizations and activities, there is no material adverse impact on the value of the (A) Collateral granted (or the security interests granted thereon) to the Collateral Agent for the benefit of the Lenders or (B) Guarantees in favor of the Lenders, in the case of each of clauses (A) and (B), taken as a whole (any reorganizations and activities described in clause (ii) above, “Permitted Reorganizations”).

 

The amount of any Investment shall be the initial amount of such Investment less all returns of principal, capital, Dividends and other cash returns therefrom (including, without limitation, any repayments, interest, returns, profits, distributions, income or similar amounts received in cash in respect of any Investment in any Unrestricted Subsidiary and the designation thereof) and less all liabilities expressly assumed by another person in connection with the sale of such Investment; provided that any reduction in the initial amount of such Investment (including upon the re-designation of an Unrestricted Subsidiary as a Restricted Subsidiary) shall be without duplication of any increase in the Cumulative Amount.

 

Section 6.04          Mergers and Consolidations.  Wind up, liquidate or dissolve its affairs or consummate a merger or consolidation, except that the following shall be permitted:

 

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(a)           Asset Sales or other dispositions in compliance with Section 6.05 (other than clause (d) thereof);

 

(b)           Investments permitted pursuant to Section 6.03 (other than clause (n) thereof);

 

(c)           (x) any Group Member (other than the Borrower) may merge or consolidate with or into the Borrower or any Subsidiary Guarantor (as long as the Borrower is the surviving person in the case of any merger or consolidation involving the Borrower, and such Subsidiary Guarantor is the surviving person in the case of any merger or consolidation involving such Subsidiary Guarantor (other than mergers or consolidations involving the Borrower)) and (y) any Restricted Subsidiary (other than the Borrower) that is not a Guarantor may merge or consolidate with or into any other Restricted Subsidiary (other than the Borrower) that is not a Guarantor;

 

(d)           a merger or consolidation pursuant to, and in accordance with, the definition of “Permitted Acquisition” to the extent necessary to consummate such Permitted Acquisition;

 

(e)           any Restricted Subsidiary (subject to clause (f) below in the case of the Borrower) may dissolve, liquidate or wind up its affairs at any time; provided that such dissolution, liquidation or winding up, as applicable, would not reasonably be expected to have a Material Adverse Effect;

 

(f)            the Borrower may merge or consolidate with another Borrower or any Borrower (other than Ping) may dissolve, liquidate or wind up its affairs; provided that if Ping is not the surviving person of any such merger or consolidation to which Ping is a party, the surviving person of such merger or consolidation shall assume all of Ping’s rights and obligations hereunder and under the other Loan Documents in its role as the Borrower; provided, further, that any such merger or consolidation, as applicable, would not reasonably be expected to have a Material Adverse Effect; and

 

(g)           Permitted Reorganizations and IPO Reorganization Transactions.

 

Section 6.05          Asset Sales.  Sell, lease, assign, transfer or otherwise dispose of any property, except that the following shall be permitted:

 

(a)           (x) sales, transfers, leases, subleases and other dispositions of inventory in the ordinary course of business, property no longer used or useful in the business or worn out, or obsolete, uneconomical, negligible or surplus property by any Group Member in the ordinary course of business, (y) the abandonment, allowance to lapse or other disposition of Intellectual Property that is, in the reasonable business judgment of the Borrower, immaterial or no longer economically practicable to maintain or (z) sales, transfers, leases, subleases and other dispositions of property by any Group Member (including Intellectual Property) that is, in the reasonable business judgment of the Borrower, immaterial or no longer used or useful in the business;

 

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(b)           any sale, lease, assignment, transfer or disposition (other than a sale of all or substantially all of the assets of the Borrower and its Restricted Subsidiaries); provided that (i) such sale, lease, assignment, transfer or disposition shall be for fair market value (as determined by the Borrower in good faith) and (ii) with respect to any aggregate consideration received in respect thereof in excess of $5,000,000, at least 75% of the purchase price for all property subject to such sale, lease, assignment, transfer or disposition shall be paid in cash or Cash Equivalents (with assumed liabilities treated as cash and other Designated Noncash Consideration treated as cash so long as the total Designated Noncash Consideration outstanding at any time does not exceed the greater of $10,000,000 and 15% of Consolidated EBITDA for the most recently ended Test Period in the aggregate, and provided that the amount of the proceeds of any portion of any such disposition that would be permitted under Section 6.05(n) shall be excluded from the numerator and denominator of such calculation);

 

(c)           (x) leases, assignments and subleases of real or personal property in the ordinary course of business and (y) licenses and sublicenses of Intellectual Property otherwise permitted under Section 6.02;

 

(d)           transactions in compliance with Section 6.04 (other than Section 6.04(a));

 

(e)           Investments in compliance with Section 6.03 (other than Section 6.03(h)), Liens in compliance with Section 6.02, Dividends in compliance with Section 6.06 and Restricted Debt Payments in compliance with Section 6.09;

 

(f)            sales of any non-core assets (i) acquired in connection with any Permitted Acquisitions or other Investments in compliance with Section 6.03 (other than Section 6.03(h)) or (ii) to obtain the approval of an anti-trust authority to a Permitted Acquisition or other permitted Investment;

 

(g)           sales, discounts or forgiveness of customer delinquent notes or accounts receivable (including, in all events, the disposition of delinquent accounts receivable pursuant to any factoring arrangement) in the ordinary course of business or in connection with the settlement, collection or compromise thereof;

 

(h)           use of cash and dispositions of Cash Equivalents in the ordinary course of business;

 

(i)            sales, transfers, leases and other dispositions of assets of Holdings and its Restricted Subsidiaries that do not constitute Collateral;

 

(j)            sales, transfers, leases and other dispositions (i) to the Borrower or to any other Credit Party, (ii) to any Restricted Subsidiary that is not a Credit Party from another Restricted Subsidiary that is not a Credit Party, or (iii) to any of the Restricted Subsidiaries that are not Credit Parties from a Credit Party, so long as, in the case of this clause (iii), (A) if the consideration received from a Restricted Subsidiary that is not a Credit Party by a Credit Party is not below fair market value, such sale, transfer lease or other disposition does not have a material adverse impact on the value of the (y) Collateral granted to the Collateral Agent (including the security interests thereon) for the benefit of the Secured Parties or (z) Guarantees in favor of the Secured Parties, (B) to the extent any consideration received from a Restricted Subsidiary that is

 

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not a Credit Party by a Credit Party is less than fair market value, such amount below fair market value does not exceed the greater of $10,000,000 and 15% of Consolidated EBITDA for the most recently ended Test Period in the aggregate during the term of this Agreement, (C) to the extent the consideration received from a Restricted Subsidiary that is not a Credit Party is not below fair market value but there is a material adverse impact on the value of the Collateral granted to the Collateral Agent for the benefit of the Secured Parties or the Guarantees in favor of the Secured Parties, the fair market value of such sales, transfers, leases or other dispositions does not exceed the greater of $5,000,000 and 10% of Consolidated EBITDA for the most recently ended Test Period in the aggregate during the term of this Agreement, or (D) such sale, transfer, lease or other disposition is in connection with a reorganization or other activity related to tax planning and, in the reasonable business judgment of the Borrower, upon giving effect to such sale, transfer, lease or other disposition, there is no material adverse impact on the value of the (x) Collateral granted to the Collateral Agent (including the security interests thereon) for the benefit of the Lenders or (y) Guarantees in favor of the Lenders;

 

(k)           sales, transfers, leases and other dispositions of property to the extent required by any Governmental Authority or otherwise pursuant to any Requirements of Law;

 

(l)            sales, transfers, leases and other dispositions of property to the extent that such property constitutes an Investment permitted by Section 6.03(h) or another asset received as consideration for the disposition of any asset permitted by this Section;

 

(m)          sales or dispositions of immaterial Equity Interests to qualify directors where required by applicable Requirements of Law or to satisfy other similar Requirements of Law with respect to the ownership of Equity Interests;

 

(n)           any concurrent purchase and sale or exchange of any asset used or useful in the business of the Borrower and the Restricted Subsidiaries or in any line of business permitted hereunder, or any combination of any such assets and cash or Cash Equivalents, between the Borrower or a Restricted Subsidiary on one hand and another person in the other;

 

(o)           dispositions resulting from any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of any Group Member;

 

(p)           the sale or disposition of Unrestricted Subsidiaries;

 

(q)           any disposition of Receivables Assets in connection with any Receivables Facility and any disposition of Securitization Assets in connection with any Qualified Securitization Financing to the extent the fair market value of such Receivables Assets and Securitization Assets, respectively, disposed of in all such transactions does not exceed the greater of $10,000,000 and 20% of Consolidated EBITDA for the most recently ended Test Period in the aggregate in any fiscal year; provided that such amount may be increased by up to (x) to the extent unutilized in the immediately preceding fiscal year, the greater of $5,000,000 and 10% of Consolidated EBITDA for the most recently ended Test Period and (y) the greater of $5,000,000 and 10% of Consolidated EBITDA for the most recently ended Test Period solely to the extent that any additional amount utilized pursuant to this clause (y) shall reduce the amount

 

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of dispositions permitted pursuant to this Section 6.05(q) in the subsequent fiscal year on a dollar-for-dollar basis;

 

(r)            [reserved];

 

(s)            other sales or dispositions in an amount not to exceed the greater of $5,000,000 and 10% of Consolidated EBITDA for the most recently ended Test Period per transaction (or series of related transactions);

 

(t)            Sale Leaseback Transactions in an amount not to exceed the greater of $5,000,000 and 10% of Consolidated EBITDA for the most recently ended Test Period in the aggregate;

 

(u)           surrender or waiver of contractual rights and settlements, releases or waivers of contractual or litigation claims in the ordinary course of business;

 

(v)           any disposition, unwinding or termination of Hedging Agreements or transactions contemplated thereby; and

 

(w)          Permitted Reorganizations and IPO Reorganization Transactions.

 

To the extent the Required Lenders or all of the Lenders, as applicable, waive the provisions of this Section 6.05 with respect to the sale of any Collateral, or any Collateral is sold as permitted by this Section 6.05, such Collateral (unless sold to a Credit Party) shall be sold automatically free and clear of the Liens created by the Security Documents, and the Agents shall take all actions they reasonably deem appropriate in order to effect the foregoing.

 

Section 6.06          Dividends.  Authorize, declare or pay, directly or indirectly, any Dividends with respect to any Group Member, except that the following shall be permitted (subject to the provisos in each of subclause (l) of Section 6.01 and subclause (q) of Section 6.03):

 

(a)           Dividends by any Group Member (x) to the Borrower or any Subsidiary Guarantor, (y) to any Subsidiary that is not a Guarantor; provided that any such Dividend under this clause (y) is either (I) paid only in Equity Interests of such Group Member (other than Disqualified Capital Stock) or (II) if paid in cash, is paid to all shareholders on a pro rata basis, and (z) to Holdings paid only in Equity Interests in kind;

 

(b)           so long as no Event of Default has occurred and is continuing or would immediately result therefrom, payments to Holdings (and/or (without duplication) any direct or indirect parent company of Holdings) to permit Holdings (or any such direct or indirect parent company of Holdings) to repurchase or redeem Qualified Capital Stock of Holdings (or any direct or indirect parent company of Holdings) held by current or former officers, directors or employees (or their transferees, spouses, ex-spouses, heirs, family members, estates or beneficiaries under their estates) of any Group Member (including, without limitation, upon their death, disability, retirement, severance or termination of employment or service or to make payments on Indebtedness issued to buy such Qualified Capital Stock, including, without limitation, upon their death, disability, retirement, severance or termination of employment or

 

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service; provided that the aggregate cash consideration (for the avoidance of doubt excluding cancellation of Indebtedness owed by such person) paid for all such redemptions and payments shall not exceed, in any fiscal year, the sum of (i) the greater of $5,000,000 and 7.5% of Consolidated EBITDA for the most recently ended Test Period; provided, that such amount may be increased by (x) up to $1,500,000 or, if greater, 3.75% of Consolidated EBITDA, solely to the extent the amount available under this clause (i) was not utilized in the immediately preceding fiscal year, or (y) by up to $1,500,000 or, if greater, 3.75% of Consolidated EBITDA solely to the extent that any such additional amount utilized pursuant to this clause (y) shall reduce the amount of Dividends permitted pursuant to this Section 6.06(b)(i) in the subsequent fiscal year on a dollar-for-dollar basis plus (ii) the net cash proceeds of any “key-man” life insurance policies of any Group Member that are used to repurchase or redeem Qualified Capital Stock of Holdings (or any direct or indirect parent company of Holdings) held by the Person covered by the applicable “key-man” life insurance policy or such Person’s spouse, ex-spouse, estate or beneficiaries under the estate of the Person covered by the applicable “key-man” life insurance policy or to make payments on Indebtedness issued to buy such Qualified Capital Stock upon such Person’s death or disability; provided, further, that during an Event of Default any payments described in this clause (b) may accrue and shall be permitted to be paid upon such Event of Default no longer existing so long as no other Event of Default is continuing at such time;

 

(c)           the Borrower and any other Subsidiary of Holdings may make Dividends, directly or indirectly, to Holdings (and Holdings may pay to any direct or indirect parent company of Holdings) to permit Holdings (or any such direct or indirect parent company of Holdings) to pay for any taxable period for which Holdings, the Borrower or any Subsidiaries of Holdings are members of a consolidated, combined or similar income tax group for federal and/or applicable state or local income tax purposes or are entities treated as disregarded from any such members for U.S. federal income Tax purposes (a “Tax Group”) of which Holdings (or any direct or indirect parent company of Holdings) is the common parent, any consolidated, combined or similar income Taxes of such Tax Group that are due and payable by Holdings (or such direct or indirect parent company of Holdings) for such taxable period, but only to the extent attributable to the Borrower and/or such other Subsidiaries of Holdings, provided that (x) the amount of such Dividends for any taxable period shall not exceed the amount of such Taxes that the Borrower and/or the applicable Subsidiaries of Holdings would have paid had the Borrower and/or such Subsidiaries of Holdings, as applicable, been a stand-alone corporate taxpayer (or a stand-alone corporate Tax Group) for purposes of the relevant U.S. federal, state, local or non-U.S. income taxes, taking in to account (A) any net operating losses and other tax attributes of such stand-alone corporate taxpayer (or such stand-alone corporate Tax Group) that would have been available and (B) the deductibility of U.S. state and local taxes in computing U.S. federal income taxes, to the extent relevant and (y) Dividends in respect of an Unrestricted Subsidiary shall be permitted only to the extent that Dividends were made by such Unrestricted Subsidiary to the Borrower and/or the applicable Subsidiaries for such purpose;

 

(d)           repurchases of Equity Interests deemed to occur upon the exercise of stock options if the Equity Interests represent a portion of the exercise price thereof;

 

(e)           distributions or payments of Receivables Fees and Securitization Fees;

 

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(f)            so long as (i) no Event of Default shall have occurred and be continuing at the time of the making of such Dividend or would immediately result therefrom and (ii) solely to the extent such Dividends are made in reliance on clause (b) or (e) (solely as it relates to Retained Asset Sales Proceeds) of the definition of “Cumulative Amount”, on a Pro Forma Basis, the First Lien Leverage Ratio as of the Applicable Date of Determination and for the most recently ended Test Period is no greater than 5.50 to 1.00, the Group Members may make Dividends to Holdings and/or (without duplication) Holdings’ direct or indirect equity holders using the Cumulative Amount; provided that any Limited Condition Transaction remains subject to the terms of Section 1.06 hereof;

 

(g)           Dividends made solely in Equity Interests of Holdings (other than Disqualified Capital Stock);

 

(h)           Dividends to finance payments expressly permitted by Section 6.07(d), and payments for reasonable director fees and reasonable and documented director indemnities and expenses, may be paid as a Dividend;

 

(i)            Dividends to the extent that payment for such Dividends is made solely with cash contributions from the issuance of Equity Interests (other than Disqualified Capital Stock) of Holdings, which are contributed as cash common equity to any Credit Party and Not Otherwise Applied;

 

(j)            so long as no Event of Default shall have occurred and be continuing or would immediately result therefrom, additional Dividends may be made by any Group Member to Holdings and/or (without duplication) Holdings’ direct or indirect equity holders) in an aggregate amount not to exceed the greater of $7,500,000 and 17% of Consolidated EBITDA for the most recently ended Test Period, less the aggregate amount re-allocated to Section 6.03(y) by the Borrower pursuant to Section 6.03(y), reallocated to Section 6.09(a)(I) pursuant to Section 6.09(a)(I);

 

(k)           distributions for (i) administrative, overhead and related expenses (including franchise and similar taxes required to maintain corporate existence and other legal, accounting and other overhead expenses) of Holdings or any direct or indirect parent of Holdings to the extent directly attributable to the operations or ownership of the Group Members, and (ii) Public Company Costs;

 

(l)            so long as no Event of Default shall have occurred and be continuing or would immediately result therefrom, distributions to any of Holdings’ direct or indirect equity holders of any working capital adjustment or any other purchase price adjustment received in connection with any Permitted Acquisition or any other Investment permitted under Section 6.03; provided that, with respect to any Permitted Acquisition or other Investment, the amount of such distribution shall be limited to the Equity Funded Portion thereof;

 

(m)          Dividends by any Group Member to any direct or indirect holder of any Equity Interests in the Borrower:

 

(i)            to finance any Investment permitted to be made pursuant to Section 6.03; provided that (A) such Dividend shall be made substantially concurrently

 

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with the closing of such Investment and (B) Holdings or such other parent shall, immediately following the closing thereof, cause (1) all property so acquired (whether assets or Equity Interests) to be held by or contributed to the Borrower or a Restricted Subsidiary or (2) the merger (to the extent permitted in Section 6.04) of the Person formed or acquired into the Borrower or any other Restricted Subsidiary in order to consummate such Permitted Acquisition;

 

(ii)           the proceeds of which shall be used to pay customary costs, fees and expenses (other than to Affiliates) related to any successful or unsuccessful equity or debt offering, debt incurrence, Investment (including, for the avoidance of doubt, any Permitted Acquisition) or other transaction, in each case, to the extent not prohibited by this Agreement; and

 

(iii)          the proceeds of which shall be used to pay customary salary, bonus and other benefits payable to officers and employees of any direct or indirect parent company or partner of the Borrower to the extent such salaries, bonuses and other benefits are attributable to the ownership or operation of the Borrower and their Restricted Subsidiaries;

 

(n)           Dividends to the extent required to pay AHYDO catch-up payments relating to a borrowing of any Credit Party;

 

(o)           unlimited additional Dividends; provided that (i) at the time of making such Dividend, (A) if such Dividend is made in connection with a Limited Condition Transaction, no Event of Default under Section 8.01(a), (b), (g) or (h), or (B) in each other case, no Event of Default, shall have occurred and be continuing or would immediately result therefrom and (ii) on a Pro Forma Basis, the First Lien Leverage Ratio as of the Applicable Date of Determination and for the most recently ended Test Period shall be no greater than 4.25 to 1.00; provided that any Limited Condition Transaction remains subject to the terms of Section 1.06 hereof;

 

(p)           [reserved];

 

(q)           following the consummation of an IPO, so long as no Event of Default shall have occurred and be continuing on the date of declaration of any such Dividend or would result therefrom, the Borrower may (or may make Dividends to Holdings or any parent company of the Borrower to enable it to) make Dividends with respect to any Equity Interest in an amount of up to 7% per annum of the market capitalization of Holdings (or the applicable public filing entity) and its Subsidiaries;

 

(r)            (i) Dividends constituting any part of (x) a Permitted Reorganization (and to pay any costs or expenses related thereto) and (y) an IPO Reorganization Transaction and (ii) Dividends to pay costs or expenses related to any IPO (or IPO Reorganization Transactions) whether or not such IPO (and any related IPO Reorganization Transactions) is consummated; and

 

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(s)            Dividends and distributions among Credit Parties in connection with transfer pricing or shared services agreements to the extent advances related thereto are permitted pursuant to Section 6.03(z).

 

Section 6.07          Transactions with Affiliates.  Except as otherwise permitted hereunder, enter into, directly or indirectly, any transaction or series of related transactions with a fair market value in excess of the greater of $1,000,000 and 2.5% of Consolidated EBITDA for the most recently ended Test Period, whether or not in the ordinary course of business, with any Affiliate of any Group Member (other than among the Borrower and any Guarantor or any entity that becomes a Subsidiary Guarantor as a result of such transactions), other than on terms and conditions at least as favorable to such Group Member (or, in the case of a transaction between a Credit Party and a Subsidiary that is not a Credit Party, such Credit Party) as would reasonably be obtained by such Group Member at that time in a comparable arm’s-length transaction with a person other than an Affiliate (as reasonably determined by the Borrower), except that the following shall be permitted:

 

(a)           (i) Dividends permitted by Section 6.06, (ii) Liens granted pursuant to Section 6.02, (iii) Investments permitted by Section 6.03 and Indebtedness resulting therefrom permitted under Section 6.01, (iv) transactions permitted by Section 6.04 or Section 6.10, (v) dispositions permitted under Section 6.05 and (z) payments of Indebtedness permitted under Section 6.09;

 

(b)           director, officer and employee compensation (including bonuses) and other benefits (including, without limitation, retirement, health, incentive equity and other benefit plans) and expense reimbursement and indemnification arrangements and severance agreements;

 

(c)           transactions with customers, clients, suppliers, joint venture partners or purchasers or sellers of goods and services, in each case in the ordinary course of business and otherwise not prohibited by the Loan Documents;

 

(d)           (i) the payment of all reasonable and documented fees as set forth in the Management Services Agreement (including, without limitation, any financial advisory, monitoring, management, consulting, oversight and similar fees (including fees in connection with refinancings or subsequent transactions and termination fees) and (ii) the payment of all reasonable and documented out-of-pocket, expenses and indemnification claims required to be paid under any agreement with the Equity Investors relating to the services provided to the Group Members by the Equity Investors (including reasonable and documented out-of-pocket, expenses and indemnification claims paid pursuant to the Management Services Agreement);

 

(e)           [reserved];

 

(f)            any transaction with an Affiliate where the only consideration paid by any Credit Party is Qualified Capital Stock of Holdings (or Equity Interests of a direct or indirect parent company of Holdings);

 

(g)           agreements relating to Intellectual Property not interfering in any material respect with the ordinary conduct of business of or the value of such Intellectual Property to such

 

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Group Member or materially impairing the security interest granted under the Security Agreement therein held by the Collateral Agent;

 

(h)           any other agreement, arrangement or transaction as in effect on the Closing Date and listed on Schedule 6.07, and any amendment or modification with respect to such agreement, arrangement or transaction, and the performance of obligations thereunder, so long as such amendment or modification is not materially adverse to the interests of the Lenders;

 

(i)            the Transactions as contemplated by the Loan Documents, including the payment of any fees, costs or expenses related to such Transactions;

 

(j)            transactions pursuant to provisions of the Loan Documents with the Equity Investors and Affiliated Debt Funds (in each case, in their respective capacities as Lenders);

 

(k)           transactions entered into by an Unrestricted Subsidiary with an Affiliate prior to the re-designation of any such Unrestricted Subsidiary as a Restricted Subsidiary pursuant to the definition of “Unrestricted Subsidiary”; provided that such transactions were not entered into in contemplation of such re-designation;

 

(l)            transactions constituting any part of a Permitted Reorganization and IPO Reorganization Transaction;

 

(m)          transactions among Holdings and/or any of its Restricted Subsidiaries that are not otherwise prohibited hereunder; and

 

(n)           transactions pursuant to transfer pricing or shared services agreements, advances with respect to which are permitted by Section 6.03(z).

 

Section 6.08          First Lien Leverage Ratio.  Except with the written consent of the Required Revolving Lenders and subject to the last paragraph of this Section 6.08, permit the First Lien Leverage Ratio as of the last day of and for any Test Period to be greater than 8.25 to 1.00.

 

Notwithstanding the foregoing, this Section 6.08 shall be in effect (and shall only be in effect) when the aggregate principal amount of outstanding Revolving Loans, Swing Line Loans, Reimbursement Obligations and (solely to the extent in excess of $2,500,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $3,350,000) in the aggregate) outstanding but undrawn Letters of Credit that have not been cash collateralized in accordance with the terms of this Agreement exceed 35% of the aggregate Revolving Commitments of all Lenders as of the last day of such Test Period, commencing with the first full fiscal quarter of Holdings commencing after the Closing Date (it being understood that calculation of compliance with this Section 6.08 shall be determined as of the last day of and for each applicable Test Period).

 

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Section 6.09          Prepayments of Certain Indebtedness; Modifications of Organizational Documents and Other Documents, etc.

 

(a)           Directly or indirectly make any voluntary or optional payment or prepayment of, or repurchase, redemption or acquisition for value of, or any prepayment or redemption as a result of any Asset Sale, change of control or similar event of, any Indebtedness outstanding under documents evidencing any Indebtedness that is (1) secured on a junior lien basis to the Obligations, unsecured or subordinated and (2) in each case, in excess of $10,000,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $13,400,000) in aggregate outstanding principal amount (“Restricted Debt Payment”) except (A) to the extent not prohibited by this Agreement, any applicable Intercreditor Agreement or any subordination terms applicable to any such Subordinated Indebtedness (including pursuant to a Permitted Refinancing), with the Cumulative Amount, so long as (i) no Event of Default shall have occurred and be continuing at the time of the making of such Restricted Debt Payment or would immediately result therefrom and (ii) solely to the extent such payment, prepayment, repurchase, redemption or acquisition is made in reliance on clause (b) or (e) (solely as it relates to Retained Asset Sale Proceeds) of the definition of “Cumulative Amount”, on a Pro Forma Basis, the First Lien Leverage Ratio as of the Applicable Date of Determination and for the most recently ended Test Period is no greater than 5.50 to 1.00, (B) in connection with any Permitted Refinancing thereof or to the extent made with the proceeds of Qualified Capital Stock of Holdings that are Not Otherwise Applied; provided that in the case of any refinancing of Permitted Junior Refinancing Debt or other Indebtedness subject to any applicable Intercreditor Agreement, such refinancing must be permitted by such Intercreditor Agreement or, if applicable, the other customary subordination documentation related to such Permitted Junior Refinancing Debt or such other Indebtedness, (C) [reserved], (D) prepaying, redeeming, purchasing, defeasing or otherwise satisfying prior to the scheduled maturity thereof (or setting apart any property for such purpose) (1) in the case of any Group Member that is not a Credit Party, any Indebtedness owing by such Group Member to any other Group Member, (2) otherwise, any Indebtedness owing to any Credit Party and (3) so long as no Event of Default is continuing or would immediately result therefrom, any mandatory prepayments of Indebtedness incurred under clauses (b) and (e) of Section 6.01 and any Permitted Refinancing thereof, (E) making regularly scheduled or otherwise required payments of interest and mandatory prepayments in respect of such Indebtedness and payments of fees, expenses and indemnification obligations thereunder (to the extent not restricted by any applicable intercreditor or subordination terms), (F)  to the extent that such payment is made solely with cash contributions from the issuance of Equity Interests (other than Disqualified Capital Stock) of Holdings, which are contributed as cash common equity to any Credit Party and Not Otherwise Applied, (G) converting (or exchanging) any Indebtedness to (or for) Qualified Capital Stock of Holdings, (H) if applicable, any AHYDO catch-up payments with respect thereto, (I)  making prepayments, redemptions, purchases, defeasance or other satisfaction of Indebtedness in an amount not to exceed the greater of $15,000,000 and 35% of Consolidated EBITDA for the most recently ended Test Period less the aggregate amount re-allocated to Section 6.03(y) by the Borrower pursuant to Section 6.03(y), plus any unused amounts under Section 6.06(j), (J) so long as no Default or Event of Default has occurred and is then continuing and the First Lien Leverage Ratio computed on a Pro Forma Basis as of the Applicable Date of Determination and for the most recently ended Test Period is no greater than 4.25 to 1.00, making prepayments, redemptions, purchases, defeasance or other satisfaction of such Indebtedness; provided that any Limited Condition Transaction remains subject to the terms of Section 1.06 hereof, (K) mandatory prepayments of any Incremental Facility and/or Permitted

 

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Incremental Equivalent Debt and/or Junior Secured Indebtedness that, in each case, is secured on a junior basis to the Secured Obligations (or any Permitted Refinancing thereof) with Declined Proceeds or as otherwise permitted by Section 2.10(h) to the extent not prohibited by any applicable Intercreditor Agreement, (L) in connection with the refinancing of any Indebtedness acquired in connection with a Permitted Acquisition or similar Investment to the extent such Indebtedness was not incurred in contemplation of such Permitted Acquisition or similar Investment), (M) any payments of intercompany obligations permitted under the Intercompany Subordination Agreement or the other subordination terms approved by the Administrative Agent pursuant to Section 6.01(m) hereunder and (N) on the Effective Date, the Second Lien Refinancing;

 

(b)           amend, modify or change in any manner material and adverse to the interests of the Lenders any term or condition of documents evidencing Indebtedness that is secured on a junior lien basis to the Obligations, Indebtedness that is unsecured or Subordinated Indebtedness (in, each case, other than any amendment, modification or change that is expressly provided for in an Intercreditor Agreement or Subordinated Debt Documents) without the consent of the Required Lenders (not to be unreasonably withheld or delayed); and

 

(c)           to the extent that its shares are secured in favor of the Secured Parties pursuant to any Security Agreement, terminate, amend, modify or change any of its Organizational Documents (including by the filing or modification of any certificate of designation) or any agreement to which it is a party with respect to its Equity Interests (including any stockholders’ agreement), other than any such amendments, modifications or changes or such new agreements which are not materially adverse to the interests of the Lenders.

 

Section 6.10          Holding Company Status.  With respect to Holdings, engage in any business or activity, hold any assets or incur any Indebtedness or other liabilities, other than (i) its ownership of Equity Interests in its Subsidiaries, intercompany notes permitted hereunder, cash and Cash Equivalents, notes of officers, directors and employees permitted hereunder, and all other activities incidental to its ownership of Equity Interests in its Subsidiaries or related to the management of its investment in its Subsidiaries, (ii) maintaining its corporate existence, (iii) participating in tax, accounting and other administrative activities as a member of the consolidated group of companies including the Credit Parties, (iv) executing, delivering and performing rights and obligations under the Loan Documents (including any documents governing the terms of, or entered into in connection with, any Incremental Facility or Permitted Incremental Equivalent Debt or, in each case, any Credit Agreement Refinancing Indebtedness in respect thereof or Permitted Debt Exchange Notes issued in exchange therefor), the other Loan Documents, any documents and agreements relating to any Permitted Acquisition or Investment permitted hereunder to which it is a party, or the documents governing any other Indebtedness permitted hereunder and not described above that is guaranteed by (and permitted to be guaranteed by) Holdings, (v) performance of rights and obligations under any management services agreement (including the Management Services Agreement) to which it is a party, (vi) making any Dividend permitted by Section 6.06, (vii) purchasing or acquiring Qualified Capital Stock in any Subsidiary, (viii) making capital contributions to its first-tier Subsidiaries, (ix) taking actions in furtherance of and consummating an IPO, and fulfilling all initial and ongoing obligations related thereto, (x) executing, delivering and performing rights and obligations under any employment agreements and any documents related thereto, (xi)

 

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purchasing Obligations (including obligations under any Incremental Facility or any Permitted Incremental Equivalent Debt or, in each case, any Credit Agreement Refinancing Indebtedness in respect thereof or Permitted Debt Exchange Notes issued in exchange therefor) or any Indebtedness incurred pursuant to Section 6.01(u) in accordance with this Agreement or the documents governing any Incremental Facility, Permitted Incremental Equivalent Debt, Credit Agreement Refinancing Indebtedness, Permitted Debt Exchange Notes or other Indebtedness, (xii) the buyback and sales of equity from or to officers, directors and managers of Holdings and its Subsidiaries and other persons in accordance with Section 6.06(b), (xiii) the making of loans to officers, directors (or other Persons in comparable positions), and employees and others in exchange for Equity Interests of any Credit Party or its Subsidiaries purchased by such officers, directors (or other Persons in comparable positions), employees or others pursuant to Section 6.03(e) and the acceptance of notes related thereto, (xiv) transactions expressly described herein as involving Holdings and permitted under this Agreement, (xv) the incurrence of unsecured Indebtedness that requires the payment of interest in cash solely to the extent that the Borrower and its Restricted Subsidiaries are permitted by the terms of this Agreement to make Dividends to Holdings for such purpose, (xvi) Permitted Reorganizations or any IPO Reorganization Transaction, (xvii) with respect to intercompany loans otherwise permitted hereunder, (xviii) providing guarantees with respect to the performance of rights and obligations under contracts and agreements of its Subsidiaries and taking actions in furtherance thereof, and (xix) activities incidental to the businesses or activities described in clauses (i) through (xviii) above.

 

Section 6.11          No Further Negative Pledge; Subsidiary Distributions.  Enter into any agreement, instrument, deed or lease which (a) prohibits or limits the ability of any Credit Party to create, incur, assume or suffer to exist any Lien upon any of their respective properties or revenues, whether now owned or hereafter acquired, or which requires the grant of any security for an obligation if security is granted for another obligation or (b) prohibits, restricts or imposes any condition upon the ability of any Restricted Subsidiary that is not a Credit Party from paying dividends or other distributions with respect to any of its Equity Interests or to make or repay loans or advances to any Restricted Subsidiary or to Guarantee Indebtedness of any Restricted Subsidiary, in each case, except the following: (i) this Agreement and the other Loan Documents, and any documents governing any Incremental Facility or any Permitted Incremental Equivalent Debt or, in each case, any Credit Agreement Refinancing Indebtedness in respect thereof or Permitted Debt Exchange Notes issued in exchange therefor or any Indebtedness incurred pursuant to Section 6.01(u); provided that such Incremental Facilities, Permitted Incremental Equivalent Debt, Credit Agreement Refinancing Indebtedness, Permitted Debt Exchange Notes and other Indebtedness are no more materially restrictive with respect to such prohibitions, restrictions and conditions than the applicable terms of this Agreement; (ii) covenants in documents creating Liens permitted by Section 6.02 prohibiting further Liens on the properties encumbered thereby; (iii) [reserved]; (iv) any other agreement that does not restrict in any manner (directly or indirectly) Liens created pursuant to the Loan Documents on any Collateral securing the Secured Obligations and does not require the direct or indirect granting of any Lien securing any Indebtedness or other obligation by virtue of the granting of Liens on or pledge of property of any Credit Party to secure the Secured Obligations; (v) customary covenants and restrictions in any indenture, agreement, document, instrument or other arrangement relating to non-material assets or business of any Subsidiary existing prior to the consummation of a Permitted Acquisition in which such Subsidiary was acquired (and not

 

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created in contemplation of such Permitted Acquisition); (vi) customary restrictions on cash or other deposits; (vii) net worth provisions in leases and other agreements entered into by a Group Member in the ordinary course of business and/or in the documents entered into in connection with any Qualified Securitization Financing or Receivables Facility; (viii) contractual encumbrances or restrictions existing on the Closing Date and identified on Schedule 6.11; and (ix) any prohibition or limitation that (I) exists pursuant to applicable Requirements of Law, (II) consists of customary restrictions and conditions contained in any agreement relating to the sale of any property permitted under Section 6.05, stock sale agreement, joint venture agreement, sale/leaseback agreement, purchase agreements, or acquisition agreements (including by way of merger, acquisition or consolidation) entered into by a Credit Party or any Subsidiary solely to the extent pending the consummation of such transaction, which covenant or restriction is limited to the assets that are the subject of such agreements, (III) restricts subletting or assignment of leasehold interests contained in any Lease governing a leasehold interest of a Credit Party or a Subsidiary, or (IV) is imposed by any amendments or refinancings that are otherwise permitted by the Loan Documents of the contracts, instruments or obligations referred to in immediately preceding clauses (i) through (ix) of this Section 6.11; provided that such amendments and refinancings are no more materially restrictive with respect to such prohibitions and limitations than those prior to such amendment or refinancing.

 

Section 6.12          Nature of Business.  The Borrower and its Restricted Subsidiaries will not engage in any material line of business other than lines of business substantially similar to the lines of business conducted by the Borrower and its Restricted Subsidiaries on the Closing Date or any business reasonably related, similar, corollary, complementary, incidental or ancillary thereto.

 

Section 6.13          Fiscal Year.  Change its fiscal year end date to a date other than December 31, other than with prior written notice to the Administrative Agent.

 

ARTICLE VII
GUARANTEE

 

Section 7.01          The Guarantee.  Each Guarantor and the Borrower hereby jointly and severally guarantees, as a primary obligor and not as a surety, to each Secured Party and its successors and assigns, the prompt payment in full when due (whether at stated maturity, by required prepayment, declaration, demand, or acceleration or otherwise) of the principal of and interest on (including any interest, fees, costs or charges that would accrue but for the provisions of Title 11 of the United States Code after any bankruptcy or insolvency petition under Title 11 of the United States Code) the Loans made by the Lenders to, and the Notes held by each Lender of, the Borrower, and all other Secured Obligations from time to time owing to the Secured Parties by any Credit Party under any Loan Document or any Secured Cash Management Agreement or Secured Hedging Agreement entered into with a counterparty that is a Secured Party, in each case strictly in accordance with the terms thereof (such obligations being herein collectively called the “Guaranteed Obligations”).  Each Guarantor and the Borrower hereby jointly and severally agree that if, in the case of such Guarantor, the Borrower or any other Guarantor, and in the case of the Borrower, any Guarantor, shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the Guarantors and the Borrower in its capacity as a Guarantor under this Article VII will, promptly

 

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pay the same in cash, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal.  Notwithstanding any provision hereof or in any other Loan Document to the contrary, no Obligation in respect of any Secured Hedging Agreement shall be payable by or from the assets of any Credit Party if such Credit Party, is not, at the later of (i) the time such Secured Hedging Agreement is entered into and (ii) the date such person becomes a Credit Party, an “eligible contract participant” as such term is defined in Section 1(a)(18) of the Commodity Exchange Act, as amended, and no Credit Party shall be deemed to have entered into or guaranteed any Hedging Agreement at any time that such Credit Party is not an eligible contract participant.  The guarantee made by the Borrower hereunder relates solely to the Secured Obligations from time to time owing to the Secured Parties by any Credit Party other than the Borrower under any Secured Cash Management Agreement or Secured Hedging Agreement.

 

Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Credit Party to honor all of its obligations under this Guarantee in respect of Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section 7.01 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 7.01, or otherwise under this Guarantee, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount).  The obligations of each Qualified ECP Guarantor under this Section 7.01 shall remain in full force and effect until the termination of this Guarantee in accordance with Section 7.09 hereof.  Each Qualified ECP Guarantor intends that this Section 7.01 constitute, and this Section 7.01 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Credit Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

Section 7.02          Obligations Unconditional.  The obligations of the Guarantors and the Borrower under Section 7.01 shall constitute a guaranty of payment of Guaranteed Obligations and, to the fullest extent permitted by applicable Requirements of Law, are absolute, irrevocable and unconditional, and joint and several, irrespective of the value, genuineness, validity, regularity or enforceability of the Guaranteed Obligations of the Borrower or the applicable Guarantor under this Agreement, the Notes, if any, or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or Guarantor (except for payment in full (other than contingent indemnity obligations, unasserted expense reimbursement obligations, obligations and liabilities under Secured Cash Management Agreements and Secured Hedging Agreements with respect to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made, and Letters of Credit that have been cash collateralized in accordance with the terms of this Agreement, backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank)). Without limiting the generality of the foregoing and subject to applicable law, it is agreed that the occurrence of any one or more of the following

 

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shall not alter or impair the liability of the Guarantors hereunder, which shall remain absolute, irrevocable and unconditional under any and all circumstances as described above:

 

(a)           at any time or from time to time, without notice to the Borrower or the Guarantors, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;

 

(b)           any of the acts mentioned in any of the provisions of this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein shall be done or omitted (except in each case for payment in full of the Guaranteed Obligations (other than contingent indemnity obligations, unasserted expense reimbursement obligations, obligations and liabilities under Secured Cash Management Agreements and Secured Hedging Agreements with respect to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made, and Letters of Credit that have been cash collateralized in accordance with the terms of this Agreement, backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank);

 

(c)           the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be amended in any respect, or any right under the Loan Documents or any other agreement or instrument referred to herein or therein shall be amended or waived in any respect or any other guarantee of any of the Guaranteed Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with;

 

(d)           any Lien or security interest granted to, or in favor of, the Issuing Bank or any Lender, Agent or other Secured Party as security for any of the Guaranteed Obligations shall fail to be perfected; or

 

(e)           the release of any other Guarantor pursuant to Section 9.10.

 

The Guarantors and the Borrower hereby expressly waive, to the extent permitted by law, diligence, presentment, demand of payment, protest and all notices whatsoever (except as specifically provided for herein or in any other Loan Document), and any requirement that any Secured Party exhaust any right, power or remedy or proceed against the Borrower under this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein, or against any other person under any other guarantee of, or security for, any of the Guaranteed Obligations.  The Guarantors and the Borrower waive, to the extent permitted by law, any and all notice of the creation, renewal, extension, waiver, termination or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by any Secured Party upon this Guarantee or acceptance of this Guarantee, and the Guaranteed Obligations, and any of them, shall be deemed to have been created, contracted or incurred in reliance upon this Guarantee, and all dealings between the Borrower and the Secured Parties shall likewise be presumed to have been had or consummated in reliance upon this Guarantee. This Guarantee shall be construed as a continuing, absolute, irrevocable and unconditional guarantee of payment of the Guaranteed Obligations without regard to any right of offset with respect to the Guaranteed Obligations at any time or from time to time held by Secured Parties, and the obligations and liabilities of the Guarantors and the Borrower hereunder shall not be conditioned or contingent upon the pursuit

 

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by the Secured Parties or any other person at any time of any right or remedy against the Borrower or against any other person which may be or become liable in respect of all or any part of the Guaranteed Obligations or against any collateral security or guarantee therefor or right of offset with respect thereto. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantors and the Borrower and the successors and assigns thereof, and shall inure to the benefit of the Lenders, and their respective successors and permitted assigns, notwithstanding that from time to time during the term of this Agreement there may be no Guaranteed Obligations outstanding.

 

Section 7.03          Reinstatement.  The obligations of the Guarantors and the Borrower under this Article VII shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrower or any other Credit Party in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, in each case, including as a result of any proceedings in bankruptcy or reorganization or pursuant to a Debtor Relief Law.

 

Section 7.04          Subrogation; Subordination.  Each Guarantor hereby agrees that, until the payment and satisfaction in full in cash of all Guaranteed Obligations (other than contingent indemnification obligations, unasserted expense reimbursement obligations, obligations and liabilities under Secured Cash Management Agreements and Secured Hedging Agreements with respect to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made, and Letters of Credit that have been cash collateralized in accordance with the terms of this Agreement, backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank) and the expiration or termination of the Commitments of the Lenders under this Agreement, it shall subordinate and not exercise any claim and shall not exercise any right or remedy, direct or indirect, arising by reason of any performance by it of its guarantee in Section 7.01, whether by subrogation or otherwise, against the Borrower or any other Guarantor of any of the Guaranteed Obligations or any security for any of the Guaranteed Obligations. Any Indebtedness of any Credit Party permitted pursuant to Section 6.01(m) shall be subordinated to such Credit Party’s Guaranteed Obligations; provided that upon the payment and satisfaction in full of all Guaranteed Obligations (other than contingent indemnification obligations, unasserted expense reimbursement obligations, obligations and liabilities under Secured Cash Management Agreements and Secured Hedging Agreements with respect to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made, and Letters of Credit that have been cash collateralized in accordance with the terms of this Agreement, backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank), the expiration or termination of the Commitments of the Lenders under this Agreement and the cancellation or expiration of all Letters of Credit (except to the extent cash collateralized in accordance with the terms of this Agreement, backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank), without any further action by any person, the Guarantors shall be automatically subrogated to the rights of the Administrative Agent and the Lenders, and may exercise their rights of contribution pursuant to Section 7.10, in each case to the extent of any payment hereunder.

 

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Section 7.05          Remedies.  Subject to the terms of any applicable Intercreditor Agreement, the Guarantors jointly and severally agree that, as between the Guarantors and the Lenders, the obligations of the Borrower under this Agreement and the Notes, if any, may be declared to be forthwith due and payable as provided in Section 8.01 (and shall be deemed to have become automatically due and payable in the circumstances provided in Section 8.01) for purposes of Section 7.01, notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against the Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by the Borrower) shall forthwith become due and payable by the Guarantors for purposes of Section 7.01.

 

Section 7.06          Instrument for the Payment of Money.  Each Guarantor hereby acknowledges that the guarantee in this Article VII constitutes an instrument for the payment of money, and consents and agrees that any Lender or Agent, at its sole option, in the event of a dispute by such Guarantor in the payment of any moneys due hereunder, shall have the right to bring a motion or action under New York CPLR Section 3213.

 

Section 7.07          Continuing Guarantee.  The guarantee in this Article VII is a continuing guarantee of payment, and shall apply to all Guaranteed Obligations whenever arising.

 

Section 7.08          General Limitation on Guarantee Obligations.  In any action or proceeding involving any state corporate, limited partnership or limited liability company law, or any applicable state, federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of any Guarantor under Section 7.01 would otherwise be held or determined to be void, voidable, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 7.01, then, notwithstanding any other provision to the contrary, the amount of such liability shall, without any further action by such Guarantor, any Credit Party or any other person, be automatically limited and reduced to the highest amount (after giving effect to the right of contribution established in Section 7.10) that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

 

Section 7.09          Release of Guarantors.  If, in compliance with the terms and provisions of the Loan Documents, all or substantially all of the Equity Interests of any Subsidiary Guarantor are sold or otherwise transferred (a “Transferred Guarantor”) to a person or persons, none of which is the Borrower or a Guarantor, such Transferred Guarantor shall, effective immediately upon the consummation of such sale or transfer, be automatically released from its obligations under this Agreement (including under Section 10.03 hereof) and its obligations to pledge and grant any Collateral owned by it pursuant to any Security Document and the pledge of such Equity Interests to the Collateral Agent pursuant to the Security Agreements shall be automatically released, and, so long as the Borrower shall have provided the Agents such certifications or documents as any Agent shall reasonably request, the Collateral Agent shall (at the expense of the Borrower) take such actions as are necessary to effect each release described in this Section 7.09 in accordance with the relevant provisions of the Security Documents, so long as the Borrower shall have provided the Agents such certifications or

 

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documents as any Agent shall reasonably request in order to demonstrate compliance with this Agreement.

 

Section 7.10          Right of Contribution.  Each Guarantor hereby agrees that to the extent that such Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has not paid its proportionate share of such payment, in an amount not to exceed the highest amount that would be valid and enforceable and not subordinated to the claims of other creditors as determined in any action or proceeding involving any state corporate, limited partnership or limited liability law, or any applicable state, federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally.  Each such Guarantor’s right of contribution shall be subject to the terms and conditions of Section 7.04.  The provisions of this Section 7.10 shall in no respect limit the obligations and liabilities of any Guarantor to the Administrative Agent, the Issuing Bank, and the Lenders, and each Guarantor shall remain liable to the Administrative Agent, the Issuing Bank, and the Lenders for the full amount guaranteed by such Guarantor hereunder.

 

ARTICLE VIII
EVENTS OF DEFAULT

 

Section 8.01          Events of Default.  For so long as this Agreement remains outstanding, upon the occurrence and during the continuance of the following events (“Events of Default”):

 

(a)           default shall be made in the payment of any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof (including a Term Loan Repayment Date) or at a date fixed for mandatory prepayment thereof or by acceleration thereof or otherwise;

 

(b)           default shall be made in the payment of any interest on any Loan or any Fee or any other amount (other than an amount referred to in clause (a) above) due under any Loan Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of five Business Days;

 

(c)           any representation or warranty made or deemed made by or on behalf of any Group Member in any Loan Document, Borrowing Request or LC Request or any representation, warranty, statement or information contained in any certificate furnished by or on behalf of any Group Member pursuant to any Loan Document, shall prove to have been false or misleading in any material respect when so made or deemed made, and such false or misleading representation, warranty, statement or information, to the extent capable of being cured, shall continue to be false, misleading or otherwise unremedied, or shall not be waived, for a period of 30 days after receipt of written notice thereof from the Administrative Agent to the Borrower;

 

(d)           default shall be made in the due observance or performance by any Group Member of any covenant, condition or agreement contained in Sections 5.02(a) or 5.03(a) (only with respect to legal existence in the Borrower’s state of organization), or in Article VI; provided that the failure of Holdings and its Subsidiaries to observe or perform their obligations

 

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under Section 6.08 shall not constitute an Event of Default for purposes of any Term Loan unless and until (i) if the Borrower then has the right to receive an Equity Cure Contribution, the date occurs that is fifteen Business Days after the day on which financial statements are required to be delivered for the applicable fiscal quarter pursuant to Section 5.01(a) or (b), as applicable, and (ii) the Required Revolving Lenders have terminated the Commitments and declared the Revolving Loans due and payable (which such Event of Default for purposes of any Term Loans shall terminate automatically and immediately upon the Required Revolving Lenders rescinding such acceleration and/or waiving such Event of Default with respect to the Revolving Loans); provided that if the Lenders with any Incremental Revolving Loan Commitments shall have agreed not to have the benefit of the Financial Covenant, such Incremental Revolving Loan Commitments shall be treated for purposes of this clause (d) in the same manner as Incremental Term Loan Commitments and not as Incremental Revolving Loan Commitments would otherwise be treated for purposes of this clause (d); provided, further, that, for the avoidance of doubt, an Event of Default under this Section 8.01(d) resulting from a breach of Section 6.08 shall be subject to cure pursuant to Section 8.03;

 

(e)           default shall be made in the due observance or performance by any Group Member of any covenant, condition or agreement contained in any Loan Document other than those specified in clauses (a), (b) or (d) immediately above and such default shall continue unremedied or shall not be waived for a period of 30 days after receipt of written notice thereof from the Administrative Agent to the Borrower;

 

(f)            any Credit Party shall fail to (i) pay any principal or interest due in respect of any Indebtedness (other than the Obligations), when and as the same shall become due and payable beyond any applicable grace period, or (ii) observe or perform any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or governing any such Indebtedness, if the effect of any failure referred to in this clause (ii) is to cause, or to permit the holder or holders of such Indebtedness or a trustee or other representative on its or their behalf to cause (with or without the giving of notice, but taking into account any applicable grace periods or waivers), such Indebtedness to become due prior to its stated maturity or become subject to a mandatory offer to purchase by the obligor; provided that this clause (ii) shall not apply to secured Indebtedness that becomes due as a result of the sale, transfer or other disposition (including as a result of a casualty or condemnation event) of the property or assets securing such Indebtedness (to the extent such sale, transfer or other disposition is not prohibited under this Agreement and such Indebtedness is repaid in accordance with its terms); provided, further, that no Event of Default shall occur pursuant to this clause (f) unless the aggregate principal amount of all such Indebtedness referred to in clauses (i) and (ii) exceeds $10,000,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $13,400,000) at any one time (provided that, in the case of Hedging Obligations, the amount counted for this purpose shall be the amount payable by all Credit Parties if such Hedging Obligations were terminated at such time; provided, further, that such failure is unremedied and is not waived by the holders of such Indebtedness);

 

(g)           an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of any Group Member (other than any Immaterial Subsidiary), or of all or substantially all of the property of

 

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any Group Member (other than any Immaterial Subsidiary), under Title 11 of the U.S. Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law; (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Group Member (other than any Immaterial Subsidiary) or for all or substantially of the property of any Group Member (other than any Immaterial Subsidiary); or (iii) the winding-up or liquidation of any Group Member (other than any Immaterial Subsidiary); and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

 

(h)           any Group Member (other than any Immaterial Subsidiary) shall (i) voluntarily commence any proceeding, or file any petition, seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law; (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in clause (g) above; (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Group Member (other than any Immaterial Subsidiary) or for a substantial part of the property of any Group Member (other than any Immaterial Subsidiary); (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding; (v) make a general assignment for the benefit of creditors; (vi) become unable, admit in writing its inability, or fail generally to, pay its debts as they become due; or (vii) take any corporate (or equivalent) action for the purpose of effecting any of the foregoing;

 

(i)            there is entered against any Credit Party or any Restricted Subsidiary a final judgment or order for the payment of money in an aggregate amount in excess of $10,000,000 (or, if the Specified 2018 Acquisition is consummated on or prior to the date that is 180 days after the Closing Date, $13,400,000) (to the extent not covered by independent third-party insurance or a third-party indemnification agreement) and such judgment or order shall not have been satisfied, vacated, discharged or stayed or bonded pending an appeal for a period of 60 consecutive days;

 

(j)            any material provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder (including as a result of a transaction permitted under Section 6.04 or Section 6.05) or solely as a result of acts or omissions by the Administrative Agent or any Lender, or the satisfaction in full in cash of all of the Obligations (other than (i) contingent indemnification obligations and unasserted expense reimbursement obligations, (ii) obligations and liabilities under Secured Cash Management Agreements and Secured Hedging Agreements with respect to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made and (iii) Letters of Credit that have been cash collateralized in accordance with the terms of this Agreement, backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank and termination of the Commitments), ceases to be in full force and effect or, in the case of any Security Document, ceases to create a valid and perfected first priority lien (subject to Permitted Liens) on the Collateral covered thereby; or any material Guarantee for any reason other than as expressly permitted hereunder (including as a result of a transaction permitted under Section 6.04 or Section 6.05) or solely as a result of acts

 

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or omissions by the Administrative Agent or any Lender, or the satisfaction in full of all of the Guaranteed Obligations (other than contingent indemnification obligations, unasserted expense reimbursement obligations, obligations and liabilities under Secured Cash Management Agreements and Secured Hedging Agreements with respect to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made, and Letters of Credit that have been cash collateralized in accordance with the terms of this Agreement, backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank and termination of the Commitments), ceases to be in full force and effect; or any Credit Party contests in writing the validity or enforceability of any material provision of any Loan Document or any material Guarantee; or any Credit Party contests in writing the validity or enforceability of any material provision of an Intercreditor Agreement or subordination agreement; or any Credit Party denies in writing that it has any or further liability or obligation under any material provision of any Loan Document or any material Guarantee (in each case, other than as a result of repayment in full in cash of the Obligations (other than contingent indemnification obligations, unasserted expense reimbursement obligations, obligations and liabilities under Secured Cash Management Agreements and Secured Hedging Agreements with respect to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made, and Letters of Credit that have been cash collateralized in accordance with the terms of this Agreement, backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank) and termination of the Commitments), or purports in writing to revoke or rescind any material portion of any Loan Document, the grant or assignment of any material security interest or any material Guarantee;

 

(k)           there shall have occurred an ERISA Event that, when taken either alone or together with all such other ERISA Events, could reasonably be expected to have a Material Adverse Effect; or

 

(l)            there shall have occurred a Change of Control.

 

then, and in every such event (other than an event with respect to the Borrower described in clause (g) or (h) above), and at any time thereafter during the continuance of such event, the Administrative Agent may, with the prior consent of (x) in the case of an Event of Default subject to the first proviso to Section 8.01(d), the Required Revolving Lenders (subject to the second proviso to Section 8.01(d)) or (y) with respect to any other Event of Default, the Required Lenders, and at the request of (A) in the case of an Event of Default subject to the first proviso to Section 8.01(d), the Required Revolving Lenders (subject to the second proviso to Section 8.01(d)) or (B) in the case of any other Event of Default, the Required Lenders, shall, by notice to the Borrower, take either or both of the following actions, at the same or different times, subject to the terms of any applicable Intercreditor Agreement or subordination agreement: (i) terminate forthwith the Commitments and (ii) declare the Loans and Reimbursement Obligations then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans and Reimbursement Obligations so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other Obligations of the Borrower accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of

 

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any kind, all of which are hereby expressly waived by the Borrower and the Guarantors, anything contained herein or in any other Loan Document to the contrary notwithstanding; and in any event, with respect to the events described in clause (g) or (h) above, the Commitments shall automatically terminate and the principal of the Loans and Reimbursement Obligations then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other Obligations of the Borrower accrued hereunder and under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower and the Guarantors, anything contained herein or in any other Loan Document to the contrary notwithstanding.

 

Notwithstanding anything to the contrary contained herein or in any other Loan Document, any Default or Event of Default under this Agreement or similarly defined term under any other Loan Document, other than any Event of Default which cannot be waived without the written consent of each Lender directly and adversely affected thereby, shall be deemed not to “exist” or be “continuing” (or other similar expression with respect thereto) if the events, acts or conditions that gave rise to such Default or Event of Default have been remedied or cured (including by payment, notice, taking of any action or omitting to take any action) or have ceased to exist or if such Default or Event of Default shall have been waived.

 

Section 8.02          Application of Proceeds.  Subject to the terms of any applicable Intercreditor Agreement, the proceeds received by the Administrative Agent or the Collateral Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral or the Guarantees pursuant to the exercise by the Administrative Agent or the Collateral Agent, as the case may be, in accordance with the terms of the Loan Documents, of its remedies shall be applied, in full or in part, together with any other sums then held by the Collateral Agent pursuant to this Agreement, promptly by the Administrative Agent or the Collateral Agent, as the case may be, as follows:

 

(a)           first, to the payment of all reasonable and documented costs and expenses, fees, commissions and taxes of such sale, collection or other realization including compensation to the Administrative Agent, the Collateral Agent and their respective agents and counsel, and all expenses, liabilities and advances made or incurred by the Administrative Agent or the Collateral Agent in connection therewith and all amounts for which the Administrative Agent or the Collateral Agent is entitled to indemnification pursuant to the provisions of any Loan Document, together with interest on each such amount at the highest rate then in effect under this Agreement from and after the date such amount is due, owing and unpaid until paid in full;

 

(b)           second, to the payment of all other reasonable and documented costs and expenses of such sale, collection or other realization including compensation to the other Secured Parties and their agents and counsel and all costs, liabilities and advances made or incurred by the other Secured Parties in connection therewith, together with interest on each such amount at the highest rate then in effect under this Agreement from and after the date such amount is due, owing and unpaid until paid in full;

 

(c)           third, without duplication of amounts applied pursuant to clauses (a) and (b) above, to the payment in full in cash, pro rata, of interest and other amounts constituting Obligations (other than principal any premium thereon, Reimbursement Obligations and

 

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obligations to cash collateralize Letters of Credit) and any fees, premiums and scheduled periodic payments due under Cash Management Agreements and Hedging Agreements constituting Secured Obligations and any interest accrued thereon, in each case equally and ratably in accordance with the respective amounts thereof then due and owing;

 

(d)           fourth, to the payment in full in cash, pro rata, of the principal amount of the Obligations and any premium thereon (including Reimbursement Obligations and obligations to cash collateralize Letters of Credit) and any breakage, termination or other payments under Cash Management Agreements and Hedging Agreements constituting Secured Obligations and any interest accrued thereon; and

 

(e)           fifth, the balance, if any, to the person lawfully entitled thereto (including the applicable Credit Party or its successors or assigns) or as a court of competent jurisdiction may direct.

 

In the event that any such proceeds are insufficient to pay in full the items described in the preceding sentences of this Section 8.02, the Credit Parties shall remain liable, jointly and severally, for any deficiency.  For the avoidance of doubt, notwithstanding any other provision of any Loan Document, no amount received directly or indirectly from any Credit Party that is not a Qualified ECP Guarantor shall be applied directly or indirectly by the Administrative Agent or otherwise to the payment of any Excluded Swap Obligations, and Obligations arising under Secured Cash Management Agreements and Secured Hedging Agreements shall be excluded from the application described above in clauses (a) through (e) of the first sentence of this Section 8.02 if the Administrative Agent has not received written notice thereof, together with such supporting documentation from the applicable Cash Management Bank or Hedge Bank, as the case may be, as may be reasonably necessary to determine the amount of the Obligations owed thereunder.  Each Cash Management Bank or Hedge Bank not a party to this Agreement that has given the notice contemplated by the preceding sentence shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent and the Collateral Agent pursuant to the terms of Article IX hereof for itself and its Affiliates as if a “Lender” party hereto and be deemed to be (and agrees to be) subject to the provisions in Sections 10.09, 10.10 and 10.12 as a party hereto.

 

Section 8.03          Equity Cure.

 

(a)           Notwithstanding anything to the contrary contained in Section 8.01, but subject to Section 8.03(b), solely for the purpose of determining whether an Event of Default has occurred under the financial covenant set forth in Section 6.08 (the “Financial Covenant”) as of the end of and for any Test Period ending on the last day of any fiscal quarter (such fiscal quarter, a “Cure Quarter”), the then existing direct or indirect equity holders of Holdings shall have the right to make an equity investment or shareholder loan (to the extent such shareholder loan is subject to the terms and provisions of the Subordination Agreement in all respects), directly or indirectly, (which equity contribution shall not be Disqualified Capital Stock) in Holdings in cash, which Holdings shall contribute, directly or indirectly, to the Borrower in cash (which equity contribution shall not be Disqualified Capital Stock) on or after the first day of such Cure Quarter and on or prior to the fifteenth Business Day after the date on which financial statements are required to be delivered pursuant to Section 5.01(a) or (b), as applicable, with

 

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respect to such Cure Quarter or the fiscal year ending on the last day of such Cure Quarter, as applicable (the “Cure Expiration Date”), and such cash will, together with any Eligible Equity Issuances which have been included in clause (c) of the Cumulative Amount (to the extent Not Otherwise Applied), in each case, if so designated by Holdings, be included in the calculation of Consolidated EBITDA for purposes of determining compliance with the Financial Covenant as of the end of and for the Test Period ending on the last day of such Cure Quarter and any Test Periods ending on the last day of any of the subsequent three fiscal quarters (any such equity contribution so included in the calculation of Consolidated EBITDA, an “Equity Cure Contribution,” and the amount of such Equity Cure Contribution, the “Cure Amount”); provided that such Equity Cure Contribution is Not Otherwise Applied (other than, for the avoidance of doubt pursuant to this Section 8.03(a)).  All Equity Cure Contributions shall be disregarded for all purposes of this Agreement other than inclusion in the calculation of Consolidated EBITDA for the purpose of determining compliance with the Financial Covenant as of the end of and for the Test Period ending on the last day of such Cure Quarter and any Test Periods ending on the last day of any of the subsequent three fiscal quarters, including being disregarded for purposes of the determination of the Cumulative Amount and all components thereof and any baskets or other ratios with respect to the covenants contained in Article VI (other than Section 6.08).  There shall be no pro forma reduction in Consolidated Total Funded Indebtedness (by netting or otherwise) with the proceeds of any Equity Cure Contribution for determining compliance with the Financial Covenant under Section 6.08 as of and for the Test Period ending on the last day of the Cure Quarter; provided that such Equity Cure Contribution shall reduce Consolidated Total Funded Indebtedness in future fiscal quarters to the extent used to prepay any applicable Indebtedness.  Notwithstanding anything to the contrary contained in Section 8.01, (A) upon receipt of the Cure Amount by Holdings (and the subsequent contribution in cash to the Borrower (which equity contribution shall not be Disqualified Capital Stock in the Borrower)) in at least the amount necessary to cause the Borrower to be in compliance with the Financial Covenant as of the end of and for the Test Period ending on the last day of such Cure Quarter, the Financial Covenant under Section 6.08 shall be deemed satisfied and complied with as of the end of and for such Test Period with the same effect as though there had been no failure to comply with the Financial Covenant under Section 6.08, and any Default or Event of Default related to any failure to comply with the Financial Covenant shall be deemed not to have occurred for purposes of the Loan Documents, and (B) upon receipt by the Administrative Agent of a notice from the Borrower (“Notice of Intent to Cure”) and through the Cure Expiration Date: (i) no Default or Event of Default shall be deemed to have occurred on the basis of any failure to comply with the Financial Covenant unless such failure is not cured by the making of an Equity Cure Contribution on or prior to the Cure Expiration Date, (ii) the Borrower shall not be permitted to borrow Revolving Loans or Swing Line Loans and Letters of Credit shall not be issued or renewed unless and until the Equity Cure Contribution is made or all existing Events of Default are waived or cured, (iii) none of the Administrative Agent, the Collateral Agent or any Lender shall exercise any of the remedial rights otherwise available to it upon an Event of Default, including the right to accelerate the Loans, to terminate Commitments or to foreclose on the Collateral solely on the basis of an Event of Default having occurred as a result of a violation of Section 6.08, unless the Equity Cure Contribution is not made on or before the Cure Expiration Date and (iv) if the Equity Cure Contribution is not made on or before the Cure Expiration Date, such Event of Default or potential Event of Default shall spring into existence

 

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after such time and the Administrative Agent, the Collateral Agent and any Lender may take any actions or remedies pursuant to this Agreement and the other Loan Documents.

 

(b)                                 There shall be no more than five Equity Cure Contributions made during the term of this Agreement and no more than two Equity Cure Contributions made during any four consecutive fiscal quarters.  No Equity Cure Contribution shall be any greater than the minimum amount required for the Borrower to be in compliance with the Financial Covenant in the applicable Cure Quarter including, without limitation, for purposes of calculating any amounts to be added back to Consolidated EBITDA pursuant to clause (o) of the definition thereof.

 

ARTICLE IX
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT

 

Section 9.01                             Appointment and Authority.

 

(a)                                 Each of the Lenders and the Issuing Bank hereby irrevocably appoints GS to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and irrevocably authorizes the Administrative Agent (including through its agents or employees) to take such actions on its behalf, including execution of the other Loan Documents, and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Bank, and neither the Borrower nor any other Credit Party shall have rights as a third party beneficiary of any of such provisions (except for the provisions in Sections 9.01, 9.06 and 9.10).  It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Requirements of Law.  Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

 

(b)                                 The Administrative Agent shall also act as the “collateral agent” under the Loan Documents, and each of the Lenders (including (for all purposes of this paragraph) in its capacities as a potential or actual counterparty to Hedging Agreements and a potential Cash Management Bank) and the Issuing Bank hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender and the Issuing Bank for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Credit Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto and such Lender and the Issuing Bank acknowledge and agree that the Administrative Agent may also act, subject to and in accordance with the terms of any applicable Intercreditor Agreement as the collateral agent for the lenders and other secured parties under any documents evidencing Indebtedness permitted hereunder secured on a junior basis to the Secured Obligations.  In this connection, the Administrative Agent, as “collateral agent”, and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 9.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Documents, or for exercising any rights and

 

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remedies thereunder at the direction of the Administrative Agent, shall be entitled to the benefits of all provisions of this Article IX and Article X (including Section 10.03) (in the case of co-agents, sub-agents and attorneys-in-fact, as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto. Any entity holding Collateral for and on behalf of the Administrative Agent in its role as collateral agent shall be deemed to be appointed as a sub-agent of the Administrative Agent in accordance with the provisions of Section 9.05.

 

Section 9.02                             Rights as a Lender.  At any time that such Person is also a Lender hereunder, the Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

 

Section 9.03                             Exculpatory Provisions.

 

(a)                                 The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature.  Without limiting the generality of the foregoing, the Administrative Agent:

 

(i)                                     shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing (and it is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law, and that such term is used as a matter of market custom and is intended to create or reflect only an administrative relationship between contracting parties);

 

(ii)                                  shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith to be necessary, under the circumstances as provided for herein or in the other Loan Documents); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable Requirements of Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a

 

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forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and

 

(iii)                               shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Holdings, the Borrower or any of their respective Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

 

(b)                                 The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default (and identifying it as such) is given in writing to the Administrative Agent by the Borrower, a Lender or an Issuing Bank.

 

(c)                                  The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default, (iv) the sufficiency, validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Security Documents, (v) the value or the sufficiency of any Collateral or that the Liens granted to the Collateral Agent pursuant to the Loan Documents have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

 

Section 9.04                             Reliance by Administrative Agent.  The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person (whether or not such Person in fact meets the requirements set forth in the Loan Documents for being the signatory, sender or authenticator thereof).  The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person (whether or not such Person in fact meets the requirements set forth in the Loan Documents for being the signatory, sender or authenticator thereof), and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Bank unless

 

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the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit.  The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

Section 9.05                             Delegation of Duties.  The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through, or delegate any and all such rights and powers to, any one or more co-agents, sub-agents or attorneys-in-fact appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory and indemnification provisions of this Article IX and Article X shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply, without limiting the foregoing, to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.  The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Administrative Agent acted with gross negligence, bad faith or willful misconduct in the selection of such sub-agents.

 

Section 9.06                             Resignation of Administrative Agent.

 

(a)                                 The Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Bank and the Borrower and such notice shall also be effective in respect of its role as Collateral Agent unless the Administrative Agent otherwise agrees in writing; provided, that any such notice provided by the Administrative Agent shall provide for at least ten days prior notice to such persons of such resignation unless the Borrower expressly consents to a shorter notice period in its sole discretion.  If the Lender acting as Administrative Agent is, or the Administrative Agent is an Affiliate of a Lender that is, replaced pursuant to Section 2.16(b), then such Lender or such Administrative Agent, as applicable, shall be deemed to have submitted its notice of resignation as Administrative Agent concurrent with such replacement (and, for the avoidance of doubt, the Borrower shall be deemed to have waived the notice period required pursuant to this Section 9.06).  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with the Borrower’s consent (absent an Event of Default under Section 8.01(a), (b), (g) (with respect to the Borrower only), or (h) (with respect to the Borrower only)) (such consent not to be unreasonably withheld or delayed), to appoint a successor that is not a Disqualified Institution, which shall be a commercial bank or trust company with an office in the United States, or an Affiliate of any such commercial bank or trust company with an office in the United States having capital and surplus aggregating in excess of $1,000,000,000, with any prohibited appointment to be absolutely void ab initio.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent meeting the qualifications set forth

 

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above (including the Borrower’s consent and that such successor not be a Disqualified Institution), with any prohibited appointment to be absolutely void ab initio.  Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

 

(b)                                 With effect from the Resignation Effective Date, (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security granted to or held by the Administrative Agent on behalf of the Lenders or the Issuing Bank under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed), and (2) except for any indemnity payments or other amounts then owed to the retiring Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the Issuing Bank directly, until such time, if any, as the Required Lenders or the resigning Administrative Agent appoint a successor Administrative Agent as provided for above.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Administrative Agent (other than as provided in Section 2.15 and other than any rights to indemnity payments or other amounts owed to the retiring Administrative Agent as of the Resignation Effective Date), and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section).  The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article IX and Section 10.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

 

(c)                                  Any resignation by GS as Administrative Agent pursuant to this Section shall also constitute its resignation as an Issuing Bank and Swing Line Lender.  If any Issuing Bank resigns as an Issuing Bank, it shall retain all the rights, powers, privileges and duties of the Issuing Bank hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as Issuing Bank and all LC Obligations with respect thereto, including the right to require the Lenders to make ABR Loans or fund risk participations in outstanding Reimbursement Obligations pursuant to Section 2.18(e).  If GS resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make ABR Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.17.  Upon the appointment by the Borrower of a successor Issuing Bank or Swing Line Lender hereunder (which successor shall in all cases be a Lender other than a Defaulting Lender), (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank and/or Swing Line Lender, as applicable, (b) the retiring Issuing Bank and Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor Issuing Bank shall issue letters of credit in substitution for the Letters of

 

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Credit, if any, outstanding at the time of such succession or make other arrangements reasonably satisfactory to the Issuing Bank that issued such outstanding Letters of Credit to effectively assume the obligations of the Issuing Bank that issued such outstanding Letters of Credit with respect to such Letters of Credit.

 

Section 9.07                             Non-Reliance on Administrative Agent and Other Lenders.  Each Lender and the Issuing Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, conducted its own independent investigation of the financial condition and affairs of the Credit Parties and their Subsidiaries and made its own credit analysis and decision to enter into this Agreement.  Each Lender further represents and warrants that it has reviewed each document made available to it on the Platform in connection with this Agreement and has acknowledged and accepted the terms and conditions applicable to the recipients thereof (including any such terms and conditions set forth, or otherwise maintained, on the Platform with respect thereto).  Each Lender and the Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.  Each Lender and the Issuing Bank expressly acknowledge that the Administrative Agent and its Affiliates have not made any representation or warranty to it.  Except for documents expressly required by the Loan Documents to be transmitted by the Administrative Agent to the Lenders or the Issuing Bank, the Administrative Agent shall have no duty or responsibility (either express or implied) to provide any Lender or the Issuing Bank with any credit or other information concerning any Credit Party, including the business, prospects, operations, property, financial and other condition or creditworthiness of any Credit Party or any Affiliate of a Credit Party, that may come into the possession of the Administrative Agent or any of its Affiliates.

 

Section 9.08                             No Other Duties, Etc.  Anything herein to the contrary notwithstanding, none of the Lead Arrangers or the Agents listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, the Collateral Agent, a Lender or the Issuing Bank hereunder.

 

Section 9.09                             Administrative Agent May File Proofs of Claim; Credit Bidding.  In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Credit Party, the Administrative Agent (irrespective of whether the principal of any Loan or LC Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated), by intervention in such proceeding or otherwise:

 

(a)                                 to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, LC Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be reasonably necessary or advisable in order to have the claims of the Lenders, the Issuing Bank and the Administrative Agent

 

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(including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Issuing Bank and the Administrative Agent and their respective agents and counsel and all other amounts due to the Lenders, the Issuing Bank and the Administrative Agent under Sections 2.05 and 10.03 or otherwise) allowed in such judicial proceeding; and

 

(b)                                 to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the Issuing Bank to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders and the Issuing Bank, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.05 and 10.03.

 

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or the Issuing Bank any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or the Issuing Bank or to authorize the Administrative Agent to vote in respect of the claim of any Lender or the Issuing Bank in any such proceeding.

 

The Secured Parties hereby irrevocably authorize the Administrative Agent, at the direction of the Required Lenders, to credit bid all or any portion of the Obligations (including accepting some or all of the Collateral in satisfaction of some or all of the Secured Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (a) at any sale thereof conducted under the provisions of the Bankruptcy Code, including under Sections 363, 1123 or 1129 of the Bankruptcy Code, or any similar Requirements of Law in any other jurisdictions to which a Credit Party is subject or (b) at any other sale or foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with any applicable Requirements of Law.  In connection with any such credit bid and purchase, the Obligations owed to the Secured Parties shall be entitled to be, and shall be, credit bid on a ratable basis (with Obligations with respect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that would vest upon the liquidation of such claims in an amount proportional to the liquidated portion of the contingent claim amount used in allocating the contingent interests) in the asset or assets so purchased (or in the Equity Interests or debt instruments of the acquisition vehicle or vehicles that are used to consummate such purchase).  In connection with any such bid, (i) the Administrative Agent shall be authorized to form one or more acquisition vehicles to make a bid, (ii) the Administrative Agent shall be authorized to adopt documents providing for the governance of the acquisition vehicle or vehicles (provided that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any disposition of the assets or Equity Interests thereof, shall be governed, directly or indirectly, by the vote of the Required Lenders, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Required Lenders contained in clauses (i) through (xi) of the first proviso to Section 10.02(b) of this Agreement, (iii) the Administrative Agent shall be authorized to assign the relevant

 

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Obligations to any such acquisition vehicle pro rata by the Lenders, as a result of which each of the Lenders shall be deemed to have received a pro rata portion of any Equity Interests and/or debt instruments issued by such an acquisition vehicle on account of the assignment of the Obligations to be credit bid, all without the need for any Secured Party or acquisition vehicle to take any further action, and (iv) to the extent that Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral for any reason (as a result of another bid being higher or better, because the amount of Obligations assigned to the acquisition vehicle exceeds the amount of debt credit bid by the acquisition vehicle or otherwise), such Obligations shall automatically be reassigned to the Lenders pro rata, and the Equity Interests and/or debt instruments issued by any acquisition vehicle on account of such Obligations that had been assigned to the acquisition vehicle shall automatically be cancelled, without the need for any Secured Party or any acquisition vehicle to take any further action.

 

Section 9.10                             Collateral and Guarantee Matters.  Each of the Lenders (including in its capacities as an actual or potential secured counterparty to a Hedging Agreement or as a Cash Management Bank) and the Issuing Bank irrevocably authorize the Administrative Agent and Collateral Agent, at their option and in their discretion:

 

(a)                                 to release any Lien on any property granted to or held by the Administrative Agent or Collateral Agent under any Loan Document (i) upon termination of the Commitments of the Lenders under this Agreement and payment in full of all Secured Obligations (other than (A) contingent indemnification obligations and unasserted expense reimbursement obligations and (B) obligations and liabilities under Secured Cash Management Agreements and Secured Hedging Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made) and the expiration or termination of all Letters of Credit (other than Letters of Credit that have been cash collateralized in accordance with the terms of this Agreement, backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank), (ii) that is sold or otherwise disposed of (other than to a Credit Party) or (A) to be sold or otherwise disposed of as part of or (B) in connection with any conveyance, sale, transfer or other disposition permitted hereunder or under any other Loan Document or so that a Lien may be granted (or continue to subsist) over such property as permitted by (and subject to any conditions in) Section 6.02(c), (d), (f), (i), (k), (l), (m), (s), (t), (u), (w), (x), (z), (bb), (cc) and (dd), (iii) in connection with the designation of any Restricted Subsidiary as an Unrestricted Subsidiary or (iv) subject to Section 10.02, if approved, authorized or ratified in writing by the Required Lenders;

 

(b)                                 to subordinate any Lien on any property granted to or held by the Administrative Agent or Collateral Agent under any Loan Document to the holder of any Lien on such property that is expressly permitted to be senior to the Liens securing the Secured Obligations pursuant to Section 6.02;

 

(c)                                  to release any Guarantor from its obligations under its Guarantee if such Person ceases to be a Restricted Subsidiary as a result of a transaction permitted under the Loan Documents; and

 

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(d)                                 to enter into any Intercreditor Agreement or any other intercreditor or subordination agreement it deems reasonable (or, in each case, any amendment or modification thereto or restatement thereof) in connection with any refinancing facilities or notes (including, without limitation, Permitted Pari Passu Refinancing Debt, Permitted Junior Refinancing Debt and Permitted Unsecured Refinancing Debt), Incremental Facilities, Permitted Incremental Equivalent Debt or other obligations not prohibited hereunder and that if any such Intercreditor Agreement or other intercreditor or subordination agreement (or, in each case, any such amendment or modification thereto or restatement thereof) is posted to the Lenders three Business Days before being executed and the Required Lenders shall not have objected to such Intercreditor Agreement or other intercreditor or subordination agreement (or, in each case, any such amendment or modification thereto or restatement thereof) the Required Lenders shall be deemed to have agreed that the Administrative Agent’s or the Collateral Agent’s entry into such Intercreditor Agreement or other intercreditor or subordination agreement is reasonable and to have consented to such Intercreditor Agreement or other intercreditor or subordination agreement (or, in each case, any such amendment or modification thereto or restatement thereof) and such Agent’s execution thereof.

 

Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under its Guarantee pursuant to this Section 9.10.  In each case as specified in this Section 9.10, the Administrative Agent will, at the Borrower’s expense, execute and deliver to the applicable Credit Party such documents as such Credit Party may reasonably request to evidence the release of any such item of Collateral from the assignment and security interest granted under the Security Documents or to subordinate its interest in any such item, or to release any such Guarantor from its obligations under its Guarantee, in each case in accordance with the terms of the Loan Documents and this Section 9.10.

 

The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Administrative Agent’s Lien thereon, or any certificate prepared by any Credit Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.

 

Section 9.11                             Secured Cash Management Agreements and Secured Hedging Agreements.  Except as otherwise expressly set forth herein, no Cash Management Bank or Hedge Bank that obtains the benefits of the Loan Documents, any Guarantee or any Collateral by virtue of the provisions hereof or any Security Document shall have any right to notice of any action or to consent to or direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than (x) if applicable, in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents or (y) pursuant to any Intercreditor Agreement.  Notwithstanding any other provision of this Section 9.11 to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Secured Obligations arising under Secured Cash Management Agreements unless the Administrative Agent has received written notice of such Secured

 

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Obligations, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank, as the case may be.

 

Section 9.12                             Withholding Tax.  To the extent required by any applicable Requirements of Law (including for this purpose, pursuant to any agreements entered into with a Governmental Authority), the Agents may withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax. If the IRS or any other authority of the United States or other Governmental Authority asserts a claim that an Agent did not properly withhold Tax from any amounts paid to or for the account of any Lender for any reason (including, without limitation, because the appropriate form was not delivered or not properly executed, or because such Lender failed to notify the Agent of a change in circumstance that rendered the exemption from, or reduction of, withholding Tax ineffective), such Lender shall indemnify and hold harmless the Agent (to the extent that the Agent has not already been reimbursed by the Credit Parties and without limiting the obligation of the Credit Parties to do so) and shall make payable in respect thereof within 10 days after demand therefor, for all amounts paid, directly or indirectly, by the Agent as Tax or otherwise, including any interest, additions to Tax or penalties thereto, together with all expenses incurred, including legal expenses and any other out-of-pocket expenses, whether or not such Tax was correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by an Agent shall be deemed presumptively correct absent manifest error.  Each Lender hereby authorizes each Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due the Agents under this Section 9.12.  The agreements in this Section 9.12 shall survive the resignation and/or replacement of an Agent, any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.  Unless required by applicable laws, at no time shall any Agent have any obligation to file for or otherwise pursue on behalf of a Lender any refund of Taxes withheld or deducted from funds paid to or for the account of such Lender.  For the avoidance of doubt, for the purposes of this Section 9.12, the term “Lender” shall include the Swing Line Lender and the Issuing Bank.

 

Section 9.13                             Certain ERISA Matters.

 

(a)                                 Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and the Lead Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:

 

(i)                                     such Lender is not using “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans in connection with the Loans, the Letters of Credit or the Commitments,

 

(ii)                                  the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain

 

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transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable, and the conditions of such exemption have been satisfied, with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,

 

(iii)                               (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, and (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (a) through (g) of Part I of PTE 84-14, or

 

(iv)                              such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.

 

(b)                                 In addition, unless sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or such Lender has not provided another representation, warranty and covenant as provided in sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and the Lead Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that:

 

(i)                                     none of the Administrative Agent and the Lead Arrangers or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related to hereto or thereto),

 

(ii)                                  the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is independent (within the meaning of 29 CFR § 2510.3-21) and is a bank, an insurance carrier, an investment adviser, a broker-dealer or other person that holds, or has under management or control, total assets of at least $50 million, in each case as described in 29 CFR § 2510.3-21(c)(1)(i)(A)-(E),

 

(iii)                               the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is

 

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capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies (including in respect of the Obligations),

 

(iv)                              the Person making the investment decision on behalf of such Lender with respect to the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement is a fiduciary under ERISA or the Code, or both, with respect to the Loans, the Letters of Credit, the Commitments and this Agreement and is responsible for exercising independent judgment in evaluating the transactions hereunder, and

 

(v)                                 no fee or other compensation is being paid directly to the Administrative Agent and the Lead Arrangers or any their respective Affiliates for investment advice (as opposed to other services) in connection with the Loans, the Letters of Credit, the Commitments or this Agreement.

 

(c)                                  The Administrative Agent and each of the Lead Arrangers hereby informs the Lenders that each such Person is not undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or other payments with respect to the Loans, the Letters of Credit, the Commitments and this Agreement, (ii) may recognize a gain if it extended the Loans, the Letters of Credit or the Commitments for an amount less than the amount being paid for an interest in the Loans, the Letters of Credit or the Commitments by such Lender or (iii) may receive fees or other payments in connection with the transactions contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance fees, breakage or other early termination fees or fees similar to the foregoing.

 

ARTICLE X
MISCELLANEOUS

 

Section 10.01                      Notices.

 

(a)                                 Generally.  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in clause (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier or electronic mail as follows:

 

if to any Credit Party, to the Borrower at:

 

Ping Identity Corporation

1001 17th Street, Suite 100

Denver, Colorado 80202

 

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Attn: Raj Dani, Chief Financial Officer

E-mail: rdani@pingidentity.com

Attn: Adriana Carpenter, Vice President and Chief Accounting Officer

E-mail: acarpenter@pingidentity.com

 

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

 

Vista Equity Partners Fund V, L.P.

c/o Vista Equity Partners Management, LLC

Four Embarcadero Center, 20th Floor

San Francisco, CA 94111

Attention:  Kevin Sofield and Christina Lema

Email: ksofield@vistaequitypartners.com

clema@vistaequitypartners.com

 

and (which shall not constitute notice):

 

Kirkland & Ellis LLP

555 California Street, Suite 2700

San Francisco, CA 94104

Attention:  Sonali Jindal

Email:  sjindal@kirkland.com

 

if to the Sponsor to it at:

 

Vista Equity Partners Fund V, L.P.

c/o Vista Equity Partners Management, LLC

Four Embarcadero Center, 20th Floor

San Francisco, CA 94111

Attention:  Kevin Sofield and Christina Lema

Email: ksofield@vistaequitypartners.com

clema@vistaequitypartners.com

 

if to the Administrative Agent or the Collateral Agent at:

 

Goldman Sachs Bank USA

200 West Street, 16th Floor

New York, NY  10282

Attention: SBD Operations

Fax: (212) 428-9270
Email for Borrowing Requests and Interest Election Requests:

gs-sbdagency-borowernotices@ny.email.gs.com

Email for other notices and financial statement deliveries:

gsd.link@gs.com and joshua.desai@gs.com and

adam.fernandez@gs.com

 

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if to GS in its capacity as the Issuing Bank to it at:

 

Goldman Sachs Bank USA

c/o Goldman Sachs Loan Operations

Attn: Letter of Credit Department Manager

6011 Connection Drive

Irving, TX 75039
Fax: (917) 977-4587

Phone: (972) 368-2790
Email: gs-loc-operations@ny.email.gs.com

 

if to GS in its capacity as the Swing Line Lender to it at:

 

Goldman Sachs Bank USA

200 West Street, 16th Floor

New York, NY  10282

Attention: SBD Operations
Fax: (212) 428-9270

Email: gs-sbdagency-borowernotices@ny.email.gs.com

 

if to a Lender, to it at its address (or telecopier number) set forth in its Administrative Questionnaire.

 

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, they shall be deemed to have been given at the opening of business on the next Business Day for the recipient).  Notices delivered through electronic communications to the extent provided in clause (b) below, shall be effective as provided in said clause (b).

 

(b)                                 Electronic Communications.  Notices and other communications to the Lenders and the Issuing Bank hereunder may (subject to Section 10.01(d)) be delivered or furnished by electronic communication (including electronic mail, FpML messaging, Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent, the Collateral Agent, the Issuing Bank or the Borrower may agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it (including as set forth in Section 10.01(d)); provided that approval of such procedures may be limited to particular notices or communications.

 

Unless the Administrative Agent otherwise prescribes, notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its electronic mail address as described in the foregoing clause (b) of

 

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notification that such notice or communication is available and identifying the website address therefor.

 

(c)                                  Change of Address, etc.  Any party hereto may change its address or telecopier number or electronic mail address for notices and other communications hereunder by written notice to the other parties hereto.

 

(d)                                 Posting.  Each Credit Party hereby agrees that it will provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to this Agreement and any other Loan Document, including all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication (unless otherwise approved in writing by the Administrative Agent) that (i) relates to a request for a new, or a conversion of an existing, Borrowing or other extension of credit (including any election of an interest rate or interest period relating thereto), (ii) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (iii) provides a Notice of Intent to Cure, (iv) provides notice of any Default under this Agreement or (v) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or any borrowing or other extension of credit hereunder (all such non-excluded communications, collectively, the “Communications”), by transmitting the Communications in an electronic/soft medium in a format reasonably acceptable to the Administrative Agent at such e-mail address(es) provided to the Borrower from time to time or in such other form, including hard copy delivery thereof, as the Administrative Agent shall require.  In addition, each Credit Party agrees to continue to provide the Communications to the Administrative Agent in the manner specified in this Agreement or any other Loan Document or in such other form, including hard copy delivery thereof, as the Administrative Agent shall reasonably request.  Nothing in this Section 10.01 shall prejudice the right of the Agents, any Lender or any Credit Party to give any notice or other communication pursuant to this Agreement or any other Loan Document in any other manner specified in this Agreement or any other Loan Document or as any such Agent shall require.

 

(e)                                  Platform.  Each Credit Party further agrees that any Agent or Lead Arranger may make the Communications available to the Lenders by posting the Communications on IntraLinks, ClearPar, Debt Domain or SyndTrak or a substantially similar secure electronic transmission system (the “Platform”).  The Platform is provided “as is” and “as available.”  The Agents and Lead Arrangers do not warrant the accuracy or completeness of the Communications or the adequacy of the Platform and expressly disclaim liability for errors or omissions in the communications.  No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by any Agent or Lead Arranger in connection with the Communications or the Platform.  In no event shall any Agent or Lead Arranger or any of their Related Parties have any liability to the Credit Parties, any Lender or any other person for damages of any kind, including direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Credit Party’s or such Agent’s or Lead Arranger’s transmission of communications through the Internet, except to the extent the liability of such person is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from such person’s bad faith, gross negligence or willful misconduct.

 

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(f)                                   Public/Private.

 

(i)                                     Each Credit Party hereby authorizes the Administrative Agent to distribute (A) to Public Siders all Communications that the Borrower identifies in writing as containing no MNPI (“Public Side Communications”), and the Borrower represents and warrants that no such Public Side Communications contain any MNPI, and, at the reasonable written request of the Administrative Agent, the Borrower shall use commercially reasonable efforts to identify Public Side Communications by clearly and conspicuously marking the same as “PUBLIC”; and (B) to Private Siders all Communications other than Public Side Communications (such Communications, “Private Side Communications”).  The Borrower agrees to designate as Private Side Communications only those Communications or portions thereof that it reasonably believes in good faith constitute MNPI, and agrees to use commercially reasonable efforts not to designate any Communications provided under Sections 5.01(a), (b) and (c) as Private Side Communications.  “Private Siders” shall mean Lenders’ employees and representatives who have declared that they are authorized to receive MNPI.  “Public Siders” shall mean Lenders’ employees and representatives who have not declared that they are authorized to receive MNPI; it being understood that Public Siders may be engaged in investment and other market-related activities with respect to the Borrower’s or its Affiliates’ securities or loans.  “MNPI” shall mean material non-public information (within the meaning of United States federal securities laws assuming that Holdings is a public reporting company under federal securities laws (regardless of whether Holdings is actually a public reporting company under federal securities laws)) with respect to Holdings, its Affiliates, its Subsidiaries and any of their respective securities.

 

(ii)                                  Each Lender acknowledges that United States federal and state securities laws prohibit any person from purchasing or selling securities on the basis of material, non-public information concerning the issuer of such securities or, subject to certain limited exceptions, from communicating such information to any other person.  Each Lender confirms that it has developed procedures designed to ensure compliance with these securities laws.

 

(iii)                               Each Lender acknowledges that circumstances may arise that require it to refer to Communications that may contain MNPI.  Accordingly, each Lender agrees that it will use commercially reasonable efforts to designate at least one individual to receive Private Side Communications on its behalf in compliance with its procedures and applicable Requirements of Law and identify such designee (including such designee’s contact information) on such Lender’s Administrative Questionnaire.  Each Lender agrees to notify the Administrative Agent in writing from time to time of such Lender’s designee’s e-mail address to which notice of the availability of Private Side Communications may be sent by electronic transmission.

 

Section 10.02                      Waivers; Amendment.

 

(a)                                 Generally.  No failure or delay by any Agent, the Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall

 

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operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of each Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of any Loan Document or consent to any departure by any Credit Party therefrom shall in any event be effective unless the same shall be permitted by this Section 10.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether any Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time.  No notice or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.

 

(b)                                 Required Consents.  Subject to Section 10.02(c), (d), (e) and (g), neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended, supplemented or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrower and the Administrative Agent or, in the case of any other Loan Document (other than the Fee Letters,  each of which may be amended in accordance with its terms), pursuant to an agreement or agreements in writing entered into by the Administrative Agent, the Collateral Agent (in the case of any Security Document) and the Credit Party or Credit Parties that are party thereto, in each case with the written consent of the Required Lenders; provided that no such agreement shall be effective if the effect thereof would be to:

 

(i)                                     increase the Commitment of any Lender without the written consent of such Lender (but not, for the avoidance of doubt, the Required Lenders) (other than with respect to any Incremental Facilities to which such Lender has agreed) (it being understood that no amendment, modification, termination, waiver or consent with respect to any condition precedent, covenant, mandatory prepayment or Default or Event of Default shall constitute an increase in the Commitment of any Lender);

 

(ii)                                  reduce the principal amount of or premium, if any, on any Loan or LC Disbursement or reduce the rate of interest thereon, including any provision establishing a minimum rate (other than any waiver, extension or reduction of interest pursuant to Section 2.06(c), any waivers or extensions of mandatory prepayments, or, for the avoidance of doubt, waivers of the provisions of Section 2.20(f)), or reduce any fees (including any Fees or any prepayment fee or premium) payable hereunder, without the written consent of each Lender directly and adversely affected thereby but not the Required Lenders (it being understood that any amendment or modification to the financial definitions in this Agreement shall not constitute a reduction in the rate of interest for purposes of this clause (ii));

 

(iii)                               (A) extend the scheduled final maturity of any Term Loan, or any scheduled date of payment of principal amount of any Term Loan under Section 2.09 (other than, for the avoidance of doubt, any mandatory prepayment) except in accordance with Section 2.20, Section 2.21, Section 2.22 and Section 2.23, (B) postpone the date for

 

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payment of any Reimbursement Obligation or any interest, premium or fees payable hereunder (other than waivers of default interest, Defaults or Events of Default, waivers or extension of any mandatory prepayments, or, for the avoidance of doubt, waivers of the provisions of Section 2.20(f)), or (C) postpone the scheduled date of expiration of any Revolving Commitment or date of repayment of any Revolving Loans, in each case, beyond the Revolving Maturity Date, except in accordance with Section 2.20, Section 2.21, Section 2.22 and Section 2.23, in any case, without the written consent of each Lender directly and adversely affected thereby (but not the Required Lenders);

 

(iv)                              release Holdings or the Borrower or release all or substantially all of the value of the Subsidiary Guarantors from their Guarantees (except as expressly provided in Article IX or X), without the written consent of each Lender;

 

(v)                                 release all or substantially all of the Collateral from the Liens of the Security Documents without the written consent of each Lender (except as otherwise expressly permitted by Section 9.10(a)(i) or Section 10.02(c)(iii) (other than clause (iv) thereof) or by the Security Documents); provided that, for the avoidance of doubt, any transaction permitted under Section 6.04 or Section 6.05 shall not be subject to this clause (v) to the extent such transaction does not result in the release of all or substantially all of the Collateral;

 

(vi)                              change any provision of this Section 10.02(b) that has the effect of decreasing the number of Lenders that must approve any amendment, modification or waiver (or the approval of any Agent, Issuing Bank or Swing Line Lender), without the written consent of each Lender (or, as applicable, such Agent, Issuing Bank or Swing Line Lender);

 

(vii)                           change the percentage set forth in the definition of “Required Lenders” or “Required Revolving Lenders”, without the written consent of each Lender (or each Lender of such Class, as the case may be), other than to increase such percentage or number or to give any Additional Lender or group of Lenders such right to waive, amend or modify or make any such determination or grant any such consent;

 

(viii)                        change or waive any provision of Article IX as the same applies to any Agent, or any other provision hereof as the same applies to the rights or obligations of any Agent, in each case without the written consent of such Agent;

 

(ix)                              change or waive any obligation of the Lenders relating to the issuance of or purchase of participations in Letters of Credit, without the written consent of the Administrative Agent and the Issuing Bank;

 

(x)                                 make any change or amendment, including without limitation, any amendment of this Section 10.02(b)(x) which shall (i) unless in writing and signed by the Issuing Bank in addition to the Lenders required above, adversely affect the rights or duties of the Issuing Bank under this Agreement or any document relating to any Letter of Credit issued or to be issued by it, and (ii) unless in writing and signed by the Swing

 

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Line Lender in addition to the Lenders required above, adversely affect the rights or duties of the Swing Line Lender under this Agreement; or

 

(xi)                              amend or modify (a) the definition of “Pro Rata Percentage” or any pro rata sharing provisions contained herein or (b) the “waterfall” that applies following enforcement of the Loan Documents pursuant to Section 8.02 without the written consent of each Lender directly and adversely affected thereby;

 

provided that, notwithstanding the foregoing, this Agreement may be amended to make any change that by its terms only affects the risghts and duties of Lenders holding Loans or Commitments of a particular Class (and not Lenders holding Loans or Commitments of any other Class) with the consent of the Lenders holding the relevant Loans or Commitments voting as if such Class were the only Class hereunder.

 

Notwithstanding anything herein to the contrary, (I) no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except to the extent the consent of such Lender would be required under clause (i), (ii) or (iii) in the proviso to the first sentence of this Section 10.02(b) and, but only to the extent that any such matter disproportionately affects such Defaulting Lender, clauses (iv) or (v) of such proviso, (II) this Agreement and any other Loan Document may be amended, modified or supplemented solely with the consent of the Administrative Agent (or the Collateral Agent, as applicable) and the Borrower, each in their sole discretion, without the need to obtain the consent of any other Lender, if such amendment, modification or supplement is delivered in order to (x) cure ambiguities, defects, errors, mistakes, omissions in this Agreement or the applicable Loan Document, (y) add terms that are favorable to the Lenders (as reasonably determined by the Administrative Agent) in connection with any Incremental Facility, Permitted Incremental Equivalent Debt, Credit Agreement Refinancing Indebtedness or Permitted Debt Exchange Notes, or (z) create a fungible Class of Term Loans (including by increasing (but, for the avoidance of doubt, not by decreasing) the amount of amortization due and payable with respect to any Class of Term Loans) (provided that, at the election of the Administrative Agent in its sole discretion, any amendment described in clauses (x) through (z) shall not become effective unless the Lenders have received at least five Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five Business Days of the date of such notice to the Lenders, a written notice from the Required Lenders stating that the Required Lenders object to such amendment) or, in the case of any applicable Intercreditor Agreement (or any other intercreditor agreement and/or subordination agreement pursuant to, or contemplated by, the terms of this Credit Agreement (including with respect to Indebtedness permitted pursuant to Section 6.01 and defined terms referenced therein)), if such amendment relates to obligations other than the Obligations hereunder, or to grant a new Lien for the benefit of the Secured Parties or extend an existing Lien over additional property and (III) this Agreement and the other Loan Documents may be amended, modified or supplemented solely with the consent of the Administrative Agent (or the Collateral Agent, as applicable) and the Borrower in order to give effect to the appointment of an Additional Borrower in accordance with Section 2.24.

 

Any waiver, amendment, supplement or modification in accordance with this Section 10.02 shall apply equally to each of the affected Lenders and shall be binding upon Holdings, the Borrower, such Lenders, the Administrative Agent, the Collateral Agent and all

 

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future holders of the affected Loans.  In the case of any such waiver, Holdings, the Borrower, the Lenders, the Administrative Agent and the Collateral Agent shall be restored to their former positions and rights hereunder and under the other Loan Documents, and any Default or Event of Default so waived shall be deemed to be cured and not continuing, it being understood that no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.  In connection with the foregoing provisions, the Administrative Agent may, but shall have no obligations to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender.

 

(c)                                  Collateral.

 

(i)                                     Without the consent of any other person, but subject to the terms of any applicable Intercreditor Agreement, the applicable Credit Party or Parties and the Administrative Agent and/or Collateral Agent may (in its or their respective sole discretion), or shall, to the extent required by any Loan Document enter into any amendment or waiver of any Loan Document, or enter into any new agreement or instrument, to effect the granting, perfection, protection, expansion (including to cover additional amounts as secured obligations thereunder) or enhancement of any security interest in any Collateral or additional property to become Collateral for the benefit of the Secured Parties, or as required by local law to give effect to, or protect, any security interest for the benefit of the Secured Parties in any property or so that the security interests therein comply with applicable Requirements of Law.

 

(ii)                                  Notwithstanding anything in this Agreement or any Security Document to the contrary, the Administrative Agent and/or, as applicable, the Collateral Agent may, in its sole discretion, grant extensions of time for the satisfaction of any of the requirements under Sections 5.10 and 5.11 or of any Security Document in respect of any particular Collateral or any particular Subsidiary if it determines that the satisfaction thereof with respect to such Collateral or such Subsidiary cannot be accomplished without undue expense or unreasonable effort or due to factors beyond the control of Holdings, the Borrower and the Restricted Subsidiaries by the time or times at which any such requirement would otherwise be required to be satisfied under this Agreement or any Security Document.

 

(iii)                               The Lenders hereby irrevocably agree that the Liens granted to the Collateral Agent by the Credit Parties on any Collateral shall be automatically released (i) in full, upon the termination of this Agreement and the payment in full of all Secured Obligations (other than (A) contingent indemnification obligations and unasserted expense reimbursement obligations, (B) obligations and liabilities under Secured Cash Management Agreements and Secured Hedging Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made, and (C) Letters of Credit that have been cash collateralized in accordance with the terms of this Agreement, backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank), (ii) upon the sale or other disposition of such Collateral (including as part of or in connection with any other sale or other disposition permitted hereunder) to any Person other than another Credit Party, to

 

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the extent such sale or other disposition is made in compliance with the terms of this Agreement (and the Collateral Agent may rely conclusively on a certificate to that effect provided by any Credit Party upon its reasonable request without further inquiry), (iii) to the extent such Collateral is comprised of property leased to a Credit Party, upon termination or expiration of such lease, (iv) if the release of such Lien is approved, authorized or ratified in writing by the Required Lenders (or such other percentage of the Lenders whose consent may be required in accordance with this Section 10.02), (v) to the extent the property constituting such Collateral is owned by any Guarantor, upon the release of such Guarantor from its obligations under the applicable Guarantee (in accordance with the second following sentence), (vi) as required to effect any sale or other disposition of Collateral in connection with any exercise of remedies of the Collateral Agent pursuant to the Security Documents, or (vii) if such assets constitute Excluded Property.  Any such release shall not in any manner discharge, affect or impair the Obligations or any Liens (other than those being released) upon (or obligations (other than those being released) of the Credit Parties in respect of) all interests retained by the Credit Parties, including the proceeds of any sale, all of which shall continue to constitute part of the Collateral except to the extent otherwise released in accordance with the provisions of the Loan Documents.  Additionally, the Lenders hereby irrevocably agree that any Restricted Subsidiary that is a Guarantor shall be released from the Guarantees upon consummation of any transaction not prohibited by this Agreement resulting in such Subsidiary ceasing to constitute a Restricted Subsidiary or upon becoming an Excluded Subsidiary.  The Lenders hereby authorize the Administrative Agent and the Collateral Agent, as applicable, to, and the Administrative Agent and the Collateral Agent agree to, execute and deliver any instruments, documents and agreements necessary or desirable or reasonably requested by the Borrower to evidence and confirm the release of any Guarantor or Collateral pursuant to the foregoing provisions of this paragraph, all without the further consent or joinder of any Lender and without any representation or warranty of any such Agent or Lender.

 

(d)                                 Certain Other Amendments.  Notwithstanding anything in this Agreement (including, without limitation, this Section 10.02) or any other Loan Document to the contrary, (i) this Agreement and the other Loan Documents may be amended to effect an Incremental Amendment, Refinancing Amendment or Extension Amendment pursuant to Sections 2.20, 2.21 or 2.22 (and the Administrative Agent and the Borrower may effect such amendments to this Agreement and the other Loan Documents without the consent of any other party, as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the terms of any such Incremental Amendment, Refinancing Amendment or Extension Amendment); and (ii) the Loan Documents may be amended to add syndication or documentation agents and make customary changes and references related thereto with the consent of only the Borrower and the Administrative Agent.

 

(e)                                  Amendments to Financial Covenant and Waivers of Events of Default Under Section 6.08.  Notwithstanding anything set forth herein to the contrary, no amendment to Section 6.08, Section 8.01(d) (solely as it relates to an Event of Default under Section 6.08), Section 8.03 or the defined terms used in any thereof (but not as used in other Sections), no consent to departure therefrom, and no waiver with respect to a Default or Event of Default under Section 6.08, shall be effective without the prior written consent of the Borrower and the

 

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Required Revolving Lenders, it being understood that the consent of no other Lender (including the Required Lenders) shall be required.  Any condition precedent to any Borrowing of Revolving Loans may be waived by only the Required Revolving Lenders (and, in the case of (x) the issuance of a Letter of Credit, the Issuing Bank and (y) any Borrowing of Swing Line Loans, the Swing Line Lender) and, for the avoidance of doubt, waivers by no other Lender shall be required.

 

(f)                                   Non-Consenting Lenders.  The Borrower may, at its sole expense and effort, upon notice to a Non-Consenting Lender and the Administrative Agent, require such Lender to (i) be paid off in full for all of its Loans and interest due related thereto and relinquish all rights it has under the Loan Documents (including any amount pursuant to Section 2.10(j) if a Repricing Event has occurred), or (ii) assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.04), all of its interests, rights (other than its existing rights to payments pursuant to Section 2.12, Section 2.15 and Section 2.16) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment, or, solely in the case of Term Loans, Holdings or the Borrower (in which case such Term Loans shall, after such assignment, be immediately deemed cancelled for all purposes and no longer outstanding (and may not be resold) for all purposes of this Agreement and the other Loan Documents) or any Affiliated Debt Fund); provided that in the case of this clause (ii), (i) the Borrower shall have paid to the Administrative Agent (unless waived by the Administrative Agent) the assignment fee (if any) specified in Section 10.04(b); (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable (including any amount pursuant to Section 2.10(j) if a Repricing Event has occurred) to it hereunder in connection with any prepayment of its Loans and under the other Loan Documents from the assignee or the Borrower, (iii) such assignment does not conflict with applicable Law; and (iv) the applicable assignee shall have consented to the applicable amendment, waiver or consent.  A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

 

(g)                                  Additional Credit Facilities.  Subject to Sections 2.21 and 2.22 hereof, this Agreement may be amended (or amended and restated) (i) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents and (ii) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders on substantially the same basis as the Lenders prior to such inclusion.

 

Section 10.03                      Expenses; Indemnity; Damage Waiver.

 

(a)                                 Costs and Expenses.  The Borrower shall pay, promptly following written demand therefor: (i) all reasonable and documented out-of-pocket expenses incurred by the Lead Arrangers, the Administrative Agent, the Collateral Agent and their respective Affiliates (including the reasonable and documented out-of-pocket fees, charges and disbursements of one counsel to the Lead Arrangers, the Administrative Agent, the Collateral Agent and their

 

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respective Affiliates, taken as a whole (plus additional counsel desirable due to actual or reasonably perceived conflicts of interest among such parties), plus, if reasonably necessary, the reasonable fees, charges and disbursements of one local counsel per appropriate jurisdiction (which may include a single special counsel acting in multiple jurisdictions), for the Administrative Agent and/or the Collateral Agent (plus additional counsel desirable due to actual or reasonably perceived conflicts of interest among such parties)) in connection with the syndication of the credit facilities provided for herein (including the obtaining and maintaining of CUSIP numbers for the Loans), the preparation, negotiation, execution, delivery, filing and administration of this Agreement including any expenses incurred as a result of trades not permitted by Section 10.04 and the other Loan Documents and any amendment, amendment and restatement, modification or waiver of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), including in connection with post-closing searches to confirm that security filings and recordations have been properly made, (ii) all reasonable and documented out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, (iii) all reasonable and documented out-of-pocket expenses incurred by the Swing Line Lender in connection with any Swing Line Loans or any amendment, renewal or extension thereof or any demand for payment thereunder, (iv) all reasonable and documented out-of-pocket expenses incurred by the Lead Arrangers, the Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank (including the reasonable and documented out-of-pocket fees, charges and disbursements of any one counsel to the Administrative Agent, the Collateral Agent, the Lenders and the Issuing Bank, taken as a whole (plus additional counsel desirable due to actual or reasonably perceived conflicts of interest among such parties), plus, if reasonably necessary, the reasonable and documented out-of-pocket fees, charges and disbursements of one local counsel per appropriate jurisdiction (plus additional counsel desirable due to actual or reasonably perceived conflicts of interest among such parties) and, upon the Borrower’s prior written consent (not to be unreasonably withheld or delayed), other counsel to and consultants for the Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section 10.03, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit and (v) all Other Taxes, as provided in Section 2.15.

 

(b)                                 Indemnification by the Borrower.  The Borrower shall indemnify the Lead Arrangers, the Administrative Agent (and any sub-agent thereof), the Collateral Agent (and any sub-agent thereof), each Lender, the Issuing Bank, the Swing Line Lender and each Related Party of any of the foregoing persons (each such person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all actual and direct losses (other than lost profits), claims, damages, liabilities and related reasonable and documented out-of-pocket expenses (including the reasonable and documented out-of-pocket fees and reasonable out-of-pocket expenses of one counsel for all Indemnitees (plus additional counsel desirable due to actual or reasonably perceived conflicts of interest among the Indemnitees) plus, if reasonably necessary, the reasonable and documented out-of-pocket fees and expenses of one local counsel per appropriate jurisdiction (plus additional counsel desirable due to actual or reasonably perceived conflicts of interest among such parties) and, upon the Borrower’s prior written consent (not to be unreasonably withheld or delayed), consultants) (but excluding allocated costs

 

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of in-house counsel) incurred by any Indemnitee or asserted against any Indemnitee by any party hereto or any third party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document, or any amendment, amendment and restatement, modification or waiver of the provisions hereof or thereof, or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or Release or threatened Release of Hazardous Materials on, at, under or from any Real Property or facility now or hereafter owned, leased or operated by any Group Member at any time, or any Environmental Claim related in any way to any Group Member, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Credit Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (v) arise out of actions taken or omissions to act by such Indemnitee in its capacity as a co-investor in Holdings and its Restricted Subsidiaries, (w) are determined by a final, non-appealable judgment of a court of competent jurisdiction to have resulted from the bad faith, gross negligence or willful misconduct of such Indemnitee or (to the extent involved in or aware of the Transactions) any of its Controlling Persons, Controlled Affiliates or any of the officers, directors, employees, partners or agents, advisors or representatives, of any of the foregoing, (x) result from a claim brought by the Borrower or any other Credit Party against such Indemnitee for material breach of such Indemnitee’s obligations hereunder or under any other Loan Document (by such Indemnitee or its Controlling Persons or Controlled Affiliates), if the Borrower or such other Credit Party has obtained a final non-appealable judgment in its favor on such claim as determined by a court of competent jurisdiction, (y) arises from disputes arising solely among Indemnitees that do not involve an Agent or Lead Arranger acting in its capacity as such or any act or omission by any Group Member or its Affiliates and are unrelated to any dispute involving, or any claim by, an Agent, a Lead Arranger, any Lender or Secured Party against any Group Member or its Affiliates, or (z) are payable as a result of a settlement agreement related to the foregoing effected without the written consent of the Borrower (which consent shall not to be unreasonably withheld or delayed) (in the case of this clause (z), for the avoidance of doubt, if settled with the Borrower’s written consent, or if there is a final judgment for the plaintiff against an Indemnitee in any proceeding, the Borrower shall indemnify and hold harmless each Indemnitee to the extent and in the manner set forth above); provided, however, that such Indemnitee shall promptly refund any amount paid to such Indemnitee for fees, expenses, damages, indemnification or contribution, in each case, pursuant to this Section 10.03(b) to the extent that there is a final, non-appealable judicial determination that such Indemnitee was not entitled to the payment of such amounts pursuant to the express terms of this Section 10.03.  For the avoidance of doubt, this Section 10.03(b) shall not apply to Taxes other than Taxes that represent losses, claims, damages, liabilities, etc. arising from any non-Tax claim.

 

(c)                                  Reimbursement by Lenders.  To the extent that the Borrower for any reason fail to pay any amount required under clause (a) or (b) of this Section 10.03 to be paid by

 

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it to the Administrative Agent (or any sub-agent thereof), the Collateral Agent (or any sub-agent thereof), the Issuing Bank, the Swing Line Lender or any Related Party of any of the foregoing, each Lender severally agrees to pay (whether or not any such amount arises, in whole or in part, out of the comparative, contributory or sole negligence of the Administrative Agent (or any such sub-agent), the Collateral Agent (or any such sub-agent thereof), the Issuing Bank, the Swing Line Lender or such Related Party) to the Administrative Agent, the Collateral Agent, the Issuing Bank, the Swing Line Lender or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought or, if indemnification is sought after the date upon which all Commitments shall have terminated and the Loans and Reimbursement Obligations shall have been paid in full, ratably in accordance with such outstanding Loans and Commitments as in effect immediately prior to such date) of such unpaid amount (such indemnity shall be effective whether or not the related losses, claims, damages, liabilities and related expenses are incurred or asserted by any party hereto or any third party); provided that (i) the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), the Collateral Agent (or any sub-agent thereof) the Issuing Bank in its capacity as such, the Swing Line Lender or any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent), the Collateral Agent (or any sub-agent thereof) or the Issuing Bank in connection with such capacity and (ii) such indemnity for the Issuing Bank shall not include losses incurred by the Issuing Bank due to one or more Lenders defaulting in their obligations to purchase participations of LC Exposure under Section 2.18(d) or to make Revolving Loans under Section 2.18(e) (it being understood that this proviso shall not affect the Issuing Bank’s rights against any Defaulting Lender).  The obligations of the Lenders under this clause (c) are subject to the provisions of Section 2.14.  For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the sum of the total Revolving Exposure, outstanding Term Loans and unused Commitments at the time.

 

(d)                                 Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable Requirements of Law, no party shall assert, and each party hereby waives, any claim against any other party hereto or any of its Related Parties on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof (in each case, other than, in the case of any Credit Party, in respect of any such damages incurred or paid by an Indemnitee to a third party and otherwise required to be indemnified by a Credit Party under this Section 10.03).  No party hereto nor any of its Related Parties shall be liable for any damages (other than those damages resulting from bad faith, gross negligence or willful misconduct of such Person, as determined by a court of competent jurisdiction by final and nonappealable judgment) arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.

 

(e)                                  Payments.  All amounts due under this Section shall be payable not later than 30 Business Days after written demand (including detailed invoices) therefor.

 

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Section 10.04                      Successors and Assigns.

 

(a)                                 Successors and Assigns Generally.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder (other than in connection with a transaction permitted by Section 6.04) without the prior written consent of the Administrative Agent, the Collateral Agent, the Issuing Bank, the Swing Line Lender and each Lender (and any other attempted assignment or transfer by the Borrower shall be null and void), and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of clause (b) of this Section 10.04, Section 2.16(b) or Section 10.02(f), (ii) by way of participation in accordance with the provisions of clause (d) of this Section 10.04 or (iii) by way of pledge or assignment of a security interest in accordance with clause (f) of this Section 10.04.  Nothing in this Agreement or any other Loan Document, expressed or implied, shall be construed to confer upon any person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in clause (d) of this Section and, to the extent expressly contemplated hereby, the other Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement or any other Loan Document.

 

(b)                                 Assignments by Lenders.  Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it), subject to, except in the case of an assignment to (x) in the case of Term Loan Commitments or Term Loans, a Lender, an Affiliate of a Lender or an Approved Fund with respect to a Lender (in each case other than a Disqualified Institution) and (y) in the case of Revolving Commitments or Revolving Loans, a Revolving Lender, an Affiliate of a Revolving Lender or an Approved fund with respect to such Revolving Lender (in each case, other than a Disqualified Institution), the prior written consent of the Administrative Agent (and, in the case of such Revolving Lender’s Revolving Commitments, the Issuing Banks) and, so long as (other than in the case of a proposed assignment to a Disqualified Institution) no Event of Default under Section 8.01(a), (b), (g) with respect to the Borrower, or (h) with respect to the Borrower shall have occurred and be continuing, the Borrower (each such consent not to be unreasonably withheld or delayed; the Borrower’s consent to be deemed to have been given if (except in the case of a proposed assignment to a Disqualified Institution) the Borrower has not responded within ten Business Days of a written request for such consent); provided that:

 

(i)                                     except in the case of any assignment (a) of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or (b) to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the outstanding principal balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000, in the case of any assignment in respect of Revolving Loans and/or Revolving Commitments, or $1,000,000, in the case of any assignment in respect of

 

 

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Term Loans and/or Term Loan Commitments, and, in each case $1,000,000 increments thereof, or if less, all of such Lender’s remaining Loans and commitments of the applicable Class (provided that contemporaneous assignments to or by two or more affiliated Approved Funds shall be aggregated for purposes of meeting such minimum transfer amount), unless each of the Administrative Agent and, so long as no Event of Default under Section 8.01(a), (b), (g), or (h) has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed, and which consent shall be deemed to have been given by the Borrower if the Borrower shall not have responded within ten Business Days of a written request for such consent);

 

(ii)                                  each partial assignment shall be made as an assignment of a proportionate part of all of the assigning Lender’s rights and obligations under this Agreement with respect to the Loan or the Commitment assigned, except that this clause (ii) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate tranches on a non-pro rata basis;

 

(iii)                               the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with (other than in the case of an assignment to an Affiliate of the assigning Lender or to the Sponsor, Holdings, any Subsidiaries of Holdings, or any of their respective Affiliates) a processing and recordation fee of $3,500 (which fee may be waived or reduced by the Administrative Agent in its discretion), and the Eligible Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire and all other know-your-customer documentation reasonably requested by the Administrative Agent;

 

(iv)                              no assignment shall be made to a Disqualified Institution without the Borrower’s prior consent in writing (which consent may be withheld in its sole discretion), and upon an inquiry by any Lender to the Administrative Agent as to whether a specific potential assignee or prospective participant is a Disqualified Institution, the Administrative Agent shall be permitted to disclose to such inquiring Lender whether such specific potential assignee or prospective participant is on the list of Disqualified Institutions; provided that the Administrative Agent shall not be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor, update or enforce, compliance with the provisions hereof relating to Disqualified Institutions and shall not be obligated to ascertain, monitor or inquire as to whether any Lender or Participant or prospective Lender or Participant is a Disqualified Institution or have any liability with respect to or arising out of any assignment or participation to or disclosure of confidential information to, a Disqualified Institution;

 

(v)                                 notwithstanding anything to the contrary contained in this Agreement, any Lender may assign all or a portion of its Term Loans (but not, for the avoidance of doubt, any Revolving Commitments) to any Person who is or, after giving effect to such assignment, would be an Equity Investor (other than Affiliated Debt Funds) or an Affiliate of Holdings (other than Holdings, the Borrower or any of their respective Subsidiaries or any natural person or any Affiliated Debt Funds) (collectively, the “Sponsor Investors”) (without the consent of any Person); provided that (1) the

 

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assigning Lender and each Sponsor Investor purchasing such Lender’s Term Loans shall execute and deliver to the Administrative Agent an Assignment and Assumption via an electronic settlement system or by manual execution, (2) at the time of such assignment after giving effect to such assignment, the aggregate principal amount of all Term Loans held by the Sponsor Investors shall not exceed 25% of the aggregate principal amount of all Term Loans then outstanding under this Agreement, (3) no Sponsor Investor shall be required to make any representation that it is not in possession of MNPI with respect to Holdings, its Subsidiaries or their respective securities, and all parties to the relevant repurchases shall render customary “big boy” disclaimer letters or any such disclaimers shall be incorporated into the terms of the Assignment and Assumption, and (4) for the avoidance of doubt, Lenders shall not be permitted to assign Revolving Commitments or Revolving Loans to any Sponsor Investor; and provided, further, that:

 

(A)                               notwithstanding anything to the contrary in this Agreement, the Sponsor Investors shall not have any right to (1) attend (including by telephone or electronic means) any meeting, calls or discussions (or portions thereof) among the Administrative Agent or any Lender to which representatives of the Credit Parties are not invited or (2) receive any information or material provided by the Administrative Agent or any Lender solely to the Lenders or any communication by or among the Administrative Agent and/or one or more Lenders or have access to the Platform used to distribute information to the Lenders, except to the extent such information or materials have been made available to (or were prepared or otherwise provided by) any Credit Party or its representatives, nor will the Sponsor Investors be entitled to challenge any Agent’s or Lender’s attorney-client privilege as a result of its status as Lender;

 

(B)                               notwithstanding anything in Section 10.04(b) or the definition of “Required Lenders” to the contrary, for purposes of determining whether the Required Lenders (or all Lenders or affected Lenders) have consented (or not consented) to any amendment, modification, waiver or consent with respect to any of the terms of any Loan Document or any departure by any Credit Party therefrom, the Loans of such Sponsor Investor shall not be included in the calculation of Required Lenders (or if such non-voting designation is unenforceable for any reason, such Sponsor Investor shall be deemed to have voted its interest as a Lender without discretion in the same proportion as the allocation of voting with respect to such matter by Lenders who are not Sponsor Investors); provided that no amendment, modification, waiver or consent with respect to any Loan Document shall deprive such Sponsor Investor of its pro rata share of any payments to which such Sponsor Investor is entitled under the Loan Documents and such Sponsor Investor shall be entitled to vote on any amendment pursuant to clauses (i)-(vii) and/or (xi) of the first proviso to Section 10.02(b) or which disproportionately affects such Sponsor Investor in its capacity as a Lender; and in furtherance of the foregoing, such Sponsor Investor agrees to execute and deliver to the Administrative Agent any instrument reasonably requested by the Administrative Agent to evidence the voting of its interest as a Lender in accordance with the provisions of this Section 10.04(b)(v); provided that if such Sponsor Investor fails to promptly execute such instrument such

 

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failure shall in no way prejudice any of the Administrative Agent’s rights under this paragraph;

 

(C)                               in the event that any proceeding under the Bankruptcy Code shall be instituted by or against the Borrower or any Guarantor, each Sponsor Investor shall acknowledge and agree that it is an “insider” under Section 101(31) of the Bankruptcy Code and, as such, the claims associated with the Loans and Commitments owned by it shall not be included in determining whether the applicable class of creditors holding such claims has voted to accept a proposed plan for purposes of section 1129(a)(10) of the Bankruptcy Code, or, alternatively, to the extent that the foregoing designation is deemed unenforceable for any reason, such Sponsor Investor shall vote in such proceedings in the same proportion as the allocation of voting with respect to such matter by those Lenders who are not Sponsor Investors, except to the extent that any plan of reorganization proposes to treat the Obligations held by such Sponsor Investor in a manner that is less favorable in any material respect to such Sponsor Investor than the proposed treatment of similar Obligations held by Lenders that are not Sponsor Investors; and

 

(D)                               each Sponsor Investor hereby waives, to the fullest extent permitted at law, any rights to bring any claims, actions or suits against the Administrative Agent and/or the Collateral Agent (solely in their respective capacities as such) in connection with all Loans and Commitments held by such Sponsor Investor;

 

(vi)                              notwithstanding anything to the contrary herein, each Sponsor Investor, in its capacity as a Term Loan Lender, in its sole and absolute discretion, may make one or more capital contributions or assignments of Term Loans that it acquires in accordance with Section 10.04(b)(v) directly or indirectly to Holdings or the Borrower solely in exchange for Equity Interests of Holdings (other than Disqualified Capital Stock) or a direct or indirect parent thereof or debt securities of a parent entity of Holdings, in each case upon written notice to the Administrative Agent.  Immediately upon Holdings’ or the Borrower’s acquisition of Term Loans from a Sponsor Investor, such Term Loans and all rights and obligations as a Lender related thereto shall for all purposes (including under this Agreement, the other Loan Documents and otherwise) be deemed to be irrevocably prepaid, terminated, extinguished, cancelled and of no further force and effect and the Borrower shall neither obtain nor have any rights as a Lender hereunder or under the other Loan Documents by virtue of such capital contribution or assignment;

 

(vii)                           [reserved];

 

(viii)                        notwithstanding anything to the contrary contained in this Section 10.04(b) or any other provision of this Agreement, each Lender shall have the right at any time to sell, assign or transfer all or a portion of its Term Loans owing to it to Holdings, the Borrower or any of their Subsidiaries on a non-pro rata basis, subject to the following limitations:

 

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(A)                               no Default or Event of Default has occurred and is then continuing, or would immediately result therefrom;

 

(B)                               Holdings, the Borrower or any of their Subsidiaries shall repurchase such Term Loans through either (y) conducting one or more modified Dutch auctions or other buy-back offer processes (each, an “Offer Process”) with a third party financial institution as auction agent to repurchase all or any portion of the Term Loans; provided that, (A) notice of such Offer Process shall be made to all Term Loan Lenders, and (B) such Offer Process shall be conducted pursuant to procedures mutually established by the Administrative Agent and the Borrower which are consistent with this Section 10.04(b)(viii) or (z) open market purchases on a non-pro rata basis;

 

(C)                               with respect to all repurchases made by Holdings, the Borrower or any of their Subsidiaries pursuant to this Section 10.04(b)(viii), (u) none of Holdings, the Borrower or any of their respective Subsidiaries shall be required to make any representations that Holdings, the Borrower or such Subsidiary is not in possession of any information regarding Holdings, its Subsidiaries or its Affiliates, or their assets, the Borrower’s ability to perform its Obligations or any other matter that may be material to a decision by any Lender to participate in any offer or enter into any Assignment and Assumption or any of the transactions contemplated thereby that has not previously been disclosed to the Administrative Agent and Private Siders, (v) the repurchases are in compliance with Sections 6.03 and 6.06 hereof, (w) no Default or Event of Default has occurred and is continuing or would result from such repurchase, (x) Holdings, the Borrower or such Subsidiary shall not use the proceeds of any Revolving Loans or Swing Line Loans to acquire such Term Loans, (y) the assigning Lender and Holdings, the Borrower or such Subsidiary, as applicable, shall execute and deliver to the Administrative Agent an Assignment and Assumption in form and substance reasonably satisfactory to the Administrative Agent, and (z) all parties to the relevant repurchases shall render customary “big boy” disclaimer letters or any such disclaimers shall be incorporated into the terms of the Assignment and Assumption; and

 

(D)                               following repurchase by Holdings, the Borrower or such Subsidiary pursuant to this Section, the Term Loans so repurchased shall, without further action by any Person, be deemed cancelled for all purposes and no longer outstanding (and may not be resold by Holdings, the Borrower or such Subsidiary), for all purposes of this Agreement and all other Loan Documents, including, but not limited to (1) the making of, or the application of, any payments to the Lenders under this Agreement or any other Loan Document, (2) the making of any request, demand, authorization, direction, notice, consent or waiver under this Agreement or any other Loan Document or (3) the determination of Required Lenders, or for any similar or related purpose, under this Agreement or any other Loan Document and the Borrower shall neither obtain nor have any rights as a Lender hereunder or under the other Loan Documents by virtue of such repurchase (without limiting the foregoing, in all

 

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events, such Term Loans may not be resold or otherwise assigned, or subject to any participation, or otherwise transferred by the Borrower).  In connection with any Term Loans repurchased and cancelled pursuant to this Section 10.04(b)(viii), the Administrative Agent is authorized to make appropriate entries in the Register to reflect any such cancellation.

 

Subject to the recording thereof by the Administrative Agent pursuant to clause (c) of this Section 10.04, from and after the date such recordation in the Register is made, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement (including, for the avoidance of doubt, any rights and obligations pursuant to Section 2.15), and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.12, 2.13, 2.15, and 10.03 with respect to facts and circumstances occurring prior to the effective date of such assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with clause (d) of this Section 10.04.

 

(c)                                  Register.  The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower (and such agency being solely for tax purposes), shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it (or the equivalent thereof in electronic form) and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal and stated interest amounts of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be presumptively correct absent manifest error, and the Borrower, the Administrative Agent, the Issuing Bank and the Lenders shall treat each person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. No assignment shall be effective unless recorded in the Register.  The Register is intended to cause each Loan and other obligation hereunder to be in registered form within the meaning of Section 5f.103-1(c) of the United States Treasury Regulations and within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code.  The Register shall be available for inspection by the Borrower, the Issuing Bank (with respect to its own interests), the Collateral Agent, the Swing Line Lender (with respect to its own interests) and any Lender (with respect to its own interests), at any reasonable time and from time to time upon reasonable prior notice.

 

(d)                                 Participations.

 

(i)                                     Any Lender may at any time, without the consent of, or notice to, the Borrower, the Administrative Agent, or the Issuing Bank, sell participations to any person (other than a natural person or the Borrower or any of its Affiliates or any Disqualified Institutions) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (A) such Lender’s obligations

 

 

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under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (C) the Borrower, the Administrative Agent and the Lenders and Issuing Bank shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.

 

(ii)                                  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver with regard to amendments, modifications or waivers described in clauses (i)-(v) of the first proviso in Section 10.02(b), in each case, that directly affects such Participant. Subject to clause (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of and subject to the obligations and requirements of Sections 2.12 and 2.15 (provided that any documentation required to be provided by a Participant pursuant to Section 2.15(e) shall be provided to the participating Lender and, if Additional Amounts are required to be paid pursuant to Section 2.15, to the Borrower and the Administrative Agent), and the definition of Excluded Taxes shall apply to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to clause (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender; provided that such Participant shall be subject to Section 2.14 as though it were a Lender.  Notwithstanding anything to the contrary, no Lender shall enter into any agreement with any Participant that will permit such Participant to influence or control the voting rights of such Lender except with regard to amendments, modifications and waivers described in clauses (i)-(v) of the first proviso in Section 10.02(b), in each case, that directly affects such Participant.

 

(iii)                               Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower (and such agency being solely for tax purposes), maintain a register on which it enters the name and address of each Participant and the principal and stated interest amounts of each participant’s interest in the Loans or other obligations under this Agreement (a “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of a Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or other obligations under any Loan Document) to any Person except to the extent such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations and within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and to confirm a Participant is not a Disqualified Institution.  The entries in a Participant Register shall be presumptively correct absent manifest error, and such Lender shall treat each person whose name is recorded in a Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

 

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(iv)                              Any such participation that does not comply with this Section shall be void ab initio and, promptly following such Lender becoming aware that any such participation has been made in breach of this Section, the Participant Register shall be modified by it to reverse such participation and shall be disclosed to the Borrower and the Administrative Agent.

 

(v)                                 The Administrative Agent shall have no responsibility (in its capacity as Administrative Agent) for (i) maintaining a Participant Register and (ii) any Lender’s compliance with this Section 10.04, including any sale of participations to a Disqualified Institution in violation hereof by any Lender.

 

(e)                                  Limitations on Participant Rights.  A Participant shall not be entitled to receive any greater payment under Sections 2.12, 2.13 or 2.15 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent or except to the extent the right to greater payment results from a Change in Law after the Participant becomes a Participant.

 

(f)                                   Certain Pledges.  Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender without restriction, including any pledge or assignment to secure obligations to a Federal Reserve Bank or any central bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.  In the case of any Lender that is a fund that invests in bank loans or similar extensions of credit, such Lender may, without the consent of the Borrower or the Administrative Agent or any other Person, collaterally assign or pledge all or any portion of its rights under this Agreement, including the Loans and Notes or any other instrument evidencing its rights as a Lender under this Agreement, to any holder of, trustee for, or any other representative of holders of, obligations owed or securities issued, by such fund, as security for such obligations or securities.

 

(g)                                  Disqualified Institutions.  Notwithstanding anything to the contrary herein, if any Loans are assigned or any participations are purchased or otherwise acquired, without the Borrower’s consent (in violation of Section 10.04(b) or (d)), to any Disqualified Institution, then: (i) the Borrower may, at its sole expense and effort, upon notice to the applicable Disqualified Institution and the Administrative Agent, (x) terminate any commitment of such Disqualified Institution and repay any applicable outstanding Loans (in the case of Term Loans, at a price equal to the lesser of par and the amount that the applicable Disqualified Institution paid to acquire such Loans), plus accrued interest, accrued fees and all other amounts (other than principal amounts) payable to it hereunder, but, notwithstanding anything to the contrary, without premium, penalty, prepayment fee or breakage, and/or (y) require such Disqualified Institution to assign its rights and obligations to one or more Eligible Assignees at the price indicated in the immediately preceding clause (x), plus accrued interest, accrued fees and all other amounts (other than principal amounts) payable to it hereunder, but, notwithstanding anything to the contrary, without premium, penalty, prepayment fee or breakage (which assignment shall not be subject to the processing and recordation fee described in Section 10.04(b)(iii)), (ii) no such Disqualified Institution shall (x) receive any information or reporting

 

 

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provided by the Borrower, the Administrative Agent or any other Lender, (y) attend or participate in meetings attended by the Lenders and the Administrative Agent or (z) access any electronic site established for the Lenders or confidential communications from counsel to or financial advisors of the Administrative Agent or the Lenders, (iii) for purposes of voting, any Loans, Commitments or participations held by such Disqualified Institution shall be deemed not to be outstanding and such Disqualified Institution shall have no voting or consent rights with respect to “Required Lender” or Class votes or consents, in each case notwithstanding Section 10.02(b), (iv) for purposes of any matter requiring the vote or consent of each Lender affected by any amendment or waiver, such Disqualified Institution shall be deemed to have voted or consented to approve such amendment or waiver if a majority of the affected Class so approves and (v) such Disqualified Institution shall not be entitled to any expense reimbursement or indemnification rights ordinarily afforded to Lenders or Participants hereunder or in any Loan Document and such Disqualified Institution shall be treated in all other respects as a Defaulting Lender.

 

Section 10.05                      Survival of Agreement.  All covenants, agreements, representations and warranties made by the Credit Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Agents, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement (other than contingent indemnification obligations, unasserted expense reimbursement obligations) is outstanding and unpaid or any Letter of Credit (other than any Letter of Credit that has been cash collateralized in accordance with the terms of this Agreement, backstopped with a back to back letter of credit in a manner reasonably acceptable to the applicable Issuing Bank or rolled into another credit facility to the sole satisfaction of the applicable Issuing Bank) is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.12, 2.14, 2.15 and Article X (other than Section 10.12) shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the payment of the Reimbursement Obligations, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

 

Section 10.06                      Counterparts; Integration; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement and the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.  Delivery

 

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of an executed counterpart of a signature page of this Agreement by telecopier or other electronic transmission (PDF or TIFF format) shall be effective as delivery of a manually executed counterpart of this Agreement.

 

Section 10.07                      Severability.  Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

 

Section 10.08                      Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender, the Issuing Bank, and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Requirements of Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time due and owing by such Lender, the Issuing Bank or any such Affiliate to or for the credit or the account of the Borrower or any other Credit Party (but excluding amounts held in payroll, employee benefits, tax and other fiduciary or trust accounts) against any and all of the obligations of the Borrower or such Credit Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or the Issuing Bank, irrespective of whether or not such Lender or the Issuing Bank shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower or such Credit Party may be contingent or unmatured or are owed to a branch or office of such Lender or the Issuing Bank different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender, the Issuing Bank and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the Issuing Bank or their respective Affiliates may have.  Each Lender and the Issuing Bank agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

 

Section 10.09                      Governing Law; Jurisdiction; Consent to Service of Process.

 

(a)                                 Governing Law.  This Agreement shall be construed in accordance with and governed by the law of the State of New York.

 

(b)                                 Submission to Jurisdiction.  Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in the Borough of Manhattan in the State of New York and of the United States District Court of the Southern District of New York sitting in Borough of Manhattan in the State of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable Requirements of Law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the

 

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judgment or in any other manner provided by law.  Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Credit Party or its properties in the courts of any jurisdiction.

 

(c)                                  Waiver of Venue.  Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent permitted by applicable Requirements of Law, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in Section 10.09(b).  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable Requirements of Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(d)                                 Service of Process.  Each party hereto irrevocably consents to service of process in any action or proceeding arising out of or relating to any Loan Document, in the manner provided for notices (other than telecopier) in Section 10.01.  Nothing in this Agreement or any other Loan Document will affect the right of any party hereto to serve process in any other manner permitted by applicable Requirements of Law.

 

Section 10.10                      Waiver of Jury Trial.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE REQUIREMENTS OF LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 10.11                      Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

 

Section 10.12                      Treatment of Certain Information; Confidentiality.  Each of the Administrative Agent, the Lenders and the Issuing Bank agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (in each case, other than to a Disqualified Institution) (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors, numbering, administration and settlement services provider and other representatives (it being understood that the persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any Governmental Authority or regulatory authority (including any self-regulatory authority, such as

 

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the National Association of Insurance Commissioners), (c) to the extent compelled by legal process in, or reasonably necessary to, the defense of such legal, judicial or administrative proceeding, in any legal, judicial or administrative proceeding or otherwise as required by applicable Requirements of Law, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, but only to the extent required in connection with such exercise or enforcement, (f) subject to an agreement containing provisions substantially the same as those of this Section 10.12, to (i) any assignee of or Participant in, or any prospective assignee of or Participant (except, in each case, for the avoidance of doubt, for any Disqualified Institution) in, any of its rights or obligations under this Agreement and in connection with any pledge or assignment made pursuant to Section 10.04(f), (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations or (iii) any rating agency for the purpose of obtaining a credit rating applicable to any Credit Party or to the credit facilities hereunder, (g) with the prior consent of the Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender, the Issuing Bank or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower; provided that with respect to clauses (b) and (c) above, if the Administrative Agent, any Lender or the Issuing Bank receives a subpoena, interrogatory or other request (verbal or otherwise) for any Information, or believes that it is legally required to disclose any of the Information to a third party, it shall, in advance of such disclosure, to the extent legally permissible and unless such disclosure is made to regulatory or self-regulatory authorities in the course of routine audits and reviews, promptly provide to the Borrower written notice of any such request or requirement so that the Borrower or the applicable Credit Party (or Subsidiary thereof) may seek a protective order or other remedy.  For purposes of this Section, “Information” means all information received from Holdings or any of its Subsidiaries relating to Holdings or any of its Subsidiaries or any of their respective businesses.  Except with respect to disclosing any Information to any Disqualified Institution, any person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such person has exercised the same degree of care to maintain the confidentiality of such Information as such person would accord to its own confidential information.

 

Section 10.13                      USA PATRIOT Act Notice.  Each Lender that is subject to the Patriot Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Credit Parties, which information includes the name and address of the Credit Parties and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Credit Parties in accordance with the Patriot Act.  The Borrower shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests that is required in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act.

 

Section 10.14                      Interest Rate Limitation.  Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges

 

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and other amounts which are treated as interest on such Loan under applicable Requirements of Law (collectively, the “Rate Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable Requirements of Law, the rate of interest payable in respect of such Loan hereunder, together with all Rate Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Rate Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Rate Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Rate to the date of repayment, shall have been received by such Lender.

 

Section 10.15                      Obligations Absolute.  To the fullest extent permitted by applicable Requirements of Law, all obligations of the Credit Parties hereunder shall be absolute and unconditional irrespective of:

 

(a)                                 any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of any Credit Party;

 

(b)                                 any lack of validity or enforceability of any Loan Document or any other agreement or instrument relating thereto against any Credit Party;

 

(c)                                  any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from any Loan Document or any other agreement or instrument relating thereto;

 

(d)                                 any exchange, release or non-perfection of any other Collateral, or any release or amendment or waiver of or consent to any departure from any guarantee, for all or any of the Obligations;

 

(e)                                  any exercise or non-exercise, or any waiver, of any right, remedy, power or privilege under or in respect hereof or any Loan Document; or

 

(f)                                   any other circumstances that might otherwise constitute a defense (other than the indefeasible payment in full of the Obligations (other than contingent indemnification obligations and unasserted expense reimbursement obligations)) available to, or a discharge of, the Credit Parties.

 

Section 10.16                      No Advisory or Fiduciary Responsibility.  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower and each other Credit Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i)(A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Lead Arrangers and the Lenders are arm’s-length commercial transactions between the Borrower, each other Credit Party and their respective Affiliates, on the one hand, and the Administrative Agent, the Lead Arrangers, and the Lenders, on the other hand, (B) each of the Borrower and the other Credit Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower and

 

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each other Credit Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii)(A) the Administrative Agent, the Lead Arrangers and each Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower, any other Credit Party or any of their respective Affiliates, or any other Person, and (B) neither the Administrative Agent, the Lead Arrangers nor any Lender has any obligation to the Borrower, any other Credit Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent, the Lead Arrangers and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, the other Credit Parties and their respective Affiliates, and neither the Administrative Agent, the Lead Arrangers nor any Lender has any obligation to disclose any of such interests to the Borrower, any other Credit Party or any of their respective Affiliates.  To the fullest extent permitted by law, the Borrower and each other Credit Party hereby waives and releases any claims that it may have against the Administrative Agent, the Lead Arrangers or any Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

 

Section 10.17                      Intercreditor Agreement.

 

(a)                                 Notwithstanding anything to the contrary in this Agreement or in any other Loan Document: (a) the Liens granted to the Collateral Agent in favor of the Secured Parties pursuant to the Loan Documents and the exercise of any right related to any Collateral shall be subject, in each case, to the terms of any applicable Intercreditor Agreement, (b) in the event of any conflict between the express terms and provisions of this Agreement or any other Loan Document, on the one hand, and of any applicable Intercreditor Agreement, on the other hand, the terms and provisions of such Intercreditor Agreement shall control, and (c) each Lender authorizes the Administrative Agent and/or the Collateral Agent to execute any such Intercreditor Agreement on behalf of such Lender, and such Lender agrees to be bound by the terms thereof.

 

(b)                                 Each Secured Party hereby agrees that the Administrative Agent and/or Collateral Agent may enter into any intercreditor agreement and/or subordination agreement pursuant to, or contemplated by, the terms of this Credit Agreement (including with respect to Indebtedness permitted pursuant to Section 6.01 and defined terms referenced therein) on its behalf and agrees to be bound by the terms thereof and, in each case, consents and agrees to the appointment of GS (or its affiliated designee, representative or agent) on its behalf as collateral agent thereunder.

 

Section 10.18                      Acknowledgement and Consent to Bail-In of EEA Financial Institutions.  Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

 

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(a)           the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

 

(b)           the effects of any Bail-In Action on any such liability, including, if applicable:

 

(i)            a reduction in full or in part or cancellation of any such liability;

 

(ii)           a conversion of all or a portion of such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

 

(iii)          the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

 

Section 10.19       Electronic Execution of Assignments and Certain Other Documents.  The words “execute,” “execution,” “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including, without limitation, Assignment and Assumptions, Borrowing Requests, Interest Election Requests, amendments or other modifications, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Requirement of Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that, notwithstanding anything contained herein to the contrary, the Administrative Agent is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it.

 

[THIS SPACE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

 

ROARING FORK INTERMEDIATE, LLC,

 

a Delaware limited liability company,

 

as Holdings

 

 

 

By:

/s/ Andre Durand

 

 

Name: Andre Durand

 

 

Title: Treasurer

 

 

 

 

 

PING IDENTITY CORPORATION,

 

a Delaware corporation,

 

as Borrower

 

 

 

By:

/s/ Andre Durand

 

 

Name: Andre Durand

 

 

Title: Chief Executive Officer

 

 

 

 

 

UNBOUND ID, LLC,

 

a Delaware limited liability company,

 

as a Guarantor

 

 

 

By:

/s/ Andre Durand

 

 

Name: Andre Durand

 

 

Title: Chief Executive Officer

 

[Signature Page to Credit Agreement]

 


 

 

GOLDMAN SACHS BANK USA,

 

as Administrative Agent, Collateral Agent, Swing Line Lender, Issuing Bank and as a Lender

 

 

 

 

 

By:

/s/ Thomas M. Manning

 

 

Name: Thomas M. Manning

 

 

Title: Authorized Signatory

 

[Signature Page to Credit Agreement]

 


 

 

MACQUARIE CAPITAL FUNDING LLC,

 

as a Revolving Lender

 

 

 

 

 

By:

/s/ Ayesha Farooqi

 

 

Name: Ayesha Farooqi

 

 

Title: Authorized Signatory

 

 

 

 

 

 

 

By:

/s/ Lisa Grushkin

 

 

Name: Lisa Grushkin

 

 

Title: Authorized Signatory

 

[Signature Page to Credit Agreement]

 


 

 

 

ANTARES HOLDINGS LP,

 

 

as a Revolving Lender

 

 

 

 

 

By: Antares Holdings GP Inc., its general partner

 

 

 

 

 

 

 

 

By:

/s/ Brad Mashinter

 

 

 

Name: Brad Mashinter

 

 

 

Its: Duly Authorized Signatory

 

[Signature Page to Credit Agreement]

 


 

 

 

HENRY’S FORK I-R, LLC,

 

 

as a Revolving Lender

 

 

 

 

 

 

 

 

 

 

By:

/s/ Kristine Jurczyk

 

 

 

Name: Kristine Jurczyk

 

 

 

Title: Duly Authorized Signatory

 

 

 

 

 

 

 

 

 

 

HENRY’S FORK II-R, LLC,

 

 

as a Revolving Lender

 

 

 

 

 

 

 

 

 

 

By:

/s/ Kristine Jurczyk

 

 

 

Name: Kristine Jurczyk

 

 

 

Title: Duly Authorized Signatory

 

 

 

 

 

 

 

 

 

 

VCOF I-R, LLC,

 

 

as a Revolving Lender

 

 

 

 

 

 

 

 

 

 

By:

/s/ Kristine Jurczyk

 

 

 

Name: Kristine Jurczyk

 

 

 

Title: Duly Authorized Signatory

 

[Signature Page to Credit Agreement]

 


 

ANNEX A

 

Term Loan Commitments

 

Term Loan Lender

 

Term Loan Commitment

 

Pro Rata Share

 

Goldman Sachs Bank USA

 

$

250,000,000

 

100

%

Total

 

$

250,000,000

 

100

%

 

Revolving Commitments

 

Revolving Lender

 

Revolving Commitment

 

Pro Rata Share

 

Goldman Sachs Bank USA

 

$

12,900,000.00

 

51.60

%

Macquarie Capital Funding LLC

 

$

4,300,000.00

 

17.20

%

Antares Holdings LP

 

$

4,300,000.00

 

17.20

%

Henry’s Fork I-R, LLC

 

$

227,272.70

 

0.909

%

Henry’s Fork II-R, LLC

 

$

2,909,090.90

 

11.636

%

VCOF I-R, LLC

 

$

363,636.40

 

1.455

%

Total

 

$

25,000,000.00

 

100.00

%

 





Exhibit 10.2

 

MASTER SERVICES AGREEMENT

 

This Master Services Agreement (this “Agreement”) is made and effective as of February 23, 2017 (the “Effective Date”) by and between Vista Consulting Group, LLC (“VCG”) and Ping Identity Corporation (“Service Recipient”). Each of VCG and Service Recipient may be referred to herein as a “Party” or the “Parties”.

 

WHEREAS, VCG provides certain professional services, including services of the type desired to be obtained by Service Recipient;

 

WHEREAS, Service Recipient has elected to retain VCG to provide certain services; and,

 

WHEREAS, VCG desires to provide such services;

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1                                         DEFINITIONS

 

Confidential Information” means any information that is treated as confidential by a Party, including trade secrets, technology, information pertaining to business operations and strategies, and information pertaining to customers, pricing, and marketing. Confidential Information shall not include information that: (a) is already known to the Receiving Party without restriction on use or disclosure prior to receipt of such information from the Disclosing Party; (b) is or becomes generally known by the public other than by breach of this Agreement by, or other wrongful act of, the Receiving Party; (c) is developed by the Receiving Party independently of, and without reference to, any Confidential Information of the Disclosing Party; or (d) is received by the Receiving Party from a third party who is not under any obligation to the Disclosing Party to maintain the confidentiality of such information

 

Deliverables” means all documents, work product and other materials that are delivered to Service Recipient hereunder or prepared by or on behalf of VCG in the course of performing the Services, including any items identified as such in any Statement of Work.

 

Disclosing Party” means a Party that has disclosed information treated as confidential by such Party.

 

Equipment” means any equipment, systems, cabling or facilities provided by Service Recipient and used directly or indirectly in the provision of the Services.

 

Intellectual Property Rights” means all (a) patents, patent disclosures and inventions (whether patentable or not), (b) trademarks, service marks, trade dress, trade names, logos, corporate names and domain names, together with all of the goodwill associated therewith, (c) copyrights and copyrightable works (including computer programs), mask works, and rights in data and databases, (d) trade secrets, know-how and other confidential information, and (e) all other intellectual property rights, in each case whether registered or unregistered and including all applications for, and renewals or extensions of, such rights, and all similar or equivalent rights or forms of protection in any part of the world.

 


 

Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any federal, state, local or foreign government or political subdivision thereof, or any arbitrator, court or tribunal of competent jurisdiction.

 

Pre-Existing Materials” means the pre-existing materials provided by or used by VCG in connection with performing the Services.

 

Receiving Party” means a Party that has received information treated as confidential by the other Party.

 

Services” means either (i) those services described on any Statement of Work or (ii) general consulting services that are not specified in any Statement of Work.

 

Statement of Work” means each statement of work describing services to be provided by VCG to Service Recipient pursuant to this Agreement. For the avoidance of doubt, a Statement of Work may be denominated in any form that makes sense to the Parties, including “Statement of Work”, “Engagement Notice”, “Services Description” or the like, and is not required to be entitled “Statement of Work” to be effective under this Agreement.

 

VCG Personnel” means all employees and third party contractors engaged by VCG to provide the Services from time to time.

 

2                                         SERVICES

 

2.1                               Provision of Services. VCG shall provide the Services to Service Recipient as described in more detail in each Statement of Work in accordance with the terms and conditions of this Agreement.

 

2.2                               Statements of Work. Each Statement of Work shall include the following information, if applicable:

 

(a)                                 a detailed description of the Services to be performed pursuant to the Statement of Work;

 

(b)                                 the date upon which the Services will commence and the term of such Statement of Work;

 

(c)                                  the estimated fees to be paid to VCG under the Statement of Work;

 

(d)                                 Services implementation plan and timetable;

 

(e)                                  any criteria for completion of the Services; and

 

(f)                                   any other terms and conditions agreed upon by the parties in connection with the Services to be performed pursuant to such Statement of Work.

 

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2.3                               Change Orders. If either Party wishes to change the scope or performance of the Services, it shall submit details of the requested change to the other Party in writing. VCG shall, within a reasonable time after such request, provide a written estimate to Service Recipient of:

 

(a)                                 the likely time required to implement the change;

 

(b)                                 any necessary variations to the estimated fees and other charges for the Services arising from the change;

 

(c)                                  the likely effect of the change on the Services; and

 

(d)                                 any other impact the change might have on the performance of this Agreement.

 

Promptly after receipt of the written estimate, the Parties shall negotiate and agree in writing on the terms of such change (a “Change Order”).

 

3                                         VCG OBLIGATIONS

 

3.1                               Personnel. VCG shall have the right to select all VCG Personnel in its sole discretion. VCG shall select a primary and secondary contact out of the VCG Personnel for the purpose of ensuring accurate and timely communication between VCG and the Service Recipient regarding the Services, and shall provide contact information for such individuals to Service Recipient; provided, however, that VCG shall have the right to substitute different individuals upon written notice to Service Recipient. VCG shall use commercially reasonable efforts to ensure that all VCG Personnel comply with all rules, regulations and policies of Service Recipient that are communicated to VCG in writing, including security procedures concerning systems and data and remote access thereto, building security procedures.

 

3.2                               Compensation and Benefits. VCG shall be responsible for all VCG Personnel and for the payment of their compensation, including, if applicable, withholding of income taxes, and the payment and withholding of social security and other payroll taxes, unemployment insurance, workers’ compensation insurance payments and disability benefits.

 

4                                         SERVICE RECIPIENT OBLIGATIONS.

 

4.1                               Cooperation. Service Recipient shall cooperate with VCG in all matters relating to the Services, respond promptly to any VCG request to provide direction, information, approvals, authorizations or decisions that are reasonably necessary for VCG to perform Services in accordance with the requirements of this Agreement and appoint a Service Recipient employee to serve as the primary contact with respect to this Agreement and who will have the authority to act on behalf of Service Recipient with respect to matters pertaining to this Agreement.

 

4.2                               Facility Access and Equipment. Service Recipient shall provide access to its premises, and such offices and other facilities, as may be reasonably requested by VCG for the purpose of providing the Services, and ensure that all Equipment is in good working order and suitable for the purposes for which it is use, and conforms to all applicable industry standards.

 

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4.3                               Licenses. Service Recipient shall obtain and maintain all necessary licenses and consents and comply with all applicable Law in relation to the Services and the use of the Service Recipient Equipment, in all cases before the date on which the Services are to start.

 

4.4                               Excusable Delays. If VCG’s performance of its obligations under this Agreement is prevented or delayed by any act or omission of Service Recipient or its agents, subcontractors, consultants or employees, VCG shall not be deemed in breach of its obligations under this Agreement or otherwise liable for any costs, charges or losses sustained or incurred by Service Recipient, in each case, to the extent arising directly or indirectly from such prevention or delay.

 

5                                         FEES AND PAYMENTS.

 

5.1                               Fees Generally. In consideration of the provision of the Services by VCG and the rights granted to Service Recipient under this Agreement. Service Recipient shall pay the fees set forth in the applicable Statement of Work.

 

5.2                               Time and Materials. Where the Services are provided on a time and materials basis: the fees payable for the Services shall be calculated in accordance with VCG’s daily or hourly fee rates for the VCG Personnel; and VCG shall issue invoices to Service Recipient monthly in arrears for its fees for time for the immediately preceding month, calculated as provided in this Section 5.2, together with a detailed breakdown of any expenses for such month incurred in accordance with Section 5.5.

 

5.3                               Fixed Fees. Where Services are provided for a fixed price, the total fees for the Services shall be the amount set out in the applicable Statement of Work. The total price shall be paid to VCG in installments, as set out in the Statement of Work.

 

5.4                               Subscription Fees.  Where Services are provided under a subscription model, the recurring rate for such Services shall be set out in the applicable Statement of Work, and invoices shall be issued monthly, or on such other period as set forth in the applicable Statement of Work.

 

5.5                               Expenses. Service Recipient agrees to reimburse VCG for all reasonable expenses (including expenses related to training programs, meetings and other events (to the extent that such programs, meetings or events are attended by Service Recipient personnel), certain entertainment expenses (to the extent that such expenses are attributable to the Service Recipient), travel expenses (which include expenses for chartered or first class travel), and expenses relating to recruiting, relocation and background checks for Service Recipient positions) incurred by VCG in connection with the performance of the Services or any fees, servicing payments, rebates, or other benefits incurred by VCG related to group purchasing arrangements to the extent that the same benefit Service Recipient.

 

5.6                               Rate Increases. The Parties agree that, for Services provided on a time and materials basis, VCG may increase its standard fee rates upon notice to Service Recipient.

 

5.7                               Invoices. VCG shall issue invoices to Service Recipient only in accordance with the terms of this Section, and Service Recipient shall pay all properly invoiced amounts due to VCG within 30 days after Service Recipient’s receipt of such invoice. All payments hereunder shall be in US dollars and made by check or wire transfer.

 

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5.8                               Taxes. Service Recipient shall be responsible for all sales, use and excise taxes, and any other similar taxes, duties and charges of any kind imposed by any federal, state or local governmental entity on any amounts payable by Service Recipient hereunder; provided, that, in no event shall Service Recipient pay or be responsible for any taxes imposed on, or with respect to, VCG’s income, revenues, gross receipts, personnel or real or personal property or other assets.

 

6                                         CONFIDENTIALITY.

 

6.1                               Confidentiality Generally. The Receiving Party agrees (a) not to disclose or otherwise make available Confidential Information of the Disclosing Party to any third party without the prior written consent of the Disclosing Party; provided, however, that the Receiving Party may disclose the Confidential Information of the Disclosing Party to its officers, employees, consultants and legal advisors who have a “need to know”, who have been apprised of this restriction and who are themselves bound by nondisclosure obligations at least as restrictive as those set forth in this Section 6; (b) to use the Confidential Information of the Disclosing Party only for the purposes of performing its obligations under the Agreement or, in the case of Customer, to make use of the Services and Deliverables; and (c) to promptly notify the Disclosing Party in the event it becomes aware of any loss or disclosure of any of the Confidential Information of Disclosing Party.

 

6.2                               Permitted Disclosures. If the Receiving Party becomes legally compelled to disclose any Confidential Information, the Receiving Party shall provide prompt written notice of such requirement so that the Disclosing Party may seek, at its sole cost and expense, a protective order or other remedy; and reasonable assistance, at the Disclosing Party’s sole cost and expense, in opposing such disclosure or seeking a protective order or other limitations on disclosure. It, after providing such notice and assistance as required herein, the Receiving Party remains required by Law to disclose any Confidential Information, the Receiving Party shall disclose no more than that portion of the Confidential Information which, on the advice of the Receiving Party’s legal counsel, the Receiving Party is legally required to disclose and, upon the Disclosing Party’s request, shall use commercially reasonable efforts to obtain assurances from the applicable court or agency that such Confidential Information will be afforded confidential treatment.

 

7                                         INTELLECTUAL PROPERTY AND OWNERSHIP.

 

7.1                               Service Recipient IP. Except as set forth in Section 7.2, Service Recipient is, and shall be, the sole and exclusive owner of all right, title and interest in and to the Deliverables, including all Intellectual Property Rights therein. VCG agrees that with respect to any Deliverables that may qualify as “work made for hire”, such Deliverables are hereby deemed a “work made for hire” for Service Recipient. To the extent that any of the Deliverables do not constitute a “work made for hire”, VCG hereby irrevocably assigns, and shall cause the VCG Personnel to irrevocably assign to Service Recipient, in each case without additional consideration, all right, title and interest throughout the world in and to the Deliverables, including all Intellectual Property Rights therein. Upon the reasonable request of Service Recipient, VCG shall, and shall cause the VCG Personnel to, promptly take such further actions, including execution and delivery of all appropriate instruments of conveyance, as may be necessary to assist Service Recipient to prosecute, register, perfect or record its rights in or to any Deliverables.

 

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7.2                               VCG IP. VCG and its licensors are, and shall remain, the sole and exclusive owners of all right, title and interest in and to the Pre-Existing Materials, including all Intellectual Property Rights therein. VCG hereby grants Service Recipient a limited, irrevocable, perpetual, fully paid-up, royalty-free, non-transferable, non-sublicenseable. worldwide license to any Pre-Existing Materials to the extent incorporated in, combined with or otherwise necessary for the use of the Deliverables for any and all purposes/solely to the extent reasonably required in connection with Service Recipient’s receipt or use of the Services and Deliverables. All other rights in and to the Pre-Existing Materials are expressly reserved by VCG.

 

8                                         REPRESENTATIONS AND WARRANTIES.

 

8.1                               Mutual Representations. Each Party represents and warrants to the other Party that:

 

(a)                                 it is duly organized, validly existing and in good standing as a corporation or other entity as represented herein under the laws and regulations of its jurisdiction of incorporation, organization or chartering:

 

(b)                                 it has the full right, power and authority to enter into this Agreement, to grant the rights and licenses granted hereunder and to perform its obligations hereunder;

 

(c)                                  the execution of this Agreement by its representative whose signature is set forth at the end hereof has been duly authorized by all necessary corporate action of the Party; and.

 

(d)                                 when executed and delivered by such Party, this Agreement will constitute the legal, valid and binding obligation of such party, enforceable against such Party in accordance with its terms.

 

8.2                               DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. EXCEPT FOR THE EXPRESS WARRANTIES IN THIS SECTION 8, (A) EACH PARTY HEREBY DISCLAIMS ALL WARRANTIES, EITHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE UNDER THIS AGREEMENT, AND (B) VCG SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE AND NON-INFRINGEMENT.

 

9                                         LIMITATION OF LIABILITY.

 

9.1                               GENERAL LIMITATION. EXCEPT AS OTHERWISE PROVIDED IN SECTION 9.3, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER OR TO ANY THIRD PARTY FOR ANY LOSS OF USE, REVENUE OR PROFIT OR LOSS OF DATA OR FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL OR PUNITIVE DAMAGES WHETHER ARISING OUT OF BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, REGARDLESS OF WHETHER SUCH DAMAGE WAS FORESEEABLE AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

9.2                               CAP ON DAMAGES. EXCEPT AS OTHERWISE PROVIDED IN SECTION 9.3, IN NO EVENT WILL EITHER PARTY’S LIABILITY ARISING OUT OF OR RELATED TO THIS AGREEMENT, WHETHER ARISING OUT OF OR RELATED TO BREACH OF

 

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CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EXCEED THE AGGREGATE AMOUNTS PAID OR PAYABLE TO VCG IN THE ANNUAL PERIOD PRECEDING THE EVENT GIVING RISE TO THE CLAIM.

 

9.3                               Exclusions. The exclusions and limitations in Section 9.1 and Section 9.2 shall not apply to damages or other liabilities arising out of or relating to a party’s failure to comply with its confidentiality obligations under Section 6.

 

10                                  TERM AND TERMINATION.

 

10.1                        Term. This Agreement shall begin on the Effective Date and extend in time in perpetuity unless no active Statement of Work has been in effect for 120 days, in which case this Agreement shall expire.

 

10.2                        Other Termination. Either Party may terminate this Agreement, effective upon written notice to the other Party (the “Defaulting Party”), if the Defaulting Party:

 

(a)                                 breaches this Agreement, and such breach is incapable of cure, or with respect to a breach capable of cure, the Defaulting Party does not cure such breach within 30 days after receipt of written notice of such breach;

 

(b)                                 (i) becomes insolvent or admits its inability to pay its debts generally as they become due; (ii) becomes subject, voluntarily or involuntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency law, which is not fully stayed within 7 business days or is not dismissed or vacated within 45 days after filing; (iii) is dissolved or liquidated or takes any corporate action for such purpose; (iv) makes a general assignment for the benefit of creditors; or (v) has a receiver, trustee, custodian or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business.

 

10.3                        Effect of Termination. Upon expiration or termination of this Agreement for any reason each Party shall (i) return to the other Party all documents and tangible materials (and any copies) containing, reflecting, incorporating or based on the other party’s Confidential Information, (ii) permanently erase all of the other Party’s Confidential Information from its computer systems and (iii) certify in writing to the other Party that it has complied with the requirements of this Section 10.3. The rights and obligations of the parties set forth in this Section 10.3 and Section 1, Section 6, Section 7, Section 9, and Section 11, and any right or obligation of the parties in this Agreement which, by its nature, should survive termination or expiration of this Agreement, will survive any such termination or expiration of this Agreement.

 

11                                  MISCELLANEOUS.

 

11.1                        Non-Solicitation. During the Term of this Agreement and for a period of twelve (12) months thereafter, Service Recipient shall not, directly or indirectly, in any manner solicit or induce for employment any person who performed any work under this Agreement who is then in the employment of VCG. A general advertisement or notice of a job listing or opening or other similar general publication of a job search or availability to fill employment positions, including on the internet, shall not be construed as a solicitation or inducement for the purposes of this Section 11.1, and the hiring of any such employees or independent contractor who freely responds

 

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thereto shall not be a breach of this Section 11.1. If Service Recipient breaches  Section 11.1, Service Recipient shall, on demand, pay to VCG a sum equal to one year’s basic salary or the annual fee that was payable by VCG to that employee, worker or independent contractor plus the recruitment costs incurred by VCG in replacing such person.

 

11.2                        No Exclusivity. VCG retains the right to provide services of a type similar to the Services to any third party at any time.

 

11.3                        Force Majeure. No Party shall be liable or responsible to the other Party, nor be deemed to have defaulted under or breached this Agreement, for any failure or delay in fulfilling or performing any term of this Agreement (except for any obligations to make payments to the other party hereunder), when and to the extent such failure or delay is caused by or results from acts beyond the affected Party’s reasonable control, including (a) acts of God; (b) flood, fire or explosion; (c) war, invasion, riot or other civil unrest; (d) actions, embargoes or blockades in effect on or after the date of this Agreement; (e) national or regional emergency; (f) strikes, labor stoppages or slowdowns or other industrial disturbances; (g) compliance with any law or governmental order, rule, regulation or direction, or any action taken by a governmental or public authority, including imposing an embargo, export or import restriction, quota or other restriction or prohibition, or failing to grant a necessary license or consent; (h) shortage of adequate power or telecommunications or transportation facilities.

 

11.4                        Independent Contractors.  The relationship between the Parties is that of independent contractors. Nothing contained in this Agreement shall be construed as creating any agency, partnership, joint venture or other form of joint enterprise, employment or fiduciary relationship between the Parties, and neither arty shall have authority to contract for or bind the other party in any manner whatsoever.

 

11.5                        No Press Releases. Neither Party shall issue or release any announcement, statement, press release or other publicity or marketing materials relating to this Agreement, or otherwise use the other Party’s trademarks, service marks, trade names, logos, symbols or brand names, in each case, without the prior written consent of the other Party.

 

11.6                        Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day’ if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Party at the addresses indicated below (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 11.6).

 

If to VCG:

 

If to Service Recipient:

 

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11.7                        Construction of Agreement. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Sections and Statements of Work refer to the Sections of, and Statements of Work attached to this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Statements of Work referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

 

11.8                        Integration. This Agreement, together with all Statements of Work and any other documents incorporated herein by reference, constitutes the sole and entire agreement of the Parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any conflict between the terms and provisions of this Agreement and those of any Statement of Work, the following order of precedence shall govern: (a) first, any Statement of Work, and (b) second, the body of this Agreement.

 

11.9                        Assignment. Neither Party may assign, transfer or delegate any or all of its rights or obligations under this Agreement, without the prior written consent of the other Party: provided, that, upon prior written notice to the other Party, either party may assign the Agreement to a successor of all or substantially all of the assets of such party through merger, reorganization, consolidation or acquisition. No assignment shall relieve the assigning Party of any of its obligations hereunder. Any attempted assignment, transfer or other conveyance in violation of the foregoing shall be null and void. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and permitted assigns. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement.

 

11.10                 Amendments and Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each Party hereto. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

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11.11                 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of California without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than those of the State of California. Any legal suit, action or proceeding arising out of or related to this Agreement or the Services provided hereunder shall be instituted exclusively in the federal courts of the United States or the courts of the State of California in each case located in the city and county of San Francisco, and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by mail to such Party’s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. Each Party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby.

 

11.12                 Equitable Relief. Each Party acknowledges that a breach by a party of Section 6 may cause the non-breaching Party irreparable damages, for which an award of damages would not be adequate compensation and agrees that, in the event of such breach or threatened breach. the non-breaching Party will be entitled to seek equitable relief, including a restraining order, injunctive relief, specific performance and any other relief that may be available from any court. in addition to any other remedy to which the non-breaching Party may be entitled at law or in equity. Such remedies shall not be deemed to be exclusive but shall be in addition to all other remedies available at law or in equity, subject to any express exclusions or limitations in this Agreement to the contrary.

 

11.13                 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written.

 

VISTA CONSULTING GROUP

 

PING IDENTITY CORPORATION

 

 

 

/s/ David M. Post

 

/s/ Lauren Romer

 

 

 

 

 

By:

David M. Post

 

By:

Lauren Romer

 

 

 

 

 

Title:

COO

 

Title:

VP/GC

 

 

 

 

 

Date:

2/23/2017

 

Date:

2/23/2017

 

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Exhibit 10.3

 

PING IDENTITY HOLDING CORP.

 


 

OMNIBUS INCENTIVE PLAN

 


 

ARTICLE I
PURPOSE; EFFECTIVE DATE; TERM

 

1.1                               Purpose. The purpose of this Ping Identity Holding Corp. Omnibus Incentive Plan is to enhance the profitability and value of the Company for the benefit of its Stockholders by enabling the Company to offer Eligible Individuals stock- and cash-based incentives in order to attract, retain, and reward such individuals and strengthen the mutuality of interests between such individuals and the Stockholders.

 

1.2                               Effective Date. The Plan is effective on [Date] (the Effective Date), which is the date of its adoption by the Board, subject to the approval of the Plan by the Stockholders in accordance with the requirements of the laws of the State of Delaware.

 

1.3                               Term. No Award may be granted on or after the tenth anniversary of the earlier of the Effective Date or the date of Stockholder approval of the Plan, but Awards granted prior to such tenth anniversary may extend beyond that date.

 

ARTICLE II
DEFINITIONS

 

For purposes of the Plan, the following terms will have the following meanings:

 

2.1                               Affiliate means each of the following: (a) any Subsidiary; (b) any Parent; (c) any corporation, trade, or business which is directly or indirectly controlled 50% or more (whether by ownership of stock, assets, or an equivalent ownership interest or voting interest) by the Company or any Affiliate; (d) any trade or business which directly or indirectly controls 50% or more (whether by ownership of stock, assets, or an equivalent ownership interest or voting interest) of the Company; and (e) any other entity in which the Company or any Affiliate has a material equity interest and which is designated as an “Affiliate” by resolution of the Committee.

 

2.2                               Award means any award granted under the Plan of any Stock Option, Stock Appreciation Right, Restricted Share, Performance Award, Other Share-Based Award, or Other Cash-Based Award. All Awards will be granted by, confirmed by, and subject to the terms and conditions of, a written Award Agreement executed by the Company and the Participant.

 

2.3                               Award Agreement means the written or electronic agreement setting forth the terms and conditions applicable to an Award.

 

2.4                               Board means the Board of Directors of the Company.

 

2.5                               Business Combination has the meaning set forth in Section 11.2(c).

 


 

2.6                               Cause means, as determined by the Company, unless otherwise determined by the Committee in the applicable Award Agreement, with respect to an Eligible Employee’s or Consultant’s Separation from Service, the following: (a) in the case where there is no employment agreement, consulting agreement, change in control agreement, or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award (or where there is such an agreement but it does not define “cause” (or words of like import)), Separation from Service due to a Participant’s insubordination, dishonesty, fraud, incompetence, moral turpitude, willful misconduct, refusal to perform the Participant’s duties or responsibilities for any reason other than illness or incapacity, repeated or material violation of any employment policy, violation or breach of any confidentiality agreement, work product agreement, or other agreement between the Participant and the Company, or materially unsatisfactory performance of the Participant’s duties to the Company or an Affiliate; or (b) in the case where there is an employment agreement, consulting agreement, change in control agreement, or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award that defines “cause” (or words of like import), “cause” as defined under such agreement; provided, however, that with regard to any agreement under which the definition of “cause” only applies on occurrence of a change in control, such definition of “cause” will not apply until a change in control actually takes place and then only with regard to a Separation from Service after the change in control. Notwithstanding any foregoing term or condition of this definition of Cause, with respect to a Non-Employee Director’s Separation from Service, Cause means an act or failure to act that constitutes cause for removal of a director under applicable Delaware law.

 

2.7                               Change in Control has the meaning set forth in Section 11.2.

 

2.8                               Change in Control Price has the meaning set forth in Section 11.1.

 

2.9                               Codemeans the Internal Revenue Code of 1986.

 

2.10                        Committee means any committee of the Board duly authorized by the Board to administer the Plan. If no committee is duly authorized by the Board to administer the Plan, the term “Committee” will be deemed to refer to the Board for all purposes under the Plan.

 

2.11                        Common Stock means the shares of common stock, $0.001 par value per share, of the Company. Unless otherwise determined by the Committee, the Common Stock subject to any Award must constitute “service recipient stock” under Section 409A (or otherwise not subject the Award to Section 409A).

 

2.12                        Companymeans Ping Identity Holding Corp., a Delaware corporation, and its successors by operation of law.

 

2.13                        Consultant means any natural person who is an advisor or consultant to the Company or an Affiliate.

 

2.14                        Detrimental Conductmeans, as determined by the Company, the Participant’s serious misconduct or unethical behavior, including any of the following: (a) any violation by the Participant of a restrictive covenant agreement that the Participant has entered into with the Company or an Affiliate (covering, for example, confidentiality, non-competition, non-solicitation, non-disparagement, etc.); (b) any conduct by the Participant that could result in the

 

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Participant’s Separation from Service for Cause; (c) the commission of a criminal act by the Participant, whether or not performed in the workplace, that subjects, or if generally known would subject, the Company or an Affiliate to public ridicule or embarrassment, or other improper or intentional conduct by the Participant causing reputational harm to the Company, an Affiliate, or a client or former client of the Company or an Affiliate; (d) the Participant’s breach of a fiduciary duty owed to the Company or an Affiliate or a client or former client of the Company or an Affiliate; (e) the Participant’s intentional violation, or grossly negligent disregard, of the Company’s or an Affiliate’s policies, rules, or procedures; or (f) the Participant taking or maintaining trading positions that result in a need to restate financial results in a subsequent reporting period or that result in a significant financial loss to the Company or an Affiliate.

 

2.15                        Disability means, unless otherwise determined by the Committee in the applicable Award Agreement, with respect to a Participant’s Separation from Service, a permanent and total disability as defined in Code Section 22(e)(3). A Disability will only be deemed to occur at the time of the determination by the Committee of the Disability. Notwithstanding the foregoing terms and conditions of this definition, for Awards that are subject to Section 409A, Disability means that a Participant is disabled under Section 409A.

 

2.16                        Effective Date has the meaning set forth in Section 1.2.

 

2.17                        Eligible Employee means each employee of the Company or an Affiliate.

 

2.18                        Eligible Individual means each Eligible Employee, Non-Employee Director, and Consultant who is designated by the Committee as eligible to receive an Award.

 

2.19                        Exchange Act means the Securities Exchange Act of 1934.

 

2.20                        Fair Market Value means, as of any date and except as provided below, the last sales price reported for the Common Stock on the applicable date: (a) as reported on the principal national securities exchange in the United States on which the Common Stock is then traded, (b) or if the Common Stock is not traded, listed, or otherwise reported or quoted, the Committee will determine the Fair Market Value taking into account the requirements of Section 409A. For purposes of the grant of any Award, the applicable date will be the trading day immediately prior to the date on which the Award is granted. For purposes of any Award granted in connection with the Registration Date, the Fair Market Value will be the public offering price in the initial public offering as set forth on the cover of the final prospectus. For purposes of the purchase of any Award, the applicable date will be the date a notice of purchase is received by the Company or, if not a day on which the applicable market is open, the next day that it is open.

 

2.21                        Family Member means the Participant’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Participant’s household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than 50% of the voting interests.

 

2.22                        GAAP means generally accepted accounting principles.

 

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2.23                        Incentive Stock Option or ISOmeans any Stock Option awarded to an Eligible Employee of the Company, its Subsidiaries, or its Parents (if any) intended to be and designated as an “incentive stock option” within the meaning of Code Section 422.

 

2.24                        Incumbent Directors has the meaning set forth in Section 11.2(b).

 

2.25                        Lead Underwriterhas the meaning set forth in Section 14.21.

 

2.26                        Lock-Up Period has the meaning set forth in Section 14.21.

 

2.27                        Non-Employee Director means a director or a member of the Board of the Company or an Affiliate who is not an active employee of the Company or an Affiliate.

 

2.28                        Non-Tandem Stock Appreciation Right means a Stock Appreciation Right representing the right to receive an amount in cash or Shares equal to the difference between (a) the Fair Market Value of a Share on the date such right is exercised, and (b) the aggregate purchase price of such right, otherwise than on surrender of a Stock Option.

 

2.29                        Nonstatutory Stock Option means any Stock Option that is not an ISO.

 

2.30                        Other Cash-Based Award means an award granted to an Eligible Individual under Section 10.3 that is payable in cash at the time or times and subject to the terms and conditions determined by the Committee.

 

2.31                        Other Share-Based Award means an award granted to an Eligible Individual under Article X that is valued in whole or in part by reference to, or is payable in or otherwise based on, Common Stock, including an award valued by reference to an Affiliate.

 

2.32                        Parent means any parent corporation of the Company within the meaning of Code Section 424(e).

 

2.33                        Participantmeans an Eligible Individual who has been granted, and holds, an Award.

 

2.34                        Performance Award means an an award granted to an Eligible Individual under Article IX contingent upon achieving specified Performance Goals.

 

2.35                        Performance Goals means goals established by the Committee as contingencies for Awards to vest or become exercisable or distributable based on one or more of the performance criteria set forth in Exhibit A.

 

2.36                        Performance Period means the designated period during which Performance Goals must be satisfied with respect to a Performance Award.

 

2.37                        Person means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, and a government or any branch, department, agency, political subdivision, or official thereof.

 

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2.38                        Plan means this Ping Identity Holding Corp. Omnibus Incentive Plan.

 

2.39                        Proceedinghas the meaning set forth in Section 14.10.

 

2.40                        Reference Stock Option has the meaning set forth in Section 7.1.

 

2.41                        Registration Date means the date on which the Company consummates the sale of its Common Stock in a bona fide, firm commitment underwriting pursuant to a registration statement under the Securities Act.

 

2.42                        Reorganization has the meaning set forth in Section 4.2(b)(ii).

 

2.43                        Restricted Shares means restricted Shares granted to an Eligible Individual under Article VIII.

 

2.44                        Restriction Period has the meaning set forth in Section 8.3(a).

 

2.45                        Rule 16b-3 means Rule 16b-3 under Section 16(b) of the Exchange Act.

 

2.46                        Section 409A means Code Section 409A.

 

2.47                        Securities Act means the Securities Act of 1933.

 

2.48                        Separation from Service means, unless otherwise determined by the Committee or the Company, the termination of the applicable Participant’s employment with, and performance of services for, the Company and all Affiliates, including by reason of the fact that the Participant’s employer or other service recipient ceases to be an Affiliate of the Company. Unless otherwise determined by the Company, if a Participant’s employment or service with the Company or an Affiliate terminates but the Participant continues to provide services to the Company or an Affiliate in a Non-Employee Director capacity or as an Eligible Employee or Consultant, as applicable, such change in status will not be considered a Separation from Service. Approved temporary absences from employment because of illness, vacation, or leave of absence and transfers among the Company and its Affiliates will not be considered Separations from Service. Notwithstanding the foregoing definition of Separation from Service, with respect to any Award that constitutes nonqualified deferred compensation under Section 409A, “Separation from Service” means a “separation from service” as defined under Section 409A.

 

2.49                        Share means a share of Common Stock.

 

2.50                        Share Reserve has the meaning set forth in Section 4.1.

 

2.51                        Stock Appreciation Right means a stock appreciation right granted to an Eligible Individual under Article VII.

 

2.52                        Stock Option means an option to purchase Shares granted to an Eligible Individual under Article VI.

 

2.53                        Stockholder means a stockholder of the Company.

 

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2.54                        Subsidiary means any subsidiary corporation of the Company within the meaning of Code Section 424(f).

 

2.55                        Tandem Stock Appreciation Right means a Stock Appreciation Right representing the right to surrender to the Company all (or a portion) of a Stock Option in exchange for an amount in cash or Shares equal to the difference between (i) the Fair Market Value on the date such Stock Option (or such portion thereof) is surrendered, of the Common Stock covered by such Stock Option (or such portion thereof), and (ii) the aggregate purchase price of such Stock Option (or such portion thereof).

 

2.56                        Ten Percent Stockholdermeans a Person owning stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, its Subsidiaries, or its Parent.

 

2.57                        Transfer means (a) when used as a noun, any direct or indirect transfer, sale, assignment, pledge, hypothecation, encumbrance, or other disposition, whether for value or no value and whether voluntary or involuntary, and (b) when used as a verb, to directly or indirectly transfer, sell, assign, pledge, encumber, charge, hypothecate, or otherwise dispose of, whether for value or for no value and whether voluntarily or involuntarily. “Transferred” and “Transferable” have a correlative meaning under the Plan.

 

ARTICLE III
ADMINISTRATION

 

3.1                               The Committee. The Plan will be administered and interpreted by the Committee. To the extent required by applicable law, rule, or regulation, it is intended that each member of the Committee will qualify as (a) a “non-employee director” under Rule 16b-3 and (b) an “independent director” under the rules of any national securities exchange or national securities association, as applicable. If it is later determined that one or more members of the Committee do not so qualify, actions taken by the Committee prior to such determination will be valid despite such failure to qualify.

 

3.2                               Grants of Awards. The Committee will have full authority to grant, under the terms and conditions of the Plan, to Eligible Individuals: (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Shares, (iv) Performance Awards, (v) Other Share-Based Awards, and (vi) Other Cash-Based Awards. In particular, the Committee will have the authority:

 

(a)         to select the Eligible Individuals to whom Awards may from time to time be granted;

 

(b)         to determine whether and to what extent Awards, or any combination thereof, are to be granted to one or more Eligible Individuals;

 

(c)          to determine the number of Shares to be covered by each Award;

 

(d)         to determine the terms and conditions, not inconsistent with the terms and conditions of the Plan, of all Awards;

 

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(e)          to determine the amount of cash to be covered by each Award;

 

(f)           to determine whether, to what extent, and under what circumstances grants of Stock Options and other Awards are to operate on a tandem basis or in conjunction with or apart from other awards made by the Company outside of the Plan;

 

(g)          to determine whether and under what circumstances a Stock Option may be settled in cash, Common Stock, or Restricted Shares under Section 6.4(d);

 

(h)         to determine whether a Stock Option is an ISO or Nonstatutory Stock Option;

 

(i)             to impose a “blackout” period during which Stock Options may not be exercised;

 

(j)            to determine whether to require a Participant, as a condition of the granting of any Award, to not sell or otherwise dispose of Shares acquired upon the exercise of an Award for a period of time as determined by the Committee following the date of the acquisition of such Award;

 

(k)         to modify, extend, or renew an Award, subject to Article XII and Section 6.4(l); and

 

(l)             solely to the extent permitted by applicable law, to determine whether, to what extent, and under what circumstances to provide loans (which may be on a recourse basis and bear interest at the rate the Committee may determine) to Participants in order to exercise Stock Options.

 

3.3                               Guidelines. Subject to Article XII, the Committee will have the authority to adopt, alter, and repeal such administrative rules, guidelines, and practices governing the Plan and perform all acts, including the delegation of its responsibilities (to the extent permitted by applicable law and applicable securities exchange rules), as it may, from time to time, deem advisable; to construe and interpret the Plan, all Awards, and all Award Agreements (and in each case any agreements relating thereto); and to otherwise supervise the administration of the Plan. The Committee may correct any defect, supply any omission, or reconcile any inconsistency in the Plan or in any agreement relating thereto in the manner and to the extent it deems necessary to effectuate the purpose and intent of the Plan. The Committee may adopt special terms and conditions for Persons who are residing in, or employed in, or subject to the taxes of, any domestic or foreign jurisdictions to comply with applicable tax, securities, and other laws of such domestic or foreign jurisdictions. Notwithstanding the foregoing terms and conditions of this Section 3.3, no action of the Committee under this Section 3.3 may substantially impair the rights of any Participant without the Participant’s consent. To the extent applicable, the Plan is intended to comply with the applicable requirements of Rule 16b-3, and the Plan will be limited, construed, and interpreted in a manner so as to comply therewith.

 

3.4                               Sole Discretion; Decisions Final. Any decision, interpretation, or other action made or taken by or at the direction of the Company, the Board, or the Committee (or any of their members) arising out of or in connection with the Plan will be within the sole and absolute discretion of all and each of them, as the case may be, and will be final, binding, and conclusive

 

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on the Company and all employees and Participants and their respective heirs, executors, administrators, successors, and assigns and all other Persons having an interest in the Plan.

 

3.5                               Designation of Consultants/Liability.

 

(a)         The Committee may designate employees of the Company and professional advisors to assist the Committee in the administration of the Plan and may grant authority to officers to grant Awards and execute agreements and other documents on behalf of the Committee, in each case to the extent permitted by applicable law and applicable securities exchange rules. In the event of any designation of authority hereunder, subject to applicable law, applicable securities exchange rules, and any terms and conditions imposed by the Committee in connection with such designation, such designee or designees will have the power and authority to take such actions, exercise such powers, and make such determinations that are otherwise specifically designated to the Committee hereunder.

 

(b)         The Committee may employ such legal counsel, consultants, and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion received from any such counsel or consultant and any computation received from any such consultant or agent. Expenses incurred by the Committee or the Board in the engagement of any such counsel, consultant, or agent will be paid by the Company. The Committee, its members, and any Person designated under Section 3.5(a) will not be liable for any action or determination made in good faith with respect to the Plan. To the maximum extent permitted by applicable law, no officer of the Company or member or former member of the Committee or of the Board will be liable for any action or determination made in good faith with respect to the Plan or any Award.

 

3.6                               Indemnification. To the maximum extent permitted by applicable law and the Certificate of Incorporation and By-Laws of the Company and to the extent not covered by insurance directly insuring such Person, each officer and employee of the Company and each Affiliate and member or former member of the Committee and the Board will be indemnified and held harmless by the Company against all costs and expenses and liabilities, and advanced amounts necessary to pay the foregoing at the earliest time and to the fullest extent permitted, arising out of any act or omission to act in connection with the administration of the Plan, except to the extent arising out of such officer’s, employee’s, member’s, or former member’s own fraud or bad faith. Such indemnification will be in addition to any right of indemnification the employees, officers, directors, or members or former officers, directors, or members may have under applicable law or under the Certificate of Incorporation or By-Laws of the Company or an Affiliate. Notwithstanding any other term or condition of the Plan, this indemnification will not apply to the actions or determinations made by an individual with regard to Awards granted to himself or herself.

 

ARTICLE IV
SHARE LIMITATION

 

4.1                               Shares.

 

(a)         Share Limits and Counting. The maximum number of Shares available for issuance under the Plan may not exceed [          ] Shares (subject to any increase or decrease under

 

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this Section 4.1 or Section 4.2) (the Share Reserve). The Share Reserve may consist of authorized and unissued Shares and Shares held in or acquired for the treasury of the Company. The Share Reserve will automatically increase on each January 1 that occurs after the Effective Date, for ten years, by an amount equal to [  ]% of the total number of Shares outstanding on December 31 of the preceding calendar year, or a lesser number as may be determined by the Board. The maximum number of Shares with respect to which ISOs may be granted is [          ] Shares. With respect to Stock Appreciation Rights settled in Shares, upon settlement, only the number of Shares delivered to a Participant will count against the Share Reserve. If any Stock Option, Stock Appreciation Right, or Other Share-Based Award expires, terminates, or is canceled for any reason without having been exercised in full, the number of Shares underlying such Award will be added back to the Share Reserve. If any Restricted Shares, Performance Awards, or Other Share-Based Awards denominated in Shares are forfeited for any reason, the number of Shares underlying such Award will be added back to the Share Reserve. Any Award settled in cash will not count against the Share Reserve. If Shares issuable upon exercise, vesting, or settlement of an Award, or Shares owned by a Participant (that are not subject to any pledge or other security interest), are surrendered or tendered to the Company in payment of the purchase price of an Award or any taxes required to be withheld in respect of an Award, in each case, in accordance with the terms of the Plan, such surrendered or tendered Shares will be added back to the Share Reserve.

 

(b)         Annual Non-Employee Director Award Limitation. The maximum value of Awards granted during any calendar year to any Non-Employee Director, taken together with any cash fees paid to that Non-Employee Director during the calendar year and the value of awards granted to the Non-Employee Director under any other compensation plan of the Company or any Affiliate during the calendar year, may not exceed the following in total value (based on the Fair Market Value of the Shares underlying the Award as of the grant date for Restricted Shares and Other Share-Based Awards, and based on the grant date fair value for accounting purposes for Stock Options and Stock Appreciation Rights): (i) $[          ] for the non-employee Chair of the Board and (ii) $[          ] for each Non-Employee Director other than the Chair of the Board.

 

4.2                               Changes.

 

(a)         The existence of the Plan and any Awards will not affect in any way the right or power of the Board, the Committee, or the Stockholders to make or authorize (i) any adjustment, recapitalization, reorganization, or other change in the Company’s capital structure or its business, (ii) any merger or consolidation of the Company or any Affiliate, (iii) any issuance of bonds, debentures, preferred, or prior preference stock ahead of or affecting the Common Stock, (iv) the dissolution or liquidation of the Company or any Affiliate, (v) any sale or transfer of all or part of the assets or business of the Company or any Affiliate, or (vi) any other corporate act or proceeding.

 

(b)         Subject to the terms and conditions of Section 11.1:

 

(i)                                     If the Company at any time subdivides the outstanding Common Stock into a greater number of Shares, or combines its outstanding Common Stock into a lesser number of Shares, then the respective purchase prices for outstanding Awards that provide for a Participant purchase and the number of Shares covered by outstanding Awards will be

 

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appropriately adjusted by the Committee to prevent dilution or enlargement of the rights granted to, or available for, Participants.

 

(ii)                                  Excepting transactions covered by Section 4.2(b)(i), if the Company effects any merger, consolidation, statutory exchange, spin-off, reorganization, sale or transfer of all or substantially all the Company’s assets or business, or other corporate transaction or event in such a manner that the Company’s outstanding Shares are converted into the right to receive (or the holders of Common Stock are entitled to receive in exchange therefor), either immediately or upon liquidation of the Company, securities or other property of the Company or other entity (each, a Reorganization), then, subject to the terms and conditions of Section 11.1, (A) the aggregate number or kind of securities that thereafter may be issued under the Plan, (B) the number or kind of securities or other property to be issued under Awards, or (C) the purchase price thereof, will be appropriately adjusted by the Committee to prevent dilution or enlargement of the rights granted to, or available for, Participants under the Plan.

 

(iii)                               If any change in the capital structure of the Company occurs other than those covered by Section 4.2(b)(i) or 4.2(b)(ii), including by reason of any extraordinary dividend (whether cash or equity), any conversion, any adjustment, any issuance of any class of securities convertible or exercisable into, or exercisable for, any class of equity securities of the Company, then the Committee may adjust any Award and make such other adjustments to the Plan to prevent dilution or enlargement of the rights granted to, or available for, Participants under the Plan.

 

(iv)                              Fractional Shares resulting from any adjustment in Awards under Section 4.2(a) or this Section 4.2(b) will be aggregated until, and eliminated at, the time of exercise or payment by rounding down to the nearest whole number. No cash settlements will be required with respect to fractional Shares eliminated by rounding. Notice of any adjustment will be given by the Committee to each Participant whose Award has been adjusted and such adjustment (whether or not such notice is given) will be effective and binding for all purposes of the Plan.

 

4.3                               Minimum Purchase Price. Notwithstanding any other term or condition of the Plan, if authorized but previously unissued Shares are issued under the Plan, such Shares may not be issued for a consideration that is less than as permitted under applicable law.

 

ARTICLE V
ELIGIBILITY

 

5.1                               General Eligibility. All current and prospective Eligible Individuals are eligible to be granted Awards. Eligibility for the grant of Awards and actual participation in the Plan will be determined by the Committee.

 

5.2                               ISOs. Notwithstanding Section 5.1, only Eligible Employees of the Company, its Subsidiaries, and its Parent (if any) are eligible to be granted ISOs.

 

5.3                               General Requirement. The vesting and exercise of Awards granted to a prospective Eligible Individual are conditioned upon such individual actually becoming an Eligible Employee, Consultant, or Non-Employee Director, respectively.

 

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ARTICLE VI
STOCK OPTIONS

 

6.1                               Stock Options. Stock Options may be granted alone or in addition to other Awards. Each Stock Option will be of one of two types: (a) an ISO or (b) a Nonstatutory Stock Option.

 

6.2                               Grants. The Committee will have the authority to grant to any Eligible Employee one or more ISOs, Nonstatutory Stock Options, or both types of Stock Options. The Committee will have the authority to grant any Consultant or Non-Employee Director one or more Nonstatutory Stock Options. To the extent that any Stock Option does not qualify as an ISO (whether because of its terms and conditions or the time or manner of its exercise or otherwise), such Stock Option or the portion thereof which does not so qualify will constitute a separate Nonstatutory Stock Option.

 

6.3                               ISOs. Notwithstanding any other term or condition of the Plan, no term or condition of the Plan relating to ISOs will be interpreted, amended, or altered, nor will any discretion or authority granted under the Plan be so exercised, so as to disqualify the Plan under Code Section 422, or, without the consent of the Participants affected, to disqualify any ISO under Code Section 422.

 

6.4                               Terms and Conditions of Stock Options. Stock Options will be subject to terms and conditions, not inconsistent with the terms and conditions of the Plan, determined from time to time by the Committee, and the following:

 

(a)         Purchase Price. The purchase price per Share subject to a Stock Option will be determined by the Committee at the time of grant, provided that the per Share purchase price of a Stock Option may not be less than 100% (or, in the case of an ISO granted to a Ten Percent Stockholder, 110%) of the Fair Market Value of the Common Stock at the grant date.

 

(b)         Stock Option Term. The term of each Stock Option will be fixed by the Committee, provided that no Stock Option may be exercisable more than ten years after the date the Stock Option is granted; and provided further that the term of an ISO granted to a Ten Percent Stockholder may not exceed five years.

 

(c)          Exercisability. Unless otherwise determined by the Committee in accordance with this Section 6.4, Stock Options will be exercisable at the time or times and subject to the terms and conditions determined by the Committee at the time of grant. If the Committee provides that any Stock Option is exercisable subject to certain terms and conditions, the Committee may waive those terms and conditions on the exercisability at any time at or after the time of grant in whole or in part.

 

(d)         Method of Exercise. Subject to whatever installment exercise and waiting period terms and conditions that may apply under Section 6.4(c), to the extent vested, Stock Options may be exercised in whole or in part at any time during the Stock Option term by giving written notice of exercise to the Company specifying the number of Shares to be purchased. Such notice must be accompanied by payment in full of the purchase price as follows: (i) in cash or by check, bank draft, or money order payable to the order of the Company; (ii) solely to the extent

 

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permitted by applicable law, if the Common Stock is traded on a national securities exchange, and the Committee authorizes, through a procedure whereby the Participant delivers irrevocable instructions to a broker reasonably acceptable to the Committee to deliver promptly to the Company an amount equal to the purchase price; (iii) having the Company withhold Shares issuable upon exercise of the Stock Option, or by payment in full or in part in the form of Shares owned by the Participant, based on the Fair Market Value of the Shares on the payment date; or (iv) on such other terms and conditions that may be acceptable to the Committee. No Shares will be issued under the Plan until payment for those Shares has been made or provided for in accordance with the terms and conditions of the Plan.

 

(e)          Non-Transferability of Stock Options. No Stock Option will be Transferable by the Participant other than by will or by the laws of descent and distribution, and all Stock Options will be exercisable, during the Participant’s lifetime, only by the Participant, except that the Committee may determine at the time of grant or thereafter that a Nonstatutory Stock Option that is otherwise not Transferable under this Section 6.4(e) is Transferable to a Family Member in whole or in part on terms and conditions that are specified by the Committee. A Nonstatutory Stock Option that is Transferred to a Family Member under the preceding sentence (i) may not be subsequently Transferred other than by will or by the laws of descent and distribution and (ii) remains subject to the terms and conditions of the Plan and the applicable Award Agreement. Any Shares acquired upon the exercise of a Nonstatutory Stock Option by a permissible transferee of a Nonstatutory Stock Option or a permissible transferee under a Transfer after the exercise of the Nonstatutory Stock Option will be subject to the terms and conditions of the Plan and the applicable Award Agreement.

 

(f)           Separation from Service by Death or Disability. Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Separation from Service is by reason of death or Disability, all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Separation from Service may be exercised by the Participant (or in the case of the Participant’s death, by the legal representative of the Participant’s estate) at any time within a period of one year from the date of such Separation from Service, but in no event beyond the expiration of the stated term of such Stock Options; provided, however, that, in the event of a Participant’s Separation from Service by reason of Disability, if the Participant dies within such exercise period, all unexercised Stock Options held by such Participant will thereafter be exercisable, to the extent to which they were exercisable at the time of death, for a period of one year from the date of such death, but in no event beyond the expiration of the stated term of such Stock Options.

 

(g)          Involuntary Separation from Service without Cause. Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Separation from Service is initiated by the Company without Cause, all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Separation from Service may be exercised by the Participant at any time within a period of ninety days from the date of such Separation from Service, but in no event beyond the expiration of the stated term of such Stock Options.

 

(h)         Voluntary Resignation. Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Separation

 

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from Service is voluntary (other than a voluntary Separation from Service described in Section 6.4(i)(y)), all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Separation from Service may be exercised by the Participant at any time within a period of ninety days from the date of such Separation from Service, but in no event beyond the expiration of the stated term of such Stock Options.

 

(i)             Separation from Service for Cause. Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Separation from Service (x) is for Cause or (y) is a voluntary Separation from Service (as provided in Section 6.4(h)) after the occurrence of an event that would be grounds for a Separation from Service for Cause, all Stock Options, whether vested or not vested, that are held by such Participant will terminate and expire as of the date of such Separation from Service.

 

(j)            Unvested Stock Options. Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, Stock Options that are not vested as of the date of a Participant’s Separation from Service for any reason will terminate and expire as of the date of such Separation from Service.

 

(k)         ISO Terms and Conditions. To the extent that the aggregate Fair Market Value (determined as of the time of grant) of the Common Stock with respect to which ISOs are exercisable for the first time by an Eligible Employee during any calendar year under the Plan or any other stock option plan of the Company, any Subsidiary, or any Parent exceeds $100,000, such Stock Options will be treated as Nonstatutory Stock Options. In addition, if an Eligible Employee does not remain employed by the Company, any Subsidiary, or any Parent at all times from the time an ISO is granted until three months prior to the date of exercise thereof (or such other period as required by applicable law), such Stock Option will be treated as a Nonstatutory Stock Option. Should any term or condition of the Plan not be necessary in order for the Stock Options to qualify as ISOs, or should any additional terms and conditions be required, the Committee may amend the Plan accordingly.

 

(l)             Form, Modification, Extension and Renewal of Stock Options. Subject to the terms and conditions of the Plan, Stock Options will be evidenced by such form of agreement or grant as is approved by the Committee, and the Committee may (i) modify, extend, or renew outstanding Stock Options (provided that the rights of a Participant are not reduced without such Participant’s consent; and provided further that such action does not subject the Stock Options to Section 409A without the consent of the Participant), and (ii) accept the surrender of outstanding Stock Options (to the extent not theretofore exercised) and authorize the granting of new Stock Options in substitution therefor (to the extent not theretofore exercised). Notwithstanding any other term or condition of the Plan, except in connection with a corporate transaction involving the Company in accordance with Section 4.2, the repricing of Options (and Stock Appreciation Rights) is prohibited without prior approval of the Stockholders. For this purpose, a “repricing” means any of the following (or any other action that has the same effect as any of the following): (x) changing an Option or a Stock Appreciation Right to lower its purchase price; (y) any other action that is treated as a “repricing” under GAAP; and (z) repurchasing for cash or canceling an Option or a Stock Appreciation Right at a time when its purchase price is greater than the Fair Market Value of the underlying Shares in exchange for another Award. A cancellation and

 

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exchange under clause (z) would be considered a “repricing” regardless of whether it is treated as a “repricing” under GAAP and regardless of whether it is voluntary on the part of the Participant.

 

(m)     Early Exercise. The Committee may provide that a Stock Option include a term or condition whereby the Participant may elect at any time before the Participant’s Separation from Service to exercise the Stock Option as to any part or all of the Shares subject to the Stock Option prior to the full vesting of the Stock Option and such Shares will be subject to the terms and conditions of Article VIII and be treated as Restricted Shares. Unvested Shares so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Committee may determine.

 

(n)         Automatic Exercise. The Committee may include a term or condition in an Award Agreement providing for the automatic exercise of a Nonstatutory Stock Option on a cashless basis on the last day of the term of such Stock Option if the Participant has failed to exercise the Nonstatutory Stock Option as of such date, with respect to which the Fair Market Value of the Shares underlying the Nonstatutory Stock Option exceeds the purchase price of such Nonstatutory Stock Option on the date of expiration of such Stock Option, subject to Section 14.5.

 

ARTICLE VII
STOCK APPRECIATION RIGHTS

 

7.1                               Tandem Stock Appreciation Rights. Tandem Stock Appreciation Rights may be granted in conjunction with all or part of any Stock Option (a Reference Stock Option). In the case of a Nonstatutory Stock Option, Tandem Stock Appreciation Rights may be granted either at or after the time of the grant of the Reference Stock Option. In the case of an ISO, Tandem Stock Appreciation Rights may be granted only at the time of the grant of the Reference Stock Option.

 

7.2                               Terms and Conditions of Tandem Stock Appreciation Rights. Tandem Stock Appreciation Rights will be subject to terms and conditions, not inconsistent with the terms and conditions of the Plan, determined from time to time by the Committee, and the following:

 

(a)         Purchase Price. The purchase price per Share subject to a Tandem Stock Appreciation Right will be determined by the Committee at the time of grant, provided that the per Share purchase price of a Tandem Stock Appreciation Right may not be less than 100% of the Fair Market Value of the Common Stock at the time of grant.

 

(b)         Term. A Tandem Stock Appreciation Right or applicable portion thereof granted with respect to a Reference Stock Option will terminate and no longer be exercisable upon the termination or exercise of the Reference Stock Option, provided that, unless otherwise determined by the Committee at the time of grant, a Tandem Stock Appreciation Right granted with respect to less than the full number of Shares covered by the Reference Stock Option will not be reduced until, and then only to the extent that the exercise or termination of the Reference Stock Option causes, the number of Shares covered by the Tandem Stock Appreciation Right to exceed the number of Shares remaining available and unexercised under the Reference Stock Option.

 

(c)          Exercisability. Tandem Stock Appreciation Rights will be exercisable only at such time or times and to the extent that the Reference Stock Options to which they relate will be

 

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exercisable in accordance with the terms and conditions of Article VI, and will be subject to the terms and conditions of Section 6.4(c).

 

(d)         Method of Exercise. A Tandem Stock Appreciation Right may be exercised by the Participant by surrendering the applicable portion of the Reference Stock Option. Upon such exercise and surrender, the Participant will be entitled to receive an amount determined in the manner prescribed in this Section 7.2. Stock Options which have been so surrendered, in whole or in part, will no longer be exercisable to the extent that the related Tandem Stock Appreciation Rights have been exercised.

 

(e)          Payment. Upon the exercise of a Tandem Stock Appreciation Right, a Participant will be entitled to receive up to, but no more than, an amount in cash or Common Stock (as chosen by the Committee) equal in value to the excess of the Fair Market Value of one Share over the Stock Option purchase price per Share specified in the Reference Stock Option agreement multiplied by the number of Shares in respect of which the Tandem Stock Appreciation Right is exercised, with the Committee having the right to determine the form of payment.

 

(f)           Non-Transferability. Tandem Stock Appreciation Rights will be Transferable only when and to the extent that the underlying Stock Option would be Transferable under Section 6.4(e).

 

7.3                               Non-Tandem Stock Appreciation Rights. Non-Tandem Stock Appreciation Rights may also be granted without reference to any Stock Options.

 

7.4                               Terms and Conditions of Non-Tandem Stock Appreciation Rights. Non-Tandem Stock Appreciation Rights will be subject to terms and conditions, not inconsistent with the terms and conditions of the Plan, determined from time to time by the Committee, and the following:

 

(a)         Purchase Price. The purchase price per Share subject to a Non-Tandem Stock Appreciation Right will be determined by the Committee at the time of grant, provided that the per Share purchase price of a Non-Tandem Stock Appreciation Right will not be less than 100% of the Fair Market Value of the Common Stock at the time of grant.

 

(b)         Term. The term of each Non-Tandem Stock Appreciation Right will be fixed by the Committee, but may not be greater than ten years after the date the right is granted.

 

(c)          Exercisability. Unless otherwise determined by the Committee in accordance with the terms and conditions of this Section 7.4, Non-Tandem Stock Appreciation Rights will be exercisable at the time or times and subject to the terms and conditions determined by the Committee at the time of grant. If the Committee provides that any such right is exercisable subject to certain terms and conditions, the Committee may waive those terms and conditions on the exercisability at any time at or after grant in whole or in part.

 

(d)         Method of Exercise. Subject to whatever installment exercise and waiting period terms and conditions apply under Section 7.4(c), Non-Tandem Stock Appreciation Rights may be exercised in whole or in part at any time in accordance with the applicable Award

 

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Agreement, by giving written notice of exercise to the Company specifying the number of Non-Tandem Stock Appreciation Rights to be exercised.

 

(e)          Payment. Upon the exercise of a Non-Tandem Stock Appreciation Right a Participant will be entitled to receive, for each right exercised, up to, but no more than, an amount in cash or Common Stock (as chosen by the Committee) equal in value to the excess of the Fair Market Value of one Share on the date that the right is exercised over the Fair Market Value of one Share on the date that the right was awarded to the Participant.

 

(f)           Separation from Service. Unless otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, subject to the terms and conditions of the applicable Award Agreement and the Plan, upon a Participant’s Separation from Service for any reason, Non-Tandem Stock Appreciation Rights will remain exercisable following a Participant’s Separation from Service on the same basis as Stock Options would be exercisable following a Participant’s Separation from Service in accordance with the terms and conditions of Sections 6.4(f) through 6.4(j).

 

(g)          Non-Transferability. No Non-Tandem Stock Appreciation Rights will be Transferable by the Participant other than by will or by the laws of descent and distribution, and all such rights will be exercisable, during the Participant’s lifetime, only by the Participant.

 

7.5                               Automatic Exercise. The Committee may include a term or condition in an Award Agreement providing for the automatic exercise of a Stock Appreciation Right on a cashless basis on the last day of the term of the Stock Appreciation Right if the Participant has failed to exercise the Stock Appreciation Right as of such date, with respect to which the Fair Market Value of the Shares underlying the Stock Appreciation Right exceeds the purchase price of such Stock Appreciation Right on the date of expiration of such Stock Appreciation Right, subject to Section 14.5.

 

ARTICLE VIII
RESTRICTED SHARES

 

8.1                               Restricted Shares. Restricted Shares may be issued either alone or in addition to other Awards. The Committee will determine the Eligible Individuals, to whom, and the time or times at which, grants of Restricted Shares will be made, the number of Restricted Shares to be awarded, the price (if any) to be paid by the Participant (subject to Section 8.2), the time or times within which such Awards will be subject to forfeiture, the vesting schedule and rights to acceleration thereof, and all other terms and conditions of the Awards.

 

8.2                               Awards and Certificates. Participants selected to receive Restricted Shares will not have any right with respect to the Award, unless and until the Participant has delivered a fully executed copy of the agreement evidencing the Award to the Company, to the extent required by the Committee, and has otherwise complied with the applicable terms and conditions of the Award. Further, such Award will be subject to the following terms and conditions:

 

(a)         Purchase Price. The purchase price of Restricted Shares will be fixed by the Committee. Subject to Section 4.3, the purchase price for Restricted Shares may be zero to the

 

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extent permitted by applicable law, and, to the extent required by applicable law, such purchase price may not be less than par value.

 

(b)         Acceptance. Awards of Restricted Shares must be accepted within a period of sixty days (or such shorter period as the Committee may specify at grant) after the grant date, by executing an Award Agreement and by paying whatever price (if any) the Committee has designated thereunder.

 

(c)          Legend. Each Participant receiving Restricted Shares will be issued a stock certificate in respect of the Restricted Shares, unless the Committee elects to use another system, such as book entries by the transfer agent, as evidencing ownership of Restricted Shares. Such certificate will be registered in the name of the Participant, and will, in addition to any legends required by applicable securities laws, bear an appropriate legend referring to the terms and conditions applicable to the Award, substantially in the following form:

 

“The anticipation, alienation, attachment, sale, transfer, assignment, pledge, encumbrance, or charge of the restricted shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the Ping Identity Holding Corp. (the “Company”) Omnibus Incentive Plan (the “Plan”) and an award agreement entered into between the registered owner and the Company dated            (the “Agreement”). Copies of such Plan and Agreement are on file at the principal office of the Company.”

 

(d)         Custody. If stock certificates are issued in respect of Restricted Shares, the Committee may require that any stock certificates evidencing such Shares be held in custody by the Company until the restrictions thereon have lapsed, and that, as a condition of any grant of Restricted Shares, the Participant must deliver a duly signed stock power or other instruments of assignment, each endorsed in blank with a guarantee of signature if deemed necessary or appropriate by the Company, which would permit transfer to the Company of all or a portion of the Restricted Shares in the event that such Award is forfeited in whole or part.

 

8.3                               Terms and Conditions. Restricted Shares will be subject to terms and conditions, not inconsistent with the terms and conditions of the Plan, determined from time to time by the Committee, and the following:

 

(a)         Restriction Period. The Participant is not permitted to Transfer Restricted Shares during the period or periods set by the Committee (the Restriction Period) commencing on the date of such Award, as set forth in the applicable Award Agreement, and such agreement will set forth a vesting schedule and any event that would accelerate vesting of the Restricted Shares. Within these limits, based on service, attainment of Performance Goals, or such other factors or criteria as the Committee may determine, the Committee may condition the grant or provide for the lapse of such restrictions in installments in whole or in part, or may accelerate the vesting of all or any part of any Restricted Shares and waive the deferral terms and conditions for all or any part of any Restricted Shares.

 

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(b)         Rights as a Stockholder. Except as provided in Section 8.3(a) and this Section 8.3(b) or as otherwise determined by the Committee, the Participant will have, with respect to Restricted Shares, all of the rights of a Stockholder, including the right to receive dividends, the right to vote such Restricted Shares, and, subject to and conditioned upon the full vesting of Restricted Shares, the right to tender those Shares. The Committee may determine at the time of grant that the payment of dividends will be deferred until, and conditioned upon, the expiration of the applicable Restriction Period.

 

(c)          Separation from Service. Unless otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, subject to the applicable terms and conditions of the Award Agreement and the Plan, upon a Participant’s Separation from Service for any reason during the relevant Restriction Period, all Restricted Shares will be forfeited.

 

(d)         Lapse of Restrictions. If and when the Restriction Period expires without a prior forfeiture of the Restricted Shares, the certificates for such Shares will be delivered to the Participant. All legends will be removed from said certificates at the time of delivery to the Participant, except as otherwise required by applicable law or other terms and conditions imposed by the Committee.

 

ARTICLE IX
PERFORMANCE AWARDS

 

9.1                               Performance Awards. The Committee may grant a Performance Award to a Participant payable upon the attainment of specific Performance Goals. If the Performance Award is payable in Restricted Shares, such Shares will be transferable to the Participant only upon attainment of the relevant Performance Goal in accordance with Article VIII. If the Performance Award is payable in cash, it may be paid upon the attainment of the relevant Performance Goals either in cash or in Restricted Shares (based on the then current Fair Market Value of such Shares), as determined by the Committee. Each Performance Award will be evidenced by an Award Agreement in such form that is not inconsistent with the Plan and that the Committee may from time to time approve. The Committee will condition the right to payment of any Performance Award upon the attainment of objective Performance Goals established under Section 9.2(c).

 

9.2                               Terms and Conditions. Performance Awards will be subject to terms and conditions, not inconsistent with the terms and conditions of the Plan, determined from time to time by the Committee, and the following:

 

(a)         Earning of Performance Award. At the expiration of the applicable Performance Period, the Committee will determine the extent to which the Performance Goals established under Section 9.2(c) are achieved and the percentage of each Performance Award that has been earned.

 

(b)         Non-Transferability. Subject to the applicable terms and conditions of the Award Agreement and the Plan, Performance Awards may not be Transferred.

 

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(c)          Objective Performance Goals, Formulae or Standards. The Committee will establish the objective Performance Goals for the earning of Performance Awards based on a Performance Period applicable to each Participant or class of Participants in writing prior to the beginning of the applicable Performance Period or at such later date while the outcome of the Performance Goals is substantially uncertain. Such Performance Goals may incorporate terms and conditions for disregarding (or adjusting for) changes in accounting methods, corporate transactions, and other similar type events or circumstances.

 

(d)         Dividends. Unless otherwise determined by the Committee at the time of grant, amounts equal to dividends declared during the Performance Period with respect to the number of Shares covered by a Performance Award will not be paid to the Participant.

 

(e)          Payment. Following the Committee’s determination in accordance with Section 9.2(a), the Company will settle Performance Awards, in such form as determined by the Committee, in an amount equal to such Participant’s earned Performance Awards. Notwithstanding the foregoing sentence, the Committee may award an amount less than the earned Performance Awards and subject the payment of all or part of any Performance Award to additional vesting, forfeiture, and deferral terms and conditions.

 

(f)           Separation from Service. Subject to the applicable terms and conditions of the Award Agreement and the Plan, upon a Participant’s Separation from Service for any reason during the Performance Period for a Performance Award, the Performance Award will vest or be forfeited in accordance with the terms and conditions established by the Committee at grant.

 

(g)          Accelerated Vesting. Based on service, performance, and any other factors or criteria the Committee may determine, the Committee may, at or after grant, accelerate the vesting of all or any part of any Performance Award.

 

ARTICLE X
OTHER STOCK-BASED AND CASH-BASED AWARDS

 

10.1                        Other Share-Based Awards. The Committee is authorized to grant to Eligible Individuals Other Share-Based Awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to Shares, including Shares awarded purely as a bonus and not subject to terms or conditions, Shares in payment of the amounts due under an incentive or performance plan sponsored or maintained by the Company or an Affiliate, stock equivalent units, restricted stock units (RSUs), and Awards valued by reference to book value of Shares. Other Share-Based Awards may be granted either alone or in addition to or in tandem with other Awards.

 

Subject to the terms and conditions of the Plan, the Committee has the authority to determine the Eligible Individuals to whom, and the time or times at which, Other Share-Based Awards will be granted, the number of Shares to be granted under such Awards, and all other terms and conditions of the Awards.

 

10.2                        Terms and Conditions. Other Share-Based Awards will be subject to terms and conditions, not inconsistent with the terms and conditions of the Plan, determined from time to time by the Committee, and the following:

 

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(a)         Non-Transferability. Subject to the applicable terms and conditions of the Award Agreement and the Plan, Shares subject to Other Share-Based Awards may not be Transferred prior to the date on which the Shares are issued, or, if later, the date on which any applicable restriction, performance, or deferral period lapses.

 

(b)         Dividends. Unless otherwise determined by the Committee at the time of grant, subject to the terms and conditions of the Award Agreement and the Plan, the recipient of an Other Share-Based Award will not be entitled to receive, currently or on a deferred basis, dividends or dividend equivalents in respect of the number of Shares covered by the Award.

 

(c)          Vesting. All Other Share-Based Awards and any Shares covered by those awards will vest or be forfeited to the extent so provided in the Award Agreement.

 

(d)         Price. Common Stock issued on a bonus basis under this Article X may be issued for no cash consideration. Common Stock purchased under a purchase right awarded under this Article X will be priced, as determined by the Committee.

 

10.3                        Other Cash-Based Awards. The Committee may from time to time grant Other Cash-Based Awards to Eligible Individuals in amounts, on terms and conditions, and for consideration, including no consideration or such minimum consideration as may be required by applicable law, as the Committee may determine. Other Cash-Based Awards may be granted subject to the satisfaction of vesting terms and conditions or may be awarded purely as a bonus and not subject to terms and conditions, and if subject to vesting terms and conditions, the Committee may accelerate the vesting of such Awards at any time.

 

ARTICLE XI
CHANGE IN CONTROL TERMS AND CONDITIONS

 

11.1                        Benefits. In the event of a Change in Control (as defined below), and except as otherwise determined by the Committee in an Award Agreement, a Participant’s unvested Awards will not vest automatically and will be treated in accordance with one or more of the following methods as determined by the Committee:

 

(a)         Awards, whether or not then vested, will be continued, assumed, or have new rights substituted therefor, as determined by the Committee, and restrictions to which Restricted Shares or any other Award granted prior to the Change in Control are subject will not lapse upon the Change in Control and the Restricted Shares or other Awards will, as determined by the Committee, receive the same distribution as other Common Stock on terms and conditions determined by the Committee, provided that the Committee may decide to award additional Restricted Shares or other Awards in lieu of any cash distribution. Notwithstanding any other term or condition of the Plan, for purposes of ISOs, any assumed or substituted Stock Option will comply with the requirements of Treasury Regulation Section 1.424-1.

 

(b)         The Committee may provide for the purchase of any Awards by the Company or an Affiliate for an amount of cash equal to the excess (if any) of the Change in Control Price (as defined below) of the Shares covered by such Awards, over the aggregate purchase price of such Awards. For purposes of the Plan, Change in Control Price means the highest price per Share paid in any transaction related to a Change in Control.

 

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(c)          The Committee may terminate all outstanding and unexercised Stock Options, Stock Appreciation Rights, and other Other Share-Based Awards that provide for a Participant-elected exercise, effective as of the Change in Control, by delivering notice of termination to each Participant at least twenty days prior to the date of consummation of the Change in Control, in which case during the period from the date on which such notice of termination is delivered to the consummation of the Change in Control, each affected Participant will have the right to exercise in full all of the Participant’s Awards that are then outstanding (without regard to any terms and conditions on exercisability otherwise contained in the Award Agreements), but any such exercise will be contingent on the occurrence of the Change in Control, and provided that if the Change in Control does not take place within a specified period after giving such notice for any reason whatsoever, the notice and exercise pursuant thereto will be null and void.

 

(d)         The Committee may make any other determination as to the treatment of Awards in connection with a Change in Control. The treatment of Awards need not be the same for all Participants. Any escrow, holdback, earnout, or similar terms and conditions in the definitive agreements relating to the Change in Control may apply to any payment to the holders of Awards to the same extent and in the same manner as such terms and conditions apply to the holders of Shares.

 

11.2                        Change in Control. Unless otherwise determined by the Committee in the applicable Award Agreement or other written agreement with a Participant approved by the Committee, a Change in Control means:

 

(a)         any “person,” as that term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the Stockholders in substantially the same proportions as their ownership of Common Stock), becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities;

 

(b)         during any period of twenty-four consecutive calendar months, individuals who were directors serving on the Board on the first day of such period (the Incumbent Directors) cease for any reason to constitute a majority of the Board; provided, however, that any individual becoming a director subsequent to the first day of such period whose election, or nomination for election, by the Stockholders was approved by a vote of at least two-thirds of the Incumbent Directors will be considered as though such individual were an Incumbent Director, but excluding, for purposes of this proviso, any such individual whose initial assumption of office occurs as a result of an actual or threatened proxy contest with respect to election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as used in Section 13(d) of the Exchange Act), in each case other than the Board;

 

(c)          consummation of a reorganization, merger, consolidation, or other business combination (any of the foregoing, a Business Combination) of the Company or any direct or indirect subsidiary of the Company with any other corporation, in any case with respect to which the Company voting securities outstanding immediately prior to such Business Combination do not, immediately following such Business Combination, continue to represent (either by

 

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remaining outstanding or being converted into voting securities of the Company or any ultimate parent thereof) more than 50% of the then outstanding voting securities entitled to vote generally in the election of directors of the Company (or its successor) or any ultimate parent thereof after the Business Combination; or

 

(d)         a complete liquidation or dissolution of the Company or the consummation of a sale or disposition by the Company of all or substantially all of the Company’s assets other than the sale or disposition of all or substantially all of the assets of the Company to a Person or Persons who beneficially own, directly or indirectly, 50% or more of the combined voting power of the outstanding voting securities of the Company at the time of the sale.

 

Notwithstanding the foregoing terms and conditions of this definition, with respect to any Award that is characterized as “nonqualified deferred compensation” within the meaning of Section 409A, an event will not be considered to be a Change in Control under the Plan for purposes of payment of such Award unless such event is also a “change in control event” within the meaning of Section 409A.

 

11.3                        Initial Public Offering not a Change in Control. Notwithstanding the foregoing terms and conditions of the definition of Change in Control, the occurrence of the Registration Date or any change in the composition of the Board within one year following the Registration Date will not be considered a Change in Control.

 

ARTICLE XII
TERMINATION OR AMENDMENT OF PLAN

 

Notwithstanding any other term or condition of the Plan, the Board may at any time, and from time to time, amend, in whole or in part, any or all of the terms and conditions of the Plan, or suspend or terminate it entirely, retroactively or otherwise; provided, however, that, unless otherwise required by law or specifically provided in the Plan, the rights of a Participant with respect to Awards granted prior to such amendment, suspension, or termination may not be substantially impaired without the consent of the Participant, and provided, further that without the approval of the Stockholders, no amendment may be made that would (i) increase the Share Reserve (except by operation of Section 4.2); (ii) change the classification of individuals eligible to receive Awards; (iii) decrease the minimum purchase price of any Stock Option or Stock Appreciation Right; (iv) extend the maximum exercise period under Section 6.4; (v) award any Stock Option or Stock Appreciation Right in replacement of a canceled Stock Option or Stock Appreciation Right with a higher purchase price than the replacement award; or (vi) require Stockholder approval under Code Section 422. In no event may the Plan be amended without the approval of the Stockholders in accordance with the applicable laws of the State of Delaware to increase the aggregate number of Shares that may be issued under the Plan, decrease the minimum purchase price of any Award, or to make any other amendment that would require Stockholder under Financial Industry Regulatory Authority (FINRA) rules and regulations or the rules of any exchange or system on which the Company’s securities are listed or traded at the request of the Company. Notwithstanding any other term or condition of the Plan, the Board may amend the Plan or any Award Agreement at any time without a Participant’s consent to comply with applicable law. The Committee may amend the terms and conditions of any Award theretofore granted, prospectively or retroactively, but, subject to Article IV or as otherwise specifically

 

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provided in the Plan, no such amendment or other action by the Committee may substantially impair the rights of any holder without the holder’s consent.

 

ARTICLE XIII
UNFUNDED STATUS OF PLAN; NO SEGREGATION OF ASSETS

 

The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payment as to which a Participant has a fixed and vested interest but which is not yet made to a Participant by the Company, nothing in the Plan gives any Participant any right that is greater than the rights of a general unsecured creditor of the Company. The grant of an Award will not require a segregation of any of the Company’s assets for satisfaction of the Company’s payment obligation under any Award.

 

ARTICLE XIV
GENERAL TERMS AND CONDITIONS

 

14.1                        Legend. The Committee may require each person receiving Shares under the Plan to represent to and agree with the Company in writing that the Participant is acquiring the Shares without a view to distribution thereof. In addition to any legend required by the Plan, the certificates for Shares issued under the Plan may include any legend that the Committee deems appropriate to reflect any restrictions on Transfer. All certificates for Shares delivered under the Plan will be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any securities exchange upon which the Common Stock is then listed or any national securities exchange system upon whose system the Common Stock is then quoted, any applicable federal or state securities law, and any applicable corporate law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

 

14.2                        Book Entry. Notwithstanding any other term or condition of the Plan, the Company may elect to satisfy any requirement under the Plan for the delivery of Share certificates through the use of another system, such as book entry.

 

14.3                        Other Plans. Nothing contained in the Plan prevents the Board from adopting other or additional compensation arrangements, subject to Stockholder approval if such approval is required, and such arrangements may be either generally applicable or applicable only in specific cases.

 

14.4                        No Right to Employment/Consultancy/Directorship. Neither the Plan nor the grant of any Award gives any Person any right with respect to continuance of employment, consultancy, or directorship by the Company or any Affiliate, nor does the Plan or the grant of any Award cause any limitation in any way on the right of the Company or any Affiliate by which an employee is employed or a Consultant or Non-Employee Director is retained to terminate such employment, consultancy, or directorship at any time.

 

14.5                        Withholding for Taxes. The Company or an Affiliate, as the case may be, has the right to deduct from payments of any kind otherwise due to a Participant any federal, state, or local taxes of any kind required by law to be withheld (a) with respect to the vesting of or other

 

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lapse of restrictions applicable to an Award, (b) upon the issuance of any Shares upon the exercise of an Option or Stock Appreciation Right, or (c) otherwise due in connection with an Award. At the time the tax obligation becomes due, the Participant must pay to the Company or the Affiliate, as the case may be, any amount that the Company or Affiliate determines to be necessary to satisfy the tax obligation. The Company or the Affiliate, as the case may be, may require or permit the Participant to satisfy the tax obligation, in whole or in part, (i) by causing the Company or Affiliate to withhold up to the maximum required number of Shares otherwise issuable to the Participant as may be necessary to satisfy such tax obligation or (ii) by delivering to the Company or Affiliate Shares already owned by the Participant. The Shares so delivered or withheld must have an aggregate Fair Market Value equal to the tax obligation. The Fair Market Value of the Shares used to satisfy the tax obligation will be determined by the Company or the Affiliate as of the date that the amount of tax to be withheld is to be determined. To the extent applicable, a Participant may satisfy his or her tax obligation only with Shares that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements. Any fraction of a Share required to satisfy tax obligations will be disregarded and the amount due must be paid instead in cash by the Participant.

 

14.6                        No Assignment of Benefits. No Award or other benefit payable under the Plan may, except as otherwise specifically provided by law or permitted by the Committee, be Transferable in any manner, and any attempt to Transfer any such benefit will be void, and any such benefit will not in any manner be liable for or subject to the debts, contracts, liabilities, engagements, or torts of any Person who will be entitled to such benefit, nor will it be subject to attachment or legal process for or against such Person.

 

14.7                        Listing and Other Terms and Conditions.

 

(a)         Unless otherwise determined by the Committee, as long as the Common Stock is listed on a national securities exchange or system sponsored by a national securities association, the issuance of Shares under an Award will be conditioned upon such Shares being listed on such exchange or system. The Company will have no obligation to issue such Shares unless and until such Shares are so listed, and the right to exercise any Stock Option or other Award with respect to such Shares will be suspended until such listing has been effected.

 

(b)         If at any time counsel to the Company is of the opinion that any sale or delivery of Shares under an Award is or may be unlawful or result in the imposition of excise taxes on the Company, the Company will have no obligation to make such sale or delivery, or to make any application or to effect or to maintain any qualification or registration under the Securities Act or otherwise, with respect to Shares or Awards, and the right to exercise any Stock Option or other Award will be suspended until, in the opinion of said counsel, such sale or delivery would be lawful or would not result in the imposition of excise taxes on the Company.

 

(c)          Upon termination of any period of suspension under this Section 14.7, any Award affected by such suspension which has not expired or terminated will be reinstated as to all Shares available before such suspension and as to Shares which would otherwise have become available during the period of such suspension, but no such suspension will extend the term of any Award.

 

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(d)         A Participant will be required to supply the Company with certificates, representations, and information that the Company requests and otherwise cooperate with the Company in obtaining any listing, registration, qualification, exemption, consent, and approval the Company determines necessary or appropriate.

 

14.8                        Stockholders Agreement and Other Requirements. Notwithstanding any other term or condition of the Plan, as a condition to the receipt of Shares under an Award, to the extent required by the Committee, the Participant must execute and deliver a Stockholder’s agreement and such other documentation that sets forth certain restrictions on transferability of the Shares acquired upon exercise or purchase, and such other terms and conditions as the Committee may from time to time establish. The Company may require, as a condition of exercise, the Participant to become a party to any other existing Stockholder agreement (or other agreement).

 

14.9                        Governing Law. The Plan and actions taken in connection with the Plan will be governed and construed in accordance with the laws of the State of Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of conflict of laws).

 

14.10                 Jurisdiction; Waiver of Jury Trial. Any suit, action, or proceeding with respect to the Plan or any Award or Award Agreement, or any judgment entered by any court of competent jurisdiction in respect of the Plan or any Award or Award Agreement, will be resolved only in the courts of the State of Delaware or the United States District Court for the District of Delaware and the appellate courts having jurisdiction of appeals in such courts. In that context, and without limiting the generality of the foregoing, each of the Company and each Participant irrevocably and unconditionally (a) submits in any proceeding relating to the Plan or any Award or Award Agreement, or for the recognition and enforcement of any judgment in respect of the Plan or any Award or Award Agreement (a Proceeding), to the exclusive jurisdiction of the courts of the State of Delaware, the court of the United States of America for the District of Delaware, and appellate courts having jurisdiction of appeals from any of the foregoing, and agrees that all claims in respect of any Proceeding will be heard and determined in such Delaware State court or, to the extent permitted by law, in such federal court, (b) consents that any Proceeding may and will be brought in such courts and waives any objection that the Company or the Participant may have at any time after the Effective Date to the venue or jurisdiction of any Proceeding in any such court or that the Proceeding was brought in an inconvenient court and agrees not to plead or claim the same, (c) waives all right to trial by jury in any Proceeding (whether based on contract, tort, or otherwise) arising out of or relating to the Plan or any Award or Award Agreement, (d) agrees that service of process in any Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party, in the case of a Participant, at the Participant’s address shown in the books and records of the Company or, in the case of the Company, at the Company’s principal offices, attention General Counsel, and (e) agrees that nothing in the Plan will affect the right to effect service of process in any other manner permitted by the laws of the State of Delaware.

 

14.11                 Other Benefits. No Award will be considered compensation for purposes of computing benefits under any retirement plan of the Company or any Affiliate or affect any benefit under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation.

 

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14.12                 Costs. The Company will bear all expenses associated with administering the Plan, including expenses of issuing Common Stock under Awards.

 

14.13                 No Right to Same Benefits. The terms and conditions of Awards need not be the same with respect to each Participant, and Awards to individual Participants need not be the same in subsequent years (if granted at all).

 

14.14                 Death/Disability. The Committee may require the transferee of a Participant to supply it with written notice of the Participant’s death or Disability and to supply it with a copy of the will (in the case of the Participant’s death) or such other evidence as the Committee deems necessary to establish the validity of the transfer of an Award. The Committee may also require that the agreement of the transferee to be bound by all of the terms and conditions of the Plan.

 

14.15                 Section 16(b) of the Exchange Act. All elections and transactions under the Plan by Persons subject to Section 16 of the Exchange Act involving Shares are intended to comply with any applicable exemptive condition under Rule 16b-3. The Committee may establish and adopt written administrative guidelines, designed to facilitate compliance with Section 16(b) of the Exchange Act, as it may deem necessary or proper for the administration and operation of the Plan and the transaction of business thereunder.

 

14.16                 Section 409A. The Plan is intended to comply with the applicable requirements of Section 409A and will be limited, construed, and interpreted in accordance with such intent. To the extent that any Award is subject to Section 409A, it will be paid in a manner that complies with Section 409A. Notwithstanding any other provision of the Plan, any Plan provision that is inconsistent with Section 409A will be deemed to be amended to comply with Section 409A and to the extent such provision cannot be amended to comply, such provision will be null and void. The Company will have no liability to a Participant, or any other party, if an Award that is intended to be exempt from or compliant with Section 409A is not so exempt or compliant or for any action taken by the Committee or the Company and, in the event that any amount or benefit under the Plan becomes subject to penalties under Section 409A, responsibility for payment of such penalties will rest solely with the affected Participants and not with the Company. Notwithstanding any other provision in the Plan or any Award Agreement, any payment(s) of “nonqualified deferred compensation” (within the meaning of Section 409A) that are otherwise required to be made under the Plan to a “specified employee” (as defined under Section 409A) as a result of such employee’s separation from service (other than a payment that is not subject to Section 409A) will be delayed for the first six months following such separation from service (or, if earlier, the date of death of the specified employee) and will instead be paid (in a manner set forth in the Award Agreement) upon expiration of such delay period. All installment payments under the Plan will be deemed separate payments for purposes of Section 409A.

 

14.17                 California Participants. The Plan is intended to comply with Section 25102(o) of the California Corporations Code, to the extent applicable. In that regard, to the extent required by Section 25102(o), (a) the terms and conditions of any Options and Stock Appreciation Rights, to the extent vested and exercisable upon a Participant’s Separation from Service, will include any minimum exercise periods following Separation from Service required by Section 25102(o) and (b) any repurchase right of the Company or any Affiliate will include a minimum ninety-day notice requirement. Any Plan term that is inconsistent with Section 25102(o) will, without further

 

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act or amendment by the Company or the Board, be reformed to comply with the requirements of Section 25102(o).

 

14.18                 Successor and Assigns. The Plan will be binding on all successors and permitted assigns of a Participant, including the estate of such Participant and the executor, administrator, or trustee of such estate.

 

14.19                 Severability of Terms and Conditions. If any term or condition of the Plan is held invalid or unenforceable, such invalidity or unenforceability will not affect any other term or condition of the Plan, and the Plan will be construed and enforced as if such term or condition had not been included.

 

14.20                 Payments to Minors, Etc. Any benefit payable to or for the benefit of a minor, an incompetent Person, or other Person incapable of receipt thereof will be considered paid when paid to such Person’s guardian or to the party providing or reasonably appearing to provide for the care of such Person, and such payment will fully discharge the Committee, the Board, the Company, all Affiliates, and their employees, agents, and representatives with respect thereto.

 

14.21                 Lock-Up Agreement. As a condition to the grant of an Award, if requested by the Company and the lead underwriter of any public offering of Common Stock (the Lead Underwriter), a Participant must irrevocably agree not to sell, contract to sell, grant any option to purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of, any interest in any Common Stock or any securities convertible into, derivative of, or exchangeable or exercisable for, or any other rights to purchase or acquire Common Stock (except Common Stock included in such public offering or acquired on the public market after such offering) during such period of time following the effective date of a registration statement of the Company filed under the Securities Act that the Lead Underwriter may specify (the Lock-Up Period). Each Participant must sign such documents as may be requested by the Lead Underwriter to effect the foregoing. The Company may impose stop-transfer instructions with respect to Common Stock acquired under an Award until the end of such Lock-Up Period.

 

14.22                 Separation from Service for Cause; Clawbacks; Detrimental Conduct.

 

(a)                                 Separation from Service for Cause. The Company may annul an Award if the Participant incurs a Separation from Service for Cause.

 

(b)                                 Clawbacks. All awards, amounts, or benefits received or outstanding under the Plan will be subject to clawback, cancellation, recoupment, rescission, payback, reduction, or other similar action in accordance with any Company clawback or similar policy or any applicable law related to such actions. A Participant’s acceptance of an Award will constitute the Participant’s acknowledgement of and consent to the Company’s application, implementation, and enforcement of any applicable Company clawback or similar policy that may apply to the Participant, whether adopted before or after the Effective Date, and any applicable law relating to clawback, cancellation, recoupment, rescission, payback, or reduction of compensation, and the Participant’s agreement that the Company may take any actions that may be necessary to effectuate any such policy or applicable law, without further consideration or action.

 

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(c)                                  Detrimental Conduct. Except as otherwise determined by the Committee, notwithstanding any other term or condition of the Plan, if a Participant engages in Detrimental Conduct, whether during the Participant’s service or after the Participant’s Separation from Service, in addition to any other penalties or restrictions that may apply under the Plan, state law, or otherwise, the Participant must forfeit or pay to the Company the following:

 

(i)                                     any and all outstanding Awards granted to the Participant, including Awards that have become vested or exercisable;

 

(ii)                                  any cash or Shares received by the Participant in connection with the Plan within the thirty-six-month period immediately before the date the Company determines the Participant has engaged in Detrimental Conduct; and

 

(iii)                               the profit realized by the Participant from the sale, or other disposition for consideration, of any Shares received by the Participant under the Plan within the thirty-six-month period immediately before the date the Company determines the Participant has engaged in Detrimental Conduct.

 

14.23                 Data Protection. A Participant’s acceptance of an Award will be deemed to constitute the Participant’s acknowledgement of and consent to the collection and processing of personal data relating to the Participant so that the Company and the Affiliates can fulfill their obligations and exercise their rights under the Plan and generally administer and manage the Plan. This data will include data about participation in the Plan and Shares offered or received, purchased or sold under the Plan and other appropriate financial and other data (such as the date on which the Awards were granted) about the Participant and the Participant’s participation in the Plan.

 

14.24                 Plan Construction. In the Plan, unless otherwise stated, the following uses apply:

 

(a)                                 references to a statute or law refer to the statute or law and any amendments and supplements thereto and any successor statutes or laws, and to all valid and binding rules and regulations promulgated thereunder, court decisions, and other regulatory and judicial authority issued or rendered thereunder, as amended or supplemented, or their successors, as in effect at the relevant time;

 

(b)                                 in computing periods from a specified date to a later specified date, the words “from” and “commencing on” (and the like) mean “from and including,” and the words “to,” “until,” and “ending on” (and the like) mean “to and including”;

 

(c)                                  indications of time of day will be based upon the time applicable to the location of the principal headquarters of the Company;

 

(d)                                 the words “include,” “includes,” and “including” (and the like) mean “include, without limitation,” “includes, without limitation,” and “including, without limitation” (and the like), respectively;

 

(e)                                  all references to articles, sections, and exhibits are to articles, sections, and exhibits in or to the Plan;

 

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(f)                                   all words used will be construed to be of such gender or number as the circumstances and context require;

 

(g)                                  the captions and headings of articles, sections, and exhibits have been inserted solely for convenience of reference and will not be considered a part of the Plan, nor will any of them affect the meaning or interpretation of the Plan;

 

(h)                                 any reference to an agreement, plan, policy, form, document, or set of documents, and the rights and obligations of the parties under any such agreement, plan, policy, form, document, or set of documents, will mean the agreement, plan, policy, form, document, or set of documents as amended from time to time, and any and all modifications, extensions, renewals, substitutions, or replacements thereof; and

 

(i)                                     all accounting terms not specifically defined will be construed in accordance with GAAP.

 

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EXHIBIT A

 

PERFORMANCE GOALS

 

Performance Goals established for purposes of Performance Awards will be based on the attainment of certain target levels of, or a specified increase or decrease (as applicable) in one or more of the following performance criteria:

 

·                  earnings per share;

·                  operating income;

·                  gross income;

·                  net income (before or after taxes);

·                  cash flow;

·                  gross profit;

·                  gross profit return on investment;

·                  gross margin return on investment;

·                  gross margin;

·                  operating margin;

·                  working capital;

·                  earnings before interest and taxes;

·                  earnings before interest, tax, depreciation, and amortization;

·                  adjusted earnings before interest, tax, depreciation, and amortization;

·                  return on equity;

·                  return on assets;

·                  return on capital;

·                  return on invested capital;

·                  net revenues;

·                  gross revenues;

·                  net recurring revenues;

·                  revenue growth;

·                  annual recurring revenues;

·                  recurring revenues;

·                  license revenues;

·                  sales or market share;

·                  total shareholder return;

·                  economic value added;

·                  specified objectives with regard to limiting the level of increase in all or a portion of the Company’s bank debt or other long-term or short-term public or private debt or other similar financial obligations of the Company, which may be calculated net of cash balances and other offsets and adjustments as may be established by the Committee;

·                  the fair market value of a Share;

·                  the growth in the value of an investment in the Common Stock assuming the reinvestment of dividends;

 

A-1


 

·                  reduction in operating expenses;

·                  cash earnings per share;

·                  adjusted net income;

·                  adjusted net income per share;

·                  volume/volume growth;

·                  in year volume;

·                  merchant account production;

·                  distribution partner account production;

·                  new merchant locations;

·                  new merchant locations using a particular product;

·                  calculated attrition;

·                  product revenue;

·                  goals based on product performance;

·                  annual cash adjusted earnings per share growth;

·                  annual stock price growth;

·                  diluted earnings per share;

·                  total shareholder return positioning within a comparator group; or

·                  adjusted cash net income per share.

 

The Committee may exclude, or adjust to reflect, the impact of an event or occurrence that the Committee determines should be excluded or adjusted, including:

 

(a)         restructurings, discontinued operations, extraordinary items and events, and other unusual and non-recurring charges;

 

(b)         an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management; or

 

(c)          a change in tax law or accounting standards.

 

Performance Goals may also be based upon individual Participant Performance Goals, as determined by the Committee.

 

In addition, Performance Goals may be based upon the attainment of specified levels of Company (or Affiliate, division, other operational unit, administrative department, or product category) performance under one or more of the measures described above relative to the performance of other corporations. The Committee may also:

 

(a)         designate additional business criteria on which the Performance Goals may be based; and

 

(b)         adjust, modify, or amend the aforementioned business criteria.

 

A-2





Exhibit 10.4

 

OPTION AWARD AGREEMENT

PING IDENTITY HOLDING CORP. OMNIBUS INCENTIVE PLAN

 

Ping Identity Holding Corp. (the “Company”) grants to the Participant named below (“you”) [an Incentive/a Nonstatutory] Stock Option to purchase the number of Shares set forth below (the “Option”), under this Option Award Agreement (“Agreement”).

 

Governing Plan:

 

Ping Identity Holding Corp. Omnibus Incentive Plan

 

 

 

Defined Terms:

 

As set forth in the Plan, unless otherwise defined in this Agreement

 

 

 

Participant:

 

[Name]

 

 

 

Type of Option:

 

[Incentive/Nonstatutory] Stock Option

 

 

 

Grant Date:

 

[Date]

 

 

 

Number of Shares Purchasable:

 

[·]

 

 

 

Purchase Price per Share:

 

$[·], which is the Fair Market Value as of the Grant Date

 

 

 

Original Expiration Date:

 

[·] years from the Grant Date (or earlier if your Separation from Service occurs before this Expiration Date; see Exercise after Separation from Service below)

 

 

 

Exercisability:

 

The Option will become exercisable as follows, as long as you do not have a Separation from Service before the applicable [date/event]:

 

 

 

 

 

[Date/Event]

 

% of Option Exercisable

 

 

[—]

 

[·]%

 

 

 

Exercise after Separation from Service:

 

Separation from Service for any reason other than Disability, death, or Cause: any unexercisable portion of the Option expires immediately and any exercisable portion remains exercisable for [·] after your Separation from Service for any reason other than Disability, death, or Cause.

 

Separation from Service due to Disability or death: any unexercisable portion of the Option expires immediately and any exercisable portion remains exercisable for [·] after your Separation from Service due to your Disability or death.

 

Separation from Service for Cause: the entire Option, including any exercisable and unexercisable portion, expires immediately upon your Separation from Service for Cause.

 

Notwithstanding anything else in this Agreement, the Option may not be exercised after the latest Original Expiration Date set forth above.

 

OPTION TERMS

 

1.                                      Grant of Option.

 

(a)                                 The Option is subject to the terms of the Plan. The terms of the Plan are incorporated into this Agreement by this reference.

 


 

(b)                                 You must accept the terms of this Agreement within 30 days after the Agreement is presented to you for review. You may not exercise any portion of the Option before you have accepted the terms of this Agreement. The Committee may unilaterally cancel and forfeit the Option in its entirety if you do not accept the terms of this Agreement.

 

(c)                                  If designated above as an Incentive Stock Option, the Option is intended to qualify as an Incentive Stock Option. To the extent the Option fails to meet the requirements of an Incentive Stock Option or is not designated as an Incentive Stock Option, the Option will be a Nonstatutory Stock Option.

 

2.                                      Exercise of Option.

 

(a)                                 Right to Exercise. The Option will be exercisable in accordance with the terms provided in the table above, and all the rest of the terms of this Agreement. The Option, to the extent exercisable, may be exercised in whole or in part. The Option may not be exercised after it expires. No Shares will be issued upon the exercise of the Option unless the issuance and exercise comply with all applicable laws. For income tax purposes, Shares will be considered transferred to you on the date you properly exercise the Option. Until you have duly exercised the Option and Shares have been delivered, you will not have any rights as a Stockholder for those Shares.

 

(b)                                 Method of Exercise and Payment. You may exercise the Option by delivering an exercise notice in a form approved by the Company (the “Exercise Notice”). The Exercise Notice must state your election to exercise the Option, the number of Option Shares that are being purchased, and any other representations and agreements that may be required by the Company. Together with the Exercise Notice, you must tender payment of the aggregate Purchase Price for all Shares exercised and all applicable withholding and other taxes. The Option will be deemed to be exercised upon receipt by the Company of a fully executed Exercise Notice and payment of the aggregate Purchase Price and all applicable withholding and other taxes.

 

3.                                      Method of Payment. If you elect to exercise the Option, you must pay the aggregate Purchase Price, as well as any applicable withholding or other taxes, in accordance with any of the payment methods set forth in Section 6.4(d) of the Plan (or any successor sections).

 

4.                                      Restrictions on Exercise.

 

(a)                                 You may not exercise the Option (i) if it is an Incentive Stock Option and the Plan has not been approved by the Stockholders or (ii) if the issuance of Shares upon exercise or the method of payment for those Shares would constitute a violation of any applicable law, regulation, or Company policy.

 

(b)                                 Any issuance of Shares under the Option may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any securities exchange or similar entity.

 

(c)                                  If a certificate for Shares is delivered to you under the Option, the certificate may bear the following or a similar legend as determined by the Company:

 

The ownership and transferability of this certificate and the shares of stock represented hereby are subject to the terms (including forfeiture) of the Ping Identity Holding Corp. Omnibus Incentive Plan and an option award agreement entered into between the registered owner and Ping Identity Holding Corp. Copies of such plan and agreement are on file in the executive offices of Ping Identity Holding Corp.

 

In addition, any stock certificates for Shares will be subject to any stop-transfer orders and other restrictions as the Company may deem advisable under the rules, regulations, and other requirements of the SEC, any securities exchange or similar entity upon which the Shares are then listed, and any applicable federal or state securities law,

 

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and the Company may cause a legend or legends to be placed on any certificates to make appropriate reference to these restrictions. In addition, you acknowledge and expressly agree to the lock-up terms of Section 14.21 of the Plan (and any successor terms).

 

5.                                      Transferability.

 

(a)                                 The Option may not be transferred in any manner other than by will or by the laws of descent or distribution and may be exercised during your lifetime only by you.

 

6.                                      Term of Option. The Option may not be exercised after it expires and may only be exercised in accordance with this Agreement.

 

7.                                      Taxes. Regardless of any action the Company may take that is related to any or all income tax, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items owed by you is and will remain your responsibility. The Company (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items under the Award and (ii) does not commit to structure the terms of the Award to reduce or eliminate your liability for Tax-Related Items. You will be required to meet any applicable tax withholding obligation in accordance with the tax withholding terms of Section 14.5 of the Plan (and any successor terms). The Option is intended to be exempt from Section 409A, and this Agreement will be administered and interpreted consistently with that intent and with the terms of Section 14.16 of the Plan (and any successor terms). [If you make any disposition of Shares delivered under an Incentive Stock Option under the circumstances described in Code Section 421(b) (relating to certain disqualifying dispositions), you must notify the Company of that disposition within 10 days.]

 

8.                                      Adjustment. Upon any event described in Section 4.2 of the Plan (or any successor section) occurring after the Grant Date, the adjustment terms of that section will apply to the Option.

 

9.                                      Bound by Plan and Committee Decisions. By accepting the Option, you acknowledge that you have received a copy of the Plan, have had an opportunity to review the Plan, and agree to be bound by all of the terms of the Plan. If there is any conflict between this Agreement and the Plan, the Plan will control. The authority to manage and control the operation and administration of this Agreement and the Plan is vested in the Committee. The Committee has all powers under this Agreement that it has under the Plan. Any interpretation of this Agreement or the Plan by the Committee and any decision made by the Committee related to the Agreement or the Plan will be final and binding on all Persons.

 

10.                               Regulatory and Other Limitations. Notwithstanding anything else in this Agreement, the Committee may impose conditions, restrictions, and limitations on the issuance of Shares under the Option unless and until the Committee determines that the issuance complies with (a) all registration requirements under the Securities Act, (b) all listing requirements of any securities exchange or similar entity on which the Shares are listed, (c) all Company policies and administrative rules, and (d) all applicable laws.

 

11.                               Miscellaneous.

 

(a)                                 Notices. Any notice that may be required or permitted under this Agreement must be in writing and may be delivered personally, by intraoffice mail, or by electronic mail or via a postal service (postage prepaid) to the electronic mail or postal address and directed to the person as the receiving party may designate in writing.

 

(b)                                 Waiver. The waiver by any party to this Agreement of a breach of any term of the Agreement will not operate or be construed as a waiver of any other or subsequent breach.

 

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(c)                                  Entire Agreement. This Agreement and the Plan constitute the entire agreement between you and the Company for the Option. Any prior agreement, commitment, or negotiation related to the Option is superseded.

 

(d)                                 Binding Effect; Successors. The obligations and rights of the Company under this Agreement will be binding upon and inure to the benefit of the Company and any successor corporation or organization resulting from the merger, consolidation, sale, or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company. Your obligations and rights under this Agreement will be binding upon and inure to your benefit and the benefit of your beneficiaries, executors, administrators, heirs, and successors.

 

(e)                                  Governing Law; Jurisdiction; Waiver of Jury Trial; Data Protection. You acknowledge and expressly agree to the governing law terms of Section 14.9 of the Plan (and any successor terms), the jurisdiction and waiver of jury trial terms of Section 14.10 of the Plan (and any successor terms), and the data protection terms of Section 14.23 of the Plan (and any successor terms).

 

(f)                                   Amendment. This Agreement may be amended at any time by the Committee, except that no amendment may, without your consent, materially impair your rights under the Option.

 

(g)                                  Severability. The invalidity or unenforceability of any term of the Plan or this Agreement will not affect the validity or enforceability of any other term of the Plan or this Agreement, and each other term of the Plan and this Agreement will be severable and enforceable to the extent permitted by law.

 

(h)                                 No Rights to Service; No Impact on Other Benefits. Nothing in this Agreement will be construed as giving you any right to be retained in any position with the Company or its Affiliates. Nothing in this Agreement will interfere with or restrict the rights of the Company or its Affiliates—which are expressly reserved—to remove, terminate, or discharge you at any time for any reason whatsoever or for no reason, subject to the Company’s certificate of incorporation, bylaws, and other similar governing documents and applicable law. Any value under the Option is not part of your normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance, or similar employee benefit. The grant of the Option does not create any right to receive any future awards.

 

(i)                                     Further Assurances. You must, upon request of the Company, do all acts and execute, deliver, and perform all additional documents, instruments, and agreements that may be reasonably required by the Company to implement this Agreement.

 

(j)                                    Clawback. All awards, amounts, or benefits received or outstanding under the Plan will be subject to clawback, cancellation, recoupment, rescission, payback, reduction, or other similar action in accordance with the terms of any Company clawback or similar policy or any applicable law related to such actions, as may be in effect from time to time. You acknowledge and consent to the Company’s application, implementation, and enforcement of any applicable Company clawback or similar policy that may apply to you, whether adopted before or after the Grant Date (including the forfeiture, clawback, and detrimental conduct terms contained in Section 14.22 of the Plan as of the Grant Date (and any successor terms)), and any term of applicable law relating to clawback, cancellation, recoupment, rescission, payback, or reduction of compensation, and the Company may take such actions as may be necessary to effectuate any such policy or applicable law, without further consideration or action.

 

(k)                                 Electronic Delivery and Acceptance. The Company may deliver any documents related to current or future participation in the Plan by electronic means. You consent to receive those documents by electronic delivery and to participate in the Plan through any on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

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12.                               Your Representations. You represent to the Company that you have read and fully understand this Agreement and the Plan and that your decision to participate in the Plan is completely voluntary. You also acknowledge that you are relying solely on your own advisors regarding the tax consequences of the Option.

 

By selecting the signature button below, you are signing this Agreement electronically and agreeing that your electronic signature is the legal equivalent of a manual signature on this Agreement. In addition, you are agreeing to all of the terms of this Agreement, as of the Grant Date.

 

5





Exhibit 10.5

 

RESTRICTED SHARES AWARD AGREEMENT

PING IDENTITY HOLDING CORP. OMNIBUS INCENTIVE PLAN

 

Ping Identity Holding Corp. (the “Company”) grants to the Participant named below (“you”) the number of Restricted Shares set forth below (the “Award”), under this Restricted Shares Award Agreement (“Agreement”).

 

Governing Plan:

 

Ping Identity Holding Corp. Omnibus Incentive Plan

 

 

 

Defined Terms:

 

As set forth in the Plan, unless otherwise defined in this Agreement

 

 

 

Participant:

 

[Name]

 

 

 

Grant Date:

 

[Date]

 

 

 

Number of Restricted Shares:

 

[·]

 

 

 

Vesting:

 

The Restricted Shares will become vested as follows, as long as you do not have a Separation from Service before the applicable [date/event]:

 

 

 

 

 

[Date/Event]

 

Restricted Shares Vesting

 

 

[—]

 

[·]%

 

RESTRICTED SHARES TERMS

 

1.                                      Grant of Restricted Shares.

 

(a)                                 The Award is subject to the terms of the Plan. The terms of the Plan are incorporated into this Agreement by this reference.

 

(b)                                 You must accept the terms of this Agreement within 30 days after the Agreement is presented to you for review. The Committee may unilaterally cancel and forfeit the Award in its entirety if you do not accept the terms of this Agreement.

 

(c)                                  As soon as practicable after the Grant Date, the Company will direct that a stock certificate or certificates representing the Restricted Shares be registered in your name. Such certificate(s) will be held in the custody of the Company or its designee until the expiration of the Restricted Period. Upon the request of the Company, you will be required to deliver to the Company one or more stock powers endorsed in blank relating to the Restricted Shares.

 

(d)                                 If a certificate for the Restricted Shares is delivered to you under the Award, the certificate may bear the following or a similar legend as determined by the Company:

 

The ownership and transferability of this certificate and the shares of stock represented hereby are subject to the terms (including forfeiture) of the Ping Identity Holding Corp. Omnibus Incentive Plan and a restricted shares award agreement entered into between the registered owner and Ping Identity Holding Corp. Copies of such plan and agreement are on file in the executive offices of Ping Identity Holding Corp.

 

In addition, any stock certificates for the Restricted Shares will be subject to any stop-transfer orders and other restrictions as the Company may deem advisable under the rules, regulations, and other requirements of the SEC, any securities exchange or similar entity upon which the Shares are then listed, and any applicable federal or state

 


 

securities law, and the Company may cause a legend or legends to be placed on any certificates to make appropriate reference to these restrictions. In addition, you acknowledge and expressly agree to the lock-up terms of Section 14.21 of the Plan (and any successor terms).

 

(e)                                  Any issuance of Shares under the Award may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any securities exchange or similar entity.

 

2.                                      Restrictions.

 

(a)                                 You will have all rights and privileges of a Stockholder as to the Restricted Shares, including the right to vote and receive dividends, except that the following restrictions will apply:

 

(i)                                     you will not be entitled to delivery of any Share certificates for the Restricted Shares until the expiration of the Restricted Period (if at all), and upon the satisfaction of all other terms;

 

(ii)                                  you may not sell, transfer (other than by will or the laws of descent and distribution), assign, pledge, or otherwise encumber or dispose of the Restricted Shares or any rights under the Restricted Shares during the Restricted Period; and

 

(iii)                               you will forfeit all of the Restricted Shares and all of your rights under the Restricted Shares will terminate in their entirety on the terms set forth in Section 4 below and Section 9(j) below.

 

(b)                                 Any attempt to dispose of the Restricted Shares or any interest in the Restricted Shares in a manner contrary to the terms of this Agreement will be void and of no effect.

 

3.                                      Restricted Period and Vesting. The “Restricted Period” is the period beginning on the Grant Date and ending on the date the Restricted Shares, or such applicable portion of the Restricted Shares, are deemed vested under the terms set forth in the table at the beginning of this Agreement.

 

4.                                      Forfeiture. If, during the Restricted Period, (a) you incur a Separation from Service (for the avoidance of doubt, which does not otherwise result in the vesting of the Restricted Shares), (b) you materially breach this Agreement, or (c) you fail to meet the tax withholding obligations described in Section 5 below, all of your rights to any Restricted Shares will terminate immediately and be forfeited in their entirety.

 

5.                                      Taxes. Regardless of any action the Company may take that is related to any or all income tax, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items owed by you is and will remain your responsibility. The Company (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items under the Award and (ii) does not commit to structure the terms of the Award to reduce or eliminate your liability for Tax-Related Items. You will be required to meet any applicable tax withholding obligation in accordance with the tax withholding terms of Section 14.5 of the Plan (and any successor terms). The Award is intended to be exempt from Section 409A, and this Agreement will be administered and interpreted consistently with that intent and with the terms of Section 14.16 of the Plan (and any successor terms).

 

6.                                      Adjustment. Upon any event described in Section 4.2 of the Plan (and any successor sections) occurring after the Grant Date, the adjustment terms of that section will apply to the Award.

 

7.                                      Bound by Plan and Committee Decisions. By accepting the Award, you acknowledge that you have received a copy of the Plan, have had an opportunity to review the Plan, and agree to be bound by all of the terms of the Plan. If there is any conflict between this Agreement and the Plan, the Plan will control. The authority to manage and control the operation and administration of this Agreement and the Plan is vested in the Committee. The Committee has all powers under this Agreement that it has under the Plan. Any interpretation of this Agreement

 

2


 

or the Plan by the Committee and any decision made by the Committee related to the Agreement or the Plan will be final and binding on all Persons.

 

8.                                      Regulatory and Other Limitations. Notwithstanding anything else in this Agreement, the Committee may impose conditions, restrictions, and limitations on the issuance of Shares under the Award unless and until the Committee determines that the issuance complies with (a) all registration requirements under the Securities Act, (b) all listing requirements of any securities exchange or similar entity on which the Shares are listed, (c) all Company policies and administrative rules, and (d) all applicable laws.

 

9.                                      Miscellaneous.

 

(a)                                 Notices. Any notice that may be required or permitted under this Agreement must be in writing and may be delivered personally, by intraoffice mail, or by electronic mail or via a postal service (postage prepaid) to the electronic mail or postal address and directed to the person as the receiving party may designate in writing from time to time.

 

(b)                                 Waiver. The waiver by any party to this Agreement of a breach of any term of the Agreement will not operate or be construed as a waiver of any other or subsequent breach.

 

(c)                                  Entire Agreement. This Agreement and the Plan constitute the entire agreement between you and the Company related to the Award. Any prior agreements, commitments, or negotiations concerning the Award are superseded.

 

(d)                                 Binding Effect; Successors. The obligations and rights of the Company under this Agreement will be binding upon and inure to the benefit of the Company and any successor corporation or organization resulting from the merger, consolidation, sale, or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company. Your obligations and rights under this Agreement will be binding upon and inure to your benefit and the benefit of your beneficiaries, executors, administrators, heirs, and successors.

 

(e)                                  Governing Law; Jurisdiction; Waiver of Jury Trial; Data Protection. You acknowledge and expressly agree to the governing law terms of Section 14.9 of the Plan (and any successor terms), the jurisdiction and waiver of jury trial terms of Section 14.10 of the Plan (and any successor terms), and the data protection terms of Section 14.23 of the Plan (and any successor terms).

 

(f)                                   Amendment. This Agreement may be amended at any time by the Committee, except that no amendment may, without your consent, materially impair your rights under the Award.

 

(g)                                  Severability. The invalidity or unenforceability of any term of the Plan or this Agreement will not affect the validity or enforceability of any other term of the Plan or this Agreement, and each other term of the Plan and this Agreement will be severable and enforceable to the extent permitted by law.

 

(h)                                 No Rights to Service; No Impact on Other Benefits. Nothing in this Agreement will be construed as giving you any right to be retained in any position with the Company or its Affiliates. Nothing in this Agreement will interfere with or restrict the rights of the Company or its Affiliates—which are expressly reserved—to remove, terminate, or discharge you at any time for any reason whatsoever or for no reason, subject to the Company’s certificate of incorporation, bylaws, and other similar governing documents and applicable law. The Restricted Shares are not part of your normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance, or similar employee benefit. The grant of the Restricted Shares does not create any right to receive any future awards.

 

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(i)                                     Further Assurances. You must, upon request of the Company, do all acts and execute, deliver, and perform all additional documents, instruments, and agreements that may be reasonably required by the Company to implement this Agreement.

 

(j)                                    Clawback. All awards, amounts, or benefits received or outstanding under the Plan will be subject to clawback, cancellation, recoupment, rescission, payback, reduction, or other similar action in accordance with the terms of any Company clawback or similar policy or any applicable law related to such actions, as may be in effect from time to time. You acknowledge and consent to the Company’s application, implementation, and enforcement of any applicable Company clawback or similar policy that may apply to you, whether adopted before or after the Grant Date (including the forfeiture, clawback, and detrimental conduct terms contained in Section 14.22 of the Plan as of the Grant Date (and any successor terms)), and any term of applicable law relating to clawback, cancellation, recoupment, rescission, payback, or reduction of compensation, and the Company may take such actions as may be necessary to effectuate any such policy or applicable law, without further consideration or action.

 

(k)                                 Electronic Delivery and Acceptance. The Company may deliver any documents related to current or future participation in the Plan by electronic means. You consent to receive those documents by electronic delivery and to participate in the Plan through any on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

10.                               Your Representations. You represent to the Company that you have read and fully understand this Agreement and the Plan and that your decision to participate in the Plan is completely voluntary. You also acknowledge that you are relying solely on your own advisors regarding the tax consequences of the Award.

 

By selecting the signature button below, you are signing this Agreement electronically and agreeing that your electronic signature is the legal equivalent of a manual signature on this Agreement. In addition, you are agreeing to all of the terms of this Agreement, as of the Grant Date.

 

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Exhibit 10.6

 

SAR AWARD AGREEMENT

PING IDENTITY HOLDING CORP. OMNIBUS INCENTIVE PLAN

 

Ping Identity Holding Corp. (the “Company”) grants to the Participant named below (“you”) the number of Non-Tandem Stock Appreciation Rights (“SARs”) set forth below (the “Award”), under this SAR Award Agreement (“Agreement”).

 

Governing Plan:

 

Ping Identity Holding Corp. Omnibus Incentive Plan

 

 

 

Defined Terms:

 

As set forth in the Plan, unless otherwise defined in this Agreement

 

 

 

Participant:

 

[Name]

 

 

 

Grant Date:

 

[Date]

 

 

 

Number of SARs:

 

[·]

 

 

 

Definition of SAR:

 

Each SAR entitles you to receive, upon exercise, an amount equal to (i) the Fair Market Value of a Share on the date of exercise minus (ii) the Exercise Price per SAR (the “Appreciation Value”).

 

 

 

Exercise Price per SAR:

 

$[·], which is the Fair Market Value as of the Grant Date

 

 

 

Original Expiration Date:

 

[·] years from the Grant Date (or earlier if your Separation from Service occurs before this Expiration Date; see Exercise after Separation from Service below)

 

 

 

Exercisability:

 

The SARs will become exercisable as follows, as long as you do not have a Separation from Service before the applicable [date/event]:

 

 

 

 

 

[Date/Event]

 

% of SARs Exercisable

 

 

[—]

 

[·]%

 

 

 

Exercise after Separation from Service:

 

Separation from Service for any reason other than Disability, death, or Cause: any unexercisable SARs expire immediately and any exercisable SARs remain exercisable for [·] after your Separation from Service for any reason other than Disability, death, or Cause.

 

Separation from Service due to Disability or death: exercisable SARs remain exercisable for [·] after your Separation from Service due to your Disability or death.

 

Separation from Service for Cause: all SARs (including any exercisable and unexercisable SARs) expire immediately upon your Separation from Service for Cause.

 

Notwithstanding anything else in this Agreement, the SARs may not be exercised after the latest Original Expiration Date set forth above.

 

SAR TERMS

 

1.                                      Grant of Award.

 

(a)                                 The Award is subject to the terms of the Plan. The terms of the Plan are incorporated into this Agreement by this reference.

 


 

(b)                                 You must accept the terms of this Agreement within 30 days after the Agreement is presented to you for review. You may not exercise any of the SARs before you have accepted the terms of this Agreement. The Committee may unilaterally cancel and forfeit the Award in its entirety if you do not accept the terms of this Agreement.

 

2.                                      Exercise of SARs.

 

(a)                                 Right to Exercise. The SARs will be exercisable in accordance with the terms provided in the table above, and all the rest of the terms of this Agreement. The SARs, to the extent exercisable, may be exercised in whole or in part. The SARs may not be exercised after they expire. No Shares will be issued upon the exercise of the SARs unless the issuance and exercise comply with all applicable laws. For income tax purposes, Shares will be considered transferred to you on the date you properly exercise the SARs. Until you have duly exercised the SARs and Shares have been delivered, you will not have any rights as a Stockholder for those Shares.

 

(b)                                 Method of Exercise. You may exercise the SARs by delivering an exercise notice in a form approved by the Company (the “Exercise Notice”). The Exercise Notice must state your election to exercise the SARs, the number of SARs that are being exercised, and any other representations and agreements that may be required by the Company. The SARs will be deemed to be exercised upon receipt by the Company of a fully executed Exercise Notice.

 

3.                                      Restrictions on Exercise.

 

(a)                                 You may not exercise the SARs if the exercise would constitute a violation of any applicable law, regulation, or Company policy.

 

(b)                                 Any issuance of Shares under the Award may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any securities exchange or similar entity.

 

(c)                                  If a certificate for Shares is delivered to you under the Award, the certificate may bear the following or a similar legend as determined by the Company:

 

The ownership and transferability of this certificate and the shares of stock represented hereby are subject to the terms (including forfeiture) of the Ping Identity Holding Corp. Omnibus Incentive Plan and an SAR award agreement entered into between the registered owner and Ping Identity Holding Corp. Copies of such plan and agreement are on file in the executive offices of Ping Identity Holding Corp.

 

In addition, any stock certificates for Shares will be subject to any stop-transfer orders and other restrictions as the Company may deem advisable under the rules, regulations, and other requirements of the SEC, any securities exchange or similar entity upon which the Shares are then listed, and any applicable federal or state securities law, and the Company may cause a legend or legends to be placed on any certificates to make appropriate reference to these restrictions. In addition, you acknowledge and expressly agree to the lock-up terms of Section 14.21 of the Plan (and any successor terms).

 

4.                                      Transferability. You may not transfer the SARs in any manner other than by will or by the laws of descent or distribution and the SARs may be exercised during your lifetime only by you.

 

5.                                      Term of SARs. You may not exercise the SARs after they expire and you may only exercise the SARs in accordance with this Agreement.

 

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6.                                      Taxes. Regardless of any action the Company may take that is related to any or all income tax, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items owed by you is and will remain your responsibility. The Company (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items under the Award and (ii) does not commit to structure the terms of the Award to reduce or eliminate your liability for Tax-Related Items. You will be required to meet any applicable tax withholding obligation in accordance with the tax withholding terms of Section 14.5 of the Plan (and any successor terms). The Award is intended to be exempt from Section 409A, and this Agreement will be administered and interpreted consistently with that intent and with the terms of Section 14.16 of the Plan (and any successor terms).

 

7.                                      Form of Payment. Upon the exercise of all or a portion of the SARs, you will be entitled to an amount of Shares having a Fair Market Value on the date of exercise equal to the Appreciation Value of the SARs being exercised, less any amounts withheld under Section 6 above.

 

8.                                      Adjustment. Upon any event described in Section 4.2 of the Plan (or any successor section) occurring after the Grant Date, the adjustment terms of that section will apply to the SARs.

 

9.                                      Bound by Plan and Committee Decisions. By accepting the Award, you acknowledge that you have received a copy of the Plan, have had an opportunity to review the Plan, and agree to be bound by all of the terms of the Plan. If there is any conflict between this Agreement and the Plan, the Plan will control. The authority to manage and control the operation and administration of this Agreement and the Plan is vested in the Committee. The Committee has all powers under this Agreement that it has under the Plan. Any interpretation of this Agreement or the Plan by the Committee and any decision made by the Committee related to the Agreement or the Plan will be final and binding on all Persons.

 

10.                               Regulatory and Other Limitations. Notwithstanding anything else in this Agreement, the Committee may impose conditions, restrictions, and limitations on the issuance of Shares under the Award unless and until the Committee determines that the issuance complies with (a) all registration requirements under the Securities Act, (b) all listing requirements of any securities exchange or similar entity on which the Shares are listed, (c) all Company policies and administrative rules, and (d) all applicable laws.

 

11.                               Miscellaneous.

 

(a)                                 Notices. Any notice that may be required or permitted under this Agreement must be in writing and may be delivered personally, by intraoffice mail, or by electronic mail or via a postal service (postage prepaid) to the electronic mail or postal address and directed to the person as the receiving party may designate in writing.

 

(b)                                 Waiver. The waiver by any party to this Agreement of a breach of any term of the Agreement will not operate or be construed as a waiver of any other or subsequent breach.

 

(c)                                  Entire Agreement. This Agreement and the Plan constitute the entire agreement between you and the Company for the SARs. Any prior agreement, commitment, or negotiation related to the SARs is superseded.

 

(d)                                 Binding Effect; Successors. The obligations and rights of the Company under this Agreement will be binding upon and inure to the benefit of the Company and any successor corporation or organization resulting from the merger, consolidation, sale, or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company. Your obligations and rights under this Agreement will be binding upon and inure to your benefit and the benefit of your beneficiaries, executors, administrators, heirs, and successors.

 

(e)                                  Governing Law; Jurisdiction; Waiver of Jury Trial; Data Protection. You acknowledge and expressly agree to the governing law terms of Section 14.9 of the Plan (and any successor terms), the jurisdiction

 

3


 

and waiver of jury trial terms of Section 14.10 of the Plan (and any successor terms), and the data protection terms of Section 14.23 of the Plan (and any successor terms).

 

(f)                                   Amendment. This Agreement may be amended at any time by the Committee, except that no amendment may, without your consent, materially impair your rights under the Award.

 

(g)                                  Severability. The invalidity or unenforceability of any term of the Plan or this Agreement will not affect the validity or enforceability of any other term of the Plan or this Agreement, and each other term of the Plan and this Agreement will be severable and enforceable to the extent permitted by law.

 

(h)                                 No Rights to Service; No Impact on Other Benefits. Nothing in this Agreement will be construed as giving you any right to be retained in any position with the Company or its Affiliates. Nothing in this Agreement will interfere with or restrict the rights of the Company or its Affiliates—which are expressly reserved—to remove, terminate, or discharge you at any time for any reason whatsoever or for no reason, subject to the Company’s certificate of incorporation, bylaws, and other similar governing documents and applicable law. Any value under the Option is not part of your normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance, or similar employee benefit. The grant of the SARs does not create any right to receive any future awards.

 

(i)                                     Further Assurances. You must, upon request of the Company, do all acts and execute, deliver, and perform all additional documents, instruments, and agreements that may be reasonably required by the Company to implement this Agreement.

 

(j)                                    Clawback. All awards, amounts, or benefits received or outstanding under the Plan will be subject to clawback, cancellation, recoupment, rescission, payback, reduction, or other similar action in accordance with the terms of any Company clawback or similar policy or any applicable law related to such actions, as may be in effect from time to time. You acknowledge and consent to the Company’s application, implementation, and enforcement of any applicable Company clawback or similar policy that may apply to you, whether adopted before or after the Grant Date (including the forfeiture, clawback, and detrimental conduct terms contained in Section 14.22 of the Plan as of the Grant Date (and any successor terms)), and any term of applicable law relating to clawback, cancellation, recoupment, rescission, payback, or reduction of compensation, and the Company may take such actions as may be necessary to effectuate any such policy or applicable law, without further consideration or action.

 

(k)                                 Electronic Delivery and Acceptance. The Company may deliver any documents related to current or future participation in the Plan by electronic means. You consent to receive those documents by electronic delivery and to participate in the Plan through any on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

12.                               Your Representations. You represent to the Company that you have read and fully understand this Agreement and the Plan and that your decision to participate in the Plan is completely voluntary. You also acknowledge that you are relying solely on your own advisors regarding the tax consequences of the Award.

 

By selecting the signature button below, you are signing this Agreement electronically and agreeing that your electronic signature is the legal equivalent of a manual signature on this Agreement. In addition, you are agreeing to all of the terms of this Agreement, as of the Grant Date.

 

4





Exhibit 10.7

 

RSU AWARD AGREEMENT

PING IDENTITY HOLDING CORP. OMNIBUS INCENTIVE PLAN

 

Ping Identity Holding Corp. (the “Company”) grants to the Participant named below (“you”) the number of restricted stock units (“RSUs”) set forth below (the “Award”), under this RSU Award Agreement (“Agreement”).

 

Governing Plan:

 

Ping Identity Holding Corp. Omnibus Incentive Plan

 

 

 

Defined Terms:

 

As set forth in the Plan, unless otherwise defined in this Agreement

 

 

 

Participant:

 

[Name]

 

 

 

Grant Date:

 

[Date]

 

 

 

Number of RSUs:

 

[·]

 

 

 

Definition of RSU:

 

Each RSU entitles you to receive one Share in the future subject to the terms of this Agreement.

 

 

 

Earning and Payment:

 

The RSUs will become earned and payable as follows, as long as you do not have a Separation from Service before the applicable [date/event]:

 

 

 

 

 

[Date/Event]

 

RSUs Earned and Payable

 

 

[—]

 

[·]

 

RSU TERMS

 

1.                                      Grant of RSUs.

 

(a)                                 The Award is subject to the terms of the Plan. The terms of the Plan are incorporated into this Agreement by this reference.

 

(b)                                 You must accept the terms of this Agreement within 30 days after the Agreement is presented to you for review. The Committee may unilaterally cancel and forfeit the Award in its entirety if you do not accept the terms of this Agreement.

 

2.                                      Restrictions.

 

(a)                                 You will have no rights or privileges of a Stockholder as to the Shares underlying the RSUs before settlement under Section 5 below (“Settlement”), including no right to vote or receive dividends or other distributions; in addition, the following terms will apply:

 

(i)                                     you will not be entitled to delivery of any Share certificates for the RSUs until Settlement (if at all), and upon the satisfaction of all other terms;

 


 

(ii)                                  you may not sell, transfer (other than by will or the laws of descent and distribution), assign, pledge, or otherwise encumber or dispose of the RSUs or any rights under the RSUs before Settlement; and

 

(iii)                               you will forfeit all of the RSUs and all of your rights under the RSUs will terminate in their entirety on the terms set forth in Section 4 below and Section 10(j) below.

 

(b)                                 Any attempt to dispose of the RSUs or any interest in the RSUs in a manner contrary to the terms of this Agreement will be void and of no effect.

 

3.                                      Restricted Period and Payment. The “Restricted Period” is the period beginning on the Grant Date and ending on the date the RSUs, or such applicable portion of the RSUs, are deemed earned and payable under the terms set forth in the table at the beginning of this Agreement.

 

4.                                      Forfeiture. If, during the Restricted Period, (a) you incur a Separation from Service (for the avoidance of doubt, which does not otherwise result in the immediate or continued earning and payment of the RSUs), (b) you materially breach this Agreement, or (c) you fail to meet the tax withholding obligations described in Section 6 below, all of your rights to the RSUs will terminate immediately and be forfeited in their entirety.

 

5.                                      Settlement of RSUs. Delivery of Shares or other amounts under this Agreement will be subject to the following:

 

(a)                                 The Company will deliver to you one Share for each RSU that has become earned and payable within 30 days after the end of the applicable Restricted Period.

 

(b)                                 Any issuance of Shares under the Award may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any securities exchange or similar entity.

 

(c)                                  If a certificate for Shares is delivered to you under the Award, the certificate may bear the following or a similar legend as determined by the Company:

 

The ownership and transferability of this certificate and the shares of stock represented hereby are subject to the terms (including forfeiture) of the Ping Identity Holding Corp. Omnibus Incentive Plan and an RSU award agreement entered into between the registered owner and Ping Identity Holding Corp. Copies of such plan and agreement are on file in the executive offices of Ping Identity Holding Corp.

 

In addition, any stock certificates for Shares will be subject to any stop-transfer orders and other restrictions as the Company may deem advisable under the rules, regulations, and other requirements of the SEC, any securities exchange or similar entity upon which the Shares are then listed, and any applicable federal or state securities law, and the Company may cause a legend or legends to be placed on any certificates to make appropriate reference to these restrictions. In addition, you acknowledge and expressly agree to the lock-up terms of Section 14.21 of the Plan (and any successor terms).

 

6.                                      Taxes. Regardless of any action the Company may take that is related to any or all income tax, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items owed by you is and will remain your responsibility. The Company (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items under the Award and (ii) does not commit to structure the terms of the Award to reduce or eliminate your liability for Tax-Related Items. You will be required to meet any applicable tax withholding obligation in accordance with the tax withholding terms of Section 14.5 of the Plan (and any successor

 

2


 

terms). The RSUs are intended to be exempt from Section 409A, and this Agreement will be administered and interpreted consistently with that intent and with the terms of Section 14.16 of the Plan (and any successor terms).

 

7.                                      Adjustment. Upon any event described in Section 4.2 of the Plan (and any successor sections) occurring after the Grant Date, the adjustment terms of that section will apply to the Award.

 

8.                                      Bound by Plan and Committee Decisions. By accepting the Award, you acknowledge that you have received a copy of the Plan, have had an opportunity to review the Plan, and agree to be bound by all of the terms of the Plan. If there is any conflict between this Agreement and the Plan, the Plan will control. The authority to manage and control the operation and administration of this Agreement and the Plan is vested in the Committee. The Committee has all powers under this Agreement that it has under the Plan. Any interpretation of this Agreement or the Plan by the Committee and any decision made by the Committee related to the Agreement or the Plan will be final and binding on all Persons.

 

9.                                      Regulatory and Other Limitations. Notwithstanding anything else in this Agreement, the Committee may impose conditions, restrictions, and limitations on the issuance of Shares under the Award unless and until the Committee determines that the issuance complies with (a) all registration requirements under the Securities Act, (b) all listing requirements of any securities exchange or similar entity on which the Shares are listed, (c) all Company policies and administrative rules, and (d) all applicable laws.

 

10.                               Miscellaneous.

 

(a)                                 Notices. Any notice that may be required or permitted under this Agreement must be in writing and may be delivered personally, by intraoffice mail, or by electronic mail or via a postal service (postage prepaid) to the electronic mail or postal address and directed to the person as the receiving party may designate in writing from time to time.

 

(b)                                 Waiver. The waiver by any party to this Agreement of a breach of any term of the Agreement will not operate or be construed as a waiver of any other or subsequent breach.

 

(c)                                  Entire Agreement. This Agreement and the Plan constitute the entire agreement between you and the Company related to the Award. Any prior agreements, commitments, or negotiations concerning the Award are superseded.

 

(d)                                 Binding Effect; Successors. The obligations and rights of the Company under this Agreement will be binding upon and inure to the benefit of the Company and any successor corporation or organization resulting from the merger, consolidation, sale, or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company. Your obligations and rights under this Agreement will be binding upon and inure to your benefit and the benefit of your beneficiaries, executors, administrators, heirs, and successors.

 

(e)                                  Governing Law; Jurisdiction; Waiver of Jury Trial; Data Protection. You acknowledge and expressly agree to the governing law terms of Section 14.9 of the Plan (and any successor terms), the jurisdiction and waiver of jury trial terms of Section 14.10 of the Plan (and any successor terms), and the data protection terms of Section 14.23 of the Plan (and any successor terms).

 

(f)                                   Amendment. This Agreement may be amended at any time by the Committee, except that no amendment may, without your consent, materially impair your rights under the Award.

 

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(g)                                  Severability. The invalidity or unenforceability of any term of the Plan or this Agreement will not affect the validity or enforceability of any other term of the Plan or this Agreement, and each other term of the Plan and this Agreement will be severable and enforceable to the extent permitted by law.

 

(h)                                 No Rights to Service; No Impact on Other Benefits. Nothing in this Agreement will be construed as giving you any right to be retained in any position with the Company or its Affiliates. Nothing in this Agreement will interfere with or restrict the rights of the Company or its Affiliates—which are expressly reserved—to remove, terminate, or discharge you at any time for any reason whatsoever or for no reason, subject to the Company’s certificate of incorporation, bylaws, and other similar governing documents and applicable law. The value of the RSUs is not part of your normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance, or similar employee benefit. The grant of the RSUs does not create any right to receive any future awards.

 

(i)                                     Further Assurances. You must, upon request of the Company, do all acts and execute, deliver, and perform all additional documents, instruments, and agreements that may be reasonably required by the Company to implement this Agreement.

 

(j)                                    Clawback. All awards, amounts, or benefits received or outstanding under the Plan will be subject to clawback, cancellation, recoupment, rescission, payback, reduction, or other similar action in accordance with the terms of any Company clawback or similar policy or any applicable law related to such actions, as may be in effect from time to time. You acknowledge and consent to the Company’s application, implementation, and enforcement of any applicable Company clawback or similar policy that may apply to you, whether adopted before or after the Grant Date (including the forfeiture, clawback, and detrimental conduct terms contained in Section 14.22 of the Plan as of the Grant Date (and any successor terms)), and any term of applicable law relating to clawback, cancellation, recoupment, rescission, payback, or reduction of compensation, and the Company may take such actions as may be necessary to effectuate any such policy or applicable law, without further consideration or action.

 

(k)                                 Electronic Delivery and Acceptance. The Company may deliver any documents related to current or future participation in the Plan by electronic means. You consent to receive those documents by electronic delivery and to participate in the Plan through any on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

11.                               Your Representations. You represent to the Company that you have read and fully understand this Agreement and the Plan and that your decision to participate in the Plan is completely voluntary. You also acknowledge that you are relying solely on your own advisors regarding the tax consequences of the Award.

 

By selecting the signature button below, you are signing this Agreement electronically and agreeing that your electronic signature is the legal equivalent of a manual signature on this Agreement. In addition, you are agreeing to all of the terms of this Agreement, as of the Grant Date.

 

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Exhibit 10.8

 

INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made and entered into as of [·], 2019 between Ping Identity Holding Corp., a Delaware corporation (the “Company”), and [            ] (“Indemnitee”).

 

WHEREAS, highly competent persons have become more reluctant to serve corporations as directors or officers or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;

 

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities.  Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions.  At the same time, directors, officers and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the corporation or business enterprise itself.  The Bylaws of the Company (as amended or restated, the “Bylaws”) require indemnification of the officers and directors of the Company.  Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (“DGCL”).  The Bylaws and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers of the Company and other persons with respect to indemnification;

 

WHEREAS, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;

 

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company and its stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

 

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

 

WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; [and]

 

WHEREAS, Indemnitee may not be willing to serve or continue to serve as an officer or director without adequate protection, and the Company desires Indemnitee to serve or continue

 


 

to serve in such capacity; Indemnitee is willing to serve, continue to serve and take on additional service for or on behalf of the Company on the condition that he be so indemnified[; and]

 

[WHEREAS, Indemnitee has certain rights to indemnification and/or insurance provided by Vista Equity Partners (“Vista”) or affiliates of Vista which Indemnitee and Vista intend to be secondary to the primary obligation of the Company to indemnify Indemnitee as provided herein, with the Company’s acknowledgment of and agreement to the foregoing being a material condition to Indemnitee’s willingness to serve on the Board.](1)

 

NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as a director or officer from and after the date hereof, the parties hereto agree as follows:

 

1.                                      Indemnity of Indemnitee.  Subject to the provisions of Section 9, the Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law, as such may be amended from time to time, if Indemnitee was or is, or is threatened to be made, a party to, or otherwise becomes involved in, any Proceeding (as hereinafter defined) by reason of Indemnitee’s Corporate Status (as hereinafter defined). In furtherance of the foregoing indemnification, and without limiting the generality thereof:

 

(a)                                 Proceedings other than Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section l(a) if, by reason of his Corporate Status, Indemnitee is, or is threatened to be made, a party to or participant, or otherwise becomes involved in, in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company.  Pursuant to this Section 1(a), Indemnitee shall be indemnified against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him, or on his behalf, in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.

 

(b)                                 Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of his Corporate Status, Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company.  Pursuant to this Section 1(b), Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee, or on Indemnitee’s behalf, in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided, however, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company unless and only to the extent that the court in which the Proceeding was brought shall determine that Indemnitee is fairly and reasonably entitled to indemnification.

 


(1)                                 NTD: Bracketed language to be included in form for Vista directors.

 

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(c)                                  Indemnification for Expenses of a Party Who is Wholly or Partly Successful.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to or participant in and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, he shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.  If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter.  For purposes of this Section 1(c) and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

2.                                      Additional Indemnity.  In addition to, and without regard to any limitations on the indemnification provided for in Section 1 of this Agreement, the Company shall and hereby does, to the fullest extent permitted by applicable law, indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status, he is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company).  The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement, other than those set forth in Section 9 hereof, shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful.

 

3.                                      Contribution.

 

(a)                                 Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), to the fullest extent permitted by applicable law, the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee.  The Company shall not, without the Indemnitee’s prior written consent, enter into any such settlement of any action, suit or proceeding (in whole or in part) unless such settlement (i) provides for a full and final release of all claims asserted against Indemnitee and (ii) does not impose any Expense, judgment, fine, penalty or limitation on Indemnitee.

 

(b)                                 Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), to the fullest extent permitted by applicable law, the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to

 

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the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the law may require to be considered.  The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

 

(c)                                  To the fullest extent permitted by applicable law, the Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.

 

(d)                                 To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding, and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

 

4.                                      Indemnification for Expenses of a Witness.  Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is, by reason of his Corporate Status, a witness, is made (or asked) to respond to discovery requests, or is otherwise asked to participate, in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

 

5.                                      Advancement of Expenses.  Notwithstanding any other provision of this Agreement (other than Section 7(e) and Section 9), the Company shall advance, to the extent not prohibited by law, all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding (or part of any Proceeding) not initiated by Indemnitee or any Proceeding initiated by Indemnitee with the prior approval of the Board as provided in Section 9(d), within thirty (30) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such

 

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Proceeding.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee.  Any advances pursuant to this Section 5 shall be unsecured and interest free.  In accordance with Sections 7(d) and 7(e) of this Agreement, advances shall include any and all reasonable Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed.  This Section 5 shall not apply to claim by Indemnitee for expenses in a matter for which indemnity and advancement of expenses is excluded pursuant to Section 9.

 

6.                                      Procedures and Presumptions for Determination of Entitlement to Indemnification.  It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the DGCL and public policy of the State of Delaware.  Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:

 

(a)                                 To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification.  The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.  Notwithstanding the foregoing, any failure of Indemnitee to provide such a request to the Company, or to provide such a request in a timely fashion, shall not relieve the Company of any liability that it may have to Indemnitee unless, and to the extent that, such failure actually and materially prejudices the interests of the Company.

 

(b)                                 Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a) hereof, a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following four methods, which shall be at the election of the Board:  (1) by a majority vote of the Disinterested Directors (as hereinafter defined), even though less than a quorum; (2) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum; (3) if there are no Disinterested Directors, or if the Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (4) if so directed by the Board, by the stockholders of the Company; provided, however, that if a Change in Control has occurred, the determination with respect to Indemnitee’s entitlement to indemnification shall be made by Independent Counsel.  For purposes hereof, Disinterested Directors are those members of the Board who are not parties to the action, suit or proceeding in respect of which indemnification is sought by Indemnitee.

 

(c)                                  In the event the determination of entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel shall be selected as provided in this Section 6(c). If a Change in Control has not occurred, the Independent Counsel shall be selected by the Board, and the Company shall give written notice to the Indemnitee advising him of the identity of the Independent Counsel so selected. Indemnitee may, within 10 days after such written notice of selection shall have been given, deliver to the Company a written objection to such selection; provided, however, that such objection may be asserted only on the

 

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ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 12 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the Person so selected shall act as Independent Counsel.  If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit.  If a Change in Control has occurred, the Independent Counsel shall be selected by the Indemnitee (unless the Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and approved by the Board within 20 days after notification by Indemnitee.  If (i) an Independent Counsel is to make the determination of entitlement pursuant to this Section 6, and (ii) within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected (including as a result of an objection to the selected Independent Counsel), either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a Person selected by the court or by such other Person as the court shall designate, and the Person with respect to whom all objections are so resolved or the Person so appointed shall act as Independent Counsel under Section 6(b) hereof.  The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c), regardless of the manner in which such Independent Counsel was selected or appointed.

 

(d)                                 In making a determination with respect to entitlement to indemnification hereunder, the Person making such determination shall to the fullest extent permitted by law presume that Indemnitee is entitled to indemnification under this Agreement.  Anyone seeking to overcome this presumption shall have the burden of proof to overcome such presumption.  Neither the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

 

(e)                                  Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise (as hereinafter defined), including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise.  In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.  Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed to

 

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the best interests of the Company.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

 

(f)                                   If the Person empowered or selected under this Section 6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall to the fullest extent permitted by law be deemed to have been made and Indemnitee shall be entitled to such indemnification absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the Person making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 6(f) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 6(b) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination, the Board or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat.

 

(g)                                  Indemnitee shall cooperate with the Person making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such Person upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination.  Any costs or expenses (including reasonable attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the Person making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

 

(h)                                 The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty.  In the event that any action, claim or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall to the fullest extent permitted by law be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

 

(i)                                     The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its

 

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equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.

 

7.                                      Remedies of Indemnitee.

 

(a)                                 In the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no determination of entitlement to indemnification is made pursuant to Section 6(b) of this Agreement within ninety (90) days after receipt by the Company of the request for indemnification or (iv) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of Indemnitee’s entitlement to such indemnification, contribution or advancement of Expenses.  Alternatively, Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association.  The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

 

(b)                                 In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial, or arbitration, on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 6(b).  In any judicial proceeding or arbitration commenced pursuant to this Section 7, Indemnitee shall be presumed to be entitled to indemnification under this Agreement and the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be, and the Company may not refer to or introduce into evidence any determination pursuant to Section 6(b) of this Agreement adverse to Indemnitee for any purpose other than to establish its compliance with the terms of this Agreement.  If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 7, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 5 until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).

 

(c)                                  If a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 7, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s misstatement not materially misleading, in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

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(d)                                 In the event that Indemnitee, pursuant to this Section 7, incurs costs, in a judicial or arbitration proceeding or otherwise, attempting to enforce his rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall pay on his behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 12 of this Agreement) actually and reasonably incurred by him in such efforts, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery, to the fullest extent permitted by applicable law. It is the intent of the Company that, to the fullest extent permitted by applicable law, Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to Indemnitee hereunder.

 

(e)                                  The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.

 

(f)                                   Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

 

8.                                      Non-Exclusivity; Survival of Rights; [Primacy of Indemnification;] Insurance; Subrogation.

 

(a)                                 The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation of the Company (as amended or restated, the “Charter”), the Bylaws, any agreement, a vote of stockholders, a resolution of directors or otherwise, of the Company.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal.  To the extent that a change in the DGCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Charter, Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

 

(b)                                 The Company shall, if commercially reasonable, obtain and maintain in effect during the entire period for which the Company is obligated to indemnify Indemnitee under this Agreement, one or more policies of insurance with reputable insurance

 

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companies to provide the directors and officers of the Company with coverage for losses from wrongful acts and omissions and to ensure the Company’s performance of its indemnification obligations under this Agreement.  Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such officer or director under such policy or policies.  In all such insurance policies, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee with the same rights and benefits as are accorded to the most favorably insured of the Company’s directors and officers.  At the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

 

(c)                                  [The Company hereby acknowledges that Indemnitee has certain rights to indemnification, advancement of expenses and/or insurance provided by Vista and certain affiliates that, directly or indirectly, (i) are controlled by, (ii) control or (iii) are under common control with, Vista (collectively, the “Fund Indemnitors”).  With respect to any amounts that are subject to indemnity under this Agreement and also subject to an indemnity obligation owed by Fund Indemnitors, the Company hereby agrees (i) that, as compared the Fund Indemnitors, it is the indemnitor of first resort with respect to any rights to indemnification provided to Indemnitee herein (i.e., its obligations to Indemnitee are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee is secondary), (ii) that it shall be required to advance the full amount of expenses incurred by Indemnitee and shall be liable for the full amount of all Expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of this Agreement and the Charter or Bylaws of the Company (or any other agreement between the Company and Indemnitee), without regard to any rights Indemnitee may have against the Fund Indemnitors, and (iii) that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof.  The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company.  The Company and Indemnitee agree that the Fund Indemnitors are express third party beneficiaries of the terms of this Section 8(c).]

 

(d)                                 [Except as provided in Section 8(c) above,] in the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee [(other than against the Fund Indemnitors)], who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

(e)                                  [Except as provided in Section 8(c) above,] the Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable (or for which advancement of Expenses is provided) hereunder if and to the extent that Indemnitee has

 

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otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

 

(f)                                   [Except as provided in Section 8(c) above,] the Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.

 

9.                                      Exception to Right of Indemnification. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity or advancement of expenses in connection with any claim made against Indemnitee:

 

(a)                                 for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; [provided, that the foregoing shall not affect the rights of Indemnitee or the Fund Indemnitors set forth in Section 8(c) above;] or

 

(b)                                 for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (as hereinafter defined), or similar provisions of state statutory law or common law; or

 

(c)                                  for reimbursement to the Company of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company in each case as required under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) or Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act in connection with an accounting restatement of the Company or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act);

 

(d)                                 in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Company has joined in or the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation, (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law, or (iii) the Proceeding is one to enforce Indemnitee’s rights under this  Agreement or;

 

(e)    any reimbursement of the Company by Indemnitee of any compensation pursuant to any compensation recoupment or clawback policy adopted by the Board or the compensation committee of the Board, including but not limited to any such policy

 

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adopted to comply with stock exchange listing requirements implementing Section 10D of the Exchange Act.

 

10.                               Non-Disclosure of Payments. Except as expressly required by the securities laws of the United States of America, neither party shall disclose any payments under this Agreement unless prior approval of the other party is obtained. If any payment information must be disclosed, the Company shall afford the Indemnitee an opportunity to review all such disclosures and, if requested, to explain in such statement any mitigating circumstances regarding the events to be reported.

 

11.                               Duration of Agreement.  All agreements and obligations of the Company contained herein shall continue until and terminate upon the later of (i) twenty (20) years after the date that Indemnitee shall have ceased to serve as a director or officer of the Company or a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which Indemnitee served at the request of the Company, and (ii) one (1) year after the final termination of any Proceeding (including any rights of appeal thereto) in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any Proceeding commenced by Indemnitee pursuant to Section 7 of this Agreement relating thereto (including any rights of appeal of any Section 7 Proceeding). Termination of this Agreement shall not adversely affect any right or protection hereunder of any Indemnitee in respect of any Proceeding (regardless of when such Proceeding is first threatened, commenced or completed) arising out of, or related to, any act or omission occurring prior to the time of such termination. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives.

 

12.                               Definitions.  For purposes of this Agreement:

 

(a)                                 Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

 

(b)                                 Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

 

(i)  Acquisition of Stock by Third Party.  Any Person (as defined below), other than Vista and its affiliates and other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the Beneficial Owner (as defined above), directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then

 

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outstanding securities, unless the change in relative Beneficial Ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding securities entitled to vote generally in the election of directors;

 

(ii)  Change in Board of Directors.  During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in Section 12(b)(i), 12(b)(iii) or 12(b)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board;

 

(iii)  Corporate Transactions.  The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity; and

 

(iv)  Liquidation.  The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement or series of agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, or, if such approval is not required, the decision by the Board to proceed with such a liquidation, sale, or disposition in one transaction or a series of related transactions.

 

(c)                                  Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company, any direct or indirect subsidiary of the Company, or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at the express written request of the Company.

 

 

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

 

(e)                                  Enterprise” shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, employee, agent or fiduciary.

 

(f)                                   Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(g)                                  Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts and other professionals, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, ERISA excise taxes and penalties, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding.  Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding and any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent.  Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

 

(h)                                 Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent:  (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any Person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.  The Company agrees to pay the reasonable fees and disbursements of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

(i)                                     Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

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(j)                                    Proceeding” includes any threatened, pending or completed action, suit, claim, counterclaim, cross claim, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of the fact that Indemnitee is or was an officer or director of the Company, by reason of any action taken by him or of any inaction on his part while acting as an officer or director of the Company, or by reason of the fact that he is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise; in each case whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant to Section 7 of this Agreement to enforce his rights under this Agreement.

 

13.                               Severability.  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (i) the validity, legality, and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (ii) such provision or provisions shall be deemed reformed to the fullest extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (iii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.  Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification rights to the fullest extent permitted by applicable laws.

 

14.                               Enforcement and Binding Effect.

 

(a)                                 The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving or continuing to serve as a director or officer of the Company.

 

(b)                                 Without limiting any of the rights of Indemnitee under the Charter or Bylaws of the Company as they may be amended from time to time, this Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

 

(c)                                  The indemnification and advancement of expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties

 

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hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or of any other Enterprise at the Company’s request, and shall inure to the benefit of Indemnitee and his spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

 

(d)                                 The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

(e)                                  The Company and Indemnitee agree herein that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that such breach may cause Indemnitee irreparable harm. Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement by seeking injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which he may be entitled. The Company and Indemnitee further agree that Indemnitee shall be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertaking in connection therewith. The Company acknowledges that in the absence of a waiver, a bond or undertaking may be required of Indemnitee by the court, and the Company hereby waives any such requirement of such a bond or undertaking.

 

15.                               Modification and Waiver.  No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

 

16.                               Notice By Indemnitee.  Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder.  The failure to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company.

 

17.                               Notices.  All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given:  (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally recognized

 

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overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent:

 

(a)                                 To Indemnitee at the address set forth below Indemnitee’s signature hereto.

 

(b)                                 To the Company at:

 

Ping Identity Holding Corp.

1001 17th Street, Suite 100

Attention: Chief Legal Officer

E-mail: lromer@pingidentity.com

 

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

 

18.                               Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.  This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

19.                               Headings.  The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

20.                               Usage of Pronouns.  Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.

 

21.                               Governing Law and Consent to Jurisdiction.  This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict-of-laws rules.  Except with respect to any arbitration commenced by Indemnitee pursuant to Section 7 of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first written above.

 

 

 

PING IDENTITY HOLDING CORP.

 

 

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

INDEMNITEE

 

 

 

 

 

 

 

Name:

 

 

 

Address:

 

 

 

 

 

SIGNATURE PAGE TO INDEMNIFICATION AGREEMENT

 





Exhibit 10.9

 

DIRECTOR NOMINATION AGREEMENT

 

THIS DIRECTOR NOMINATION AGREEMENT (this “Agreement”) is made and entered into as of [·], 2019, by and among Ping Identity Holding Corp., a Delaware corporation (the “Company”), Vista Equity Partners Fund VI, L.P., Vista Equity Partners Fund VI-A, L.P., VEPF VI FAF, L.P. (collectively referred to herein as the “Vista Funds”), Vista Equity Partners Fund VI GP, L.P. (“Fund VI GP”),  VEPF VI GP, Ltd. (“Fund VI UGP”), VEPF Management, L.P. (the “Management Company”) and VEP Group, LLC (“VEP Group” and, together with the Vista Funds, Fund VI GP, Fund VI UGP, the Management Company and their Affiliates (as defined herein), “Vista”).  This Agreement shall become effective (the “Effective Date”) upon the closing of the Company’s initial public offering (the “IPO”) of shares of its common stock, par value $0.001 per share (the “Common Stock”).

 

WHEREAS, as of the date hereof, the Vista Funds collectively own all of the outstanding equity interests of the Company (apart from interests held by directors and officers of the Company and Rio Grande Fork Holdings, LLC, a co-investor in the Company) and whereas VEP Group is the indirect beneficial owner of the majority of such equity interests;

 

WHEREAS, Vista is contemplating causing the Company to effect the IPO;

 

WHEREAS, Vista currently has the authority to appoint all directors of the Company;

 

WHEREAS, in consideration of Vista agreeing to undertake the IPO, the Company has agreed to permit Vista to designate persons for nomination for election to the board of directors of the Company (the “Board”) following the Effective Date on the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and  other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the parties to this Agreement agrees as follows:

 

1.                                      Board Nomination Rights.

 

(a)                                 From the Effective Date, VEP Group shall have the right, but not the obligation, to nominate to the Board a number of designees equal to at least: (i) 100% of the Total Number of Directors (as defined below), so long as Vista Beneficially Owns shares of Common Stock representing at least 40% of the Original Amount of  VEP Group, (ii) 40% of the Total Number of Directors, in the event that Vista Beneficially Owns shares of Common Stock representing at least 30% but less than 40% of the Original Amount of VEP Group, (iii) 30% of the Total Number of Directors, in the event that Vista Beneficially Owns shares of Common Stock representing at least 20% but less than 30% of the Original Amount of VEP Group, (iv) 20% of the Total Number of Directors, in the event that Vista Beneficially Owns shares of Common Stock representing at least 10% but less than 20% of the Original Amount of VEP Group and (v) 1 Director (as defined below), in the event that Vista Beneficially Owns shares of Common Stock representing at least 5% of the Original Amount of VEP Group (such persons, the “Nominees”).  For purposes of calculating the number of directors that VEP Group is entitled to designate pursuant to the

 


 

immediately preceding sentence, any fractional amounts shall automatically be rounded up to the nearest whole number (e.g., 1¼ Directors shall equate to 2 Directors) and any such calculations shall be made after taking into account any increase in the Total Number of Directors.

 

(b)                                 In the event that VEP Group has nominated less than the total number of designees, VEP Group shall be entitled to nominate pursuant to Section 1(a), Vista shall have the right, at any time, to nominate such additional designees to which it is entitled, in which case, the Company and the Directors shall take all necessary corporation action, to the fullest extent permitted by applicable law (including with respect to fiduciary duties under Delaware law), to (x) enable VEP Group to nominate and effect the election or appointment of such additional individuals, whether by increasing the size of the Board, or otherwise and (y) to designate such additional individuals nominated by VEP Group to fill such newly created vacancies or to fill any other existing vacancies.

 

(c)                                  In addition to the nomination rights set forth in Section 1(a) above, from the Effective Date, for so long as Vista Beneficially Owns shares of Common Stock representing at least 5% of the Original Amount of VEP Group, VEP Group shall have the right, but not the obligation, to designate a person (a “Non-Voting Observer”) to attend meetings of the Board (including any meetings of any committees thereof) in a non-voting observer capacity.  Any such Non-Voting Observer shall be permitted to attend all meetings of the Board. VEP Group shall have the right to remove and replace its Non-Voting Observer at any time and from time to time. The Company shall furnish to any Non-Voting Observer (i) notices of Board meetings no later than, and using the same form of communication as, notice of Board meetings are furnished to directors and (ii) copies of any materials prepared for meetings of the Board that are furnished to the directors no later than the time such materials are furnished to the directors; provided that failure to deliver notice, or materials, to such Non-Voting Observer in connection with such Non-Voting Observer’s right to attend and/or review materials with respect to, any meeting of the Board shall not, by itself, impair the validity of any action taken by such Board at such meeting. Such Non-Voting Observer shall be required to execute or otherwise become subject to any codes of conduct or confidentiality agreements of the Company generally applicable to directors of the Company or as the Company reasonably requests.

 

(d)                                 The Company shall pay all reasonable out-of-pocket expenses incurred by the Nominees and the Non-Voting Observer in connection with the performance of his or her duties as a director or a Non-Voting Observer and in connection with his or her attendance at any meeting of the Board.

 

(e)                                  Beneficially Own” shall mean that a specified person has or shares the right, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, to vote shares of capital stock of the Company.  “Affiliate” of any person shall mean any other person controlled by, controlling or under common control with such person; where “control” (including, with its correlative meanings, “controlling,” “controlled by” and “under common control with”) means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities, by contract or otherwise).

 

(f)                                   Director” means any member of the Board.

 

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(g)                                  Original Amount of VEP Group” means the aggregate number of shares of Common Stock held, directly or indirectly, by VEP Group on the date hereof, as such number may be adjusted from time to time for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or other similar changes in the Company’s capitalization.

 

(h)                                 Total Number of Directors” means the total number of Directors comprising the Board.

 

(i)                                     No reduction in the number of shares of Common Stock that Vista Beneficially Owns shall shorten the term of any incumbent director.  At the Effective Date, the Board shall be comprised of nine members and the initial Nominees shall be Andre Durand, Brian N. Sheth, Rod Aliabadi, David A. Breach, Michael Fosnaugh, Yancey L. Spruill, John McCormack, Clifford Chiu and Lisa Hook.

 

(j)                                    In the event that any Nominee shall cease to serve for any reason, VEP Group shall be entitled to designate such person’s successor in accordance with this Agreement (regardless of Vista’s beneficial ownership in the Company at the time of such vacancy) and the Board shall promptly fill the vacancy with such successor nominee; it being understood that any such designee shall serve the remainder of the term of the director whom such designee replaces.

 

(k)                                 If a Nominee is not appointed or elected to the Board because of such person’s death, disability, disqualification, withdrawal as a nominee or for other reason is unavailable or unable to serve on the Board, VEP Group shall be entitled to designate promptly another nominee and the director position for which the original Nominee was nominated shall not be filled pending such designation.

 

(l)                                     So long as VEP Group has the right to nominate Nominees under Section 1(a) or any such Nominee is serving on the Board, the Company shall use its reasonable best efforts to maintain in effect at all times directors and officers indemnity insurance coverage reasonably satisfactory to Vista, and the Company’s Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws (each as may be further amended, supplemented or waived in accordance with its terms) shall at all times provide for indemnification, exculpation and advancement of expenses to the fullest extent permitted under applicable law.

 

(m)                             If the size of the Board is expanded, VEP Group shall be entitled to nominate a number of Nominees to fill the newly created vacancies such that the total number of Nominees serving on the Board following such expansion will be equal to that number of Nominees that VEP Group would be entitled to nominate in accordance with Section 1(a) if such expansion occurred immediately prior to any meeting of the stockholders of the Company called with respect to the election of members of the Board, and the Board shall appoint such Nominees to the Board.

 

(n)                                 At such time as the Company ceases to be a “controlled company” and is required by applicable law or the NASDAQ Global Select Market (the “Exchange”) listing standards to have a majority of the Board comprised of “independent directors” (subject in each case to any applicable phase-in periods), Vista’s Nominees shall include a number of persons that qualify as

 

3


 

“independent directors” under applicable law and the Exchange listing standards such that, together with any other “independent directors” then serving on the Board that are not Nominees, the Board is comprised of a majority of “independent directors.”

 

(o)                                 At any time that VEP Group shall have any nomination rights under Section 1, the Company shall not take any action, including making or recommending any amendment to the Certificate of Incorporation or the Company’s bylaws that could reasonably be expected to adversely affect VEP Group’s rights under this Agreement, in each case without the prior written consent of VEP Group.

 

2.                                      Company Obligations.  The Company agrees to use its reasonable best efforts to ensure that prior to the date that Vista and its Affiliates cease to Beneficially Own shares of Common Stock representing at least 5% of the total voting power of the then outstanding Common Stock, (i) each Nominee is included in the Board’s slate of nominees to the stockholders (the “Board’s Slate”) for each election of directors; and (ii) each Nominee is included in the proxy statement prepared by management of the Company in connection with soliciting proxies for every meeting of the stockholders of the Company called with respect to the election of members of the Board (each, a “Director Election Proxy Statement”), and at every adjournment or postponement thereof, and on every action or approval by written consent of the stockholders of the Company or the Board with respect to the election of members of the Board.  VEP Group will promptly provide reporting to the Company after Vista ceases to Beneficially Own shares of Common Stock representing at least 5% of the total voting power of the then outstanding Common Stock, such that Company is informed of when this obligation terminates. The calculation of the number of Nominees that VEP Group is entitled to nominate to the Board’s Slate for any election of directors shall be based on the percentage of the total voting power of the then outstanding Common Stock then Beneficially Owned by Vista (“Vista Voting Control”) immediately prior to the mailing to shareholders of the Director Election Proxy Statement relating to such election (or, if earlier, the filing of the definitive Director Election Proxy Statement with the U.S. Securities and Exchange Commission). Unless VEP Group notifies the Company otherwise prior to the mailing to shareholders of the Director Election Proxy Statement relating to an election of directors, the Nominees for such election shall be presumed to be the same Nominees currently serving on the Board, and no further action shall be required of VEP Group for the Board to include such Nominees on the Board’s Slate; provided, that, in the event VEP Group is no longer entitled to nominate the full number of Nominees then serving on the Board, VEP Group shall provide advance written notice to the Company, of which currently servicing Nominee(s) shall be excluded from the Board Slate, and of any other changes to the list of Nominees. If VEP Group fails to provide such notice prior to the mailing to shareholders of the Director Election Proxy Statement relating to such election (or, if earlier, the filing of the definitive Director Election Proxy Statement with the U.S. Securities and Exchange Commission), a majority of the independent directors then serving on the Board shall determine which of the Nominees of VEP Group then serving on the Board will be included in the Board’s Slate.  Furthermore, the Company agrees for so long as the Company qualifies as a “controlled company” under the rules of the Exchange the Company will elect to be a “controlled company” for purposes of the Exchange and will disclose in its annual meeting proxy statement that it is a “controlled company” and the basis for that determination. The Company and Vista acknowledge and agree that, as of the Effective Date, the Company is a “controlled company.”

 

4


 

3.                                      Committees.  From and after the Effective Date hereof until such time as Vista and its Affiliates cease to Beneficially Own shares of Common Stock representing at least 5% of the total voting power of the then outstanding Common Stock, Vista shall have the right to designate a number of members of each committee of the Board equal to the nearest whole number greater than the product obtained by multiplying (a) the percentage of the total voting power of the then outstanding Common Stock then Beneficially Owned by Vista and (b) the number of positions, including any vacancies, on the applicable committee, provided that any such designee shall be a director and shall be eligible to serve on the applicable committee under applicable law or listing standards of the Exchange, including any applicable independence requirements (subject in each case to any applicable exceptions, including those for newly public companies and for “controlled companies,” and any applicable phase-in periods). Any additional members shall be determined by the Board. Nominees designated to serve on a Board committee shall have the right to remain on such committee until the next election of directors, regardless of the level of Vista Voting Control following such designation.  Unless VEP Group notifies the Company otherwise prior to the time the Board takes action to change the composition of a Board committee, and to the extent Vista has the requisite Vista Voting Control for VEP Group to nominate a Board committee member at the time the Board takes action to change the composition of any such Board committee, any Nominee currently designated by VEP Group to serve on a committee shall be presumed to be re-designated for such committee.

 

4.                                      Amendment and Waiver.  Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by the Company and Vista, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. VEP Group shall not be obligated to nominate all (or any) of the Nominees it is entitled to nominate pursuant to this Agreement for any election of directors but the failure to do so shall not constitute a waiver of its rights hereunder with respect to future elections; provided, however, that in the event VEP Group fails to nominate all (or any) of the Nominees it is entitled to nominate pursuant to this Agreement prior to the mailing to shareholders of the Director Election Proxy Statement relating to such election (or, if earlier, the filing of the definitive Director Election Proxy Statement with the U.S. Securities and Exchange Commission), the Compensation and Governance Committee of the Board shall be entitled to nominate individuals in lieu of such Nominees for inclusion in the Board’s Slate and the applicable Director Election Proxy Statement with respect to the election for which such failure occurred and VEP Group shall be deemed to have waived its rights hereunder with respect to such election. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

5.                                      Benefit of Parties.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective permitted successors and assigns. Notwithstanding the foregoing, the Company may not assign any of its rights or obligations hereunder without the prior written consent of Vista.  Except as otherwise expressly provided in Section 6, nothing herein

 

5


 

contained shall confer or is intended to confer on any third party or entity that is not a party to this Agreement any rights under this Agreement.

 

6.                                      Assignment. Upon written notice to the Company, VEP Group may assign to any of the Vista Funds or any Affiliate of VEP Group (other than a portfolio company) all of its rights hereunder and, following such assignment, such assignee shall be deemed to be “VEP Group” for all purposes hereunder.

 

7.                                      Headings.  Headings are for ease of reference only and shall not form a part of this Agreement.

 

8.                                      Governing Law.  This Agreement shall be construed in accordance with and governed by the law of the State of Delaware without giving effect to the principles of conflicts of laws thereof.

 

9.                                      Jurisdiction.  Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement may be brought against any of the parties in any federal court located in the State of Delaware or any Delaware state court, and each of the parties hereby consents to the exclusive jurisdiction of such court (and of the appropriate appellate courts) in any such suit, action or proceeding and waives any objection to venue laid therein. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each of the parties agrees that service of process upon such party at the address referred to in Section 16, together with written notice of such service to such party, shall be deemed effective service of process upon such party.

 

10.                               WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

 

11.                               Entire Agreement.  This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings and negotiations, both written and oral among the parties with respect to the subject matter hereof.

 

12.                               Counterparts; Effectiveness.  This Agreement may be signed in any number of counterparts, each of which shall be deemed an original. This Agreement shall become effective when each party shall have received a counterpart hereof signed by each of the other parties. An executed copy or counterpart hereof delivered by facsimile shall be deemed an original instrument.

 

13.                               Severability.  If any provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provisions to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law.

 

6


 

14.                               Further Assurances.  Each of the parties hereto shall execute and deliver such further instruments and do such further acts and things as may be required to carry out the intent and purpose of this Agreement.

 

15.                               Specific Performance. Each of the parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any federal or state court located in the State of Delaware, in addition to any other remedy to which they are entitled at law or in equity.

 

16.                               Notices. All notices, requests and other communications to any party or to the Company shall be in writing (including telecopy or similar writing) and shall be given,

 

If to the Company:

 

Ping Identity Holding Corp.

1001 17th Street, Suite 100

Denver, Colorado 80202

Attention: Chief Legal Officer

 

If to any member of Vista or any Nominee:

 

c/o Vista Equity Partners

4 Embarcadero Center

20th Floor

San Francisco, California 94111

Attention: David Breach

Christina Lema

Facsimile: (415) 765-6666

 

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

 

Kirkland & Ellis LLP

300 N. LaSalle

Chicago, IL  60654

Attention: Robert M. Hayward, P.C.

Robert E. Goedert, P.C.

Facsimile: (312) 862-2200

 

or to such other address or telecopier number as such party or the Company may hereafter specify for the purpose by notice to the other parties and the Company.  Each such notice, request or other communication shall be effective when delivered at the address specified in this Section 16 during regular business hours.

 

7


 

17.                               Enforcement.  Each of the parties hereto covenant and agree that the disinterested members of the Board have the right to enforce, waive or take any other action with respect to this Agreement on behalf of the Company.

 

*       *       *       *       *

 

8


 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written.

 

 

 

PING IDENTITY HOLDING CORP.

 

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

 

VISTA EQUITY PARTNERS FUND VI, L.P.

 

 

 

 

By:

Vista Equity Partners Fund VI GP, L.P.

 

Its:

General Partner

 

 

 

 

By:

VEPF VI GP, Ltd.

 

Its:

General Partner

 

 

 

 

By:

 

 

Name:

Robert F. Smith

 

Title:

Director

 

 

 

 

 

VISTA EQUITY PARTNERS FUND VI-A, L.P.

 

 

 

By:

Vista Equity Partners Fund VI GP, L.P.

 

Its:

General Partner

 

 

 

 

By:

VEPF VI GP, Ltd.

 

Its:

General Partner

 

 

 

 

By:

 

 

Name:

Robert F. Smith

 

Title:

Director

 


 

 

VEPF VI FAF, L.P.

 

 

 

By:

Vista Equity Partners Fund VI GP, L.P.

 

Its:

General Partner

 

 

 

 

By:

VEPF VI GP, Ltd.

 

Its:

General Partner

 

 

 

 

 

 

 

By:

 

 

Name:

Robert F. Smith

 

Title:

Director

 

 

 

 

 

VEPF MANAGEMENT, L.P.

 

 

 

By:

VEP Group, LLC

 

Its:

General Partner

 

 

 

 

By:

 

 

Name:

Robert F. Smith

 

Title:

Managing Member

 





Exhibit 10.10

 

LEASE AGREEMENT

 

between

 

MG-1005, LLC, a Colorado limited liability company

 

(as Landlord)

 

and

 

PING IDENTITY CORPORATION, a Delaware corporation

 

(as Tenant)

 

Section

 

Page

 

 

 

1.

PRINCIPAL TERMS

3

2.

GENERAL COVENANTS

5

3.

TERM

5

4.

RENT

5

5.

COMPLETION OR REMODELING OF THE PREMISES

6

6.

OPERATING EXPENSES

6

7.

SERVICES

6

8.

QUIET ENJOYMENT

8

9.

DEPOSIT

9

10.

CHARACTER OF OCCUPANCY

9

11.

MAINTENANCE, ALTERATIONS AND REENTRY BY LANDLORD

10

12.

ALTERATIONS AND REPAIRS BY TENANT

11

13.

CONSTRUCTION LIENS

13

14.

SUBLETTING AND ASSIGNMENT

13

15.

DAMAGE TO PROPERTY

15

16.

INDEMNITY

16

17.

SURRENDER AND NOTICE

16

18.

INSURANCE, CASUALTY, AND RESTORATION OF PREMISES

16

19.

CONDEMNATION

18

20.

DEFAULT BY TENANT

19

21.

DEFAULT BY LANDLORD

22

22.

SUBORDINATION AND ATTORNMENT

22

23.

REMOVAL OF TENANT’S PROPERTY

23

24.

HOLDING OVER: TENANCY MONTH-TO-MONTH

23

25.

PAYMENTS AFTER TERMINATION

23

 

i


 

26.

STATEMENT OF PERFORMANCE

24

27.

MISCELLANEOUS

24

28.

AUTHORITIES FOR ACTION AND NOTICE

29

29.

PARKING

30

30.

SUBSTITUTE PREMISES

30

31.

BROKERAGE

31

32.

COUNTERPARTS

31

33.

ADDENDUM/EXHIBITS

31

 

ii


 

LEASE AGREEMENT

 

THIS LEASE AGREEMENT (“Lease”), dated as of January 21, 2011, is by and between MG-1005, LLC, a Colorado limited liability company (“Landlord”), and PING IDENTITY CORPORATION, a Delaware corporation (“Tenant”).

 

WITNESSETH:

 

1.                                      PRINCIPAL TERMS. Capitalized terms, first appearing in quotations in this Section, elsewhere in the Lease or any Exhibits, are definitions of such terms as used in the Lease and Exhibits and shall have the defined meaning whenever used.

 

1.1.

“BUILDING”:

Buildings located at 1001 17th Street, Denver, Colorado 80202 consisting of approximately 655,565 rentable square feet

 

 

 

1.2.

“PREMISES”:

Approximately 20,225 rentable square feet located in Suite 100 of the Building

 

 

 

1.3.

“INITIAL TERM”:

66 whole calendar months

 

“Commencement Date”: the earlier to occur of: (a) May 15, 2011, as extended for each day of Net Landlord Delay (as defined in the Work Letter); or (b) the date Tenant commences the Permitted Use in any portion of the Premises but in no event sooner than April 15, 2011

 

“Expiration Date”: The last day of the 66th whole calendar month following the Commencement Date:

 

 

 

1.4.

“BASE RENT”:

Period

 

RSF Rate
Annually

 

Applicable
RSF

 

Monthly
Payment

 

 

 

Months 1-12

 

$

5.85

 

16,000

 

$

7,800.00

 

 

 

Months 13-18

 

$

18.25

 

16,000

 

$

24,333.33

 

 

 

Months 19-30

 

$

18.25

 

20,225

 

$

32,444.27

 

 

 

Months 31-42

 

$

18.25

 

20,225

 

$

34,129.69

 

 

 

Months 43-54

 

$

18.25

 

20,225

 

$

35,815.10

 

 

 

Months 55-66

 

$

18.25

 

20,225

 

$

37,500.52

 

 

 

 

 

 

Notwithstanding anything in this Lease to the contrary, the first month of Base Rent that Tenant is obligated to pay hereunder shall be paid in advance at the time Tenant executes this Lease.

 

 

 

1.5.

OPERATING EXPENSES:

Pro Rata Share: 3.0851%

 

3


 

1.6.

“DEPOSIT”:

None; See Addendum re required Letter of Credit

 

 

 

1.7.

“PERMITTED USE”:

General office use

 

 

 

1.8.

“GUARANTOR”:

None

 

 

 

1.9.

PARKING ALLOTMENT:

20 unreserved parking spaces (based on one (1) parking space per 1,000 rentable square feet of the Premises), the use of which shall be subject to and in accordance with Section 29 of the Lease

 

 

 

1.10.

LANDLORD’S NOTICE ADDRESS:

MG-1005, LLC, c/o Miller Global Properties, LLC
4643 S. Ulster Street, Suite 1500, Denver, CO 80237
Attn: Paul Hogan

 

 

 

1.11.

RENT PAYMENT:

If by check, mailed to:
MG-1005, LLC
P.O. Box 17767
Denver, CO 80217

 

If by ACH electronic payment, to:

 

Colorado Capital Bank, Account #: [***] ABA#[***]
5251 DTC Parkway, Suite 100, Greenwood Village,
CO 80111

 

 

 

1.12.

LANDLORD’S TAX I.D.:

[***]

 

 

 

1.13.

TENANTS NOTICE ADDRESS:
Precommencement Address:

 

 

1099 18th St., Suite 2950
Denver, CO 80202
Attn: Finance/Contracts

 

 

 

 

Post Commencement Address:

1001 17th Street, Suite 100
Denver, CO 80202
Attn: Finance/Contracts

 

With required copies to:

 

Jones Lang LaSalle Brokerage, Inc.
1225 17th Street Suite 1900
Denver, Colorado 80202
Attn: Lindsay Brown

 

and to:

 

4


 

 

 

Brownstein Hyatt Farber Schreck LLP
410 17th St., Suite 2200
Denver, CO 80202-4432
Attn: Aaron M. Hyatt (14644.1)

 

 

 

1.14.

TENANTS TAX I.D.:

[***]

 

 

 

1.15.

LANDLORD’S BROKER:

Cushman & Wakefield of Colorado, Inc.

 

 

 

1.16.

COOPERATING BROKER:

Jones Lang LaSalle

 

 

 

1.17.

ATTACHMENTS:

[check if applicable]

 

 

 

 

 

x Addendum

 

 

 

 

 

x Exhibit A-1 - The Premises

 

 

 

 

 

x Exhibit A-2 - The Patio Area

 

 

 

 

 

x Exhibit B - Real Property

 

 

 

 

 

x Exhibit C - Operating Expenses

 

 

 

 

 

x Exhibit D - Commencement Certificate

 

 

 

 

 

x Exhibit E - Rules and Regulations

 

 

 

 

 

x Exhibit F - Letter of Credit

 

 

 

 

 

x Exhibit G - Subordination, Non-Disturbance And Attornment Agreement

 

 

 

 

 

x Work Letter

 

2.                                      GENERAL COVENANTS. Tenant covenants and agrees to pay Rent and perform the obligations hereafter set forth and in consideration therefor Landlord leases to Tenant the Premises as depicted on the floor plate attached as Exhibit A-1, together with (a) an exclusive license to use the outdoor patio area adjacent to the Premises as depicted on Exhibit A-2 (the “Patio Area”), and (b) a non-exclusive right, subject to the provisions hereof, to use Common Areas, as herein defined, or other areas on the real property legally described on Exhibit B (the “Real Property”). The Building, Real Property, Common Areas, and appurtenances are hereinafter collectively sometimes called the “Building Complex.”

 

3.                                      TERM. The Initial Term of the Lease commences at 12:01 a.m. on the Commencement Date and terminates at 12:00 midnight on the Expiration Date (the Initial Term together with any extensions thereof is herein referred to as the “Term.”).

 

4.                                      RENT. Subject to the provisions below, commencing on the Commencement Date and on the first day of each month thereafter, Tenant shall pay Base Rent in the amount stated in Section 1.4, in advance without notice (all amounts, including Base Rent, to be paid by Tenant pursuant to this Lease as the context requires are sometimes referred to collectively as “Rent(s)”). Except as otherwise set forth in this Lease, Rents shall be paid without set off, abatement, or diminution, at the address set forth in Section 1.11, or at such other place as Landlord from time to time designates in writing.

 

5


 

5.                                      COMPLETION OR REMODELING OF THE PREMISES.

 

5.1.                            Provisions regarding remodeling or tenant finish work in the Premises, if any, are set forth in a work letter attached to this Lease (the “Work Letter”). “Initial Tenant Finish” means the Premises in its as-is condition with the base Building systems in good working order on the date Landlord delivers the Premises (“Delivery Date”) to Tenant for Tenant’s completion of the Finish Work in accordance with the Work Letter. Landlord has no obligation for the completion or remodeling of the Premises, and Tenant accepts the Premises in its “as is” condition on the Delivery Date which is anticipated to occur on the date of mutual execution of this Lease by Landlord and Tenant provided, however, Tenant’s acceptance of the Premises shall not in any way diminish or otherwise affect Landlord’s warranty, maintenance or repair obligations set forth elsewhere in this Lease. From the Delivery Date until the Commencement Date (the “Beneficial Occupancy Period”), Tenant shall have access to the Premises during the Beneficial Occupancy Period for purposes of constructing the Finish Work but shall not be required to pay Base Rent or Operating Expenses, nor shall Tenant’s rights to parking be in effect or the obligation to pay parking fees at any time prior to April 15, 2011. Landlord shall provide all Services (as defined below) during the Beneficial Occupancy Period at no cost to Tenant. Tenant’s occupancy of the Premises and the Patio Area during the Beneficial Occupancy Period shall otherwise be subject to all other terms and obligations of the Lease. As soon as the Term commences, Landlord and Tenant agree to execute a commencement agreement in the form attached as Exhibit D, setting forth the exact Commencement Date and Expiration Date, Delivery Date and commencement and ending dates of the Abated Rent Period.

 

5.2.                            Taking possession of the Premises by Tenant for construction purposes is, except as otherwise set forth in Section 5.1 above, conclusive evidence that the Premises are in the condition agreed between Landlord and Tenant.

 

6.                                      OPERATING EXPENSES. Tenant shall pay additional Rent in accordance with Exhibit C attached hereto.

 

7.                                      SERVICES.

 

7.1.                            Subject to the provisions below, Landlord agrees in accordance with standards determined by Landlord from time to time for the Building at least equivalent to services provided by first class office buildings of similar size and quality in the Denver central business district (“Minimum Standard”): (1) to furnish, at all times, running water at those points of supply for general use of tenants of the Building and at those points of supply within the Premises approved by Landlord as part of the Approved Drawings (as defined below); (2) during Ordinary ‘Business Hours to furnish to interior Common Areas heated or cooled air (as applicable), electrical current, janitorial services, and maintenance; (3) during Ordinary Business Hours to furnish heated or cooled air to the Premises for standard office use provided the reasonable recommendations of Landlord’s engineer regarding occupancy and use of the Premises are complied with by Tenant; (4) to furnish, subject to availability and capacity of building systems (and Landlord’s right to charge for such services as provided below), unfiltered treated condenser water for use in Tenant’s packaged HVAC systems provided that such systems are approved by Landlord, including strainers, pumping systems and controls; (5) to provide, during Ordinary Business Hours, the general use of passenger elevators for ingress and egress to and from the

 

6


 

Premises (at least one such elevator shall be available at all times except in the case of emergencies or repair) and access to the Building on a 24-hours per day, 7-days. per week basis (by, key card during periods outside of Ordinary Business Hours), subject to emergencies and required repairs and maintenance; (6) to provide janitorial services for the Premises customarily provided for office use in similar class A office buildings in downtown Denver, Colorado (including window washing of the outside of exterior windows); (7) to cause electric current to be supplied to the Premises for Tenant’s Standard Electrical Usage; and (8) to furnish telephone lines at those points of supply for general use of tenants of the Building and at those points of supply within the Premises approved by Landlord as part of the Approved Drawings (items (1) through (8) are collectively called “Services”). “Tenants Standard. Electrical Usage” means 7.0 watts of electricity per square foot, including electricity for fluorescent and incandescent lighting (including task and task ambient lighting systems) and for normal office equipment, including duplicating (reproduction) machines and personal computers (provided they do not require any additional voltage, special electrical or HVAC requirements beyond the systems existing in the Premises), and internal communications systems (“Normal Office Equipment”). “Ordinary Business Hours” means 7:00 a.m. to 6:00 p.m. Monday through Friday and 9:00 a.m. to 1:00 p.m. on Saturdays, Legal Holidays excepted. “Legal Holidays” mean New Year’s Day, Martin Luther King Day, Presidents Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day, and such other national holidays hereafter established by the United States Government.

 

7.2.                            “Excess Usage” means any usage of electricity (1) during other than Ordinary Business Hours (except for occasional after-hours lighting and electrical usage consistent with similar use by other tenants in the Building Complex and 24-hour electrical usage for Normal Office Equipment); (2) in an amount in excess of Tenant’s Standard Electrical Usage (including the costs of providing condenser water to Tenant’s packaged HVAC system); or (3) for Special Equipment or for standard HVAC services during other than Ordinary Business Hours. “Special Equipment” means (a) any equipment consuming more than 0.5 kilowatts at rated capacity, (b) any equipment requiring a voltage other than 120 volts, single phase, or (c) equipment that requires the use of self-contained HVAC units. If Tenant desires Excess Usage, Landlord will use reasonable efforts to supply the same. Tenant shall reimburse Landlord for all of Landlord’s actual costs (without mark-up) of providing services for Excess Usage, including costs for materials, additional wear and tear on equipment, utilities, and labor (including, fringe and overhead costs). Computation of such costs will be made by Landlord’s engineer, based on his engineering survey of Tenant’s Excess Usage. Tenant shall also reimburse Landlord for all costs of supplementing the Building HVAC System and/or extending or supplementing any electrical service, as Landlord reasonably determines is necessary, as a result of Tenant’s Excess Usage. As of the date hereof Landlord has estimated that the per hour charge for air-conditioning outside Ordinary Business Hours will be $75.00 per floor served (all or any portion) subject to a 3 hour minimum use period at times when the services are required to be specifically turned on for Tenant’s sole use plus payment of the engineer’s hourly wages if such assistance is required; such charge is subject to increase based on increases in costs of utilities included in such costs. Prior to installation or use of Special Equipment or operation of the Premises for extended hours on an ongoing basis, Tenant shall notify Landlord of such intended installation or use and obtain Landlord’s consent, which shall not be unreasonably conditioned, delayed or withheld. Not less than 4 hours’ prior notice during Ordinary Business Hours (and not less than 12 hours’ prior notice outside of Ordinary Business Hours) shall be given Landlord of Tenant’s request for such services. Tenant may request that Landlord install at Tenant’s cost a check meter and/or flow meter to determine the cost of

 

7


 

Tenant’s Excess Usage. Tenant shall also pay the cost of replacing light bulbs and/or tubes and ballast used in all lighting in the Premises other than that provided by Landlord to all tenants of the Building.

 

7.3.                            If Tenant requires janitorial services other than those included as standard Services, Tenant shall separately pay for such services monthly upon billings by Landlord, or Tenant shall, at Landlord’s option, separately contract for such services with the same company used by Landlord to furnish janitorial services to the Building.

 

7.4.                            Landlord may discontinue, reduce, interrupt or curtail Services (either temporarily or permanently) when necessary due to accident, repairs, alterations, strikes, lockouts, Applicable Laws, or any other happening beyond Landlord’s reasonable control. Landlord is not liable for damages to Tenant or any other party as a result of any interruption, reduction, or discontinuance of Services (either temporary or permanent), including the failure of any power generator or backup power source, nor shall the occurrence of any such event be construed as an eviction of Tenant, cause or permit an abatement, reduction or setoff of Rent, or operate to release Tenant from Tenant’s obligations. Notwithstanding the foregoing, Landlord agrees that if there is an interruption within Landlord’s reasonable control (other than an interruption resulting from a fire or other casualty) of the Services which Landlord is to provide that renders all or any portion of the Premises unusable for Tenant’s normal operations and continues for a period of 5 or more consecutive business days after Landlord receives notice from Tenant, which notice may be by telephone or e-mail to Landlord’s property manager (each, an “Unauthorized Interruption”), Tenant’s Rent will, except as provided below, abate commencing at the end of said 5-business-day period until the Premises are tenantable (unless Landlord has commenced to cure such cause or remediate such interruption and it cannot be fully cured or reasonably remediated within such 5 business-day period). If the Unauthorized Interruption is the result of any misconduct or negligent acts of Tenant or Tenant’s Agents, Rent will not abate, except to the extent of Landlord’s recovery under its loss of rent insurance. If Tenant continues to use any part of the Premises to conduct its business, the Rent will only abate for the untenantable part not used.

 

7.5.                            Tenant shall promptly notify Landlord of any accidents or defects in the Building of which Tenant becomes aware, including defects in pipes, electric wiring, and HVAC equipment, and of any condition which may cause injury or damage to the Building or any person or property therein.

 

7.6.                            Landlord will, at Landlord’s sole cost and expense, provide Tenant one line of Building standard signage on Building lobby directory.

 

8.                                      QUIET ENJOYMENT. So long as an Event of Default is not continuing, Tenant is entitled to the quiet enjoyment and peaceful possession of the Premises and the use of the Patio Area subject to the provisions of this Lease. Landlord shall under no circumstances be held responsible for restriction or disruption of access to the Building from public streets caused by construction work or other actions taken by governmental authorities or other tenants (their employees, agents, visitors, contractors or invitees) or any other cause not entirely within Landlord’s direct control, and such circumstances shall not constitute a constructive eviction of Tenant nor give rise to any right of Tenant against Landlord. This covenant of quiet enjoyment is

 

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in lieu of any covenant of quiet enjoyment provided or implied by law, and Tenant waives any such other covenant to the extent broader than the covenant contained in this Section.

 

9.                                      DEPOSIT. [Intentionally Omitted]

 

10.                               CHARACTER OF OCCUPANCY.

 

10.1.                     Tenant shall occupy the Premises for the Permitted Use and for no other purpose, and use it in a careful, safe, and proper manner and shall, subject to the terms of this Lease, pay on demand for any damage to the Premises caused by misuse or abuse by Tenant, Tenant’s agents or employees, or any other person entering upon the Premises under express or implied invitation of Tenant (collectively, “Tenant’s Agents”). Tenant, at Tenant’s expense, shall comply with all applicable federal, state, city, quasi-governmental and utility provider laws, codes, rules, and regulations now or hereafter in effect (“Applicable Laws”) which impose any duty upon Landlord or Tenant with respect to the occupation or alteration of the Premises; provided, however, Tenant shall not he required to make any changes, additions or improvements to the structural elements of the Building or to any mechanical systems of the Building to comply with Applicable Laws unless such required compliance arises from (A) Alterations by Tenant after the Commencement Date or (B) Tenant’s particular use of the Premises (as distinguished nom general office use) or in connection with making reasonable accommodation for a specific employee or employees. Landlord is responsible for complying with Applicable Laws relating to the Building (excluding the Premises following the date of delivery thereof) and its Common Areas existing as of the date hereof, including Title III of the Americans with Disabilities Act of 1990 (the “ADA”) and the costs of such compliance with existing Applicable Laws will be paid by Landlord and will not be charged back to Tenant. The method and timing of compliance will be within Landlord’s reasonable discretion. Landlord will include Landlord’s future compliance costs due to changes in or new Applicable Laws as an Operating Expense in accordance with Section 6 of this Lease. Tenant shall not commit or permit waste or any nuisance on or in the Premises. Tenant agrees not to store, keep, use, sell, dispose of or offer for sale in, upon or from the Premises any article or substance prohibited by any insurance policy covering the Building Complex nor shall Tenant keep, store, produce or dispose of on, in or from the Premises or the Building Complex any substance which may be deemed an infectious waste or hazardous substance under any Applicable Laws, except customary office and cleaning supplies.

 

10.2.                     Tenant shall be permitted, to the extent allowed by all governmental authorities exercising control over the Premises, to place, at Tenants cost and expense, outdoor seating in the Patio Area. The initial location of the outdoor seating in the Patio Area shall be as further depicted on the diagram attached hereto as Exhibit A-2. Tenant shall obtain Landlord’s approval of the appearance of table and chairs, any other furnishings, and any landscaping in the Patio Area prior to installation (including any permanently affixing the same to the ground) or during the continued placement of the same in the Patio Area, which approval shall be in Landlord’s reasonable determination. Tenant agrees to maintain and operate, at Tenant’s cost and expense, the Patio Area, as well as such outdoor seating, furnishings and landscaping in the Patio Area, in a clean first class manner and shall be responsible for insuring such outdoor seating and furnishings in the Patio Area. Use of the Patio Area shall be subject to the terms and conditions of the Lease. Tenant shall provide adequate trash receptacles, shall frequently clean (as Landlord may reasonably deem necessary), at Tenant’s cost and expense, the Patio Area and any outdoor seating

 

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area and sidewalks located within the Patio Area, shall maintain, at Tenant’s cost and expense, the landscaping in the Patio Area, and shall not permit the Patio Area to become a nuisance. In the event Tenant fails to maintain the-Patio Area, the outdoor seating, other furnishings, sidewalks, and/or landscaping located therein in a first class manner, after notice and a reasonable opportunity to cure, Landlord shall have the right to revoke Tenant’s right to the Patio Area. If any plans, conditions, such as railing or lighting, or permits are required by the City and County of Denver or other appropriate governmental authority, such plans, conditional requirements or permits shall be subject to Landlord’s prior written approval, which approval shall be in Landlord’s reasonable determination, and Tenant shall be solely responsible for obtaining, at Tenant’s sole cost and expense, such conditional requirements and permits.

 

11.                               MAINTENANCE, ALTERATIONS AND REENTRY BY LANDLORD.

 

11.1.                     Landlord shall, at all times during the Term, repair, replace and maintain in a good order, condition and repair the Building systems (except for those portions to be maintained by Tenant pursuant to this Lease), including, without limitation: (i) making repairs and replacements to HVAC, mechanical, life safety and electrical systems in the Premises (to the extent such systems are Building standard); and (ii) provide upkeep, maintenance, and repairs to all Common Areas, including the parking facilities, driveways, sidewalks and all structural elements of the Building, including without limitation the roof, exterior walls (including windows and glass), interior bearing walls, foundations, footings, and all exterior surfaces of the Building. Landlord shall perform its obligations under this Section 11.1 in accordance with Applicable Laws, and in a manner consistent with the Minimum Standard. All work performed by Landlord pursuant to this Section 11.1 shall be performed in a good and workmanlike manner, using new or like-new materials and equipment at least equal in quality to those existing at the Building Complex as of the date hereof. Except as provided in this Section or otherwise expressly required in this Lease, Landlord is not required to make improvements or repairs to the Premises during the Term.

 

11.2.                     Landlord or Landlord’s agents may at any time enter the Premises after reasonable prior notice to Tenant (except in an emergency or during routine janitorial services or maintenance, when no notice is required) for examination and inspection, or to perform, if Landlord elects, any obligations of Tenant which Tenant fails to perform or such cleaning, maintenance, janitorial services, repairs, replacements, additions, or alterations as Landlord deems necessary for the safety, improvement, or preservation of the Premises or other portions of the Building Complex or as required by Applicable Laws. After reasonable prior notice to Tenant, Landlord or Landlord’s agents may also show the Premises to prospective purchasers and Mortgagees and during the last 9 months of the Term to prospective tenants. Any such reentry does not constitute an eviction or entitle Tenant to abatement of Rent. Landlord may make such alterations or changes in other portions of the Building Complex as Landlord desires so long as such alterations and changes do not unreasonably interfere with Tenant’s occupancy of the Premises. Landlord may use the Common Areas and one or more street entrances to the Building Complex as may be necessary in Landlord’s judgment to complete such work. Tenant shall have the right to designate areas within the Premises as secured areas by written notice to Landlord or as part of the Finish Work (“Secured Areas”), which Secure Areas may not be accessed at any time by Landlord (or anyone claiming by, through or under Landlord), without Tenant’s prior written consent, except in cases of emergency. Tenant may install locks or other security devices on the Secure Areas and shall not be required to provide Landlord with keys or codes to the same.

 

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Any entry by Landlord to Secure Areas (except in the event of emergencies) shall be subject to reasonable rules and regulations established by Tenant from time-to-time. Entry by Landlord into the Secured Area shall be in the company of a duly authorized Tenant personnel except in an emergency, in which event, if no representative with a key to such. area is immediately available, Landlord shall have a right, accompanied by police, fire or rescue personnel, to break down the doors to such Secured Areas for the purpose of dealing with the emergency; Landlord shall inform Landlord’s onsite employees that a person on Tenant’s emergency response list should be notified in the event of such Emergency. In such event, Tenant shall be responsible for any damage caused by such entrance; after any such emergency situation has been ended, entry by Landlord shall be subject to the restrictions provided herein. Landlord shall use reasonable efforts, subject to causes beyond its reasonable control, during an entry into the Premises during Ordinary Business Hours not to unreasonably interrupt or interfere with Tenant’s use or occupancy of the Premises; provided, however, Tenant acknowledges that some interference and disruption of its business is inevitable, Landlord will not be liable for any loss of business due to such disruption, and such disruption will not constitute an eviction of Tenant or entitle Tenant to any abatement of Rent.

 

12.                               ALTERATIONS AND REPAIRS BY TENANT.

 

12.1.                     Alterations. Other than the Finish Work, which shall be governed by the Work Letter, Tenant shall not make any alterations to the Premises during the Term, including installation of equipment or machinery which requires modifications to existing electrical outlets or increases Tenant’s usage of electricity beyond Tenant’s Standard Electrical Usage (collectively “Alterations”) without in each instance first obtaining the written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, Landlord’s consent shall not be required for any Alteration that satisfies all of the following criteria (a “Minor Alteration”): (a) is either cosmetic in nature (including, without limitation, painting, carpeting and wallcovering) or consists of an interior decorating improvement or alteration; (b) is not visible from the exterior of the Premises or Building; (c) will not affect the base Building systems; (d) does not require work to be performed inside the walls or above the ceiling of the Premises; (e) does not require a building permit; and (f) the cost of Alterations made at any one time does not exceed $50,000, so long as Tenant shall provide prior written notice to Landlord detailing the type and scope of any Minor Alterations prior to commencement of the same (a “Minor Alterations Notice”). Except as otherwise expressly provided herein, Minor Alterations shall be subject to all the other provisions of this Section 12.

 

Landlord’s consent or approval of the plans, specifications and working drawings for any Alterations shall not constitute any warranty or representation by Landlord (and shall not impose any liability on Landlord) as to their completeness, design sufficiency, or compliance with Applicable Laws. Tenant shall at its cost pay all engineering and design costs incurred by Landlord, if any, as to all Alterations, obtain all governmental permits and approvals required, and cause all Alterations to be completed in compliance with Applicable Laws and the reasonable requirements of Landlord’s insurance. All such work relating to Alterations shall be performed in a good and workmanlike manner, using materials and equipment at least equal in quality to the Initial Tenant Finish, and shall comply with the rules and regulations relating to construction activities m the Building promulgated from time to time by Landlord for the Building, a copy of which is attached to the Work Letter as Exhibit B (the “Construction Rules”). Tenant shall give Landlord notice at least 15 days prior to the commencement of any Alterations or Minor

 

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Alterations in the Premises. Prior to starting work, Tenant shall furnish Landlord with: (1) plans and specifications for the Alterations, if applicable; (2) names of contractors, which contractors shall be reasonably acceptable to Landlord (provided that Landlord may designate specific contractors with respect to Base Building or mechanical systems); and (3) required permits and approvals from governmental authorities, if applicable. Tenant shall pay Landlord a supervisory fee for any work performed by someone other than Landlord’s employees or contractors (other than Minor Alterations, for which there shall be no fee) in an amount not to exceed one percent (1%) of labor, material, and all other so-called “hard” costs of the Alterations. Upon completion of any Alterations or maintenance work, Tenant shall provide Landlord with completion affidavits and full and final waivers of lien reasonably acceptable to Landlord and “as-built” plans for Alterations, if applicable, excluding Minor Alterations. Tenant shall deliver to Landlord prior to commencement of any Alterations, certificates issued by insurance companies qualified to do business in the state in which the Premises are located, evidencing that worker’s compensation, public liability insurance, and property damage insurance (in amounts, with companies and on forms reasonably satisfactory. to Landlord) are in force and maintained by all contractors and subcontractors engaged to perform such work. All liability policies shall name Landlord, Building Manager, and Mortgagee as additional insureds. Each certificate shall provide that the insurance may not be cancelled or modified without 30 days’ prior written notice to Landlord and Mortgagee. Landlord also has the right to post notices in the Premises in locations designated by Landlord stating that Landlord is not responsible for payment for such work and containing such other information as Landlord deems necessary. All such work shall be performed in a manner which does not unreasonably interfere with Landlord or other tenants of the Building, or impose additional expense upon Landlord in the operation of the Building Complex.

 

Landlord agrees to reasonably cooperate with Tenant at no cost or expense to Landlord (including execution of any necessary documents) in connection with Tenant’s submission of any applications for approvals, licenses and/or permits from any governmental authority as may be reasonably necessary or appropriate relating to Tenant’s construction of any Alterations, provided that Tenant pays all permit and inspection fees required under such approvals, licenses and/or permits.

 

12.2.                     Maintenance and Repairs. Tenant shall keep the Premises in as good order, condition, and repair and in an orderly state, as on the Commencement Date, damage by Landlord, loss by fire or other casualty and ordinary wear excepted.

 

12.3.                     Ownership and Removal of Alterations. All Alterations, including partitions, paneling, carpeting, drapes or other window coverings, and permanently installed light fixtures (but not including Tenant’s Property (as defined in Section 15 below), which shall at all times remain the property of Tenant, both during and upon expiration of the Term), are deemed a part of the real estate and the property of Landlord and remain upon and be surrendered with the Premises at the end of the Term, whether by lapse of time or otherwise, unless Landlord notifies Tenant no later than 15 days prior to the end of the Term that it elects to have Tenant remove all or part of such Alterations (unless Landlord elects not to require Tenant to remove such Alterations), and in such event, Tenant shall at Tenant’s expense promptly remove the Alterations specified and restore the Premises to its prior condition, reasonable wear and tear excepted. Notwithstanding the foregoing Landlord will make its election regarding removal of Alterations at the time Landlord approves such Alterations if such election by Landlord is expressly requested

 

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by Tenant as to any Alterations requiring Landlord’s consent, and within 10 days of receipt of a Minor Alterations Notice if such election by Landlord is expressly requested by Tenant. If Landlord fails to timely make such election following receipt of a notice requesting such election, Tenant shall have no obligation to remove any such Alterations or Minor Alterations, as applicable.

 

13.                               CONSTRUCTION LIENS. Tenant shall pay for all work or services performed and materials and supplies furnished for the Premises by Tenant or at its request (other than the Initial Tenant Finish) and will keep the Premises free of construction and other liens on account of such work or services. Tenant indemnifies, defends, and saves Landlord and all Mortgagees harmless from all liability, loss, damage, or expenses, including attorneys’ fees, on account of claims of laborers, materialmen, professional service providers or others for work or services performed or materials or supplies furnished to Tenant or persons claiming under Tenant. If any lien is recorded against the Premises or Building or any suit affecting title thereto is commenced as a result of such work or services, Tenant shall cause it to be removed of record within 30 days after notice from Landlord or, if Tenant desires to contest it, Tenant shall furnish Landlord within such 30-day period adequate security of at least 150% of the amount of the claim, plus estimated costs and interest. If a final judgment establishing the validity of any lien is entered, Tenant shall immediately pay and satisfy the same. Tenant’s failure to act in accordance with the foregoing shall be an Event of Default and Landlord may, in addition to other remedies, pay such amounts, which together with reasonable attorneys’ fees incurred and interest, shall be immediately due Landlord upon notice.

 

14.                               SUBLETTING AND ASSIGNMENT.

 

14.1.                     Except as otherwise set forth in this Section 14, Tenant shall not sublet any part of the Premises nor assign or otherwise transfer this Lease or any interest herein (sometimes referred to as “Transfer,” and the subtenant or assignee may be referred to as “Transferee”) without the consent of Landlord first being obtained, which consent will not be unreasonably conditioned, delayed or withheld provided that: (1) Tenant complies with the provisions of Section 14.3; (2) Landlord declines to exercise its rights under Section 14.3; (3) the Transferee is engaged in a business and the portion of the Premises will be used for the Permitted Use in a manner which is in keeping with the Minimum Standard of the Building and does not conflict with any exclusive use rights granted to any other tenant of the Building Complex; (4) the Transferee has reasonable financial worth in light of the responsibilities involved; (5) an Event of Default is not continuing at the time Tenant makes its request; (6) the Transferee is not a governmental or quasi-governmental agency; and (7) the Transferee is not a tenant in the Building or currently negotiating a lease with Landlord 111 the Building within 120 days prior to Tenant’s Transfer Request (hereafter defined).

 

14.2.                     Except as otherwise set forth in this Section 14, Transfer includes a sale by Tenant of substantially all of its assets or stock if Tenant is a publicly traded corporation, a merger of Tenant with another corporation, the transfer of 49% or more of the stock in a corporate tenant whose stock is not publicly traded, or transfer of 49% or more of the beneficial ownership interests in a partnership or limited liability company tenant. Notwithstanding anything to the contrary in this Section 14, Tenant may, without obtaining Landlord’s consent, complete a Transfer to a Permitted Transferee subject to the following conditions: (i) the proposed use of the Premises shall be the same as Tenant’s use and Landlord shall not be required, as a result of Applicable Laws, to

 

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make any renovations to the Building Complex or provide special services as a result of such Transfer; and (ii) not less than 30 days following the effective date of the Transfer, Tenant provides Landlord with documentation evidencing such transaction and such other evidence as Landlord may reasonably require to establish that such transaction complies with the provisions of this Section. “Permitted Transferee” means: (i) any subsidiary or affiliate in which Tenant owns a substantial interest; (ii) any parent of Tenant; (iii) any subsidiary or affiliate in which Tenant’s parent owns a substantial interest; or (iv) any corporation into which Tenant may be merged or consolidated or which purchases all or substantially all of the assets or stock of Tenant provided that the resulting corporation has a net worth at least equal to Tenant’s net worth as of the date hereof.

 

14.3.                     Except for a Transfer to a Permitted Transferee, Tenant must notify Landlord at least 30 days prior to the desired date of a proposed Transfer (“Transfer Request”). The Transfer Request shall describe the terms and conditions of the proposed Transfer. Within 15 days following receipt of a Transfer Request, Landlord shall notify Tenant (“Landlord’s Notice’) of its election of the following as applicable:

 

(1)                                 Landlord shall have the right to identify a proposed Transferee to accept the Transfer Request and Tenant shall not unreasonably withhold consent to a Transfer to the identified party, in which event the rent and. other sums due from the Transferee will be paid to Tenant directly. Landlord has no responsibility for such Transferee’s performance of its obligations to Tenant; or

 

(2)                                 If a Transfer Request involves 49% or more of the Premises., Landlord may recapture such space by terminating Tenant’s Lease obligations as to the applicable portion of the Premises; provided, however, if Landlord makes such election, Tenant may, within 15 days after Landlord’s Notice, withdraw a Transfer Request. If such termination occurs, it shall be effective on the date designated in Landlord’s Notice, which date shall not be more than 30 days following such notice; or

 

(3)                                 Landlord may waive Landlord’s rights under (1) and (2) above, as applicable, in which case Tenant shall be free to make a Transfer substantially identical to that described in the Transfer Request to any third party, subject to Landlord’s consent as provided in Section 14.1. If Tenant does not complete the Transfer within 60 days following Landlord’s Notice or materially modifies terms from those in the Transfer Request, then, prior to a Transfer to a third party, Tenant must resubmit a modified Transfer Request to Landlord and repeat the process in accordance with the provisions hereof.

 

14.4.                     All documents utilized by Tenant to evidence a Transfer are subject to approval by Landlord. Tenant shall pay Landlord’s expenses, including reasonable attorneys’ fees, of determining whether to consent and in reviewing and approving the documents; provided, however, such fees shall not exceed $1,000 for any sublease using; Landlord’s standard sublease and consent form without substantive modification. Tenant shall provide Landlord with such information as Landlord reasonably requests regarding a proposed Transferee, including financial information.

 

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14.5.                     Following any Transfer in accordance with this Section 14, Landlord may, after the happening of an Event of Default by Tenant, collect rent from the Transferee or occupant and apply the net amount collected to the Rent, but no such collection will be deemed an acceptance of the Transferee or occupant as Tenant or release Tenant from its obligations. Consent to a Transfer shall not relieve Tenant from obtaining Landlord’s consent to any other Transfer. Notwithstanding a Transfer, even if consented to by Landlord, Tenant will not be released and continues to be primarily liable for its obligations; provided, however, if Landlord consents to a Transfer by assignment of the entirety of Tenant’s interest in this Lease, such assigning Tenant shall not be liable for obligations arising during any extension or renewal of this Lease exercised by such assignee under Section 3 of the Addendum. If Tenant collects any rent or other amounts from a Transferee in excess of the Rent for any monthly period, after deduction of Tenant’s reasonable costs for tenant finish allowances and commissions related to the Transfer, Tenant shall pay Landlord 50% of such monthly excess, as and when received, after deduction of Tenant’s reasonable transaction costs incurred for such Transfer amortized monthly on a straight-line basis over the term of such Transfer.

 

14.6.                     If a trustee or debtor in possession in bankruptcy is entitled to assume control over Tenant’s rights under this Lease and assigns such rights to any third party notwithstanding the provisions hereof; the rent to be paid by such party shall be increased to the current Base Rent (if greater than that being paid for the Premises) which Landlord charges for comparable space in the Building as of the date of such third party’s occupancy. If Landlord is entitled under the Bankruptcy Code to “Adequate Assurance” of future performance of this Lease, the parties agree that such term includes the following:

 

(1)                                 Any assignee must demonstrate to Landlord’s reasonable satisfaction a net worth (as defined in. accordance with generally accepted accounting principles consistently applied) at least as large as the net worth of Tenant on the Commencement Date increased by 7%, compounded annually, for each year thereafter through the date of the proposed assignment. Tenant’s financial condition was a material inducement to Landlord in executing this Lease.

 

(2)                                 The assignee must assume and agree to be bound by the provisions of this Lease.

 

15.                               DAMAGE TO PROPERTY.

 

15.1.                     Tenant agrees Landlord is not liable for any injury or damage, either proximate or remote, occurring through or caused by fire, water, steam, or any repairs, alterations, injury, accident, or any other cause to the Premises, to any furniture, fixtures, Tenant improvements, or other personal property of Tenant (“Tenant’s Property”) kept or stored in. the Premises, or in other parts of the Building Complex, whether by reason of the negligence or default of Landlord, other occupants, any other person, or otherwise; and the keeping or storing of all property of Tenant in the Premises and Building Complex is at the sole risk of Tenant.

 

15.2.                     Landlord agrees Tenant is not liable for any injury or damage, either proximate or remote, occurring through or caused by fire, water, steam, or any repairs, alterations, injury, accident, or any other cause to any, furniture, fixtures, or other personal property of

 

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Landlord kept or stored in the Building Complex, whether by reason of the negligence or default of Tenant, other occupants, any other person, or otherwise; and the keeping or storing of all property of Landlord in the Building Complex is at the sole risk of Landlord.

 

15.3.                     Except in connection with Landlord’s indemnification obligations hereunder, Tenant hereby waives any consequential damages, compensation or claims for inconvenience or loss of business, rents, or profits, whether or not caused by the willful and wrongful act of Landlord. Except in connection with Tenant’s indemnification obligations hereunder, Landlord hereby waives any consequential damages, compensation or claims for inconvenience or loss of business, rents, or profits, whether or not caused by the willful and wrongful act of Tenant.

 

16.                               INDEMNITY.

 

16.1.                     Tenant agrees to indemnify, defend, and hold Landlord and Building Manager harmless from all liability, costs, or expenses, including attorneys’ fees, on. account of damage to the person or property of any third party, including any other tenant in the Building Complex, to the extent caused by the negligence or breach of this Lease by the Tenant or Tenant’s Agents.

 

16.2.                     Landlord agrees to indemnify, defend, and hold Tenant (together with officers, directors, members, managers, partners, shareholders, affiliates, employees, agents and representatives, and each of their respective successors and assigns) harmless from all liability, costs, or expenses, including attorneys’ fees, on account of damage to the person or property of any third party (excluding Tenant’s Agents), including any other tenant in the Building Complex, to the extent caused by the intentional misconduct, negligence or breach of this Lease by Landlord or Landlord’s agents or employees.

 

16.3.                     The indemnifications in this Section 16 (a) shall survive the expiration or earlier termination of this Lease, (b) shall not operate to relieve the indemnified party of liability to the extent such liability is caused by the negligence or willful and wrongful act of the indemnified party and (c) are subject to and shall not diminish any waivers in effect in accordance with Sections 15 above and 18.3 below.

 

17.                               SURRENDER AND NOTICE. Upon the expiration or other termination of this Lease, Tenant shall immediately quit and surrender to Landlord the Premises broom clean, in good order and condition, ordinary wear and tear, damage by Landlord and loss by fire or other casualty excepted, and Tenant shall remove all of its movable furniture and other effects, all telephone cable and related equipment m the Building installed for Tenant, and such Alterations, as Landlord requires to be removed pursuant to Section 12.3 above. If Tenant fails to timely vacate the Premises as required, Tenant is responsible to Landlord for all resulting costs and damages of Landlord, including any amounts paid to third parties who are delayed in occupying the Premises.

 

18.                               INSURANCE, CASUALTY, AND RESTORATION OF PREMISES.

 

18.1.                     Tenant shall maintain throughout the Term insurance coverage at least as broad as ISO Causes of Loss - Special Form Coverage and Equipment Breakdown Protection

 

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Coverage against risks of direct physical loss or damage (commonly known as “all risk” and “boiler and machinery”) for the full replacement cost of Tenant’s Property located at the Premises.

 

18.2.                     Tenant shall maintain throughout the Term a commercial general liability and if necessary a commercial umbrella policy, including protection against bodily injury, personal injury and property damage with a single limit of not less than $3,000,000.00 each occurrence. Such policy shall name Landlord Building Manager, and Mortgagee as additional insureds, be primary to any other similar insurance of such additional insureds, and provide that it may not be cancelled or modified without at least 20 days’ prior notice to Landlord and Mortgagee. The minimum limits of such insurance do not limit the liability of Tenant hereunder.

 

18.3.                     Tenant shall purchase and maintain workers’ compensation and employer’s liability insurance as follows: Workers’ Compensation Coverage A - Statutory Coverage in an amount required by the state m which the Building Complex is located; Workers’ Compensation Coverage B - Employers Liability Coverage in the amounts of $500,000 Each Accident, $500,000 Disease, Policy Limit, and $500,000 Disease, Each Employee

 

18.4.                     Prior to the occupancy of the Premises and prior to expiration of the then-current insurance coverage, Tenant shall furnish a certificate from the issuing insurance company or companies evidencing that insurance required under this Lease is in effect. The words “endeavor to” and “but failure to mail such notice shall impose no obligation or liability of any kind upon the company, its agents or representatives” shall be deleted from the certificate form’s cancellation provision. Any insurance required to be maintained by Tenant hereunder shall be written by companies having an A.M. Best rating of “A” or better and a financial category of X or better, and be legally qualified to issue such insurance in the state in which the Building Complex is located.

 

18.5.                     Landlord shall maintain liability, property and equipment breakdown protection insurance including insurance for loss of Rent for the Building Complex, and insurance for shell and core, fixtures, equipment and improvements located in the Building and the Premises in such amounts, from such companies, and on such. terms and conditions, as Landlord deems appropriate, from time to time; provided, however, all insurance maintained by Landlord shall be consistent with the Minimum Standard.

 

18.6.                     If the Building is damaged by fire or other casualty which renders the Premises wholly untenantable and the damage is so extensive that an architect selected by Landlord certifies in writing to Landlord and Tenant within 60 days of said casualty that the Premises cannot, with the exercise of reasonable diligence, be made fit for occupancy within 180 working days from the happening thereof, then, at the option of Landlord or Tenant exercised in writing to the other within 30 days of such determination, this Lease shall terminate as of the occurrence of such damage. In the event of termination, Tenant shall pay Rent duly apportioned up to the time of such casualty and forthwith surrender the Premises and all interest. If Tenant fails to do so, Landlord may reenter and take possession of the Premises and remove Tenant. If, however, the damage is such that the architect certifies that the Premises can be made tenantable within such 180-day period or neither Landlord nor Tenant elects to terminate the Lease despite the extent of damage, then the provisions below apply.

 

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18.7.                     Rent shall abate during any period of repair and restoration in the same proportion that the part of the Premises rendered untenantable bears to the whole; provided, however, if the casualty is the result of the negligence or intentional or criminal acts of Tenant or Tenant’s Agents, then the Rent will abate during any such period of repair and restoration but only to the extent of any recovery by Landlord under its rental insurance related to the Premises.

 

18.8.                     If the Building is damaged (though the Premises may not be affected, or if affected, can be repaired within 180 days) and within 60 days after the damage Landlord decides not to reconstruct or rebuild the Building, then, notwithstanding anything contained herein, upon notice to that effect from Landlord within said 60 days, Tenant shall pay the Rent apportioned to such date, this Lease shall terminate from the date of such notice, and both parties discharged from further obligations except as otherwise expressly provided.

 

18.9.                     Landlord and Tenant waive all rights of recovery against the other and its respective officers, partners, members, agents, representatives, and employees for loss or damage to its real and personal property kept in the Building Complex or tor loss of business revenue or extra expense which is capable of being insured against for perils covered by ISO Causes of Loss Special Form and Equipment Breakdown Protection Coverage and to the extent of damages and coverage under workers’ compensation and employers liability insurance required under this Lease. Tenant also waives all such rights of recovery against Building Manager. Each party shall, upon. obtaining the insurance required by this Lease, notify the insurance carrier that the foregoing waiver is contained in this Lease and use reasonable efforts to obtain an appropriate waiver of subrogation provision in the policies.

 

18.10.              Rent shall abate during any period of repair and restoration to the extent of any recovery by Landlord under its loss of rent insurance related to the Premises in the same proportion that the part of the Premises rendered untenantable bears to the whole.

 

18.11.              In the event Landlord is required to rebuild and repair the Premises pursuant to this Section 18, Landlord shall: (i) commence such rebuilding and repair within 180 days after the date of the casualty and (ii) pursue diligently such rebuilding and repair to completion.

 

19.                               CONDEMNATION. If the Premises or substantially all of it or any portion of the Building Complex which renders the Premises untenantable is taken by right of eminent domain, or by condemnation (which includes a conveyance in lieu of a taking), this Lease, at the option of either Landlord or Tenant exercised by notice to the other within 30 days after the taking, shall terminate and Rent shall be apportioned as of the date of the taking. Tenant shall forthwith surrender the Premises and all interest in this Lease, and, if Tenant fails to do so, Landlord may reenter and take possession of the Premises. If less than all the Premises is taken, Landlord shall promptly repair the Premises as nearly as possible to its condition immediately prior to the taking, unless Landlord elects not to rebuild under Section 18.8. Landlord shall receive the entire award or consideration for the taking; except Tenant may claim and prove in any such proceeding and receive any award made to Tenant specifically for damages for loss of movable trade fixtures, equipment and moving expenses so long as such award does not reduce Landlord’s award.

 

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20.                               DEFAULT BY TENANT.

 

20.1.                     Each of the following events is an “Event of Default”:

 

(1)                                 Any failure by Tenant to pay Rent on the due date (provided, however, that Tenant shall have a right to cure such Event of Default not later than 5 business days after notice of such non-payment by Landlord; however, Tenant is not entitled to such notice and cure period more than 1 time during any calendar year);

 

(2)                                 Tenant vacates or abandons the Premises or fails to continually operate its Permitted Use in the Premises except to the extent permitted pursuant to Section 27.21;

 

(3)                                 This Lease or Tenant’s interest is transferred whether voluntarily or by operation of law except as permitted in Section 14;

 

(4)                                 This Lease or any part of the Premises is taken by process of law and is not released within 15 days after a levy;

 

(5)                                 Commencement by Tenant of a proceeding under any provision of federal or state law relating to insolvency, bankruptcy, or reorganization (“Bankruptcy Proceeding”);

 

(6)                                 Commencement of a Bankruptcy Proceeding against Tenant, unless dismissed within 60 days after commencement;

 

(7)                                 The insolvency of Tenant or execution by Tenant of an assignment for the benefit of creditors; the convening by Tenant of a meeting of its creditors or any significant class thereof for purposes of effecting a moratorium upon or extension or composition of its debts; or the failure of Tenant generally to pay its debts as they mature, or the occurrence of any of the foregoing with respect to any Guarantor, if any, of Tenant’s obligations;

 

(8)                                 The admission in writing by Tenant (or any general partner of Tenant if Tenant is a partnership), that it is unable to pay its debts as they mature or it is generally not paying its debts as they mature;

 

(9)                                 Tenant fails to take possession of the Premises within 60 days after the Commencement Date;

 

(10)                          Tenant fails to perform any of its other obligations and non-performance continues for 30 days after notice by Landlord or, if such performance cannot be reasonably had within such 30 day period, Tenant does not in good faith commence performance within such 30 day period and diligently proceed to completion; provided, however, Tenant’s right to cure shall not exceed the period provided by Applicable Law;

 

(11)                          Any event which is expressly defined as or deemed an Event of Default under this Lease.

 

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20.2.                     Remedies of Landlord. If an Event of Default occurs, Landlord may then or at any time thereafter, either:

 

(1)                                 (a) Without further notice except as required by Applicable Laws, reenter and repossess the Premises or any part and. expel Tenant and those claiming through or under Tenant and remove the effects of both without being deemed guilty of any manner of trespass and without prejudice to any remedies for arrears of Rent or preceding breach of this Lease. Should Landlord reenter or take possession pursuant to legal proceedings or any notice provided for by Applicable Law, Landlord may, from time to time, without terminating this Lease, relet the Premises or any part, either alone or in conjunction with other portions of the Building Complex, in Landlord’s or Tenant’s name but for the account of Tenant, for such periods (which may be greater or less than the period which would otherwise have constituted the balance of the Term) and on such conditions and upon such other terms (which may include concessions of free rent and alteration and repair of the Premises) as Landlord, in its sole discretion, determines and Landlord may collect the rents therefor. Landlord is not in any way responsible or liable for failure to relet the Premises, or any part thereof, or for any failure to collect any rent due upon such reletting. Landlord agrees to use commercially reasonable efforts in order to mitigate its damages following any default by Tenant under the Lease; provided, however, nothing shall require Landlord to (i) attempt to re-lease the Premises unless and until Landlord obtains possession of the Premises, or (ii) lease less than all of the Premises or lease the Premises in smaller increments than the entire Premises. If there is other unleased space in the Building, Landlord may lease such other space without prejudice to its remedies against Tenant. No such reentry, repossession or notice from Landlord, or any other acts or omissions of Landlord, including maintenance, preservation, efforts to relet the Premises, or appointment of a receiver, shall be construed as an election by Landlord to terminate this Lease finless specific notice of such intention is given Tenant. Landlord reserves the right following any reentry and/or reletting to exercise its right to terminate this Lease by giving Tenant notice, in which event this Lease will terminate as specified in the notice.

 

(b)                                 If Landlord takes possession of the Premises without terminating this Lease, Tenant shall pay Landlord (i) the Rent which would be payable if repossession had not occurred, less (ii) the net proceeds, if any, of any reletting of the Premises after deducting all of Landlord’s reasonable expenses incurred in connection with such reletting, including all repossession costs, brokerage commissions, attorneys’ fees, expenses of employees, alteration, and repair costs (collectively “Reletting Expenses”). If, in connection with any reletting, the new lease term extends beyond the Term or the premises covered thereby include other premises not part of the Premises, a fair apportionment of the rent received from such reletting and the Reletting Expenses, will be made in determining the net proceeds received from the reletting. In determining such net proceeds, rent concessions will also be apportioned over the term of the new lease. Tenant shall pay such amounts to Landlord monthly on the days on which the Rent would have been payable if possession had not been retaken, and Landlord is entitled to receive the same from Tenant on each such day; or

 

(2)                                 Give Tenant notice of termination of this Lease on the date specified and, on such date, Tenant’s right to possession of the Premises shall cease and the Lease will terminate except as to Tenant’s liability as hereafter provided as if the expiration of the term fixed in such notice were the end of the Term. If this Lease terminates pursuant to this Section, Tenant

 

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remains liable to Landlord for damages in an amount equal to the Rent which would have been owing by Tenant for the balance of the Term had this Lease not terminated, less the net proceeds, if any, of reletting of the Premises by Landlord subsequent to termination after deducting Reletting Expenses. Landlord may collect such damages from Tenant monthly on the days on which the Rent would have been payable if this Lease had not terminated and Landlord shall be entitled to receive the same from Tenant on each such day. Alternatively, if this Lease is terminated, Landlord at its option may recover forthwith against Tenant as damages for loss of the bargain and not as a penalty an amount equal to the worth at the time of termination of the excess, if any, of the Rent reserved in this Lease for the balance of the Term over the then Reasonable Rental Value of the Premises for the same period plus all Reletting Expenses. “Reasonable Rental Value” is the amount of rent Landlord can obtain for the remaining balance of the Term.

 

20.3.                     Cumulative Remedies. Suits to recover Rent and damages may be brought by Landlord, from time to time, and nothing herein requires Landlord to await the date the Term would expire had there been no Event of Default or termination, as the case may be. Each right and remedy provided for in this Lease is cumulative and non-exclusive and in addition to every other right or remedy now or hereafter existing at law or equity, including suits for injunctive relief and specific performance. The exercise or beginning of the exercise by Landlord of one or more rights or remedies shall not preclude the simultaneous or later exercise by Landlord of other rights or remedies. All costs incurred by Landlord to collect any Rent and damages or to enforce this Lease are also recoverable from Tenant. If any suit is brought because of an alleged breach of this Lease, the prevailing party shall recover from the other party all reasonable attorneys’ fees and costs incurred in connection therewith.

 

20.4.                     No Waiver. No failure by Landlord to insist upon strict performance of any provision or to exercise any right or remedy upon a breach thereof; and no acceptance of full or partial Rent during the continuance of any breach constitutes a waiver of any such breach or such provision, except by written instrument executed by Landlord. No waiver shall affect or alter this Lease but each provision hereof continues in effect with respect to any other then existing or subsequent breach thereof.

 

20.5.                     Bankruptcy. Nothing contained in this Lease limits Landlord’s right to obtain as liquidated damages in any bankruptcy or similar proceeding the maximum amount allowed by law at the time such damages are to be proven, whether such amount is greater, equal to, or less than the amounts recoverable, either as damages or Rent, referred to in any of the preceding provisions of this Section. Notwithstanding anything in this Section to the contrary, any proceeding described in Section 20.1(5),(6),(7) and (8) is an Event of Default only when such proceeding is brought by or against the then holder of the leasehold estate under this Lease.

 

20.6.                     Late Payment Charge. Any Rent not paid within 5 days after the due date shall thereafter bear interest at 5 percentage points above the Prime Rate or the highest rate permitted by law, whichever is lower (the “Default Rate”), until paid; provided, however, that Landlord will not assess interest on the first instance of late payment by Tenant in the Term so long as the payment is received by Landlord within 5 days after the due date. Further, if such Rent is not paid within 5 days after notice, Tenant agrees Landlord will incur additional administrative expenses, the amount of which will be difficult to determine; Tenant therefore shall also pay Landlord a late charge for each late payment of 5% of such payment; provided, however, that

 

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Landlord shall permit Tenant one late payment per each calendar year with no late charge provided that such amount is paid in full within 5 days of Tenants receipt of Landlord’s notice. Any amounts paid by Landlord to cure a default of Tenant which Landlord has the right but not the obligation to do, shall, if not repaid by Tenant within 5 days of demand by Landlord, thereafter bear interest at 5 percentage points above the Prime Rate until paid. “Prime Rate” means that rate announced by Wells Fargo Bank, N.A. as its prime rate on the date closest to the date interest commences.

 

20.7.                     Waiver of Jury Trial. Tenant and Landlord waive any right to a trial by jury in suits arising out of or concerning the provisions of this Lease.

 

21.                               DEFAULT BY LANDLORD. Landlord shall be in default hereunder if Landlord fails to perform any of its obligations hereunder and non-performance continues for 30 days after notice by Tenant or, if such performance cannot be reasonably had within such 30-day period, Landlord does not in good faith commence performance within such 30-day period and diligently proceed to completion (such period hereinafter referred to as the “Landlord Cure Period”); provided, however, Landlord’s Cure Period shall not exceed the period provided by Applicable Law. Such notice shall be ineffective unless a copy is simultaneously also delivered in the manner required in this Lease to any holder of a mortgage and/or deed of trust affecting all or any portion of the Building, Complex (collectively, “Mortgagee”), provided that prior to such notice Tenant has been notified (by way of notice of Assignment of Rents and Leases, or otherwise), of the address of a Mortgagee. If Landlord fails to cure such default within the time provided, then Mortgagee shall have an additional 30 days following a second notice from Tenant or, if such default cannot be cured within that time, such additional time as may be necessary provided within such 30 days, Mortgagee commences and diligently pursues a cure (including commencement of foreclosure proceedings if necessary to effect such cure). Tenant’s sole remedy will be equitable relief or actual damages but in no event is Landlord or any Mortgagee responsible for consequential damages or lost profit incurred by Tenant as a result of any default by Landlord. If a Mortgagee, or transferee under such Mortgage (hereafter defined), succeeds to Landlord’s interest as a result of foreclosure or otherwise, such party shall not be: (i) liable for any default, nor subject to any setoff or defenses that Tenant may have against Landlord; (ii) bound by any amendment (including an agreement for early termination) without its consent made at any time after notice to Tenant that such Mortgage requires such consent; and (iii) bound by payment of Rent in advance for more than 30 days. Tenant agrees to pay Rent (and will receive credit under this Lease) as directed in any Mortgagee’s notice of Landlord’s default under the Mortgage reciting that Mortgagee is entitled to collect Rent.

 

22.                               SUBORDINATION AND ATTORNMENT.

 

22.1.                     Subject to Section 22.5 below, this Lease will be subordinate to the lien and terms of any mortgage, deed of trust and related documents now or hereafter placed upon the Building Complex (including all advances made thereunder), and to all amendments, renewals, replacements, or restatements thereof (collectively, “Mortgage”) unless any Mortgagee elects to have this Lease superior to the lien and terms of its Mortgage pursuant to Section 22.2. Subject to Section 22.5 below, Tenant agrees that no documentation other than this Lease is required to evidence such subordination.

 

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22.2.                     If any Mortgagee elects to have this Lease superior to the lien of its Mortgage and gives notice to Tenant, this Lease will be deemed prior to such Mortgage whether this Lease is dated prior or subsequent to the date of such Mortgage or the date of recording thereof

 

22.3.                     In confirmation of subordination or superior position, as the case may be, Tenant will execute such documents as may be required by Mortgagee and if it fails to do so within 10 days after demand, Tenant hereby irrevocably appoints Landlord as Tenant’s attorney-in-fact and in Tenant’s name, place, and stead, to do so.

 

22.4.                     Tenant hereby attorns to all successor owners of the Building, whether such ownership is acquired by sale, foreclosure of a Mortgage, or otherwise.

 

22.5.                     Landlord shall, at Landlord’s sole cost and expense, obtain a non-disturbance agreement from Landlord’s present Mortgagee in the form attached hereto as Exhibit G following execution of the Lease (an “SNDA”). If Landlord fails to obtain an SNDA from the present Mortgagee on or before the date that is 30 days after the date hereof, Tenant shall have the right to terminate this Lease by notice to Landlord within 5 days after such 30 day period has expired. If Tenant fails to give such notice within such 5 day period, Tenant’s right to terminate shall be waived and this Lease shall continue in full force and effect. Landlord agrees to use reasonable efforts to obtain a non-disturbance agreement from any future Mortgagee of the Real Property and/or the Building on such Mortgagee’s standard form for such purposes, however, such efforts shall not require Landlord to expend any costs or expenses, including attorneys’ fees, in doing so, unless such costs and expenses are paid by Tenant, nor shall Landlord be required to commence litigation; provided, however, Tenant’s subordination to such a future Mortgagee shall be subject to such future Mortgagee executing such non-disturbance agreement on such Mortgagee’s standard form as provided above.

 

23.                               REMOVAL OF TENANT’S PROPERTY.

 

23.1.                     All movable personal property of Tenant not removed from the Premises upon vacation, abandonment, or termination of this Lease shall be conclusively deemed abandoned and may be sold, or otherwise disposed of by Landlord without notice to Tenant and without obligation to account; Tenant shall pay Landlord’s expenses in connection with such disposition.

 

23.2.                     [Intentionally deleted]

 

24.                               HOLDING OVER: TENANCY MONTH-TO-MONTH. If, after the expiration or termination of this Lease, Tenant remains in possession of the Premises without a written agreement as to such holding over and continues to pay rent and Landlord accepts such rent, such possession is a tenancy from month-to-month, subject to all provisions hereof but at a monthly rent equivalent to 150% of the monthly Rent paid by Tenant immediately prior to such expiration or termination. Rent shall continue to be payable in advance on the first day of each calendar month. Such tenancy may be terminated by either party upon 10 days’ notice prior to the end of any monthly period. Nothing contained herein obligates Landlord to accept rent tendered after the expiration of the Term or relieves Tenant of its liability under Section

 

25.                               PAYMENTS AFTER TERMINATION. No payments by Tenant after expiration or termination of this Lease or after any notice (other than a demand for payment of money) by

 

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Landlord to Tenant reinstates, continues, extends the Term, or affects any notice given to Tenant prior to such payments. After notice, commencement of a suit, or final judgment granting Landlord possession of the Premises, Landlord may collect any amounts due or otherwise exercise Landlord’s remedies without waiving any notice or affecting any suit or judgment.

 

26.                               STATEMENT OF PERFORMANCE. Tenant agrees at any time upon not less than 10 days’ notice to execute and deliver to Landlord a written statement certifying that this Lease is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified stating the modifications); that there have been no defaults by Landlord or Tenant and no event which with the giving of notice or passage of time, or both, would constitute such a default (or, if there have been defaults, setting forth the nature thereof); the date to which Rent has been paid in advance and such other information as Landlord requests. Such statement may be relied upon by a prospective purchaser of Landlord’s interest or Mortgagee. Tenant’s failure to timely deliver such statement is conclusive upon Tenant that: (i) this Lease is in full force and effect without modification except as may be represented by Landlord; (n) there are no uncured defaults in Landlord’s performance; and (iii) not more than 1 month’s Rent has been paid in advance. Upon request, Tenant will furnish Landlord an appropriate resolution confirming that the party signing the statement is authorized to do so.

 

27.                               MISCELLANEOUS.

 

27.1.                     Transfer by Landlord. The term “Landlord” means so far as obligations of Landlord are concerned, only the owner of the Building at the time in question and, if any transfer of the title occurs and the transferee assumes, in a written instrument delivered to Tenant, the Lease and all of Landlord’s obligations thereafter to be performed, Landlord herein named (and in the case of any subsequent transfers, the then grantor) is automatically released from and after the date of such transfer of all liability as respects performance of any obligations of Landlord thereafter to be performed. Any funds in Landlord’s possession at the time of transfer in which Tenant has an interest will be turned over to the grantee and any amount then due Tenant under this Lease will be paid to Tenant.

 

27.2.                     No Merger. The termination or mutual cancellation of this Lease will not work a merger, and such termination or cancellation will at the option of Landlord either terminate all subleases or operate as an automatic assignment to Landlord of such subleases.

 

27.3.                     Common Area Use. The “Common Areas” as used herein shall mean and refer to all of the following: Building entryways and lobbies, outdoor plaza areas, including the plaza located between 17th Street and the Building, service and delivery corridors; parking areas; sidewalks; canopies; mall; driveways; passenger vehicle roadways; truck roadways; loading platforms and docks, and stairs not contained in the Building; public and common washrooms; lounges and shelters; fitness centers; and any other facilities available for common use by all tenants and occupants of space on the Real Property and their employees, agents, customers, licensees, and invitees, as they may from time to time exist during the Term. Landlord reserves the right for itself and the owners, from time to time, of portions of the Real Property to prevent the acquisition of public rights in such areas, or to discourage non-customer parking. The Common Areas shall be maintained and operated by Landlord in good, clean, and orderly condition. The manner in which Common Areas shall be maintained and operated and the expenditures therefor

 

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shall be at the sole discretion of Landlord. Landlord may use any of the Common Areas for the purposes of completing or making repairs or alterations in any portion of the Building Complex, provided that Landlord does not unreasonably interfere with Tenant’s access to or use of the Premises or the Patio Area for the Permitted Use. Subject to the provisions hereof, Landlord shall have the right from time to time to construct other temporary and permanent buildings or improvements in the Common Areas, to change the location or character of, to make alterations of or additions to the Common Areas, to repair and reconstruct the Common Areas, and to do any such other acts in and to the Common Areas as they may deem desirable to improve the convenience thereof and in so doing Landlord shall not unreasonably interfere with Tenant’s access to or use of the Premises for the Permitted Use. Landlord hereby grants to Tenant the right to use the Common Areas, as hereinafter defined, subject to the conditions hereinafter stated and in any covenants placed of record with respect to the Real Property. Tenant’s use of such Common Areas shall be subject to the following: (i) The Common Areas shall be used by Tenant, Tenant’s Agents, customers, and invitees, in common with agents, employees, customers, and invitees of Landlord and the other owners, occupants, and tenants from time to time in the Building Complex; (ii) Tenant’s right to use the Common Areas shall terminate upon the termination of this Lease by lapse of tune or otherwise; (iii) Tenant shall make no use of the Common Areas which shall interfere in any way with the use of the Common Areas by others; (iv) Tenant’s use of the Common Areas shall be subject to the Rules and Regulations (as defined below); and (v) Tenant’s use of any fitness center in the Building Complex shall be in common with agents, employees, customers, and invitees of Landlord and the other owners, occupants, and tenants from time to time in the Building Complex without additional charge except for charges imposed by Landlord in order to accommodate special needs of specific employees of Tenant or for a separate particular use of any fitness center. The Rules and Regulations are binding upon Tenant, and any failure to adhere thereto shall, after any applicable notice and cure period, constitute a default hereunder by Tenant and shall entitle Landlord to exercise its rights and remedies hereunder as set forth herein. The Rules and Regulations may be reasonably amended by Landlord, from time to time, with or without advance notice to Tenant, and all amendments shall be effective upon delivery of a copy of them to Tenant at the Premises, but such amendments shall not adversely affect the rights expressly granted to Tenant under this Lease; provided, however, Tenant shall not be bound by any modifications to the Rules and Regulations that (a) materially and adversely impact Tenant’s access to or use of the Premises, the Patio Area, the Common Areas or the Building’s parking facilities or (b) increase the Rent due hereunder. The Rules and regulations will be applied by Landlord in an uniform and non-discriminatory mariner. In the event of any conflict between this Lease and the Rules and Regulations, this Lease shall control.

 

27.4.                     Independent Covenants. This Lease is to be construed as though the covenants between Landlord and Tenant are independent and not dependent and, except as expressly set forth in this Lease, Tenant is not entitled to any setoff of the Rent against Landlord if Landlord fails to perform its obligations; provided, however, the foregoing does not impair Tenant’s right to commence a separate suit against Landlord. for any default by Landlord so long as Tenant complies with Section 21.

 

27.5.                     Validity of Provisions. If any provision is invalid under present or future laws, then it is agreed that the remainder of this Lease is not affected and that in lieu of each provision that is invalid, there will be added as part of this Lease a provision as similar to such invalid provision as may be possible and is valid and enforceable.

 

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27.6.                     Captions. The caption of each Section is added for convenience only and has no effect in the construction of any provision of this Lease.

 

27.7.                     Construction. The .parties waive any rule of construction that ambiguities are to be resolved against the drafting party. Any words following the words “include,” “including,” “such as,” “for example,” or similar words or phrases shall be illustrative only and are not intended to be exclusive, whether or not language of non-limitation is used. This Lease has been prepared to reflect additions and deletions negotiated between Landlord and Tenant from Landlord’s standard form for the Building. All provisions and terms that are stricken are deletions and shall not be a part of this Lease; provided, however, a deletion from this Lease shall not be construed to create the opposite intent of the deleted provisions. All provisions and terms which are underlined (other than headings, titles and captions) are additions and shall be a part of this Lease.

 

27.8.                     Applicability. Except as otherwise provided, the provisions of this Lease are applicable to and are binding upon Landlord’s and Tenant’s respective heirs, successors and assigns. Such provisions are also considered to be covenants running with the land to the fullest extent permitted by law.

 

27.9.                     Authority. Tenant and the party executing this Lease on. behalf of Tenant represent to Landlord that such party is authorized to do so by requisite action of Tenant and agree, upon request, to deliver to Landlord a resolution, or similar document to that effect.

 

27.10.              Severability. If there is more than one party which is the Tenant, the obligations imposed upon Tenant are joint and several.

 

27.11.              Acceptance of Keys, Rent or Surrender. No act of Landlord or its representatives during the Term, including any agreement to accept a surrender of the Premises or amend this Lease, is binding on Landlord unless such act is by a partner, member or officer of Landlord, as the case may be, or other party designated in writing by Landlord as authorized to act. The delivery of keys to Landlord or its representatives will not operate as a termination of this Lease or a surrender of the Premises. No payment by Tenant of a lesser amount than the entire Rent owing is other than on account of such Rent nor is any endorsement or statement on any check or letter accompanying payment an accord and satisfaction. Landlord may accept payment without prejudice to Landlord’s right to recover the balance or pursue any other remedy available to Landlord.

 

27.12.              Building Name and Size. Landlord may as it relates to the Building and Building Complex: change the name, increase the size by adding additional real property, construct other buildings or improvements, change the location and/or character, or make alterations or additions. If additional buildings are constructed or the size is increased, Landlord shall, at Landlord’s sole cost and expense, re-measure the Building Complex in accordance with The Standard for Measuring Floor Area of the Building Owners and Managers Association, ANSI/BOMA Z65.1-1996 (the “BOMA Standard”), and Landlord and Tenant shall execute an amendment which incorporates any necessary modifications to Tenant’s Pro Rata Share. Tenant may not use the Building’s name for any purpose other than as part of its business address. Notwithstanding anything to the contrary contained in this Section, (a) in the event Landlord,

 

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changes the name of the Building, Landlord shall reimburse Tenant for all reasonable costs of reprinting replacement stationery, business cards and other printed material bearing Tenant’s address to the extent affected by the change in name of the Building, in an amount not to exceed $5,000.00, and (b) in no event shall Tenant’s Base Rent or Tenant’s Pro Rata Share of Operating Expenses ever increase as a result of any changes by Landlord to Building size or any alterations or improvements to the Building or Building Complex.

 

27.13.              Diminution of View. Tenant agrees that no diminution of light, air, or view from the Building entitles Tenant to any reduction of Rent under this Lease, results in any liability of Landlord, or in any way affects Tenant’s obligations.

 

27.14.              Limitation of Liability. Notwithstanding anything to the contrary contained in this Lease, Landlord’s liability is limited to Landlord’s interest in the Building and Landlord shall never be personally liable for recovery of any judgment.

 

27.15.              Non-Reliance. Tenant confirms it has not relied on any statements, representations, or warranties by Landlord or its representatives except as set forth herein.

 

27.16.              Written Modification. No amendment or modification of this Lease is valid or binding unless in writing and executed by the parties.

 

27.17.              Mortgagee’s Requirements. [Intentionally deleted]

 

27.18.              Effectiveness. Submission of this instrument for examination or signature by Tenant does not constitute a reservation of or option to lease and it is not effective unless and until execution and delivery by both Landlord and Tenant.

 

27.19.              Survival. This Lease, notwithstanding expiration or termination, continues in effect as to any provisions requiring observance or performance subsequent to termination or expiration.

 

27.20.              Time of Essence. Time is of the essence herein.

 

27.21.              Rules and Regulations. The rules and regulations attached hereto as Exhibit E (the “Rules and Regulations”) are a part of this Lease and Tenant agrees that Tenant and Tenant’s Agents shall at all times abide by such rules and regulations. Notwithstanding Rule 6 of Exhibit E attached hereto, Landlord shall furnish Tenant with 81 key cards. Rule 15 shall not be deemed to prohibit the installation of customary first-class office carpeting or flooring and as otherwise approved by Landlord shall not be prohibited. It is understood and agreed that the use of the Premises and character of Tenant are of concern to Landlord because of the location of the Premises and visibility on the lobby level of the Building, which as result may add to or detract from the first-class appearance and image of the Building. Landlord has entered into this Lease in consideration of Tenant’s use of the Premises described in Section 10 of the Lease as the “Permitted Use.” Therefore, Tenant’s failure to continually occupy the Premises for such Permitted Use (except for temporary closures due to casualties or temporary closures of not more than two consecutive weeks after notice thereof to Landlord) shall be deemed an Event of Default under this Lease and Landlord shall have the right to exercise all remedies available to it as a result of such Event of Default. It is further understood and agreed that any area of the interior of the

 

27


 

Premises that is visible from outside the Premises, including without limitation any signage and window display areas, are of concern to Landlord because they may add to or detract from the first-class appearance of the Building. Landlord retains the right to reasonably approve any items placed in areas of the Premises visible from outside the Premises, including, without limitation, furniture, fixtures, wall hangings, equipment, signage or window displays, and Landlord shall have the right, from time to time, to request that Tenant make changes in or remove any items in such areas to better adapt the same to the character of the Building Complex (as reasonably determined appropriate by Landlord), and Tenant agrees to alter or remove the same in accordance with Landlord’s requests. Any improvements approved as a part of the Finish Work described in the Work Letter are deemed approved by Landlord, except for changes by Tenant that Landlord has not approved.

 

27.22.              Recording. Tenant will not record this Lease. Recording of the Lease by or on behalf of Tenant is an Event of Default.

 

27.23.              Financial Information. Tenant acknowledges that the financial capability of Tenant and Guarantor, if any, to perform obligations hereunder is material to Landlord and Landlord would not enter into this Lease but for its belief, based on its review of financial statements, that such parties are capable of performing such financial obligations. Tenant hereby represents to Landlord that the financial statements previously furnished Landlord with respect to Tenant and any Guarantor were true and correct in all material respects and there have been no material adverse changes subsequent thereto. Unless Tenant (or Guarantor, respectively) is a publicly traded entity with financial statements publicly available, Tenant will furnish Tenant’s or any Guarantor’s financial statements to Landlord within 10 days after Landlord’s written request from time to time, but not more frequently than once every 12 months or if required by Landlord in connection with a proposed sale or refinancing. Such statements shall include at least a balance sheet, income statement and statement of changes in financial position for the most current month end, year to date and prior year-end certified by a duly authorized representative to be an accurate representation of the financial condition. Such statements shall be prepared in accordance with generally accepted accounting principles and, if such is the normal practice of Tenant (or Guarantor, respectively) as to annual statements, audited by an independent certified public accountant for the period covered. Notwithstanding anything in this Section 27.23 to the contrary, Tenant may condition its delivery of any financial information upon Tenant’s receipt of a reasonable confidentiality agreement from all parties that will have access to such financial information.

 

27.24.              Patriot Act Compliance Provision. Tenant represents and warrants that:

 

(a)                                 no action, proceeding, investigation, charge, claim, report or notice (collectively, “Action”) has been commenced, threatened or to its knowledge filed against Tenant (which, for purposes of this Section, includes its affiliates) alleging any violation of any laws relating to terrorism or money laundering, including Executive Order No. 13224 on Terrorist Financing (effective September 24, 2001) (the “Executive Order”) and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56) (the ‘Patriot Act”).

 

28


 

(b)                                 to Tenant’s knowledge, Tenant has not taken or omitted to take any action which could reasonably be expected to result in any Action against Tenant alleging any violation of the Executive Order or the Patriot Act.

 

(c)                                  Tenant is not a Prohibited Person. “Prohibited Person” shall mean: (i) a person (which for purposes of this Section includes any entity) that is listed in the Annex to, or is otherwise subject to the provisions of the Executive Order and relating to blocking property and prohibiting transactions with persons who commit, threaten to commit, or support terrorism; (ii) a person owned or controlled by, or acting for or on behalf of, any person that is listed in the Annex to, or is otherwise subject to the provisions of; the Executive Order; (iii) a person with whom Landlord is prohibited from dealing or otherwise engaging in any transaction by any terrorism or money laundering law, including the Executive Order and the Patriot Act; (iv) a person who commits, threatens, or conspires to commit or supports “terrorism” as defined in the Executive Order; (v) a person that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gov/ofac/t11sdn.pdf or at any replacement website or other replacement official publication of such list; and (vi) a person who is affiliated with a person listed above.

 

(d)                                 Tenant is not violating and will not violate, any of the prohibitions set forth in any terrorism or money laundering law, including the Executive Order and Patriot Act.

 

Tenant agrees to promptly hereafter deliver to Landlord (but in any event within 10 days following Landlord’s written request) any evidence, including a certification, reasonably requested from time to time by Landlord confirming Tenant’s compliance with this Section.

 

27.25.              Governing Law; Venue; Jurisdiction. This Lease shall be construed in accordance with the laws of the State of Colorado, without giving effect to conflict of laws principles. Each party hereto (which includes any assignee, successor, heir or personal representative of a party) hereby waives any objection to venue in the County in which the Premises are located, and agrees and consents to personal jurisdiction of the courts of the State of Colorado, in any action or proceeding or counterclaim brought by any party hereto against the other on any matter whatsoever arising out of or in any way connected with this Lease.

 

27.26.              Reasonable Consent. Wherever pursuant to this Lease the consent or approval of one party is required or requested with respect to the performance by the other party of any term, covenant, condition or provision of this Lease or the doing of any act in connection therewith or in connection with the Premises, it is agreed and understood that, unless otherwise expressly provided herein, such consent or approval shall not be unreasonably withheld, conditioned or delayed.

 

28.                               AUTHORITIES FOR ACTION AND NOTICE.

 

28.1.                     Unless otherwise provided, Landlord may act through Landlord’s Building Manager or other designated representatives from time to time.

 

29


 

28.2.                     All notices or other communications required or desired to be given to Landlord must be in writing and shall be deemed received when delivered personally to any officer, partner, or member of Landlord (depending upon the nature of Landlord) or the manager of the Building (the “Building Manager”) whose office is in the Building, or when deposited in the United States mail, postage prepaid, certified or registered, return receipt requested, or when deposited with a nationally-recognized overnight courier service with delivery verification service, addressed as set forth in Section 1.10. All notices or communications required or desired to be given to Tenant shall be in writing and deemed duly served when delivered personally to any officer, employee, partner, or member of Tenant (depending upon the nature of Tenant), individually if a sole proprietorship, or manager of Tenant whose office is in the Building, or when deposited in the United States mail, postage prepaid, certified or registered, return receipt requested, or when deposited with a nationally-recognized overnight courier service with delivery verification service, addressed to the appropriate address set forth in Section 1.13. Either party may designate in writing served as above provided a different address to which notice is to be mailed. The foregoing does not prohibit notice from being given as provided in the rules of civil procedure, as amended from time to time, for the state in which the Real Property is located.

 

29.                               PARKING. Tenant shall have the right, by notice to Landlord within 90 days following the Commencement Date, to license from Landlord directly or through the operator of the parking garage, if applicable, the number of garage parking spaces set forth in Section 1.9 (“Tenant’s Parking Allotment”). Tenant shall forfeit its right to any parking spaces of Tenant’s Parking Allotment not initially licensed by Tenant and Landlord is relieved of its obligation to make such spaces available thereafter for Tenant’s use; provided, however, so long as parking spaces are available, in Landlord’s sole determination, upon Tenant’s written request, Tenant shall have the right to license available parking spaces to the extent of Tenant’s Parking Allotment. Use of licensed parking spaces shall be on an in and out basis in the parking structure. Tenant shall pay to Landlord or the garage operator, if applicable, the current monthly rate charged for each space Tenant licenses in an amount equal to the monthly charge per parking space established by Landlord from time to time (“Parking Rate”), which monthly Parking Rate for each parking space initially is $175.00 for each unreserved parking space and $225.00 for each reserved parking space. Tenant will be billed monthly and Tenant shall pay the parking rents to Landlord (or Landlord’s designated representative or agent). Notwithstanding the above, the right granted to Tenant to use any parking spaces is a license only and Landlord’s inability to make spaces available at any time for reasons beyond Landlord’s reasonable control is not a material breach by Landlord of its obligations hereunder. If Tenant fails to pay any portion of the parking fee in a timely manner, Landlord, at its election and in addition to its other remedies under this Lease for an Event of Default, may cancel Tenant’s right to use the number of parking spaces for which Tenant has failed to pay. Tenant has no rights to use the parking facilities on the Real Property except as provided in this Section. The abatement of Tenant’s obligation to pay for unavailable spaces during any period of unavailability constitutes Tenant’s sole remedy. All vehicles parked in the parking facilities and the personal property therein shall be at the sole risk of Tenant, Tenant’s Agents and the users of such spaces and Landlord shall have no liability for loss or damage thereto for whatever cause.

 

30.                               SUBSTITUTE PREMISES. [Intentionally Omitted]

 

30


 

31.                               BROKERAGE. Tenant represents it has not employed any broker with respect to this Lease and has no knowledge of any broker’s involvement in this transaction except those listed in Sections 1.15 and 1.16 (collectively, the “Brokers”). Tenant shall indemnify Landlord against any expense incurred by Landlord as a result of any claim for commissions or fees by any other broker, finder, or agent, whether or not meritorious, employed by Tenant or claiming by, through, or under Tenant, other than the Brokers. Tenant acknowledges Landlord is not liable for any representations by the Brokers regarding the Premises, Building, Building Complex, or this Lease.

 

32.                               COUNTERPARTS. This Lease may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any one or more counterpart signature pages may be removed from one counterpart of the Lease and annexed to another counterpart of the Lease to form a completely executed original instrument without impairing the legal effect of the signature thereon.

 

33.                               ADDENDUM/EXHIBITS. Any Addenda and/or Exhibits referred to herein and attached hereto are incorporated herein by reference.

 

IN WITNESS WHEREOF, the parties have executed this Lease as of the day and year first above written and it is effective upon delivery of a filly-executed copy to Tenant.

 

PING IDENTITY CORPORATION,

a Delaware corporation

MG-1005, LLC, a Colorado limited company

 

 

By:

/s/ Jeremy Rudel

 

By:

[unintelligible signature]

Print Name:

Jeremy Rudel

 

 

Authorized Signatory

Print Title:

VP-Finance

 

 

 

 

 

 

“Landlord”

 

 

 

 

ATTEST:

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Lauren Romer

 

 

 

Print Name:

Lauren Romer

 

 

 

Print Title:

Director of Legal Affairs

 

 

 

 

“Tenant”

 

 

 

31


 

ADDENDUM

 

THIS ADDENDUM is to that certain lease agreement (the “Lease”) by and between MG-1005, LLC, a Colorado limited liability company (“Landlord”), and PING IDENTITY CORPORATION, a Delaware corporation (“Tenant”), with respect to approximately 20,225 rentable square feet of space (the “Premises”) in the Building. In the event of any conflict between the terms and provisions of the Lease and the terms and provisions of this Addendum, the terms and provisions of this Addendum shall control.

 

1.              Letter of Credit. Tenant shall deliver to Landlord, at the time of execution hereof by Tenant, a clean, unconditional, irrevocable letter of credit from a lending institution acceptable to Landlord, in Landlord’s sole discretion, in the form attached hereto as Schedule 1 or other form approved by Landlord (the “Letter of Credit”) as financial assurance for the performance of Tenant’s obligations under this Lease on the following terms and conditions:

 

A.                                    The Letter of Credit, or a renewal or substitute therefor approved by Landlord, shall be kept in effect from the date of execution of this Lease through the 60th day following the Expiration Date of the then current Term (the “LC Termination Date”). The Letter of Credit shall be in the initial amount of $600,000.00 and thereafter, so long as no Event of Default is continuing under the Lease prior to a reduction date, the amount of the Letter of Credit may be reduced at the request of Tenant by: (i) $200,000 at the end of Month 36 of the Initial Term, (ii) $200,000 at the end of Month 48 of the Initial Term, and (iii) $200,000 at the end of the 3rd month of the Option Term, if applicable. If the Letter of Credit would otherwise expire prior to the LC Termination Date, Tenant shall deliver to Landlord an extension or renewal of the Letter of Credit, or a substitute Letter of Credit in the same form as Schedule 1 attached to this Exhibit F or other form approved by Landlord, no later than 30 days prior to the expiration date of such Letter of Credit, from a lending institution subject to Landlord’s reasonable approval; such extension, renewal or substitute Letter of Credit shall be effective no later than 10 days prior to the expiration of the existing Letter of Credit and shall be in the amount provided above. If, following issuance of the Letter of Credit, Tenant receives notice that (i) the net worth of the lending institution issuing the Letter of Credit shall at any time be less than $500,000,000.00, or (ii) the lending institution shall cease to operate, shall be declared insolvent by the Federal Deposit Insurance Corporation, or any successor thereto (the “FDIC”) or shall be placed into receivership by the FDIC (each an “Issuing Bank Default”), then within 10 days following Tenant’s receipt of such notice, Tenant shall deliver to Landlord written notice of such Issuing Bank Default and within 30 days following such Issuing Bank Default and demand from Landlord, Tenant shall deliver to Landlord either (a) a replacement Letter of Credit satisfying the requirements herein and issued by a lending institution subject to Landlord’s reasonable approval; or (b) a cash security deposit in an amount equal to the then current letter of Credit. Upon an Event of Default (as defined in the default section of the Lease), Landlord may present the Letter of Credit (or the renewal, extension or substitute) for payment one or more times up to the entire amount of the Letter of Credit, with amounts received to be held and applied by Landlord in accordance with subparagraph B below. If Tenant fails to timely provide Landlord with an extension, renewal or substitute Letter of Credit, as required hereunder, such failure shall automatically and without notice be deemed an Event of Default under the Lease and Landlord shall have a right to present the Letter of Credit in accordance with the foregoing provision. If the Letter of Credit has not been presented for payment on or before the LC Termination Date, Landlord shall return the Letter of Credit to the issuer

 

32


 

within 30 days after the LC Termination Date. If Landlord transfers the Real Property, Landlord shall have the right to transfer the Letter of Credit or substitute to the transferee (and Tenant shall pay any costs or fees charged by the issuer to permit such transfer), and if the Letter of Credit has been transferred, Tenant shall look solely to such transferee for the return of the Letter of Credit (or substitute). If there is a Mortgagee, Tenant shall execute such documents as the Mortgagee may reasonably require to secure the Mortgagee’s interest in the Letter of Credit and proceeds, subject to this Section. Landlord shall give written notice to Tenant of transfer of Landlord’s interest resulting in transfer of the Letter of Credit Landlord shall deliver the then-current effective Letter of Credit to the issuer marked for cancellation upon receipt of any conforming renewal or substitute Letter of Credit provided in accordance with this Section and cooperate with the issuing bank to effect the release of such then-current effective Letter of Credit as soon as the renewal or substitute Letter of Credit is in effect pursuant to its terms. Tenant agrees to pay all fees charged by the lending institution issuing the Letter of Credit (or any reduction, renewal, extension, or substitute therefor).

 

B.                                    If an Event of Default occurs or this Lease is terminated as a result of an Event of Default, Landlord may use, apply or retain all or any portion of the amounts received under the Letter of Credit, if any, for the payment of any rent or other charge in default or for the payment of any other sum to which Landlord may become obligated by reason of Tenant’s Event of Default, or to compensate Landlord for any loss or damage which Landlord may suffer thereby in accordance with Section 20 of the Lease. Neither the Letter of Credit nor the amounts received under the Letter of Credit shall be deemed a security deposit under the Lease.

 

2.                                      Option to Extend. Landlord grants Tenant an option (the “Option”) to extend the term of the Lease for one additional term of 5 years (the “Option Term”). Such Option applies only to the Premises and is on the following conditions:

 

A.                                    Notice of Tenant’s interest in exercising the Option must be given to Landlord no earlier than 15 months and no later than 12 months prior to the Expiration Date of the Term (“Tenant’s Notice”). Within 30 days after being given Tenant’s Notice, Landlord will notify Tenant of the Base Rent applicable during the Option Term and any allowances that Landlord will make available to Tenant (“Landlord’s Notice”).

 

B.                                    Tenant has 15 days after having been given Landlord’s Notice to exercise an Option or dispute the rental rate quoted by Landlord by delivering notice of exercise or dispute to Landlord. If Tenant exercises the Option, the Term will be deemed extended on the terms as set forth in Landlord’s Notice and the parties will execute an amendment evidencing the extension. If Tenant disputes Landlord’s determination of the Base Rent rate, Tenant shall give notice of such dispute (“Dispute Notice”) within the 15-day period and the Base Rent rate shall thereafter be determined in accordance with Paragraph F below.

 

C.                                    Unless Landlord is timely notified by Tenant in accordance with subparagraphs A or B above, it will be conclusively deemed that Tenant has not exercised the Option and the Lease will expire in accordance with its terms on the Expiration Date.

 

D.                                    Unless expressly waived by Landlord, Tenant’s right to exercise the Option is conditioned on: (i) no Event of Default existing at the time of exercise or at the time of

 

33


 

commencement of the Option Term; (ii) Tenant not having subleased or vacated more than 25% of the Premises or assigned its interest under the Lease (except to a Permitted Transferee or otherwise consent to by Landlord) as of the commencement of the Option Term; and (iii) Tenant’s financial condition not having materially adversely changed, as determined in Landlord’s reasonable discretion, since the Commencement Date, or if Landlord has consented to a Transfer by assignment of the entirety of Tenant’s interest in this Lease, such assignee demonstrating, in Landlord’s sole and absolute determination, a net worth and financial condition (as of the time of exercise and at the time of commencement of the Option Term) sufficient to evidence such assignee’s ability to perform and meet the obligations under the Lease for the Option Term. Tenant’s rights pursuant to this paragraph are personal and upon an assignment of the Lease (except to a Permitted Transferee or otherwise consented to by Landlord), this paragraph is null and void.

 

E.                                     The provisions of the Lease shall be applicable during any Option Term, except that the base to be used for determination of Additional Rent and any allowances shall be as set forth in Landlord’s Notice and the Base Rent shall be as set forth in Landlord’s Notice, unless determined in accordance with paragraph F below.

 

F.                                      Following giving of Tenant’s Dispute Notice, Landlord and Tenant shall promptly negotiate to determine a mutually acceptable Base Rent. If the parties mutually agree upon a new Base Rent rate, such agreed rate shall be the Base Rent rate applicable during the particular Option Term. If the parties have not agreed within 20 days after the giving of Tenant’s Dispute Notice, then within such 20-day period Landlord and Tenant shall endeavor to agree upon a qualified commercial real estate broker of good reputation, having at least five (5) years’ experience in the real estate market in which the Building is located, to act as arbitrator (“Arbitrator”); otherwise, they shall each select, within the foregoing 20-day period, a real estate broker who meets the above qualifications and together such brokers will then select a real estate broker who meets the above qualifications and who shall be deemed the Arbitrator. Within 10 days after designation of the Arbitrator, Landlord and Tenant each shall give notice of its determination of the Prevailing Market Rental Rate supported by the reasons therefor by delivering copies to each other and the Arbitrator, under an arrangement for simultaneous exchange of such determinations. The Arbitrator will review each party’s determination and select the one which most accurately reflects such Arbitrator’s determination of the Prevailing Market Rental Rate. Such selection shall be final and binding on both parties and the Base Rent to be paid during the particular Option Term shall be the greater of such determination or the Base Rent in effect immediately prior to commencement of the particular Option Term. The Arbitrator shall have no right to propose a middle ground or any modifications of either party’s determination. The Arbitrator’s costs incurred in this procedure shall be shared equally by Landlord and Tenant and shall be fixed when the Arbitrator is selected. For purposes of this paragraph, “Prevailing Market Rental Rate” means the annual amount per square foot that a willing tenant would pay and a willing landlord would accept for Base Rent following arms-length negotiations with respect to an Assumed Lease (defined below) under the circumstances then obtaining. “Assumed Lease” means (i) a lease or renewal having a commencement date within 6 months of Tenant’s Notice for space of approximately the same size as the Premises, located in a portion of the Building or a Comparable Building (defined below), and with a view and floor height similar to the portion of the Premises for which Prevailing Market Rental Rate is being determined, for a term equal in length to the Option Term; (ii) a real estate commission is payable with respect to such extension

 

34


 

to the extent a third-party commission with respect to extension is agreed or obligated to be paid by Landlord; and (iii) taking into consideration and making adjustments to reflect that Additional Rent is paid with the base as set forth in Landlord’s Notice and allowances, if any, as provided in Landlord’s Notice; and (iv) taking into consideration any and all concessions, if any, being offered in Comparable Buildings. “Comparable Building” means any then-existing building in the Denver Central Business District office submarket that is of a size, location, quality and prestige comparable to, and with a size and efficiency of floor plate, amenities, and with tenants of a stature reasonably comparable with the Building, provided that appropriate adjustments shall be made to adjust for differences in the size, location, age, efficiency of floorplate, and quality of any Comparable Building and the Building.

 

G.                                    After exercise, or failure to exercise the Option, Tenant shall have no further rights to extend the Term.

 

3.                                      Riser Space. At no additional cost to Tenant, Tenant shall have access to and use of not less than two of the Buildings’ risers for its telecommunications requirements during the Term. Tenant’s use of riser space shall be based upon its Pro Rata Share and in accordance with the nature of the Permitted Use. Tenant shall remove, or pay for the removal of, all cabling and related equipment (but excluding conduit) from the riser space upon the expiration of the Term or earlier termination of the Lease (subject to the provisions of Section 17 of the Lease).

 

4.                                      Generator. Tenant, at Tenant’s sole cost and expense, shall have the right to tie into the Building Generator (as hereafter defined) and use and pay for a proportionate share of the costs of operation of the Building Generator as hereafter more specifically provided. Tenant acknowledges that the Building is equipped diesel engine standby generator (“Building Generator”) located on the 21st floor of the Building with a 1,200KW/1,500KVA (“Total Generator Load Capacity”). A small portion of the Total Generator Load Capacity is utilized for existing base Building systems including condenser water pumps and telecommunication systems. The Building Generator is connected to the public utility system through an automatic transfer switch (“ATS”). “Building Generator Costs” mean any costs and expenses incurred by Landlord to maintain and operate the Building Generator, including but not limited to the costs incurred by Landlord for fuel, generator and related equipment maintenance, and periodic testing of the Building Generator, ATS and associated equipment. Landlord has elected to make available to a certain portion of the remaining capacity of the Building Generator for a limited number of tenants of the Building (each a “User”). Users who desire to connect to the Building Generator agree to share in the reimbursement to Landlord of the Building Generator Costs on a pro rata basis determined as follows:

 

A.                                    A certain percentage of the available Building Generator Capacity shall be allocated to each User of the Building Generator (“User Allocation”). Each User shall be obligated to pay its percentage share of the sum of the Building Generator Costs, which share shall be determined based on its User Allocation divided by the Total Generator Load Capacity (“User’s Share”). In addition, each user shall pay for their total energy usage costs, which will be measured via a building standard electronic meter installed at the Tenant’s cost.

 

B.                                    Tenant acknowledges and agrees that its User Allocation shall be 38.4 kilowatts and based on such User Allocation, its User Share shall be 3.2% (38.4 divided by

 

35


 

1,200KW). Accordingly, Tenant shall pay as its User’s Share 3.2% of the Total Generator Load Capacity, as well as 3.2% of the Generator Costs, as additional Rent under the Lease (at the same time and place as Rent is paid under the Lease) following Landlord’s invoice for such User’s Share. Payment of such User’s Shore of the Building Generator Costs and Total Generator Load Capacity shall be in addition to Tenant’s obligation to pay other amounts (including Tenant’s Pro Rata Share of Operating Expenses) payable under the Lease.

 

Notwithstanding that Landlord shall use reasonable efforts to maintain the Building Generator, ATS and associated equipment and appropriate fuel supplies, Landlord makes no guarantee of the Building Generator run time or availability. Tenant’s usage of the services from the Building Generator shall be without warranty of Landlord and Landlord shall have no liability for an interruption of Services due to the failure of the Building Generator.

 

If Tenant pays Landlord directly for Tenant’s use of the Generator, then all costs associated with the operation, maintenance and repair of the Generator shall be excluded from Operating Expenses.

 

5.                                      Early Termination Option. Tenant may elect to terminate this Lease (“Termination Option”) effective as of last day of Month 48 of the Initial Term (the “Early Termination Date”), by giving Landlord written notice (“Tenant’s Notice”) on or before the last day of Month 39 of the Initial Term, provided that: (1) on or before the Early Termination Date, Tenant has paid Landlord all amounts due and owing under the Lease; and (2) Tenant pays to Landlord, within 30 days after Tenant receives the Termination Fee Calculations (as set forth below) a termination fee equal to: (i) $214,890.60 (representing Base Rent for Month 48 though Month 53 of the Initial Term), plus (ii) 6 months’ then estimated payments of Operating Expenses for Month 48 through Month 53 of the Initial Term, plus (iii) the unamortized portion of Landlord’s Costs calculated by amortizing Landlord’s Costs over the Initial Term with interest at the rate of 10% per annum. “Landlord’s Costs” means Landlord’s costs related to this Lease, including, but not limited to: Finish Work Costs (the Finish Work Allowance and other costs of the Finish Work paid by Landlord), reasonable legal costs, and leasing commissions. Promptly following Landlord’s receipt of Tenant’s notice, Landlord shall deliver to Tenant a calculation of the termination fee payable pursuant to this Section 5 (the “Termination Fee Calculations”), together with such supporting evidence as Tenant reasonably requires. Tenant’s right to exercise the Termination Option is conditioned on: (i) no Event of Default existing at the time of exercise of the Termination Option or on the Early Termination Date; and (ii) Tenant not having subleased or vacated more than 25% of the Premises or assigned its interest under the Lease as of the date of exercise of the Termination Option or on the Early Termination Date. If the Termination Option is timely exercised, Tenant will deliver possession of the Premises to Landlord on the Early Termination Date in accordance with the terms of the Lease and all other terms and provisions will apply as if the Lease had expired according to its terms, including Tenant’s obligation for payment of any increases in Operating Expenses attributable to periods prior to the Early Termination Date at such time as such obligation is determined. If Tenant fails to timely give notice or if Tenant fails to pay Landlord the termination fee described above within 30 days after Tenant receives the Termination Fee Calculations, then without further notice to Tenant, Tenant will be deemed to have waived its right to terminate under this Termination Option and the Termination Option will be deemed null and void and of no further force and effect. Tenant’s right to terminate the Lease pursuant to this Termination Option is personal to Tenant and may not be assigned (except to a

 

36


 

Permitted Transferee). In the event of an assignment of the Lease (except to a Permitted Transferee), this Termination Option is null and void.

 

37


 

IN WITNESS WHEREOF, the parties hereto execute this Addendum.

 

PING IDENTITY CORPORATION,

a Delaware corporation

MG-1005, LLC, a Colorado limited company

 

 

By:

/s/ Jeremy Rudel

 

By:

[unintelligible signature]

Print Name:

Jeremy Rudel

 

 

Authorized Signatory

Print Title:

VP-Finance

 

 

“Landlord”

 

 

 

 

 

 

 

 

ATTEST:

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Lauren Romer

 

 

 

Print Name:

Lauren Romer

 

 

 

Print Title:

Director of Legal Affairs

 

 

 

 

“Tenant”

 

 

 

 

38


 

EXHIBIT A-1 TO LEASE

 

THE PREMISES

 

 

1


 

EXHIBIT A-2 TO LEASE

 

THE PATIO AREA

 

 

A-2


 

EXHIBIT B TO LEASE

 

REAL PROPERTY

 

Lots 1 through 32, inclusive, Block 96,

 

together with all of the platted, now vacated, alley in said Block,

 

East Denver, according to the recorded plat thereof

 

City and County of Denver, State of Colorado.

 

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EXHIBIT C TO LEASE

 

OPERATING EXPENSES

 

6.1                               Definitions. The additional terms below have the following meanings in this Lease:

 

(2)                                 “Landlord’s Accountants” means that individual or firm employed by Landlord from time to time to keep the books and records for the Building Complex, and/or to prepare the federal and state income tax returns for Landlord with respect to the Building Complex, which books and records shall be certified to by a representative of Landlord. All determinations made hereunder shall be made on a reasonable basis by Landlord’s Accountants using generally accepted accounting principles (as consistently applied, “GAAP”).

 

(3)                                 “Rentable Area” means 655,565 rentable square feet of space. If there is a significant change in the aggregate Rentable Area as a result of an addition, partial destruction, modification to building design, or similar cause which causes a reduction or increase in the Rentable Area on a permanent basis or, if Landlord remeasures the Building and a change in Rentable Area occurs, Landlord’s Accountants shall, in accordance with the BOMA Standard, make such adjustments in the computations as are necessary to provide for such change.

 

(4)                                 “Tenant’s Pro Rata Share” means the percentage set forth in Section 1.5 of the Lease. If Tenant, at any time during the Term, leases additional space in the Building or if the Rentable Area is adjusted, Tenant’s Pro Rata Share shall, in accordance with the BOMA Standard, be recomputed by dividing the total rentable square footage of space then leased by Tenant (including any additional space) by the Rentable Area and the resulting figure shall become Tenant’s Pro Rata Share.

 

(5)                                 “Operating Expense Year” means each calendar year during the Term, except that the first Operating Expense Year begins on the Commencement Date and ends on December 31 of such year and the last Operating Expense Year begins on January 1 of the calendar year in which this Lease expires or is terminated and ends on the date of such expiration or termination. If an Operating Expense Year is less than twelve (12) months, Operating Expenses for such year shall be prorated.

 

(6)                                 “Operating Expenses” means all operating expenses of any kind or nature which are in Landlord’s reasonable judgment necessary, ordinary, or customarily incurred in connection with the operation and maintenance of the Building Complex. Operating Expenses include:

 

(a)                                 All real property taxes and assessments levied against the Building Complex by any governmental or quasi-governmental authority or under any covenants, declarations, easements or restrictions, including taxes, assessments, surcharges, or service or other fees of a nature not presently in effect which are hereafter levied on the Building Complex as a result of the use, ownership or operation of the Building Complex or for any other reason, whether in lieu of or in addition to, any current real estate taxes and assessments. However, any taxes which are levied on the rent of the Building Complex will be determined as if the Building Complex were Landlord’s only real property. In no event do taxes and assessments include any

 

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federal or state income taxes levied or assessed on Landlord. Expenses for tax consultants to contest taxes or assessments are also included as Operating Expenses (all of the foregoing are collectively referred to herein as “Taxes”). Taxes also include special assessments, license taxes, business license fees, business license taxes, commercial rental taxes, levies, charges, penalties or taxes, imposed by any authority against the Premises, Building Complex or any legal or equitable interest of Landlord. Special assessments are deemed payable in such number of installments permitted by law, whether or not actually so paid, and include any applicable interest on such installments. Taxes (other than special assessments) are computed on an accrual basis based on the year in which they are levied, even though not paid until the following Operating Expense Year;

 

(b)                                 Costs of supplies, including costs of relamping and replacing ballasts in all Building standard tenant lighting;

 

(c)                                  Costs of energy for the Building Complex, including costs of propane, butane, natural gas, steam, electricity, solar energy and fuel oils, coal or any other energy sources;

 

(d)                                 Costs of water and sanitary and storm drainage services;

 

(e)                                  Costs of janitorial and security services;

 

(f)                                   Costs of general maintenance, repairs, and replacements including costs under HVAC and other mechanical maintenance contracts; and repairs and replacements of equipment used in maintenance and repair work;

 

(g)                                  Costs of maintenance, repair and replacement of landscaping;

 

(h)                                 Insurance premiums for the Building Complex, including all-risk or multi-peril coverage, together with loss of rent endorsement; the part of any claim paid under the deductible portion of any insurance policy carried by Landlord (which deductibles shall be consistent with the Minimum Standard); public liability insurance; and any other insurance carried by Landlord on any component parts of the Building Complex;

 

(i)                                     All labor costs, including wages, costs of worker’s compensation insurance, payroll taxes, fringe benefits, including pension, profit-sharing and health, and legal fees and other costs incurred in resolving any labor dispute;

 

(j)                                    Professional building management fees (not to exceed 3% of the gross income of the Building), costs and expenses, including costs of office space and storage space required by management for performance of its services;

 

(k)                                 Legal, accounting, inspection, and other consulting fees (including fees for consultants for services designed to produce a reduction in Operating Expenses or improve the operation, maintenance or state of repair of the Building Complex);

 

(l)                                     Costs of capital improvements and structural repairs and replacements to the Building Complex to conform to changes subsequent to the Delivery Date in

 

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any Applicable Laws (herein “Required Capital Improvements”); and the costs of any capital improvements and structural repairs and replacements designed primarily to reduce Operating Expenses (herein “Cost Savings Improvements”). Expenditures for Required Capital Improvements and Cost Savings Improvements will be amortized at a market rate of interest over the useful life of such capital improvement (as determined by Landlord’s Accountants in accordance with GAAP); however, the amortized amount of any Cost Savings Improvement in any year will be equal to the estimated resulting reduction in Operating Expenses; and

 

(m)                             Costs incurred for Landlord’s Accountants including costs of any experts and consultants engaged to assist in making the computations;

 

“Operating Expenses” do not include:

 

(i)                                     Costs of work, including painting and decorating, which Landlord performs for any tenant other than work of a kind and scope which Landlord is obligated to furnish to all tenants whose leases contain a rental adjustment provision similar to this one;

 

(ii)                                  Costs of repairs or other work occasioned by fire, windstorm or other insured casualty (to the extent such casualty is required to be insured by Landlord pursuant to the Lease);

 

(iii)                               Leasing commissions, advertising expenses, and other costs incurred in leasing space in the Building;

 

(iv)                              Costs of repairs or rebuilding necessitated by condemnation;

 

(v)                                 Interest on borrowed money or debt amortization, except as specifically set forth above;

 

(vi)                              Depreciation on the Building Complex;

 

(vii)                           All costs associated with the operation of the business of the entity which constitutes “Landlord” (as distinguished from the costs of Building or Project operations) including, but not limited to, Landlord’s or Landlord’s Managing Agent’s general corporate overhead and general administrative expenses or such costs that would be normally included in a management fee (e.g., placement/recruiting fees for employees, corporate accounting, health/sports club dues, employee parking and transportation charges, tickets to special events, bank charges, etc.);

 

(viii)                        Costs incurred by Landlord in connection with the correction of defects in design and construction of the Building, the Common Area or the Building Complex, and design or construction costs otherwise incurred in connection with the original design and construction of the Building, the Common Area or the Building Complex or any major changes to the same, including, without limitation, additions or deletions of floors;

 

(ix)                              Other than Required Capital Improvements and Cost Saving Improvements, costs of a capital nature for the Building Complex, including, but not limited to,

 

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capital improvements, capital repairs, capital equipment, and capital tools, all as determined in accordance with generally accepted accounting principles and sound management practices;

 

(x)                                 Any costs of any services sold or provided to tenants or other occupants for which Landlord or Managing Agent is entitled to be reimbursed by such tenants or other occupants as an additional charge or rental over and above the basic rent (and escalations thereof);

 

(xi)                              Expenses in connection with services or other benefits which are provided to another tenant or occupant and do not benefit Tenant;

 

(xii)                           Overhead or profits paid to Landlord or to subsidiaries or affiliates of Landlord, or to any party as a result of a non-competitive selection process, for management or other services to the Building and/or Project, or for supplies or other materials, to the extent that the costs of such services, supplies, or materials exceed the costs that would have been paid had the services, supplies or materials been provided by parties unaffiliated with the Landlord on a competitive basis and are consistent with those incurred by similar buildings in the same metropolitan area in which the Building is located;

 

(xiii)                        Wages, salaries and other compensation paid to any executive employee of Landlord above the grade of General Manager, and general overhead, general administrative expenses, accounting, record-keeping and clerical support of Landlord to the extent associated with maintaining the legal entity which constitutes Landlord;

 

(xiv)                       Costs or expenses related to the testing for, removal or remediation of Hazardous Materials in or about the Building Complex or which otherwise result from the presence in the Building Complex of any such substance (except to the extent that any such costs arise in the course of ordinary maintenance or result from Tenant’s acts or omissions);

 

(xv)                          Advertising and promotional costs including tenant relation programs and events, except costs for holiday programs and events that may be included in Operating Expenses;

 

(xvi)                       Landlord’s gross receipts taxes, personal and corporate income taxes, inheritance and estate taxes, other business taxes and assessments, franchise, gift and transfer taxes, and all other real estate taxes relating to a period or payable outside the term of the Lease;

 

(xvii)                    Any fines, costs, penalties or interest resulting from the negligence, misconduct or omission of the Landlord or its agents, contractors, or employees;

 

(xviii)                 Any rental payments and related costs pursuant to any ground lease of land underlying all or any portion of the Building, Building Complex and Common Areas or any costs related to any reciprocal agreement;

 

(xix)                       Any costs, fees, dues, contributions or similar political, charitable expenses;

 

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(xx)                          Acquisition costs for sculptures, paintings, or other objects of art or the display of such items, to exclude plants from the lobby or any other location in the Building Complex;

 

(xxi)                       Costs incurred in connection with upgrading the Building to comply with disability or life insurance requirements in effect as of the date of the Lease, including penalties or damages incurred as a result of noncompliance;

 

(xxii)                    Costs for reserves of any kind;

 

(xxiii)                 Fines or penalties incurred because Landlord violated Applicable Law (including, without limitation, the ADA);

 

(xxiv)                Utility expenses provided to the Premises and separately metered and paid directly by Tenant to a utility provider;

 

(xxv)                   Insurance deductibles in. excess of the amount permitted to be carried by Landlord pursuant to the Lease;

 

(xxvi)                Any rental, either actual or not, for office space and/or storage space in excess of 3,000 rentable square feet for the Landlord’s management and/or leasing office;

 

(xxvii)             Costs with respect to the creation of a mortgage, superior lease or any other financing with respect to the Building Complex or in connection with the sale of the Building Complex, including without limitation survey costs, legal fees, transfer and recordation taxes, costs of appraisals and engineering and inspection reports associated with the sale;

 

(xxviii)          In addition to those exclusions from Taxes described in Section 5(a) above, all other Taxes relating to a period or payable outside the Term of the Lease except for Taxes attributable to tax years in which the Term commences or ends (but only that portion of such year included in the Term); and

 

(xxix)                any expenses which under generally accepted accounting principles and sound management practices would not be considered an Operating Expense.

 

To the extent that employees, utilities or other services or costs are attributable to the Building and other buildings on. a common basis or are provided for Common Areas, such Operating Expenses shall be reasonably allocated by Landlord to the Building. If any lease entered into by Landlord with any tenant in the Building is on a so-called “net” basis, or provides for a separate basis of computation for any Operating Expenses with respect to its leased premises, Landlord’s Accountants may modify the computation of Rentable Area and Operating Expenses for a particular Operating Expense Year to eliminate or modify any expenses which are paid for in whole or in part by such tenant. If the Rentable Area is not fully occupied during any particular Operating Expense Year, Landlord’s Accountants may adjust those Operating Expenses which are affected by occupancy for the particular Operating Expense Year to reflect 100% occupancy. Furthermore, in making any computations contemplated hereby, Landlord’s Accountants may make such other modifications to the computations as are required in their judgment to achieve the intention of the parties hereto.

 

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6.2                               Estimated Payments. Commencing on the Commencement Date, and each month thereafter through and including Month 12 of the Initial Term, Tenant shall pay Landlord, at the same time as Base Rent is paid, an amount equal to $7,066.67 (1/12th of the product of $5.30 multiplied by 16,000 rentable square feet). Beginning with Month 13 of the Initial Term and continuing each month thereafter throughout the Term, Tenant shall pay Landlord, at the same time as Base Rent is paid, an amount equal to 1/12 of Landlord’s estimate of Tenant’s Pro Rata Share of Operating Expenses for the particular Operating Expense Year (“Estimated Payment”).

 

6.3                               Annual Adjustments.

 

(1)                                 Following the end of each Operating Expense Year, including the first Operating Expense Year, Landlord shall submit to Tenant a statement setting forth the exact amount of Tenant’s Pro Rata Share of the Operating Expenses for the Operating Expense Year just completed and the difference, if any, between Tenant’s actual Pro Rata Share of Operating Expenses for the Operating Expense Year just completed and the Estimated Payments paid for such year. Each statement shall also set forth the projected amount of Operating Expenses for the new Operating Expense Year and the new Estimated Payment.

 

(2)                                 With the exception of the first Operating Expense Year in which Tenant shall pay the amount set forth in Section 6.2 above without any further adjustment, to the extent that Tenant’s Pro Rata Share of Operating Expenses for the period covered by a statement is different from the Estimated Payment during the Operating Expense Year just completed, Tenant shall pay Landlord the difference within 30 days following receipt by Tenant of the statement or receive a credit against the next due Estimated Payments, as the case may be. Until Tenant receives a statement, Tenant’s Estimated Payment for the new Operating Expense Year shall continue to be the amount of the prior Estimated Payment, but Tenant shall commence payment of the new Estimated Payment beginning on the first day of the month following the month in which Tenant receives the statement. Tenant shall also pay Landlord or deduct from the Rent, as the case may be, on the date required for the first payment, as adjusted, the difference, if any, between the Estimated Payment for the new Operating Expense Year set forth in the statement and the Estimated Payment actually paid during the new Operating Expense Year. If, during any Operating Expense Year, there is a change in the information on which Tenant is then making its Estimated Payments so that the prior estimate is no longer accurate, Landlord may revise the estimate and there shall be such adjustments made in the Estimated Payment on the first day of the month following notice to Tenant as shall be necessary by either increasing or decreasing, as the case may be, the amount of monthly Rent then being paid by Tenant for the balance of the Operating- Expense Year.

 

6.4                               Miscellaneous. Delay by Landlord in submitting any statement for any Operating Expense Year does not affect the provisions of this Section or constitute a waiver of Landlord’s rights for such Operating Expense Year or any subsequent Operating Expense Years.

 

6.5                               Dispute. If Tenant disputes an adjustment submitted by Landlord or a proposed increase or decrease in the Estimated Payment, Tenant shall give Landlord notice of such dispute within 30 days after Tenant’s receipt of the adjustment If Tenant does not give Landlord timely notice, Tenant waives its right to dispute the particular adjustment If Tenant timely objects, Tenant may engage its own certified public accountants (“Tenant’s Accountants”) to verify the accuracy

 

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of the statement complained of or the reasonableness of the estimated increase or decrease. Tenant’s Accountants shall enter into a confidentiality agreement satisfactory to Landlord. If Tenant’s Accountants determine that an error has been made, Landlord’s Accountants and Tenant’s Accountants shall endeavor to agree upon the matter, failing which such matter shall be submitted to an independent certified public accountant selected by Landlord, with Tenant’s reasonable approval, for a determination which will be conclusive and binding upon Landlord and Tenant. All costs incurred by Tenant for Tenant’s Accountants shall be paid for by Tenant unless Tenant’s Accountants disclose an error, ,acknowledged by Landlord’s Accountants (or found to have occurred through the above independent determination), of more than 7% in the computation of the total amount of Operating Expenses, in which event Landlord shall pay the reasonable out-of-pocket costs incurred by Tenant to obtain such audit (excluding costs or fees paid on a contingency basis). Notwithstanding the pendency of any dispute, Tenant shall continue to pay Landlord the amount of the Estimated Payment or adjustment determined by Landlord’s Accountants until the adjustment has been determined to be incorrect If it is determined that any portion of the Operating Expenses were not properly chargeable to Tenant, then Landlord shall promptly credit or refund the appropriate sum to Tenant.

 

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EXHIBIT D TO LEASE

 

COMMENCEMENT CERTIFICATE

 

 

, 20                  

 

PING IDENTITY CORPORATION

 

RE:                           Lease Agreement dated as of                  (the “Lease”), by and between MG-1005, LLC, a Colorado limited liability company, as Landlord, and PING IDENTITY CORPORATION, a Delaware corporation, as Tenant

 

Dear Tenant:

 

With regard to the referenced Lease, Landlord and Tenant acknowledge the following (initially capitalized words not otherwise defined have the same meaning set forth in the Lease):

 

1.                                      Landlord delivered the Premises consisting of          square feet in their as is condition (subject to the terms of the Lease) on            , which is Delivery Date under the Lease.

 

2.                                      The Commencement Date of the Initial Term is               and the Expiration Date is                  .

 

3.                                      Landlord’s Costs referred to in Section 5 of the Addendum to the Lease are agreed to total                  .

 

Please acknowledge the foregoing by having an authorized officer sign in the space provided below and return to our office. This document may be executed in counterparts, each of which shall constitute the original. Facsimile signatures shall be binding as original signatures.

 

ACKNOWLEDGED AND AGREED this       day of                      :

 

MG-1005, LLC, a Colorado limited liability company

 

 

 

PING IDENTITY CORPORATION, a Delaware corporation

 

By:

 

 

 

Authorized Signatory

 

 

 

By:

 

 

“Landlord”

Print Name:

 

 

 

Print Title:

 

 

 

 

 

 

ATTEST:

 

 

 

 

 

By:

 

 

 

Print Name:

 

 

 

Print Title:

 

 

 

“Tenant”

 

 

 

 

 

 

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EXHIBIT E TO LEASE

 

RULES AND REGULATIONS

 

1.                                      No sign, placard, picture, advertisement, name or notice shall be installed or displayed on any part of the outside or inside of the Building without the prior written consent of Landlord. Landlord shall have the right to remove, at the violating tenant’s expense and without notice, any sign installed or displayed in violation of this rule. All approved signs or lettering on doors and walls shall be printed, painted, affixed or inscribed at the expense of the requesting tenant by a person or vendor approved by Landlord. In addition, Landlord reserves the right to change from time to tune the format of the signs or lettering and to require previously approved signs or lettering to be appropriately altered.

 

2.                                      The coverings for all windows in each tenant’s premises shall be lowered and closed as reasonably required because of the position of the sun, during the operation of the Building’s air-conditioning system. All tenants whose premises are visible from one of the lobbies, or any other public portion of the Building, shall furnish and maintain their premises in a first-class manner, utilizing furnishings and other decorations commensurate in quality and style with the furnishings and decor in the public portions of the Building. If Landlord objects in writing to any curtains, blinds, shades or screens attached to or hung in or used in connection with any window or door of the premises, such tenant shall immediately discontinue such use. No awning shall be permitted on any part of the premises. A tenant shall not place anything or allow anything to be placed against or near any glass partitions or doors or windows which may appear unsightly, in the opinion of Landlord, from outside the premises.

 

3.                                      A tenant shall not obstruct any sidewalks, halls, passages, exits, entrances, elevators, escalators or stairways of the Building.

 

4.                                      The directory of the Building will be provided exclusively for the display or the name and location of tenants only and Landlord reserves the right to exclude any other names therefrom.

 

5.                                      Unless otherwise approved by Landlord, all cleaning and janitorial services for the Building and all premises shall be provided exclusively through Landlord. A tenant shall not cause any unnecessary labor by carelessness or indifference to the good order and cleanliness of its premises. Landlord shall not in any way be responsible to any tenant for any loss to property on the premises, however occurring, or for any damage to any tenant’s property by the janitor or any other employee or any other person.

 

6.                                      At initial occupancy, each tenant shall be furnished free of charge two keys or other access devices to each locking entry or exit door to or from its premises. A tenant shall not make or have made additional access devices and a tenant shall not alter any lock or install a new or additional locks or bolts on any door of its premises. After initial occupancy, if replacement access devices or a change of locks is necessary, tenant shall make such requests through the management office. A tenant shall be charged a reasonable fee for any change in locks or replacement access devices requested. A tenant, upon the termination of its tenancy, shall deliver to Landlord the

 

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access devices of all doors which have been furnished to it, and shall pay Landlord for any unreturned access devices.

 

7.                                      If a tenant requires telegraphic, telephonic, burglar alarm or similar services, it shall first obtain and comply with Landlord’s then-existing installation instructions and in compliance with the Building construction rules, including replacing or installing fire stopping in any floor penetrations when the wiring/cabling is installed and when removed. Landlord, or its agents, will direct the electricians as to where and how the wires may be introduced, and without such direction, no boring or cutting for wires will be permitted. Any such installation and connection shall be made at the tenant’s expense. Each tenant shall be responsible for removing, at its expense prior to moving from the Building, all telephone, data,, cable television, or other cabling extending from its premises to the telephone closet located on that floor which was used. by tenant or installed by it or for its benefit.

 

8.                                      No equipment, materials, furniture, packages, supplies, merchandise or other property will be received in the Building or carried in the elevators except between such hours and in such elevators as may be designated by Landlord. Parties employed to move furnishings, fixtures and equipment in and out of the Building shall be subject to Landlord’s approval and, if required by law, properly licensed. Any moving company shall provide a certificate of insurance naming Landlord and the Building manager as additional insureds prior to initiating its moving services in the Building. Landlord shall have the right to condition approval upon payment of an additional security deposit. A tenant must make arrangements in advance with Landlord for moving large quantities of furniture and equipment into or out of the Building.

 

9.                                      A tenant shall not place a load upon any floor which exceeds the load per square foot which such floor was designed to carry and which is allowed by law. Landlord shall have the right to prescribe the weight, size and position to all equipment, materials, furniture or other property brought into the Building. Heavy objects shall stand on such platforms as reasonably determined by Landlord to be necessary to properly distribute such weight. A tenant shall, at its cost and expense, place and maintain any of its business machines and mechanical equipment which causes unreasonable or objectionable noise or vibration to the structure of the Building or to any space in the Building on vibration eliminators or other devices sufficient to eliminate the noise or vibration. The parties employed to remove such equipment in or about the Building must be acceptable to Landlord. Landlord will not be responsible for loss of or damage to any such equipment or other property from any cause, and all damage done to the Building by maintaining or moving such equipment or other property shall be repaired at the expense of the tenant.

 

10.                               A tenant shall not have the ability to adjust temperature control thermostats. A tenant shall not use any method of heating or air conditioning, other than that supplied. by Landlord. A tenant is encouraged to not waste electricity, water or air conditioning. A tenant shall keep corridor doors closed for security purposes.

 

11.                               Landlord reserves the right to exclude from the Building outside Ordinary Business Hours any person unless that person has an access device such as a key, entry card, combination code, pass or is properly identified. A tenant shall be responsible for all persons for whom it requests passes and shall be liable to Landlord for all acts of such persons. Any person whose presence in the Building at any time shall, in the judgment of Landlord, be prejudicial to the safety,

 

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character, reputation, or interests of the Building or the Building’s tenants may be denied access or may be ejected therefrom, including any person who in the reasonable judgment of Landlord is intoxicated or under the influence of liquor or drugs or who acts in violation of these Rules and Regulations. During any public excitement or other commotion, Landlord may prevent all access to the Building during the continuance of the same, by closing the doors or otherwise, for the safety and protection of tenants, the Building, and property in the Building. Landlord may require any person leaving the Building with a package or other object to exhibit authorization from the tenant of the premises from which the package or object is removed, but enforcement of such requirement shall not impose any responsibility on Landlord to protect any tenant against removal of property from its premises. Landlord shall m no way be liable to any tenant for damages or loss arising from the admission, exclusion or ejection of any person to or from a tenant’s premises or the Building under the provisions of this rule.

 

12.                               Each tenant and its employees shall close and lock the doors of its premises and entirely shut off all water faucets or other water apparatus and gas outlets before leaving the premises. A tenant shall be responsible for any damage or injuries sustained by other tenants or occupants of the Building or by Landlord for noncompliance with this rule.

 

13.                               The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed, no foreign substance or any kind whatsoever shall be thrown into any of them, and the expense of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by the tenant who, or whose employees or invitees, shall have caused it.

 

14.                               Except as otherwise provided in the Lease, a tenant shall not install an cellular, radio or television antenna, satellite dish, loudspeaker or other device on the roof or exterior walls of the Building. A tenant shall not interfere with cellular, radio or television broadcasting or reception from or in the Building or elsewhere.

 

15.                               Except as otherwise provided in the Lease and except for the installation of customary first-class office artwork and as otherwise approved by Landlord, a tenant shall not mark, drive nails, screw or drill into the partitions, woodwork or plaster or in any way deface the premises. A tenant shall not cut or bore holes for wires. A tenant shall not affix any floor covering to the floor of the premises in any manner except as approved by Landlord. A tenant shall repair any damage resulting from non-compliance with this rule.

 

16.                               A tenant shall not install, maintain or operate in public sight upon its premises any vending machine, however, a tenant may place standard soft drink and vending machines in its break room(s) for the convenience and use of its employees and their guests.

 

17.                               A tenant shall store all its trash and garbage within its premises. A tenant shall not place in any trash box or receptacle any material which cannot be disposed of in the ordinary and customary manner of trash and garbage disposal. Some electronic equipment, such as computer monitors, contain hazardous materials and must be disposed of properly and arrangements for such disposal must be made through the Building manager. All garbage and refuse disposal shall be made in accordance with directions and via a route designated from time to time by Landlord. A tenant is encouraged to participate in the Building’s recycling program.

 

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18.                               Smoking is prohibited at all times in all areas of the Building, including offices, restrooms, corridors, stairwells, lobbies and elevators, and may be prohibited (or restricted by Landlord to designated areas) in all outside Common Areas of the Building Complex. A tenant shall not cause or permit any noise (including playing of musical instruments, radio or television) or unreasonable or objectionable odors to emanate from its premises which would annoy other tenants or create a public or private nuisance. Unless otherwise specifically provided in the Lease, no cooking shall be done or permitted by any tenant in its premises, except by use of a microwave oven approved by Underwriters’ Laboratory. Brewing coffee, tea, hot chocolate, and similar beverages shall be permitted provided that such equipment and use is in accordance with all applicable federal, state and city laws, codes, ordinances, rules and regulations. A tenant shall not conduct or permit any auction at its premises. Canvassing, soliciting and peddling in the Building are prohibited.

 

19.                               No animals, other than service animals, shall be allowed in the Building.

 

20.                               A tenant shall not use in any space or in the public halls of the Building any hand trucks except those equipped with the rubber tires and side guards or such other material-handling equipment as Landlord may approve. Bicycles shall be used or stored only in areas designated by Landlord. No other vehicles of any kind are permitted in the Building.

 

21.                               A tenant shall not use the name of the Building in connection with or in promoting or advertising its business except as its address.

 

22.                               The requirements of a tenant will be attended to only upon appropriate application to the office of the Building, by an authorized individual. Employees of Landlord shall not perform any work or do anything outside of their regular duties unless under special instruction from Landlord, and no employee of Landlord will admit any person (the tenant or otherwise) to any office without specific instructions from Landlord. All contractors hired by a tenant for any purpose permitted in its Lease shall comply with the provisions of the Lease, these Rules and Regulations, and such separate rules and regulations as Landlord may reasonably adopt for contractors.

 

23.                               Each tenant and its employees shall cooperate fully with the life safety plans of the Building established by Landlord, including participation in exit drills, fire inspections, life safety orientations and other programs relating to life safety that may be promulgated by Landlord.

 

24.                               Landlord may waive any one or more of these Rules and Regulations for the benefit of any particular tenant or tenants, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of any other tenant or tenants, nor prevent Landlord from thereafter enforcing any such Rules and Regulations against any or all of the tenants of the Building.

 

25.                               These Rules and Regulations are in addition to, and shall not be construed to in any way modify or amend, in whole or in part, the terms, covenants, agreements and conditions of any lease of premises in the Building.

 

26.                               Landlord reserves the right to make such other reasonable rules and regulations as in its judgment may from time to time be needed for safety and security, for care and cleanliness

 

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of the Building, and for the preservation of good order in and about the Building, including, without limitation, maintaining the Building’s status as an environmentally responsible, profitable and sustainable building system. Each tenant agrees to abide by all such rules and regulations in this Exhibit stated and any additional rules and regulations which are adopted.

 

27.                               Each tenant shall be responsible for the observance of all of the foregoing rules by its employees, agents, clients, customers, invitees and guests.

 

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EXHIBIT F TO LEASE

 

FORM OF LETTER OF CREDIT

 

 

, 201         

 

MG-1005, LLC
4643 South Ulster Street, Suite 1500
Denver, Colorado 80237

 

RE: Letter of Credit No.      

 

Gentlemen:

 

We hereby issue in your favor, at the request and for the account of PING IDENTITY CORPORATION, a Delaware corporation, our irrevocable Letter of Credit in the amount of $600,000.00 which is available against presentation of your sight draft. The draft must be accompanied by:

 

1.                                      This Letter of Credit No.           ; and

 

2.                                      A notarized certification signed as “Authorized Signatory” on behalf of MG-1005, LLC, a Colorado limited liability company, or an officer (or partner, if such entity is a partnership or member if a limited liability company) of its transferee or assignee, stating essentially as follows:

 

“The undersigned Beneficiary is the owner of the property described in the Lease Agreement dated                , 201   by and between MG-1005, LLC, a Colorado limited company, as Landlord, and, as Tenant (the “Lease”). The amount requested by the draft accompanying this statement is the amount to which Beneficiary is entitled under the terms of the Lease as a result of an Event of Default under the Lease and Beneficiary requests payment of the enclosed draft under the enclosed Letter of Credit.”

 

This Letter of Credit shall be subject to the Special Conditions set forth on Schedule 1, such exhibit being considered a part hereof and incorporated herein by reference.

 

We hereby agree that all drafts drawn under and in compliance with the terms of this credit shall meet with honor upon presentation and delivery of documents on or before 5:00 p.m., Mountain time,        [DATE]           (the “Expiry Date”), as specified to the drawee. This Letter of Credit may be presented one or more times; partial drawings are allowed. It is a condition of this Letter of Credit that the Expiry Date shall be automatically extended for periods of at least one year from the initial Expiry Date and each future Expiry Date unless, at least 60 days prior to the relevant expiration date, we notify you, by certified mail, return receipt requested, that we elect not to extend this Letter of Credit for any additional period.

 

[BANK]

 

By:

 

 

Title:

 

 

 

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EXHIBIT 1

 

To Letter of Credit No.

 

The Letter of Credit shall be governed by the following Special Conditions:

 

1.                                      This Letter of Credit is subject to the International Standby Practices 1998, International Chamber of Commerce Publication No. 590.

 

2.                                      Issuer agrees that it may not defer honor beyond the close of the first banking day after presentment of a sight draft drawn hereunder and accompanying documents.

 

3.                                      This Letter of Credit shall be transferable and assignable, without charge, to any person or entity who is the successor or assignee of Beneficiary’s interest under the Lease entered into on or about                , 201   between MG-1005, LLC, a Colorado limited liability company, and PING IDENTITY CORPORATION, a Delaware corporation.  Such transfer shall be accomplished by providing           [BANK]           with the appropriate transfer form and the original letter of credit for endorsement; provided, however, that such transfer shall not be subject to the approval of           [BANK]          .

 

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EXHIBIT G TO LEASE

 

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

 

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (“Agreement”) is entered into as of            , 201    (the “Effective Date”) by and between HSH NORDBANK AG, HAMBURG, a German banking corporation, in its capacity as agent for certain lenders (together with its successors and assigns in such capacity, the “Mortgagee”), and PING IDENTITY CORPORATION, a Delaware corporation (hereinafter, collectively the “Tenant”), with reference to the following facts:

 

A.                                    MG-1005, LLC, a Colorado limited liability company, whose address is MG-1005, LLC, Miller Global Properties, LLC, 4643 S. Ulster Street, Suite 1500, Denver, CO 80237, Attn: Paul Hogan (the “Landlord”) owns fee simple title or a leasehold interest in the real property described in Exhibit “A” attached hereto (the “Property”).

 

B.                                    Mortgagee has made or intends to make a loan to Landlord (the “Loan”).

 

C.                                    To secure the Loan, Landlord has encumbered the Property by entering into a Deed of Trust, Security Agreement, Financing Statement Fixture Filing and Assignment of Rents dated December 4, 2006 for the benefit of Mortgagee recorded in the Official Records in and for Denver County, Colorado, on December 4, 2006 as Reception No. 2006192947.

 

D.                                    Pursuant to the Lease Agreement effective           , 201   (the “Lease”), Landlord demised to Tenant a portion of the Property (the “Leased Premises”).

 

E.                                     Tenant and Mortgagee desire to agree upon the relative priorities of their interests in the Property and their rights and obligations if certain events occur.

 

NOW, THEREFORE, for good and sufficient consideration, Tenant and Mortgagee agree:

 

1.                                      Definitions. The following terms shall have the following meanings for purposes of this Agreement.

 

a.                                      Foreclosure Event. A “Foreclosure Event” means: (i) foreclosure or exercise of power of sale under the Mortgage; (ii) any other exercise by Mortgagee of rights and remedies (whether under the Mortgage or under applicable law, including bankruptcy law) as holder of the Loan and/or the Mortgage, as a result of which a Mortgagee becomes owner of the Property; or (iii) delivery by Landlord to Mortgagee (or its designee or nominee) of a deed or other conveyance of Landlord’s interest in the Property in lieu of any of the foregoing.

 

b.                                      Former Landlord. A “Former Landlordmeans Landlord and any other party that was landlord under the Lease at any time before the occurrence of any attornment under this Agreement.

 

c.                                       Offset Right. An “Offset Right” means any right or alleged right of Tenant to any offset, defense (other than one arising from actual payment and performance, which payment and performance would bind a Successor Landlord pursuant to this Agreement), claim, counterclaim,

 

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reduction, deduction, or abatement against Tenant’s payment of Rent or performance of Tenant’s other obligations under the Lease, arising (whether under the Lease or under applicable law) from Landlord’s breach or default under the Lease.

 

d.                                      Rent. The “Rent” means any fixed rent, base rent or additional rent under the Lease.

 

e.                                       Successor Landlord. A “Successor Landlord” means any party that becomes owner of the Property as the result of a Foreclosure Event.

 

f.                                        Termination Right. A “Termination Right” means any right of Tenant to cancel or terminate the Lease or to claim a partial or total eviction arising (whether under the Lease or under applicable law) from Landlord’s breach or default under the Lease.

 

g.                                       Other Capitalized Terms. If any capitalized term is used in this Agreement and no separate definition is contained in this Agreement, then such term shall have the same respective definition as set forth in the Lease.

 

2.                                      Subordination. The Lease, as the same may hereafter be modified, amended or extended, shall be, and shall at all times remain, subject and subordinate to the terms conditions and provisions of the Mortgage, the lien imposed by the Mortgage, and all advances made under the Mortgage. Notwithstanding the foregoing, Mortgagee may elect, in its sole and absolute discretion, to subordinate the lien of the Mortgage to the Lease.

 

3.                                      Nondisturbance, Recognition and Attornment.

 

a.                                      No Exercise of Mortgage Remedies Against Tenant. So long as the Tenant is not in default under this Agreement or under the Lease beyond any applicable grace or cure periods (an “Event of Default”), Mortgagee (i) shall not terminate or disturb Tenant’s possession of the Leased Premises under the Lease, except in accordance with the terms of the Lease and this Agreement and (ii) shall not name or join Tenant as a defendant in any exercise of Mortgagee’s rights and remedies arising upon a default under the Mortgage unless applicable law requires Tenant to be made a party thereto as a condition to proceeding against Landlord or prosecuting such rights and remedies. In the latter case, Mortgagee may join Tenant as a defendant in such action only for such purpose and not to terminate the Lease or otherwise adversely affect Tenant’s rights under the Lease or this Agreement in such action.

 

b.                                      Recognition and Attornment. Upon Successor Landlord taking title to the Property (i) Successor Landlord shall be bound to Tenant under all the terms and conditions of the Lease (except as provided in this Agreement); (ii) Tenant shall recognize and atom to Successor Landlord as Tenant’s direct landlord under the Lease as affected by this Agreement; and (iii) the Lease shall continue in full force and effect as a direct lease, in accordance with its terms (except as provided in this Agreement), between Successor Landlord and Tenant. Tenant hereby acknowledges notice that pursuant to the Mortgage and assignment of rents, leases and profits, Landlord has granted to the Mortgagee an absolute, present assignment of the Lease and Rents which provides that Tenant continue making payments of Rents and other amounts owed by Tenant under the Lease to the Landlord and to recognize the rights of Landlord under the Lease until notified otherwise in writing by the Mortgagee. After receipt of such notice from Mortgagee, the Tenant shall thereafter make all such payments directly to the Mortgagee or as the Mortgagee may otherwise direct, without

 

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any further inquiry on the part of the Tenant. Landlord consents to the foregoing and waives any right, claim or demand which Landlord may have against Tenant by reason of such payments to Mortgagee or as Mortgagee directs.

 

c.                                       Further Documentation. The provisions of this Article 3 shall be effective and self-operative without any need for Successor Landlord or Tenant to execute any further documents. Tenant and Successor Landlord shall, however, confirm the provisions of this Article 3 in writing upon request by either of them within ten (10) days of such request.

 

4.                                      Protection of Successor Landlord. Notwithstanding anything to the contrary in the Lease or the Mortgage, Successor Landlord shall not be liable for or bound by any of the following matters:

 

a.                                      Claims Against Former Landlord. Any Offset Right that Tenant may have against any Former Landlord relating to any event or occurrence before the date of attornment, including any claim for damages of any kind whatsoever as the result of any breach by Former Landlord that occurred before the date of attornment; provided, however, Successor Landlord shall be bound by Former Landlord’s obligation to provide the Finish Allowance (as defined in the Lease) to Tenant in accordance with the terms of the Lease. The foregoing shall not limit either (i) Tenant’s right to exercise against Successor Landlord any Offset Right otherwise available to Tenant because of events occurring after the date of attornment or (ii) Successor Landlord’s obligation to correct any conditions that existed as of the date of attornment and violate Successor Landlord’s obligations as landlord under the Lease.

 

b.                                      Prepayments. Any payment of Rent that Tenant may have made to Former Landlord more than thirty (30) days before the date such Rent was first due and payable under the Lease with respect to any period after the date of attornment other than, and only to the extent that, the Lease expressly required such a prepayment.

 

c.                                       Payment; Security Deposit; Work. Any obligation: (i) to pay Tenant any sum(s) that any Former Landlord owed to Tenant unless such sums, if any, shall have been actually delivered to Mortgagee by way of an assumption of escrow accounts or otherwise; (ii) with respect to any security deposited with Former Landlord, unless such security was actually delivered to Mortgagee; (iii) to reconstruct or repair improvements following a fire, casualty or condemnation; or (iv) arising from representations and warranties related to Former Landlord.

 

d.                                      Modification, Amendment or Waiver. Any modification or amendment of the Lease, or any waiver of the terms of the Lease, made without Mortgagee’s written consent.

 

e.                                       Surrender, Etc. Any consensual or negotiated surrender, cancellation, or termination of the Lease, in whole or in part, agreed upon between Landlord and Tenant, unless effected unilaterally by Tenant pursuant to the express terms of the Lease.

 

f.                                         Exceptions. Notwithstanding anything to the contrary in the Lease or the Mortgage, Successor Landlord shall be liable for and bound by Landlord’s obligation to pay and otherwise comply with the terms and conditions of the Lease regarding the Finish Allowance.

 

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5.                                      Exculpation of Successor Landlord. Notwithstanding anything to the contrary in this Agreement or the Lease, Successor Landlord’s obligations and liability under the Lease shall never extend beyond Successor Landlord’s (or its successors’ or assigns’) interest, if any, in the Leased Premises from time to time, including insurance and condemnation proceeds, security deposits, escrows, Successor Landlord’s interest in the Lease, and the proceeds from any sale, lease or other disposition of the Property (or any portion thereof) by Successor Landlord (collectively, the “Successor Landlord’s Interest”). Tenant shall look exclusively to Successor Landlord’s Interest (or that of its successors and assigns) for payment or discharge of any obligations of Successor Landlord under the Lease as affected by this Agreement. If Tenant obtains any money judgment against Successor Landlord with respect to the Lease or the relationship between Successor Landlord and Tenant, then Tenant shall look solely to Successor Landlord’s Interest (or that of its successors and assigns) to collect such judgment Tenant shall not collect or attempt to collect any such judgment out of any other assets of Successor Landlord.

 

6.                                      Mortgagee’s Right to Cure. Notwithstanding anything to the contrary in the Lease or this Agreement, before exercising any Offset Right or Termination Right:

 

a.                                      Notice to Mortgagee. Tenant shall provide Mortgagee with notice of the breach or default by Landlord giving rise to same (the “Default Notice”) and, thereafter, the opportunity to cure such breach or default as provided for below.

 

b.                                      Mortgagee’s Cure Period. After Mortgagee receives a Default Notice, Mortgagee shall have a period of thirty (30) days beyond the time available to Landlord under the Lease in which to cure the breach or default by Landlord. Mortgagee shall have no obligation to cure (and shall have no liability or obligation for not curing) any breach or default by Landlord, except to the extent that Mortgagee agrees or undertakes otherwise in writing. In addition, as to any breach or default by Landlord the cure of which requires possession and control of the Property, provided that Mortgagee undertakes by written notice to Tenant to exercise reasonable efforts to cure or cause to be cured by a receiver such breach or default within the period permitted by this paragraph, Mortgagee’s cure period shall continue for such additional time as Mortgagee may reasonably require to either: (i) obtain possession and control of the Property with due diligence and thereafter cure the breach or default with reasonable diligence and continuity; or (ii) obtain the appointment of a receiver and give such receiver a reasonable period of time in which to cure the default.

 

7.                                      Miscellaneous.

 

a.                                      Notices. Any notice or request given or demand made under this Agreement by one party to the other shall be in writing, and may be given or be served by hand delivered personal service, or by depositing the same with a reliable overnight courier service or by deposit in the United States mail, postpaid, registered or certified mail, and addressed to the party to be notified, with return receipt requested or by telefax transmission, with the original machine-generated transmit confirmation report as evidence of transmission. Notice deposited in the mail in the manner hereinabove described shall be effective from and after the expiration of three (3) days after it is so deposited; however, delivery by overnight courier service shall be deemed effective on the next succeeding business day after it is so deposited and notice by personal service or telefax transmission shall be deemed effective when delivered to its addressee or within two (2) hours after its transmission unless given after 3:00 p.m. on a business day, in which case it shall be

 

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deemed effective at 9:00 a.m. on the next business day. For purposes of notice, the addresses and telefax number of the parties shall, until changed as herein provided, be as follows:

 

i.                                               If to the Mortgagee, at:

 

HSH Nordbank AG
Gerhart-Hauptmann-Platz 50,
20095 Hamburg, Germany
Attention: Tanja Brickwedde & Elke Hamann
Telecopy No.: 49-40-3333-613721 & 49-40-3333-613322

 

with copies similarly delivered to:

 

Kaye Scholer LLP
425 Park Avenue
New York, New York 10022
Attention: Warren T. Bernstein, Esq.
Telecopy No.: (212) 836-8689

 

ii.                                            If to Tenant, at:

 

Ping Identity Corporation
1001 17
th Street, Suite 100
Denver, CO 80202
Attn: Finance/Contracts
Telecopy No.: (303) 468-2909

 

with required copies to:

 

Jones Lang LaSalle Brokerage, Inc.
1225 17th Street Suite 1900
Denver Colorado 80202
Attn: Lindsay Brown
Telecopy No.: (303) 572-0914

 

b.                                      Successors and Assigns. This Agreement shall bind and benefit the parties, their successors and assigns, any Successor Landlord, and its successors and assigns. If Mortgagee assigns the Mortgage, then upon delivery to Tenant of written notice thereof accompanied by the assignee’s written assumption of all obligations under this Agreement, all liability of the assignor shall terminate.

 

c.                                       Entire Agreement. This Agreement constitutes the entire agreement between Mortgagee and Tenant regarding the subordination of the Lease to the Mortgage and the rights and obligations of Tenant and Mortgagee as to the subject matter of this Agreement.

 

d.                                      Interaction with Lease and with Mortgage. If this Agreement conflicts with the Lease, then this Agreement shall govern as between the parties and any Successor Landlord, including upon any attornment pursuant to this Agreement This Agreement supersedes, and

 

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constitutes full compliance with, any provisions in the Lease that provide for subordination of the Lease to, or for delivery of nondisturbance agreements by the holder of the Mortgage.

 

e.                                       Mortgagee’s Rights and Obligations. Except as expressly provided for in this Agreement, Mortgagee shall have no obligations to Tenant with respect to the Lease. If an attornment occurs pursuant to this Agreement, then all rights and obligations of Mortgagee under this Agreement shall terminate, without thereby affecting in any way the rights and obligations of Successor Landlord provided for in this Agreement.

 

f.                                         Interpretation; Governing Law. The interpretation, validity and enforcement of this Agreement shall be governed by and construed under the internal laws of the State in which the Leased Premises are located, excluding such State’s principles of conflict of laws.

 

g.                                      Amendments. This Agreement may be amended, discharged or terminated, or any of its provisions waived, only by a written instrument executed by the party to be charged.

 

h.                                      Due Authorization. Tenant represents to Mortgagee that it has full authority to enter into this Agreement, which has been duly authorized by all necessary actions. Mortgagee represents to Tenant that it has full authority to enter into this Agreement, which has been duly authorized by all necessary actions.

 

i.                                         Execution. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

 

[THIS SPACE INTENTIONALLY LEFT BLANK]

 

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

 

 

MORTGAGEE:

 

 

 

HSH NORDBANK AG, HAMBURG,

 

as Agent

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

TENANT:

 

 

 

PING IDENTITY CORPORATION, a Delaware corporation

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

By:

 

 

Name:

 

Title:

 

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LANDLORD’S CONSENT

 

Landlord consents and agrees to the foregoing Agreement, which was entered into at Landlord’s request. The foregoing Agreement shall not alter, waive or diminish any of Landlord’s obligations under the Mortgage or the Lease. The above Agreement discharges any obligations of Mortgagee under the Mortgage and related loan documents to enter into a nondisturbance agreement with Tenant. Landlord is not a party to the above Agreement.

 

 

LANDLORD:

 

 

 

MG-1005, LLC,

 

a Colorado limited liability company

 

 

 

By:

 

 

Title: Authorized Signatory

 

Dated:                , 201

 

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MORTGAGEE’S ACKNOWLEDGMENT

 

STATE OF                   

)

 

) ss.

COUNTY OF

)

 

On the   day of                 in the year 201   before me, the undersigned, a Notary Public in and for said state, personally appeared                             , proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

 

 

 

 

Signature of Notary Public

 

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TENANTS ACKNOWLEDGMENT

 

STATE OF                   

)

 

) ss.

COUNTY OF

)

 

On the   day of                 in the year 201  before me, the undersigned, a Notary Public in and for said state, personally appeared                          , proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

 

 

 

 

Signature of Notary Public

 

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LIST OF EXHIBITS

 

If any exhibit is not attached hereto at the time of execution of this Agreement, it may thereafter be attached by written agreement of the parties, evidenced by initialing said exhibit.

 

Exhibit “A” - Legal Description of the Land

 

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Exhibit “A” - Legal Description of the Land

 

Lots 1 through 32, inclusive, Block 96,

 

together with all of the platted, now vacated, alley in said Block,

 

East Denver, according to the recorded plat thereof

 

City and County of Denver, State of Colorado.

 

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WORK LETTER

 

[Tenant Constructs]

 

January 21, 2011

 

PING IDENTITY CORPORATION

 

Re:                             Tenant:     PING IDENTITY CORPORATION, a Delaware corporation

 

Premises:                                             Approximately 20,225 rentable square feet of space on the first floor (the “Premises”)

 

Gentlemen:

 

Concurrently herewith, you (“Tenant”) and the undersigned (“Landlord”) have executed a Lease Agreement (the “Lease”) covering the Premises (the provisions of the Lease are hereby incorporated by reference as if fully set forth herein and initially capitalized words not defined have the same meaning set forth in the Lease). In consideration of the execution of the Lease, Landlord and Tenant mutually agree as follows:

 

1.                                      Space Planning and Engineering

 

1.1                               Landlord has provided to Tenant the architectural and engineering drawings for the base building improvements for the Building completed or to be completed by Landlord and architectural and engineering drawings for the tenant improvements existing (if any) in the Premises (“Landlord’s Drawings”).

 

1.2                               Tenant retained DLR Group (“Tenant’s Architect”) as Tenant’s architect. Tenant shall retain design engineers for electrical, plumbing and life safety as Tenant’s engineer (“Tenant’s Engineer”) to perform electrical, plumbing, and life safety engineering, which Tenant’s Engineers shall be subject to Landlord’s prior written approval (not to be unreasonably withheld). In addition, Tenant shall retain Landlord’s designated structural engineers to provide engineering design review pertaining to structural design issues and Tenant shall retain Landlord’s designated mechanical engineer to perform all design review and construction coordination related to all mechanical elements of the Premises. Tenant shall provide to Landlord the Tenant-approved space plans for the Premises (collectively referred to herein as “Space Plans”) prepared by Tenant’s Architect within 20 days of the date of the parties’ mutual execution of the Lease. The Space Plans shall contain information specified in Exhibit B and shall be sufficiently complete to permit Landlord to review such drawings for the purpose of determining conformity with the base building specifications for the Building and for the purposes described in Section 1.3 below.

 

1.3                               Within 10 business days of receipt by Landlord of the Space Plans, Landlord and its engineers (“Landlord’s Engineers”) will review the Space Plans and Tenant is responsible for the costs of Landlord’s Engineers to review the Space Plans up to $1,000.00; provided, however, Tenant shall not be obligated to pay such review costs if Tenant retains Landlord’s Engineers as Tenant’s Engineers. Tenant’s Architect will advise Landlord and Landlord’s Engineers whether

 

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the Building HVAC System and/or the electrical service will have to be supplemented to allow installation of work shown on the Space Plans. Landlord shall approve the Space Plan unless the same (i) are inconsistent with the base building specifications for the Building, including the HVAC system and electrical system; (ii) do not contain all of the information specified in Exhibit B or are not sufficiently complete to permit Landlord to review them for the purposes set forth herein; or (iii) indicate space usages inconsistent with the Lease, Landlord will advise Tenant and Tenant will revise the Space Plans accordingly, resubmit them to Landlord, and the review procedure and time frames set forth above will be repeated. Failure by Landlord to advise Tenant of such determination within such 10-day period shall be deemed to be a Landlord Delay but such failure shall not be deemed to be approval by Landlord. When approved by Landlord and Tenant, the Space Plans will be signed or initialed by Landlord and Tenant; such approved drawings will be deemed the “Approved Space Plans.” Landlord’s approval of the Space Plans creates no responsibility or liability on the part of Landlord for completeness, design sufficiency, or compliance with all Applicable Laws.

 

1.4                               Within 30 days of the Approved Space Plans, Tenant shall provide Landlord with architectural working drawings prepared by Tenant’s Architect (the “Architectural Working Drawings”) and structural, plumbing, fire protection, mechanical, controls, electrical and life safety engineering drawings (collectively, the “Engineering Working Drawings”) prepared by Tenant’s Engineer, all of which shall be prepared substantially in the form provided in Exhibit B. The Architectural Working Drawings shall be coordinated by Tenant’s Architect with Landlord’s Drawings and the Approved Space Plans. The Architectural Working Drawings and the Engineering Working Drawings shall be approved by Tenant and shall be logical extensions of the Approved Space Plans for the Premises. Tenant and Tenant’s Architect shall be responsible for the consistency between the Architectural Working Drawings and the Engineering Working Drawings, conflicts with base building specifications and field conditions (unless such field conditions materially vary from Landlord’s Drawings, as modified) and for the Architectural Working Drawings and the Engineering Working Drawings complying with building code provisions. Landlord shall notify Tenant’s Architect of changes in Landlord’s Drawings affecting the Finish Work within 5 business days of an actual change in such drawings (not just a proposed change), so as to minimize interference with or delay to completion of Tenant’s Working Drawings. Landlord shall identify items that Landlord will require Tenant to remove upon the expiration or earlier termination of the Lease in accordance with the Lease. If the review by Landlord or Landlord’s Engineers, if applicable, uncovers design errors or determines that the Finish Work or any improvements in the Premises visible from the exterior of the Premises do not meet Landlord’s reasonable design requirements, Landlord shall give notice thereof, including any review comments, within 10 business days after Landlord’s receipt of Tenant’s Architectural Working Drawings and the Engineering Working Drawings. If Landlord does not reply within such period, it shall be presumed that Landlord has no objection thereto, however, such approval shall not limit Landlord’s right to request changes in the future in the event design errors are discovered (which request shall be made as soon as practicable following such discovery) and Tenant shall not be obligated to make changes as to which notice is given beyond such 10 business day period unless the safety of the Finish Work is affected or that are required by Applicable Laws. If Landlord notifies Tenant of design errors pursuant to this Section (within the time period, as applicable), Tenant shall revise the Architectural Working Drawings and the Engineering Working Drawings accordingly, and resubmit them to Landlord only for review of those design issues noted by Landlord after Landlord’s initial review of the Working Drawings. Landlord shall provide

 

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written approval or comments within 3 business days of Tenant’s resubmission and the review procedure set forth above shall be repeated. Delay caused by such revisions shall be deemed Tenant Delay. Tenant shall simultaneously submit its Working Drawings to Landlord for review, to Tenant’s contractor for final pricing, and for building permit review. Revisions required by Landlord as a result of its approval shall be incorporated by Tenant into pricing and permitting submittals and any delays shall be deemed Tenant Delay. When approved (or deemed approved) by Landlord and Tenant, such Working Drawings shall be deemed the “Final Drawings.”

 

1.5                               Changes to the Final Drawings may be made only upon prior written approval of Landlord, which approval will not be unreasonably withheld. Landlord will respond to all written requests for changes within 5 business days of Landlord’s receipt. If Landlord does not respond within such period, Landlord will be deemed to have consented to the requested changes. Landlord’s review of the Space Plans or Tenant’s Working Drawings do not imply approval by Landlord as to the Final Drawings’ compliance with Applicable Laws.

 

2.                                      Finish Work and Finish Allowance

 

2.1                               Following Landlord’s approval of the Final Drawings, Tenant is responsible for the diligent completion of all finish work substantially in accordance with the Final Drawings (the “Finish Work”) and for all other work necessary for Tenant to commence operation of its business in the Premises, including installation of Tenant’s security system, phone and data systems, and other equipment. At the time of submittal of Working Drawings to Landlord, Tenant shall submit to Landlord, for approval, a list of all contractors from whom Tenant intends to request bids, as well as the proposed Contractor Bid Package (including the form of Contract) if available at such time; otherwise such Contract shall be submitted for review as soon as it is available) and within 3 business days of receipt Landlord will provide a determination as to such contractors (it being understood that a failure by Landlord to advise Tenant of such determination shall neither be deemed to be a Landlord Delay nor shall such failure be deemed to be approval by Landlord). Tenant shall submit bid responses and its recommendation to Landlord for approval prior to awarding the work. Tenant’s subcontractors with respect to all mechanical, electrical, fire protection and controls work in the Premises will be the subcontractors used by Landlord for such work in the Building or other subcontractors approved by Landlord.

 

2.2                               Tenant agrees to execute a contract for construction services to complete the Finish Work (the “Contract”) with contractors and subcontractors reasonably satisfactory to Landlord (collectively, “Tenant’s Contractors”). Tenant and Tenant’s Contractors will be required to adhere to the requirements set forth on Exhibit C, the rules and regulations set forth on Exhibit D, and such other requirements as Landlord reasonably imposes (collectively, “Requirements”). The Contract will incorporate the provisions of the Requirements. Landlord will review the Contract for compliance with the Requirements within 3 business days thereafter; if Landlord does not respond within such period, Landlord shall be deemed to have approved such contract. Following approval, Tenant will promptly commence and proceed diligently to complete the Finish Work.

 

2.3                               Landlord has no obligation to Tenant’s Contractors except for the provision of those services which Landlord provides to other tenant finish contractors in the Building without preference or privileges, and Landlord agrees to provide such services. Tenant’s Contractors will be obligated to cooperate with contractors employed by Landlord (“Landlord’s Contractors”) who

 

3


 

are completing work in the Building, including Landlord’s completion of any work in the Common Area corridors or construction for any other tenants of the Building, and such Contractors will each conduct its respective work in an orderly fashion and manner so as not to unreasonably interfere with the other.

 

2.4                               Tenant assumes full responsibility for Tenant’s Contractor’s performance of all Finish Work including compliance with Applicable Laws, and for all Tenant’s Contractors’ property, equipment, materials, tools or machinery placed or stored in the Premises during the completion thereof. All such work is to be performed in a good and workmanlike manner consistent with first class standards.

 

2.5                               Tenant will cause Tenant’s Contractors to: (i) conduct work so as not to unreasonably interfere with any other construction occurring in the Building or any other tenants of the Building, including Landlord’s completion of the any work in the Common Area corridors or construction for any other tenants of the Building; (ii) comply with the Requirements and all other rules and regulations relating to construction activities in the Building promulgated from time to time by Landlord for the Building; (iii) reach agreement with Landlord’s Contractors as to the terms and conditions for hoisting, systems interfacing, and use of temporary utilities; and (iv) deliver to Landlord such evidence of compliance with the provisions of this paragraph as Landlord may reasonably request.

 

2.6                               Landlord shall pay the cost of the Finish Work completed in accordance with the Final Drawings up to a total maximum amount equal to $45.00 per rentable square foot of the Premises (the “Finish Allowance”), which Finish Allowance shall be used to pay for expenditures related to the Finish Work including but not limited to costs of all labor, materials, permits, fees, contractors and subcontractors’ charges and Tenant’s construction management fees, and payment of Landlord’s construction oversight fees in an amount of up to 1% of the so-called “hard” construction costs of the Finish Work. in addition, Landlord shall pay the costs of preparation of the Space Plans and Final. Drawings, (including, but not limited to, Landlord’s, Landlord’s Architect’s and Landlord’s Engineer’s costs of review) up to an amount equal to equal to $0.15 per rentable square foot of the Premises (the “Plan Allowance”). Costs of preparation and review of the Space Plans and Final Drawings in excess of the Plan Allowance and all costs of the Finish Work in excess of the Finish Allowance shall be at Tenant’s expense. Costs arising from Tenant Delay shall be at Tenant’s additional cost and expense and may not be deducted from the Finish Allowance. Tenant is responsible for and shall pay all costs and expenses payable under this Work Letter that are not allowable as expenditures from the Finish Allowance or the Plan Allowance as such amounts become due and payable. Should the cost of the Finish Work exceed the Finish Allowance (“Excess Costs”), such Excess Costs shall be at Tenant’s sole cost and expense. Tenant shall pay Excess Costs in full directly upon invoice as the Finish Work progresses. Tenant shall have a right to use a portion of the Finish Allowance (up to an. amount equal to $5.00 per square foot of the Premises) to offset the cost of moving, the purchase of furniture, fixtures and equipment, and the costs of installation of voice and data cabling (collectively, “Moving and FF&E Items”). Unless otherwise agreed by Landlord and Tenant in writing and subject to delays beyond Tenant’s reasonable control, if any portion of the Finish Allowance or Plan Allowance has not been requested by Tenant on or before December 31, 2011 (as extended by Net Landlord Delay) such amount will be forfeited by Tenant to Landlord.

 

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2.7                               Except for Moving and FF&E Items, the Finish Allowance is to be expended solely for the benefit of Landlord; that is the Finish Allowance will be expended only to pay for design, engineering, installation, and construction of the Finish Work (including installation of any cabling) which under the Lease becomes the property of Landlord upon installation and not for movable furniture, equipment, and trade fixtures not physically attached to the Premises. Landlord may deduct from the Finish Allowance any amounts due Landlord in accordance with Section 2.6. As design, engineering, and construction work is completed and Tenant receives invoices therefor, Tenant will submit requests for payment to Landlord not more frequently than monthly, along with appropriate lien waivers (substantially in the forms attached hereto as Exhibit E) and such other documentation as Landlord reasonably requires. On a monthly basis following receipt of such documentation (with such payment being made within 30 days if all required documentation is received by Landlord by the 5th of such month), Landlord will pay the amounts requested by delivery to Tenant of Landlord’s check(s) payable to Tenant or, at Landlord’s option, payable to Tenant and Tenant’s Contractors jointly. If the Finish Work is completed in phases, the Finish Allowance shall be disbursed on a per-square-foot basis, based on the square footage completed in the respective phase (ready for occupancy and use by Tenant).

 

2.8                               During completion of the Finish Work and until the Commencement Date, Tenant’s Contractors shall balance the Building HVAC system serving the Premises, the cost and expense of which shall be part of the Finish Allowance; immediately after the Commencement Date, Landlord will reasonably cooperate with Tenant in the balancing of the Building HVAC system serving the Premises at Tenant’s sole cost and expense. Tenant will pay all such expenses within 30 days after billing from Landlord.

 

2.9                               Tenant will indemnify, defend and hold harmless Landlord, Landlord’s Mortgagee, Building Manager, and Landlord’s Contractors from and against liability, costs or expenses, including attorney’s fees on account of damage to the person or property of any third party arising out of, or resulting from the performance of the Finish Work, including, but not limited to, mechanics’ or other liens or claims (and all costs associated therewith). Tenant will also repair or cause to be repaired at its expense all damage caused to the Premises or the Building by Tenant’s Contractors or its subcontractors. Further, Landlord will have the right as described in Section 12.1 of the Lease to post and maintain notices of non-liability.

 

2.10                        Tenant agrees to submit to Landlord upon completion of all work a final set of as-built Final Drawings (inclusive of three prints and three CAD disks) incorporating changes upon completion of the Finish Work.

 

2.11                        Notwithstanding any provision herein or in the Lease to the contrary, the Commencement Date and Tenant’s Rent obligations and other obligations will not be delayed or extended by any delay in completion of the Finish Work unless such delay is caused by “Net Landlord Delay.” The term “Landlord Delay” means (i) any delay in the preparation, finalization or approval of the Approved Space Plans or Final Drawings or completion of the Finish Work caused by Landlord’s failure to perform its obligations under this Work Letter within the time limits set forth herein, (ii) each day that Landlord fails or refuses, after the Delivery Date, to permit Tenant, its agents and contractors access to and use of the Building or any Building facilities or services (including loading dock, hoists or freight elevators) required for the orderly and efficient performance of the work necessary to complete the Finish Work and move into the Premises in

 

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accordance with Tenant’s critical path schedule therefor; (iii) each day that Landlord or Tenant encounters the presence of asbestos in the Building which affects Tenant’s ability to proceed with the construction of the Finish Work; or (iv) each day that Landlord fails or refuses to (A) meet any deadline in connection with the exercise of approval rights in connection with the construction of the Finish Work; (B) timely fund the Finish Allowance; or (C) provide any Services required to be provided under the Lease or this Work Letter. All delays other than Landlord Delay are deemed “Tenant Delay.” “Net Landlord Delay” means the number of days, if any, by which Landlord Delay exceeds Tenant Delay and the Commencement Date will be delayed by a number of days equal to the number of days of Net Landlord Delay, if any.

 

2.12                        Tenant designates and authorizes Cathy Harris of Jones Lang LaSalle to act for Tenant in this Work Letter. Tenant has the right by written notice to Landlord to change its designated representative.

 

2.13                        Landlord designates and authorizes Wendy Williams to act for Landlord in connection with this Work Letter (“Landlord’s Representative”). Landlord has the right by written notice to Tenant to change the Landlord’s Representative.

 

2.14 All notices required hereunder will be in writing in accordance with provision for notices in the Lease.

 

 

Very truly yours,

 

 

 

MG-1005, LLC, a Colorado limited liability company

 

 

 

By:

[unintelligible signature]

 

Authorized Signature

 

“Landlord”

 

ACCEPTED AND AGREED this 25th day of January, 2011.

 

 

 

PING IDENTITY CORPORATION, a Delaware corporation

 

 

 

By:

/s/ Jeremy Rudel

 

Print Name:

Jeremy Rudel

 

Print Title:

VP - Finance

 

 

 

 

ATTEST:

 

 

 

By.:

/s/ Lauren Romer

 

Print Name:

Lauren Romer

 

Print Title:

Director of Legal Affairs

 

 

“Tenant”

 

 

 

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LIST OF EXHIBITS

 

Exhibit A                                             Space Plans and Architectural and Engineering Drawings Requirements
Exhibit B                                             Landlord’s Requirements of Tenant the Contractors
Exhibit C                                             Rules and Regulations
Exhibit D                                             Form of Lien Waivers

 

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EXHIBIT A TO WORK LETTER

 

SPACE PLANS AND ARCHITECTURAL AND ENGINEERING DRAWINGS REQUIREMENTS

 

I.                                        Space Plans

 

Tenant’s Space Plans will comply with the following requirements, which are intended to assist Tenant and Tenant’s Architect in defining all information required for Landlord’s review of the space usages and evaluation of the improvements contemplated thereby.

 

1.                                      All Space Plans will be drawn to 1/8” scale and may be produced on CAD equipment.

 

2.                                      Tenant will submit three prints of all Space Plans with notes describing the general intent of the usage and the improvement requirements.

 

3.                                      The Space Plans and notes thereon will depict the quality of the work that will not be less than the quality of the existing Building improvements.

 

4.                                      The Space Plans and notes shall contain all information necessary to commence engineering and will include: (a) partition layout and door locations; (b) depiction of electrical and communication equipment requirements other than for normal office equipment, including modifications required to floor or main telephone or electric closets; (c) reflected ceiling plan showing all lighting and any non-standard lighting and ceiling construction or constraints which will affect mechanical, electrical, fire protection or life safety systems; (d) Tenant’s special mechanical and plumbing requirements; (e) Tenant’s special floor loading requirements; (f) Tenant’s requirements for floor penetrations with special dimensions, including but not limited to floor outlets, plumbing penetrations, special stairs, dumbwaiters, conveyors, pneumatic systems, elevators or architectural features; (g) areas of raised floor, (h) areas of special security (i) areas of special occupancy load beyond normal office (along with exiting calculations; and (j) approximate information regarding anticipated structural and mechanical, electrical, fire protection, controls and life safety system design requirements.

 

5.                                      The Space Plans shall be expanded to include all areas outside the Premises that might be impacted, including, but not limited to any rooftop or ground-based dishes/antennas, supplemental HVAC, emergency generators, and/or UPS units. The Space Plans should define the proposed locations of any such areas outside the Premises.

 

II.                                   Architectural and Engineering Working Drawings

 

1.                                      Tenant’s submission of Architectural Working Drawings and Engineering Working Drawings (collectively the “Working Drawings”) shall include three prints of Architectural Drawings and specifications to Landlord and comply with the following requirements, which are intended to permit Landlord to review space usages and the quality and extent of the proposed construction and its effect upon the Building improvements.

 

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2.                                      The Working Drawings will depict the quality of Finish Work to be performed, including areas outside the Premises, and must provide for a quality level equal to or exceeding (as reasonably determined by Landlord) the requirements of the Building improvements (including Building standards, if they exist), consistent with similar Class “A” office space located in the area of the Building.

 

3.                                      The Architectural Working Drawings and Engineering Working Drawings collectively will include (without limitation) but not be limited to: (a) partition layout and door locations; (b) electrical outlets, including the locations and panel schedules; (c) telephone outlets, including designation of type of switch or equipment and notes regarding conduit sizing to each outlet, power and mechanical requirements for system and any requirements affecting base building construction, including modifications required to floor or main telephone rooms; (d) reflected ceiling plan showing standard and non-standard lighting, switching requirements and ceiling construction or constraints which will affect mechanical, electrical, fire protection or life safety systems, and will include all necessary specifications and details of items or construction; (e) Tenant’s occupancy capacity, usage equipment loads for all spaces, particularly special usage rooms, including, but not limited to, conference rooms, lounges, coffee rooms, copy rooms, computer terminal or keypunch rooms, audio-visual rooms and reproduction or print rooms which require special heating, ventilating, air conditioning or fire protection (all specifications on usage or equipment therein, including a summary of BTU per hour output of all equipment and parameters as to extent of any special work required); (f) Tenant’s floor loading for above standard floor loading areas (all specifications, weight, vibration and vibration isolation for each item sufficiently complete for structural engineering design), particularly special usage rooms, such as file rooms, storage rooms, computer rooms and reproduction or print rooms; (g) floor and ceiling penetrations, including, but not limited to, special stairs, dumbwaiters, conveyors, skylights (if approved), pneumatic systems, elevators or architectural features; and (h) all structural, mechanical, electrical, fire protection, controls and life safety systems requirements.

 

4.                                      The Working Drawings will include the following as well: (1) all millwork and equipment which will be part of the Finish Work and become part of the Premises; (2) complete finish designations for all floors, walls, ceilings, including millwork, door frames, etc.; (3) keying schedules; (4) special blocking requirements as may be required to support wall or ceiling hung furniture or equipment; and (5) all other information necessary to complete construction of the Premises, including the architect’s and engineer’s stamps if required by any applicable State or local law or otherwise required to permit construction under such law or applicable regulations.

 

5.                                      Tenant shall deliver to Landlord a final set of as-built Final Drawings (inclusive of three prints and three CAD disks) incorporating changes upon completion of the Finish Work.

 

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EXHIBIT B TO WORK LETTER

 

LANDLORD REQUIREMENTS OF THE CONTRACTS

 

The Contract will be subject to review and approval of Landlord and will fully incorporate the following provisions. In the event of any conflict between any provisions of the Contract and the provisions below, the provisions below will control.

 

1.                                      The Contract will be in writing and will cover all aspects of the Finish Work. No Finish Work will be performed except pursuant to the Contract. Fully executed copies of the Contract and subcontracts will be delivered to Landlord. If Landlord determines that the Contract does not comply with the provisions hereof, it will immediately be corrected and no work will be commenced in the Premises until the deficiencies have been corrected. Any delays in completion resulting from modifications will be Tenant Delays. Following delivery of a copy of the Contract to Landlord and its approval, no modification will be effective unless and until a copy thereof has been delivered to Landlord for its review.

 

2.                                      Changes in the Final Drawings will be made only upon prior written approval of Landlord which will be deemed given if Tenant has not been informed otherwise in writing or by oral communication confirmed in writing within 5 business days of Landlord’s receipt of the requested changes.

 

3.                                      Scheduling of Finish Work: The Contract will obligate Tenant’s Contractor to perform Finish Work in accordance with time schedules acceptable to Tenant, Tenant’s Contractor and Landlord. Any schedule proposed by Tenant’s Contractor will be based upon Tenant’s Contractor applying its best efforts to the Finish Work.

 

4.                                      Tenant’s Contractor will not knowingly perform Finish Work which will result in a lesser quality installation or provide inferior performance than that established by the base shell and core drawings and specifications covering similar work items. Landlord will have the right at any time during the performance of Finish Work or thereafter to require replacement and reconstruction at Tenant’s Expense of Finish Work not conforming to the standards and specifications in the Final Drawings.

 

5.                                      Tenant and Tenant’s Contractor will give all notices and comply with all applicable codes, laws, ordinances, rules, regulations and orders of any public authority relating to the performance of the Finish Work (collectively, “Applicable Laws”). If either party observes that any Finish Work is at variance with any Applicable Laws, it will promptly notify the other party and Landlord in writing, and necessary changes will be made by Tenant. If Tenant’s Contractor performs any Finish Work that it knows is contrary to Applicable Laws, and fails to deliver prior notice to Tenant and Landlord, Tenant’s Contractor will assume full responsibility therefor and will bear all costs attributable to repair, replacement or correction. The obligations of Tenant, Tenant’s Contractor and its subcontractors under this paragraph shall include compliance with Federal, State and local tax laws, social security acts, and unemployment compensation acts.

 

6.                                      All risk of loss to all property of Tenant, Tenant’s Contractor and its subcontractors will be the sole responsibility of Tenant, Tenant’s Contractor and its subcontractors, and Landlord will have no responsibility therefor.

 

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7.                                      Tenant and Tenant’s Contractor agree that in order to maintain Landlord’s warranties and guarantees for the mechanical, electrical, control life safety, and fire protection systems, all Finish Work affecting these systems will be completed by the base shell core subcontractors performing the respective base shell and core Work items; provided, however, at Landlord’s sole option, it may allow other subcontractors to perform work in the Building on special systems which may require connection into the foregoing base building systems.

 

8.                                      The following insurance requirements will be complied with:

 

a.                                      Minimum Coverage - Prior to any Finish Work being commenced by Tenants Contractor, it will obtain and maintain insurance with minimum coverage and limits to protect Tenant and Landlord from the claims hereafter set forth which may arise or result from Tenant’s Contractor’s performance of any Finish Work, whether such work is performed by Tenant’s Contractor, its subcontractors, or by anyone for whose acts such parties may be liable as follows (subject to the provisions below, such limits may be provided by an appropriate “umbrella” policy):

 

(1)                                                Workmen’s Compensation and occupational disease insurance at the statutory limits provided for by the State of Colorado;

 

(2)                                                Employer’s liability insurance in an amount not less than $100,000 for all damages arising from each accident or occupational disease;

 

(3)                                                Commercial general liability insurance covering:

 

(i)                                Operations premises liability;

 

(ii)                             Owner’s and Contractor’s protective liability;

 

(iii)                          Completed operations;

 

(iv)                         Product liability;

 

(v)                            Contractual liability;

 

(vi)                         Broad form property damage endorsement and property damage caused by conditions otherwise subject to exclusion for explosion, collapse or underground damage.

 

(4)                                                Insurance limits:

 

Bodily Injury:
$1,000,000 each occurrence; $1,000,000 aggregate completed operations products

 

Property Damage:
$500,000 each occurrence; $500,000 aggregate operations; $500,000

 

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aggregate protective; $500,000 aggregate completed operations products

 

(5)                                                Comprehensive automobile liability insurance covering all owned, hired or non-owned vehicles including the loading and unloading thereof with limits of no less than:

 

Automobile Bodily Injury:
$500,000 each person; $1,000,000 each occurrence;

 

Automobile Property Damage:
$500,000 each person

 

b.                                                Physical damage insurance covering the completed value of the Finish Work which will afford coverage against “all risks” for physical loss or damage.

 

c.                                                 Cancellation - All such insurance will be carried with a company satisfactory to Landlord and Tenant and the liability policy will name Landlord, Landlord’s Mortgagee, and Tenant and their employees and agents as additional insured parties. Each policy will provide that it will not be cancelled or altered except after 15 days prior written notice to Tenant and Landlord, and the certificate of insurance will so state.

 

d.                                                Policy Termination - Tenant’s Contractor and each subcontractor will maintain all insurance required hereunder during the term of the Contract and for a period ending one year after the date of completion of all Finish Work done pursuant to the Contract to the extent such insurance is written in a “claims made basis.”

 

e.                                                 Policies - Prior to commencement of work by Tenant’s Contractor, it will deliver one copy of the policies or certificates (in form approved by Landlord) evidencing such insurance to Tenant and Landlord. Such policies or certificates must be approved by Tenant and Landlord prior to commencement of work. Notwithstanding the above, Landlord may require greater coverage or larger limits by serving notice upon Tenant. Without the written consent of Landlord, Tenant’s Contractor agrees that it will not allow any subcontractor to commence work within the building until such subcontractor has obtained the required insurance.

 

f.                                                  Umbrella Liability Insurance - Umbrella liability insurance with limits of liability for claims of bodily injury, personal injury and property damage liability not less than $10,000,000 each occurrence and $10,000,000 aggregate.

 

g.                                                 Waiver of Subrogation - Tenant and Tenant’s Contractor will waive all rights against each other and the subcontractors, sub-subcontractors, agents and employees, for damages caused by fire or other perils available under the normal “All Risk” I.S.O. insurance policy on the work itself and the Building. After receipt of evidence satisfactory to Landlord that all insurance required to be carried hereunder has been obtained, upon request of Tenant, Landlord will execute a document evidencing its agreement to waive all rights it would otherwise have against Tenant or Tenant’s Contractor for damage covered by its property insurance on. the Building.

 

B-3


 

9.                                                Tenant’s Contractor will indemnify, defend, and hold harmless Landlord, Landlord’s Mortgagee, and their respective representatives, agents and employees from and against all claims, damages, losses and expenses, including, but not limited to reasonable attorney’s fees, arising out of or resulting from the performance of Finish Work or Tenant’s Contractor’s failure to perform in accordance with the Contract that are: a) caused in whole or in part by any negligent act or omission of Tenant’s Contractor, any subcontractor, anyone directly or indirectly employed by any of them or anyone for whose acts any of them may be liable, regardless of whether or not such claim, loss, damage or expense is caused in part by a party indemnified hereunder, and b) attributable to bodily injury, sickness, disease or death, or destruction of or damage to tangible property including loss of use resulting from any of the foregoing acts. Tenant’s indemnification obligation under this Paragraph 9 will not be limited by any limitation on the amount or type of damages, compensation or benefits payable by or for the Contractor or any subcontractor under workmen’s compensation acts, disability benefit acts or other employee benefit acts.

 

10.                                         While Landlord may make available to Tenant’s Contractor for incorporation into the Finish Work materials previously purchased by Landlord, Landlord is not the manufacturer of such materials nor is it the commercial supplier of such materials. Accordingly, Tenant and Tenant’s Contractor agree that if either one or both of them have any claim with respect to any of such materials supplied by Landlord for incorporation into the Finish Work, whether such claims relate to any alleged breach of an express warranty or an implied warranty or otherwise, any claims against Landlord whether directly or by way of defense, counterclaim, cross claim or offset are waived and released and such claims will be brought exclusively against the person or entity from whom Landlord purchased such materials or against the manufacturer. Landlord will execute such documents as may be reasonably necessary to assign any rights (to the extent assignable) Landlord would otherwise have against a supplier or manufacturer.

 

11.                                         Landlord or Tenant may require Tenant’s Contractor to provide payment and performance bonds for any or all Finish Work, such bonds to be provided at Tenant’s or Tenant’s Contractor’s expense. Any bond will be requested and provided prior to commencement of Finish Work.

 

12.                                         If Tenant’s Contractor is adjudicated a bankrupt, or makes a general assignment for the benefit of its creditors, or if a receiver is appointed on account of Tenant’s Contractor’s insolvency, or if Tenant’s Contractor persistently or repeatedly refuses or fails, except in cases where delay is justified, to supply enough properly skilled workmen or proper materials or if Tenant’s Contractor persistently disregards Applicable Laws, or otherwise is guilty of a substantial violation of a provision of the Contract, Tenant may, without prejudice to any right or remedy and after giving Tenant’s Contractor and its surety, if any, 7 business days’ written notice, terminate the Contract and take possession of all materials, equipment, tools, construction equipment and machinery owned by Tenant’s Contractor and will thereafter complete the Finish Work by whatever method it may deem expedient In such case, Tenant’s Contractor will not be entitled to receive any further payments until completion of all Finish Work; provided, however, that Tenant’s actions will not release Tenant’s Contractor from any obligations to Tenant arising from its performance or nonperformance prior to the date of such termination. Following completion, Tenant will pay Tenant’s Contractor an amount equal to the aggregate of the amounts

 

B-4


 

actually due under the Contract at the time of the termination, less the cost to Tenant of completing the Finish Work.

 

13.                                         Prior to commencement of any Finish Work in the Premises, Tenant’s Contractor will give written notice to Landlord and Tenant of the date work will commence. If a subcontractor or materialman files a mechanics’ lien as a result of performing Finish Work pursuant to the Contract, then, provided Tenant’s Contractor has been paid for such work, Tenant’s Contractor will indemnify and defend Tenant and Landlord from said lien and will, when requested by Tenant or Landlord, furnish (as Landlord or Tenant may specify) either a bond sufficient to discharge the lien, deposit in an escrow approved by Landlord and Tenant a sum equal to 150% of the amount of such lien or obtain for Landlord an endorsement through Landlord’s title policy insuring against loss or damage resulting from such lien. Subject to any restrictions of Landlord’s Mortgagee on the Building, Tenant’s Contractor may, in cooperation with Landlord and Tenant, contest the validity of a mechanics’ lien, including the right to prosecute any appeals so long as during the pendency of any contest, Tenant’s Contractor will effectively stay any official or judicial sale of the Building, upon execution or otherwise, and so long as Tenant’s Contractor immediately, pays any final judgment entered and procures record satisfaction thereof. If Tenant or Landlord is a party to any such contest, or any other action resulting from or arising out of the performance of the Finish Work, Tenant’s Contractor will pay all legal fees and other costs and expenses incurred by Landlord and Tenant in such action. If Tenant’s Contractor fails to provide a bond, cash escrow or title endorsement, or otherwise fails to fully satisfy and obtain the release of a lien in accordance with the provisions hereof, Tenant’s Contractor will be obligated to refund Tenant or Landlord, as the case may be, all monies that the latter may pay in discharging any such lien including costs and reasonable attorneys’ fees incurred in settling, defending against, appealing or in any other manner dealing with any such lien.

 

14.                                         Tenant’s Contractor will warrant and agree at its expense to correct or cause to be corrected any defects in the Finish Work (including, but not limited to, defects due to defective workmanship or materials whether supplied, installed or performed by Tenant’s Contractor or any subcontractor or supplier) which occur within one year after Tenant’s Contractor has substantially completed the Finish Work, including completion of all punch list items, or for such longer period as may be set forth in the Final Drawings. Tenant’s Contractor will require a similar warranty in all subcontracts, and will deliver to Landlord and Tenant, together with appropriate assignments, if required, all warranties of -subcontractors and suppliers. All warranties will extend to both Landlord and Tenant, as their respective interests in such Finish Work exist pursuant to the Lease.

 

15.                                         Tenant’s Contractor will: (a) comply with all reasonable rules relating to construction activities in the Building promulgated by Landlord or Landlord’s Contractor; (b) be responsible for reaching agreement with Landlord as to the conditions for use of the elevators, systems interfacing, use of temporary utilities, access to the Premises and use of truck docks and storage areas.

 

16.                                         Landlord has no obligation to Tenant’s Contractor, except for the provision of those services that Landlord provides to other tenant finish contractors in the Building without preference or privilege.

 

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17.          Landlord and Landlord’s Contractor may, from time to time, inspect or perform work within the Premises. Such inspections or work will not conflict with Tenant’s Contractor’s work unless it is necessary for completion of Landlord’s Work, or is an emergency situation. Landlord may suspend Tenant’s Contractor’s work in the Premises if such work, in the opinion of Landlord or of Landlord’s Contractor, presents a danger to life, safety, or property, or in an emergency situation.

 

18.          Tenant will give Landlord reasonable prior notice of all inspections, punchouts and other reviews during the course of construction so that Landlord may observe such events. Landlord will be likewise informed of all Building Department inspections and requirements for issuance of the certificate of occupancy or equivalent governmental approvals (“Certificate of Occupancy”) for the Premises. Landlord’s observation of any such events will not construed or interpreted as a review or approval by Landlord of any such work nor will it prevent Landlord, if it thereafter discovers any deficiency in such Work, from requiring correction. Tenant’s Contractor will be solely responsible for obtaining a Certificate of Occupancy and will submit to Landlord the original prior to Tenant’s occupancy of the Premises for the purpose of conducting business. All meetings with public entities (City or County Building Departments, Fire Marshall, etc.) will be to be coordinated with Landlord to allow for Landlord’s representative to attend. Meeting Minutes of all meetings and phone conferences with such officials should be copied to Landlord.

 

19.          Landlord’s Engineer or other agent will have the option of reviewing all equipment and materials to be used in the construction of the Finish Work and all work prior to Tenant move-in. Such review will not constitute approval by Landlord.

 

20.          Unless otherwise approved by Landlord, all services and work performed in the Premises and all materials and personal property delivered to the Premises will be performed or delivered, as the case may be, only by persons covered by a collective bargaining agreement with the trade having jurisdiction over the work.

 

21.          Tenant will promptly furnish Landlord a copy of the building permit issued to Tenant’s Contractor after issuance.

 

22.          Tenant’s Contractor will not store materials or supplies in or outside the Building (other than within the Premises) without the prior approval of Landlord or Landlord’s Contractor.

 

23.          All deliveries except hand-held items must be taken to the floors via the freight elevator and not the passenger elevators. The passenger elevators are only for passenger use not for freight or handcarts.

 

24.          Tenant’s Contractor will provide at all times direct supervision of all work being performed for Tenant.

 

25.          Tenant’s Contractor will cooperate with Landlord in disposing refuse resulting from the Finish Work. This may include the use of Landlord’s dumpster and a proration of charges associated with such use or at Landlord’s option at Tenant’s expense the placement of Tenant Contractor’s dumpster at a location specified by Landlord.

 

B-6


 

26.          Tenant’s Contractor will acknowledge that the work to be performed by it for Tenant is also for the direct benefit of Landlord. Landlord will have the right to pursue in its own name directly against Tenant’s Contractor any rights or remedies including, without limitation, claims for damages granted to Tenant.

 

27.          If any legal action or arbitration proceeding is commenced to enforce the provisions of the Contract or to recover damages as a result of the alleged breach of the provisions thereof, the prevailing party will be entitled to recover all reasonable costs incurred in connection therewith, including attorneys’ fees.

 

28.          The Contract will be construed in accordance with the laws of the State in which the Premises are located. Subject to Paragraph 27, any litigation or other proceeding will be decided by the District Court In. and For the County of the State in which the Building is located.

 

29.          All claims, disputes and other matters in question between Tenant and Tenant’s Contractor arising out of, or relating to, the Contract, will be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then obtaining unless the parties mutually agree otherwise. No such arbitration will include Landlord, its employees or consultants, except by written consent of Landlord and any other party sought to be joined.

 

B-7


 

EXHIBIT C TO WORK LETTER

 

RULES AND REGULATIONS

 

The following Rules and Regulations shall be read, agreed to and signed by each individual who enters the Building Complex to perform Finish Work. Each such signed copy of these Rules and Regulations shall be filed on site in Landlord’s management office along with a photocopy of the individual’s driver’s license, current address and phone number.

 

1.                            Access to the Building will only be permitted through the loading dock entrance. Those floors which the Premises is not a part of shall always be off limits. Landlord, Landlord’s Contractor and Building Manager shall be notified in writing when you anticipate having personnel in the Building Complex after hours. It will be considered trespassing if such prior notifications are not received.

 

2.                            Exact location of material hoist and method of support and weatherproofing will be at the discretion of the Landlord and Landlord’s Contractor.

 

3.                            No parking will be allowed in the loading dock at any time; the loading dock is for loading and unloading only. A designated off-loading area will be determined to allow site-work to be completed without interruption. Staging of materials will be approved in advance and relocated upon request of Landlord’s Contractor immediately. Vehicles which are not moved upon request will be towed at vehicle owner’s expense.

 

4.                            The Premises and Building Complex shall be maintained daily to ensure a safe and clean, workmanlike condition at all times. Tenant’s Contractors will remove trash and debris on a daily basis.

 

5.                            Prior to Tenants Contractors making any Building modifications, a notice of the intent of the scope of work to be performed will be provided to Landlord’s representative at least 72 hours in advance for coordination with the other trades and verification of authorization to proceed with the work. No X-raying of slabs will be allowed anytime the Building is occupied.

 

6.                            All tie-ins to power or lighting panels will be coordinated through Landlord’s Contractor and the Base Building Electrical Subcontractor. Any interfaces with Fire Life/Safety systems will be approved in advance.

 

7.                            Tenant’s Contractor shall maintain a daily log of work performed, deliveries and stocking schedules on site for review upon request.

 

8.                            Prior authorization will be required prior to access to the penthouse or roof area.

 

9.                            Tenant’s Contractors shall use toilet facilities in a location determined by Landlord’s Contractor.

 

C-1


 

10.                     Exposed flame or welding activities will require a yellow authorization card which will have a signature from Landlord’s Contractor prior to and after completion of operations. A 2-hour fire watch will be maintained after the work is complete.

 

11.                     Removal of any glazing will be performed by the Base Building Glazing Subcontractor to maintain the warranty. Landlord does not allow any mechanical attachments to or drilling of mullions or any part of the glazing system. The Building will be weather tight at the end of every day.

 

12.                     All roof repairs or remedial work to accommodate the Finish Work will be performed by the Base Building Roofing and Sealant Subcontractors.

 

13.                     Elevator cab protection will be maintained by Tenant’s Contractors and any additional work to recondition the service elevator will be at the Tenant’s cost.

 

14.                     Use of the service/passenger elevators will be scheduled through the Building Manager.

 

15.                     Tenant’s Fire/Life Safety subcontractors will be present at all Building inspections to secure the Certificate of Occupancy, including any premium time at the Tenant’s cost.

 

16.                     All Fire/Life Safety testing will be coordinated with Landlord’s Contractor . All testing and inspections will occur when the Building is not occupied and at the discretion of the Building Manager. Smoke detectors will be bagged during all smoke or dust generating activities and any such bags removed at the end of every day.

 

17.                     Trash removal will not be through the passenger elevators at any time. Trash removal may be by service elevator when approved by Landlord or Building Manager.

 

18.                     Building envelope will be maintained to ensure environmental control of an occupied building.

 

19.                     Base Building work such as blinds, etc. will be coordinated with Tenant’s Contractors and Landlord’s Contractor.

 

20.                     Additional work requested by the Tenant of Landlord’s Contractor regarding Base Building Work will be performed at the Tenant’s expense including premium costs as may be required to maintain the Base Building Work schedule.

 

21.                     Tenant’s Contractors shall provide their Safety Program for review by Landlord’s Contractor for compliance with established project specific safety requirements. Weekly “tool box” meeting notes will be kept on file on site for review upon request. Any safety violations will be reported immediately to the job-site safety director or Building Manager.

 

22.                     Trash dumpster locations and usage shall be at the discretion of the Building Manager.

 

C-2


 

23.                     Tenant’s Contractors shall provide temporary protection for all existing finished surfaces, whether within or outside of the Premises or the Building, during all loading, delivery, or work periods. Such protection shall be properly maintained and subject to the approval of Landlord. Temporary removal of such protection may be required from time to time, at Landlord’s discretion. Final removal of all temporary protection and repair of all existing finished surfaces shall be at Tenant’s Contractors’ cost.

 

24.                     All tie-ins to the tenant condenser water system shall be coordinated through Landlord’s Contractor and the Base Building Mechanical Subcontractor. Tie-ins shall not take place until after the tenant piping has been chemically cleaned and passivated. Tie-ins shall also be coordinated and scheduled in advance with the Building Manager.

 

25.                     Temporary construction air filtration shall be provided at the floor return fan inlets and all perimeter fan coil units in all areas subject to and throughout the duration of the Finish Work. If Landlord’s permanent filters are in place at the start of Finish Work, they shall be removed and stored in a secure location as directed by the Building Manager. At completion of Finish Work, the permanent filters shall be reinstalled. The costs for the foregoing shall be borne by Tenant.

 

26.                          Connections to the sanitary waste, vent and domestic cold water systems shall occur only at the designated wet column capped connections provided specifically for such purposes. Connections to plumbing systems serving base building toilet rooms, janitors’ closets, electric water coolers, etc. are prohibited.

 

27.                          Testing, adjusting and balancing (T&B) of Base Building air handling units and perimeter fan coil units, as well as all cooling-only VAV terminal units and air diffusion and collection devices installed as part of Finish Work, shall be performed as part of the Finish Work at Tenant’s expense. Tenant shall submit T&B plan and procedures for Landlord’s review and approval. Landlord reserves the right to monitor the T&B work in progress and to reject T&B work that does not comply with the approved plan and procedures and the standards of NEBB.

 

28.                          In addition to these Rules and Regulations, any work performed in connection with Finish Work shall comply with additional requirements that Landlord may impose for purposes of satisfying LEED program requirements, including, but not limited to, any air quality management plan or construction waste management plan.

 

C-3


 

EXHIBIT D TO WORK LETTER

 

FORM OF LIEN WAIVERS

 

Appropriate lien waivers substantially in the forms attached hereto as Exhibits D-1, D-2, D-3, and D-4, as the case may be, will accompany all requests for payment by Tenant.

 

D-1


 

EXHIBIT D-1 TO WORK LETTER

 

STATE OF                   

)

INTERIM CONTRACTOR’S AFFIDAVIT

 

) ss.

RELEASE AND LIEN WAIVER

COUNTY OF

)

 

 

TO WHOM IT MAY CONCERN:

 

The undersigned, being first duly sworn, deposes and says that:

 

1.             He is                of the                who is the general Contractor for the project hereinafter identified (the “Contractor”), and that the undersigned is authorized to execute and deliver this document on behalf of the Contractor.

 

2.             The Contractor is the contractor for the performance of certain work and/or the furnishing of certain materials or supplies (the “Work”) pursuant to a Contract between Contractor and               , as Owner, for the improvements and project commonly known as                             (the “Project”) upon property legally described as:                                      , County of                  , State of                    , hereinafter referred to as the “Property.”

 

3.             This instrument is executed and delivered in consideration of and for the purpose of inducing                       (“Construction Lender”) and the Owner to make an interim payment of $             under the Contract, subject to collection of any check given as payment. The total amount of the Contract including change orders is $            , and the undersigned acknowledges that upon receipt of this interim payment, the Contractor has received interim payments totaling $              under the Contract.

 

4.             The undersigned for the Contractor, subject to the receipt and collection of the interim payment herein requested, warrants and represents that: (i) all materials delivered to said project by or for the Contractor are for use therein only; (ii) title to all work, materials and equipment covered by said payment, whether or not incorporated in the improvement on the Property, has passed to the Owner, free and clear of all liens, claims, security or encumbrances (hereinafter all referred to as “liens”); (iii) all taxes applicable to the materials furnished for use in or on the Property and all taxes for the Work performed under the Contract have been fully paid; and (iv) all laborers, mechanics, subcontractors, materialmen and suppliers for all work done and for all materials, machinery, equipment, fixtures, tools, scaffolding and appliances furnished for the performance of the Contract and for any other indebtedness connected therewith for which the Owner of the Property might be responsible have been paid in full to the date hereof. Contractor, to the extent of the total of interim payments received, for itself, its successors, and on behalf of all persons able to claim through or under the Contractor: (a) waives, relinquishes and releases all liens and rights of claims to liens for labor or materials furnished in the construction, improvement, alteration or repair involved in performance under the Contract; (b) agrees (1) to save Owner and Construction Lender harmless from. all liability, costs and expenses, including reasonable attorneys’ fees, resulting from mechanic’s and/or materialmen’s liens for the performance of work or the furnishing of materials or supplies pursuant to the Contract, (2) to discharge (by bond or otherwise) or to defend suit to enforce any mechanic’s or materialmen’s lien, claim to or right of

 

D-1-1


 

action for any such lien which may be filed, and (3) to satisfy any claims or demands which arise out of, which are due to or which may be made for, any work performed or supplies furnished under the Contract or in furtherance of the construction or completion of the Contract, whether directly or indirectly attributable to the Contract; and (c) hereby releases the present and any future Owner of the Property, the Property, the Construction Lender and any lender who may now or hereafter have a security interest in the Property, from all claims, rights of action, liabilities and liens which may be filed or asserted in connection with the Contract.

 

Dated this         day of   , 20    .

 

 

 

 

Authorized representative of Contractor

 

SUBSCRIBED AND SWORN TO before me this    day of             , 20  .

 

My commission expires

 

 

 

 

Notary Public

 

D-1-2


 

EXHIBIT D-2 TO WORK LETTER

 

STATE OF                   

)

FINAL CONTRACTOR’S AFFIDAVIT,

 

) ss.

RELEASE AND LIEN WAIVER

COUNTY OF

)

 

 

TO WHOM IT MAY CONCERN:

 

The undersigned, being first duly sworn, deposes and says that:

 

1.             He is                of the            ,                who is the general Contractor for the project hereinafter identified (the “Contractor”), and that the undersigned is authorized to execute and deliver this document on behalf of the Contractor.

 

2.             The Contractor is the contractor for the performance of certain work and/or the furnishing of certain materials or supplies (the “Work”) pursuant to a Contract between Contractor and   ,               , as Owner, for the improvements and project commonly known as                            (the “Project”) upon property legally described as:               , County of               , State of               , hereinafter referred to as the “Property.”

 

3.             This instrument is executed and delivered in consideration of and for the purpose of inducing                (“Construction Lender”) and the Owner to make final payment of $               under the Contract, subject to collection of any check given as payment. The total amount of the Contract including change orders is $              and the undersigned acknowledges that upon receipt of this final payment, the Contractor has been paid in full the total contract price under the Contract.

 

4.             The undersigned for the Contractor, subject to the receipt and collection of the final payment herein requested, warrants and represents that: (i) all materials delivered to said project by or for the Contractor are for use therein only; (ii) title to all work, materials and equipment covered by said payment, whether or not incorporated in the improvement on the Property, has passed to the Owner, free and clear of all liens, claims, security or encumbrances (hereinafter all referred to as “liens”); (iii) all taxes applicable to the materials furnished for use in or on the Property and all taxes for the Work performed under the Contract have been fully paid; and (iv) all laborers, mechanics, subcontractors, materialmen and suppliers for all work done and for all materials, machinery, equipment, fixtures, tools, scaffolding and appliances furnished for the performance of the Contract and for any other indebtedness connected therewith for which the Owner of the Property might be responsible have been paid in full. Contractor for itself, its successors, and on behalf of all persons able to claim through or under the Contractor: (a) waives, relinquishes and releases all liens and rights of claims to liens for labor or materials furnished in the construction, improvement, alteration or repair involved in performance under the Contract; (b) agrees (1) to save Owner and Construction Lender harmless from all liability, costs and expenses, including reasonable attorneys’ fees, resulting from mechanic’s and/or materialmen’s liens for the performance of work or the furnishing of materials or supplies pursuant to the Contract, (2) to discharge (by bond or otherwise) or to defend suit to enforce any mechanic’s or

 

D-2-1


 

materialmen’s lien, claim to or right of action for any such lien which may be filed, and (3) to satisfy any claims or demands which arise out of, which are due to or which may be made for, any work performed or supplies furnished under the Contract or in furtherance of the construction or completion of the Contract, whether directly or indirectly attributable to the Contract; and (c) hereby releases the present and any future Owner of the Property, the Property, the Construction Lender and any lender who may now or hereafter have a security interest in the Property, from all claims, rights of action, liabilities and liens which may be filed or asserted in connection with the Contract

 

Dated this      day of               , 20    .

 

 

 

 

Authorized representative of Contractor

 

SUBSCRIBED AND SWORN TO before me this       day of               , 20    .

 

My commission expires                              .

 

 

 

 

Notary Public

 

D-2-2


 

EXHIBIT D-3 TO WORK LETTER

 

 

 

INTERIM SUBCONTRACTOR’S OR

Project

 

 

 

 

MATERIAL SUPPLIER’S AFFIDAVIT,

Job Address

 

 

 

 

RELEASE AND LIEN WAIVER

Job Number

 

 

 

STATE OF                   

)

 

) ss.

COUNTY OF                    

)

 

The undersigned subcontractor or material supplier (herein referred to as “Subcontractor”), being first duly sworn, deposes and says that: He is over the age of 21 years and resides at:                                  .

 

(IF SUBCONTRACTOR IS AN INDIVIDUAL:)

 

1.                                      He is the Subcontractor referred to herein.

 

(IF SUBCONTRACTOR IS A PARTNERSHIP:)

 

1.                                      He is a general partner in                   ,  a co-partnership composed of the undersigned and carrying on business at                   , City of                 . Said co-partnership is the Subcontractor referred to herein.

 

(SUBCONTRACTOR IS A CORPORATION:)

 

1.                                      He holds the title of                  , in                                 , a corporation organized under the laws of the State of                  , carrying on business at                  , City of                   , State of                  , which corporation is the Subcontractor referred to herein. The undersigned is authorized to execute this instrument on its behalf.

 

2.                                      Subcontractor is a subcontractor or material supplier for the performance of certain work and/or the furnishing of certain materials or supplies pursuant to an agreement or purchase order, as the case may be (hereinafter called the “Subcontract,” which term will refer to the agreement or purchase order, as the case may be), under a general contract between                 , (hereinafter called “Contractor”), and                   (hereinafter called the Owner”), for the improvements or project known as,                  , at                  , City of                  , County of                  , State of                   (hereinafter called the “Property”).

 

D-3-1


 

3.                                      This instrument is delivered in consideration of and for the purpose of inducing Contractor to make interim payment of $         under the Subcontract, subject to collection of any check given as payment. Subcontractor acknowledges that upon receipt of this interim payment, Subcontractor has received from Contractor interim payments totaling $         under the Subcontract.

 

4.                                      Subcontractor warrants and represents that: (i) all materials delivered to said project by or for Subcontractor are for use therein only; (ii) title to all work, material and equipment covered by said payment, whether or not incorporated in the Property, has passed to the Owner, free and clear of all liens, claims, security interests or encumbrances (hereinafter all referred to as “liens”); (iii) all taxes applicable to the materials furnished and the work performed under the Subcontract have been fully paid; and (iv) all laborers, mechanics, sub-subcontractors, materialmen and suppliers for all work done and for all materials, machinery, equipment, fixtures, tools, scaffolding and appliances furnished for the performance of the Subcontract and for any other indebtedness connected therewith for which the Owner of the Property might be responsible have been paid in full to the date hereof. Subcontractor, to the extent of the total of interim payments received, for itself, its successors, and on behalf of all persons able to claim through or under Subcontractor: (a) waives, relinquishes and releases all liens and right or claim to a lien for labor or materials furnished in the construction improvement, alteration or repair involved in performance under the Subcontract; (b) agrees to save Contractor harmless from all liability, costs and expenses, including reasonable attorneys’ fees, to: (1) discharge (by bond or otherwise) or to defend suit to enforce, any mechanics’ or materialmen’s lien, claim to or right of action for such lien, which may be filed and (2) satisfy any claims or demands arising out of, due or which may be made, directly or indirectly attributable to the Subcontract, any work performed or supplies furnished thereunder, or in furtherance of the construction or completion of the subcontract work; and (c) hereby releases Contractor, any money earned by Contractor, Contractor’s sureties, the present and any future Owner, the Property and any lender who may now or hereafter have a security interest therein, from all claim, right of action, liability and lien which may be filed or asserted in connection with the Subcontract.

 

Dated this       day of                  , 20    .

 



 

 

As Subcontractor, General Partner of

 

Subcontractor, or Authorized Officer of

 

Subcontractor, above described

 

 

D-3-2


 

STATE OF                   

)

 

) ss.

COUNTY OF                    

)

 

Subscribed and sworn to before me this       day of               , 20     , by                              , known to me to be the above-named signatory, who personally appeared before me and acknowledged that the foregoing instrument was freely and voluntarily executed for the uses and purposes and on behalf of the Subcontractor therein mentioned.

 

My commission expires                                   .

 

 

 

 

Notary Public in and for

 

said County and State

 

D-3-3


 

EXHIBIT D-4 TO WORK LETTER

 

 

 

FINAL SUBCONTRACTOR’S OR

Project

 

 

 

 

MATERIAL SUPPLIER’S AFFIDAVIT,

Job Address

 

 

 

 

RELEASE AND LIEN WAIVER

Job Number

 

 

 

STATE OF                   

)

 

) ss.

COUNTY OF                    

)

 

The undersigned subcontractor or material supplier (herein referred to as “Subcontractor”), being first duly sworn, deposes and says that: He is over the age of 21 years and resides at:                                           .

 

(IF SUBCONTRACTOR IS AN INDIVIDUAL:)

 

1.                                      He is the Subcontractor referred to herein.

 

(IF SUBCONTRACTOR IS A PARTNERSHIP:)

 

1.                                      He is a general partner in                           a co-partnership composed of the undersigned and carrying on business at                 City of                . Said co-partnership is the Subcontractor referred to herein.

 

(IF SUBCONTRACTOR IS A CORPORATION:)

 

1.                                      He holds the title of                , in                            a corporation organized under the laws of the State of                , carrying on business at                          , City of                , State of                , which corporation is the Subcontractor referred to herein. The undersigned is authorized to execute this instrument on its behalf.

 

2.                                      Subcontractor is a subcontractor or material supplier for the performance of certain work and/or the furnishing of certain materials or supplies pursuant to an agreement or purchase order, as the case may be (hereinafter called the “Subcontract,” which term will refer to the agreement or purchase order, as the case may be), under a general contract between                                     (hereinafter called “Contractor”), and                                     (hereinafter called’ the “Owner”), for the improvements or project known as                       at                       , City of                , County of                       , State of                  (hereinafter called the “Property”).

 

D-4-1


 

3.                                      This instrument is delivered in consideration of and for the purpose of inducing Contractor to make final payment of $            , subject to collection of any check given as payment. Subcontractor acknowledges that upon receipt of this final payment, Subcontractor has been paid in full the total subcontract price of $            , for all of the work performed under the Subcontract, including retainage, if any.

 

4.                                      Subcontractor warrants and represents that (i) all materials delivered to said project by or for Subcontractor are for use therein only; (ii) title to all work, material and equipment covered by said payment, whether or not incorporated in the Property, has passed to the Owner, free and clear of all liens, claims, security interests or encumbrances (hereinafter all referred to as “liens”); (iii) all taxes applicable to the materials furnished and the work performed under the Subcontract have been fully paid; and (iv) all laborers, mechanics, sub-subcontractors, materialmen and suppliers for all work done and for all materials, machinery, equipment, fixtures, tools, scaffolding and appliances furnished for the performance of the Subcontract and for any other indebtedness connected therewith for which the Owner of the Property might be responsible have been paid in full. Subcontractor for itself, its successors, and on behalf of all persons able to claim through or under Subcontractor: (a) waives, relinquishes and releases all liens and right or claim to a lien for labor or materials furnished in the construction improvement, alteration or repair involved in performance under the Subcontract; (b) agrees to save Contractor harmless from all liability, costs and expenses, including reasonable attorneys’ fees, to: (1) discharge (by bond or otherwise) or to defend suit to enforce, any mechanics’ or materialmen’s lien, claim to or right of action for such lien, which may be filed and (2) satisfy any claims or demands arising out of, due or which may be made, directly or indirectly attributable to the Subcontract, any work performed or supplies furnished thereunder, or in furtherance of the construction or completion of the subcontract work; and (c) hereby releases Contractor, any money earned by Contractor, Contractor’s sureties, the present and any future Owner, the Property and any lender who may now or hereafter have a security interest therein, from all claim, right of action, liability and lien which may be filed or asserted in connection with the Subcontract.

 

Dated this        day of              , 20    .

 

 

 

As Subcontractor, General Partner of

 

Subcontractor, or Authorized Officer of

 

Subcontractor, above described

 

 

D-4-2


 

STATE OF                   

)

 

) ss.

COUNTY OF                    

)

 

Subscribed and sworn to before me this        day of              , 20     , by                           , known to me to be the above-named signatory, who personally appeared before me and acknowledged that the foregoing instrument was freely and voluntarily executed for the uses and purposes and on behalf of the Subcontractor therein mentioned.

 

My commission expires                                   .

 

 

 

 

Notary Public in and for said

 

County and State

 

D-4-3





Exhibit 10.11

 

FIRST AMENDMENT TO LEASE AGREEMENT

 

THIS FIRST AMENDMENT TO LEASE AGREEMENT (“Amendment”) is entered into effective as of the 12th day of November, 2015, by and between FSP 1001 17th STREET LLC, a Delaware limited liability company (“Landlord”), and PING IDENTITY CORPORATION, a Delaware corporation (“Tenant”).

 

RECITALS

 

A.                                    Landlord’s predecessor-in-interest and Tenant entered into that certain Lease Agreement dated January 21, 2011 (“Lease”), which pertains to those certain Premises currently consisting of approximately 20,225 rentable square feet known as Suite 100 (“Existing Premises”) in the building located at 1001 17th Street, Denver, Colorado 80202 (“Building”). Except for such terms and words as are defined herein, any other capitalized terms and words used herein shall have the meaning attributed to them as set out in the Lease.

 

B.                                    Tenant desires to expand the Existing Premises, the parties desire to extend the term of the Lease, and otherwise Landlord and Tenant hereby desire to amend certain terms of the Lease as provided herein.

 

NOW, THEREFORE, in consideration of the mutual obligations and covenants contained in this Amendment and the Lease, as amended, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

 

1.                                      In addition to the Existing Premises, Landlord leases to Tenant and Tenant hereby leases from Landlord additional space consisting of approximately 18,333 rentable square feet of space located on the 8th floor of the Building which will be known as Suite 800 (the “Expansion Space”), as shown on Exhibit A hereto and made a part hereof by reference, on all of the terms of the Lease as herein amended, on the following basis:

 

A.                                    Tenant’s right to possession of the Expansion Space and its obligations under the Lease for the Expansion Space shall commence on the date Landlord delivers possession of the Expansion Space to Tenant (“Delivery Date”), which Delivery Date is estimated to be on or about the date of this Amendment; provided, however, Tenant’s obligation to pay Rent and other charges payable pursuant to the Lease, with respect to the Expansion Space only, shall commence on the date that is the earlier of (“Expansion Commencement Date”) (i) May 1, 2016, or (ii) the date Tenant occupies for the Permitted Use any portion of the Expansion Space.

 

B.                                    The Term of the Lease for the Existing Premises shall be extended such that the Term of the Lease for both the Existing Premises and the Expansion Space shall terminate on the last day of the 84th full calendar month following the Expansion Commencement Date (the “Expiration Date”).

 

C.                                    As of the Delivery Date, all references to Premises in the Lease shall include the Expansion Space and the Existing Premises and Tenant’s occupancy of the Expansion Space shall be subject to all terms of the Lease as herein specifically amended. Subject to the following terms and conditions, as of the Delivery Date, the Premises described in the Lease shall consist of the Existing Premises and the Expansion Space for a total of approximately 38,558 rentable square

 

1


 

feet of space as outlined on Exhibit A hereto and made a part hereof by reference. Landlord and Tenant agree that, upon completion of the Final Plans (as hereinafter defined) for the Expansion Space, Landlord shall have Landlord’s architect remeasure the Expansion Premises to determine and certify to Landlord and Tenant the rentable square footage of the Premises inclusive of the Expansion Space and the Existing Premises (in accordance with The Standard for Measuring Floor Area of the Building Owners and Managers Association, ANSI/BOMA Z65.1-1996) and, if such certified measurement differs from the approximately 18,333 rentable square feet identified above, all amounts set forth herein that are based on square footage, including but not limited to the Base Rent, Tenant’s Pro Rata Share, and the number of parking spaces to which Tenant is entitled shall be revised to reflect such certified rentable square footage. At the request of Landlord or Tenant, the parties will evidence the Expansion Commencement Date, Expiration Date, and such other matters set forth therein in an agreement substantially in the form of Exhibit B attached hereto, which agreement will contain revised Base Rent schedules for each of the Existing Premises and the Expansion Space, along with such amounts that are based on square footage, including but not limited to the Tenant’s Pro Rata Share and the number of parking spaces to which Tenant is entitled based on a modification of the rentable square footage of the Expansion Space.

 

D.                                    From and after the date of this Amendment through November 30, 2016, Tenant shall continue to pay Base Rent and Additional Rent for its use and occupancy of the Existing Premises in accordance with the terms of the Lease. Commencing on December 1, 2016, Tenant shall pay Base Rent for its use and occupancy of the Existing Premises pursuant to the terms of the Lease and in accordance with the following payment schedule:

 

Period

 

Annual PSF
for Existing
Premises

 

Monthly Base
Rent for Existing
Premises

 

December 1, 2016 through November 30, 2017

 

$

21.50

 

$

36,236.46

 

December 1, 2017 through November 30, 2018

 

$

22.00

 

$

37,079.17

 

December 1, 2018 through November 30, 2019

 

$

22.50

 

$

37,921.88

 

December 1, 2019 through November 30, 2020

 

$

23.00

 

$

38,764.58

 

December 1, 2020 through November 30, 2021

 

$

23.50

 

$

39,607.29

 

December 1, 2021 through November 30, 2022

 

$

24.00

 

$

40,450.00

 

December 1, 2022 through Expiration Date

 

$

24.50

 

$

41,292.71

 

 

Commencing on the Expansion Commencement Date, Tenant shall pay Base Rent for its use and occupancy of the Expansion Space, which Base Rent shall be in addition to the Base Rent due with respect to the Existing Premises, pursuant to the terms of the Lease and in accordance with the following payment schedule:

 

2


 

Period

 

Annual PSF
for Expansion
Space

 

Monthly Base
Rent for Expansion
Space

 

Expansion Commencement Date through November 30, 2016*

 

$

21.00

 

$

32,082.75

*

December 1, 2016 through November 30, 2017

 

$

21.50

 

$

32,846.63

 

December 1, 2017 through November 30, 2018

 

$

22.00

 

$

33,610.50

 

December 1, 2018 through November 30, 2019

 

$

22.50

 

$

34,374.38

 

December 1, 2019 through November 30, 2020

 

$

23.00

 

$

35,138.25

 

December 1, 2020 through November 30, 2021

 

$

23.50

 

$

35,902.13

 

December 1, 2021 through November 30, 2022

 

$

24.00

 

$

36,666.00

 

December 1, 2022 through Expiration Date

 

$

24.50

 

$

37,429.88

 

 


*Notwithstanding anything to the contrary, Tenant will occupy the Premises and Rent applicable to the Expansion Space (but not the Existing Premises) will be abated for a period commencing on the Expansion Commencement Date and expiring 180 days later.

 

2.                                      Prior to the Expansion Commencement Date, Tenant shall continue to pay Additional Rent for the Existing Premises only in accordance with the terms of the Lease. Commencing on the Expansion Commencement Date and for the duration of the Term, in addition to Base Rent, Tenant shall be obligated to pay Additional Rent and all other sums payable by Tenant in accordance with the Lease applicable to both the Expansion Space and the Existing Premises, including, without limitation, payment of Tenant’s Pro Rata Share of Operating Expenses. From and after the Expansion Commencement Date, Tenant’s Pro Rata Share shall be 5.8816%. Notwithstanding the foregoing, and so long as Tenant is not in default under the Lease, Tenant’s Pro Rata Share of Operating Expenses for the Expansion Space only shall be abated for the first 6 months following the Expansion Commencement Date. Notwithstanding anything to the contrary contained herein, commencing in calendar 2017, for the purposes of calculating Tenant’s Pro Rata Share of Operating Expenses, “Controlled Expenses” (hereafter defined) for the Premises will not exceed the “Maximum Controlled Expenses” (hereafter defined). “Controlled Expenses” means all Operating Expenses except those attributable to Taxes, costs of insurance, including, without limitation, liability insurance, casualty insurance and worker’s compensation insurance, costs of utilities, costs of snow removal, and costs of compliance with Applicable Laws as provided in Section 6.1(5)(1) of the Lease. “Maximum Controlled Expenses” shall mean: (a) for calendar year 2016, the full amount of the actual expenses for Controlled Expenses as determined in accordance with the foregoing provisions; (b) for calendar year 2017 and each calendar year thereafter, the prior calendar year’s Maximum Controlled Expenses multiplied by 1.05. The limitations described above are a limitation only on the calculation and pass-through to Tenant of Tenant’s Pro Rata Share of Operating Expenses and such limitation does not prohibit Landlord from spending amounts in excess thereof.

 

3.                                      Subject to the terms hereof, Tenant accepts the Existing Premises and the Expansion Space in their “as is” condition and Landlord shall have no obligation to remodel or make improvements to the Existing Premises or the Expansion Premises except as otherwise required hereby (it being acknowledged that nothing herein shall limit Landlord’s maintenance and repair obligations described in the Lease).

 

A.                                    Landlord and Tenant acknowledge that Tenant is in possession of the Existing Premises pursuant to the terms of the Lease and accepts possession of the Existing Premises in its “as is” condition as of the date hereof subject to the provisions of the Lease, as amended hereby. Landlord shall provide Tenant with an allowance of up to $27.00 per square foot of rentable area in the Existing Premises (the “Existing Allowance”) to be applied in accordance with the terms hereof.

 

3


 

B.                                    Landlord shall deliver and Tenant shall accept the Expansion Space in its “as is” condition; provided however, as of the Delivery Date, Landlord shall be responsible to deliver the Building structural systems, roof system, base building plumbing systems, exterior window systems, window coverings on the interior side of the window perimeters, elevator systems, restrooms, base building HVAC mechanical systems, base building electrical systems and fire and life safety systems, all necessary access to provide proper ingress and egress, the floor and the ceiling (it being agree that Landlord shall have no obligation to deliver a new drop ceiling or make any improvements to the ceiling existing as of the date hereof as a result of Tenant’s election to the construct the Open Ceiling (as hereinafter defined) in accordance with the terms below) free from latent and structural defects, in good and proper working order. Landlord shall provide Tenant with an allowance of up to $35.00 per square foot of rentable area in the Expansion Space (the “Expansion Allowance”) to be applied in accordance with the terms hereof.

 

C.                                    Landlord shall pay directly to Tenant’s architect its fees for preparation of a space plan and budget of the cost of Tenant Improvements in the Expansion Space up to $0.12 per rentable square feet of the Expansion Space to be applied in accordance with the terms hereof.

 

D.                                    The Existing Allowance and the Expansion Allowance collectively are herein referred to together as the “Allowance”. Tenant may utilize the Allowance only for improvements to either or both of the Existing Premises or the Expansion Space (the “Tenant Improvements”) pursuant to the Final Plans. The Allowance may be used only for hard and soft construction costs associated with the design and construction of the Existing Premises and the Expansion Space and toward costs associated with: (a) data/telecommunications cabling and equipment to include security, (b) consultant fees related to design and engineering, and (c) consultant fees related to the design and construction of the Tenant’s Improvements. The Expansion Allowance shall be applied to the cost of Tenant Improvements first. If the cost of Tenant Improvements is less than the Expansion Allowance, Tenant may utilize up to $91,665.00 (based on $5.00 per square foot of the Expansion Space) of the remaining Expansion Allowance for the following: (a) furniture, fixtures and equipment, (b) other specialty trade fixtures, signage and equipment, (c) legal fees associated with the Tenant Improvements and this Amendment, (d) moving expenses of any kind associated with the Premises, and (e) following the Outside Date (as defined below) as a credit toward then owing Rent. If the cost of the Tenant Improvements (in either or both of the Existing Premises or the Expansion Space) exceeds the cost of the Expansion Allowance, Tenant shall not be entitled to utilize any remaining portion of the remaining Allowance for items (a) through (e) herein. Landlord’s payment of the Allowance shall be subject to all of the following items (i)-(v) being completed to Landlord’s satisfaction and the Allowance shall be due and payable by Landlord on the 45th day after the last-to-be-completed item has occurred to Landlord’s reasonable satisfaction: (i) Tenant submits to Landlord an affidavit that all payrolls, bills for materials and any equipment and other indebtedness connected with the Tenant Improvements for which Landlord or its property might in any way be responsible, have been paid or otherwise satisfied; (ii) Tenant submits to Landlord any other data, to the extent and in such form as may be designated by Landlord, which establishes the final cost of the Tenant Improvements and the payment or satisfaction of all Tenant’s construction obligations, such as receipts, releases and waivers of liens arising out of the Tenant Improvements; (iii) Landlord is provided with a certificate by Tenant’s architect that the Tenant Improvements are complete in accordance with the plans and specifications approved by Landlord; (iv) Landlord is provided with all certificates or similar sign-offs necessary for occupancy of the Premises issued by the

 

4


 

appropriate governmental authority permitting use of the Premises in accordance with such approved plans and specifications; and (v) Tenant has executed such other close-out documents as may be reasonably requested by Landlord. Tenant shall be responsible for any costs of the Tenant Improvements which are in excess of the Allowance. Subject to the following, unless otherwise agreed by Landlord and Tenant, the Allowance shall remain available for Tenant’s use through and until December 31, 2016 (“Outside Date”) and following the Outside Date Tenant shall forfeit any remaining unused balance of the Allowance to Landlord.

 

E.                                     Tenant is responsible for the diligent completion of the Tenant Improvements substantially in accordance with the plans and specifications approved by Landlord (the “Final Plans”), and shall be responsible for the construction contract, construction management, the bidding process, and selection of contractors, engineers and construction manager, all subject to Landlord’s consent as provided in the Lease. The Tenant Improvements shall be accomplished by Tenant as an Alteration, as such term is used in the Lease, and shall be subject to all of the terms and conditions of the Lease (including, without limitation, Article 12 thereof) and generally in compliance with the terms and provisions of the Work Letter attached to the Lease (exclusive of any tenant improvement allowances referenced in the Work Letter). Landlord’s prior written approval, such approval not to be unreasonably withheld, conditioned or delayed, of Tenant’s Final Plans for the Tenant Improvements shall be required and Landlord shall have the right to reasonably approve Tenant’s contractors, subcontractors, engineers and construction managers. Landlord shall approve or provide comments to Tenant’s proposed plans and specifications within 10 business days of receipt. Landlord shall be entitled to a construction management fee equal to 1% of the Tenant’s hard costs of construction for supervision and oversight of the Tenant Improvements which shall be deducted by Landlord from the Allowance, as well as any amounts due Landlord in accordance herewith. Landlord shall provide all required utilities to the Expansion Space at no cost to Tenant from the Delivery Date until the Expansion Commencement Date. Subject to Landlord’s approval of Tenant’s Final Plans as set forth above. Landlord acknowledges that Tenant may create an “open” ceiling plan (the “Open Ceiling”) on the 8th floor in the Expansion Space. During the performance of the ceiling work. Tenant shall not destroy or permit to be destroyed and Landlord shall retain any ceiling tile grid, ceiling tiles, and lights removed. If reinforcement of the floor of the Expansion Space is required, Tenant shall have the right, at its sole cost and expense. to reinforce the floor in any areas specified by Tenant’s architect in accordance with the design provided by Landlord’s structural engineer.

 

4.                                      As of the date hereof, Landlord estimates that the per hour charge for air-conditioning outside Ordinary Business Hours will be $75.00 per floor served (all or any portion), subject to a 3 hour minimum use period at times when the services are required to be specifically turned on for Tenant’s sole use plus payment of the engineer’s hourly wages if such assistance is required; such charge is subject to increase based on increases in costs of utilities included in such costs. Tenant may utilize after hours HVAC at such rates and if Tenant’s electrical consumption exceeds 8.5 watts per square foot. Landlord, at Tenant’s sole cost and expense, shall be entitled to install a separate meter electrical service for the Premises.

 

5.                                      Effective as of the Expansion Commencement Date, Tenant’s Parking Allotment shall be increased to reflect 38 unreserved garage parking spaces (based on 1 unreserved garage parking space for every 1,000 rentable square foot leased by Tenant). the use of which shall be subject to the terms of the Lease, as hereby amended. The Parking Rate currently charged by

 

5


 

Landlord as of the date hereof is $185.00 per month per unreserved space, $235.00 per month per space in the reserved area, and $300.00 per month per designated reserved space. The Parking Rates are subject to increase in accordance with the terms of the Lease.

 

6.                                      By execution of this Amendment, Tenant hereby notifies Landlord in writing of its bona fide good faith desire to have Landlord cause the release of Tenant with respect to Tenant’s obligations described in that certain Sublease (“Sublease”) with FTI Consulting, Inc. (“FTI”) for approximately 5,271 rentable square feet of space on the 11th floor of the Building (the “Sublease Space”) which release shall not be effective until the Expansion Commencement Date. Landlord, as of the date hereof, shall use prompt and commercially reasonable efforts to notify FTI of such request and within 5 days after receipt of a good faith response from FTI (“FTI Response”), Landlord shall deliver to Tenant a summary of the FTI Response, and if Landlord is able to accommodate Tenant’s request for a release of the Sublease on terms and provisions which are reasonably acceptable to Landlord. If Landlord is unable to accommodate Tenant’s request for a release of the Sublease. the Lease and the Sublease of the FTI Space shall nonetheless continue in full force and effect until the expiration or earlier termination of the term thereof (it being agreed that Tenant will not elect and is prohibited hereby from exercising an option to extend the term thereof) and Landlord shall reimburse Tenant for the actual verified monthly rent paid by Tenant to FTI pursuant to the terms of the Sublease from and after the Expansion Commencement Date and the surrender of the Sublease Space but Tenant remains responsible and shall not be deemed to be released of its obligations set forth in the Sublease.

 

7.                                      As of the date of this Amendment, Tenant has on deposit with Landlord the Letter of Credit as financial assurance for the performance of Tenant’s obligations under this Lease currently in the amount of $400,000.00, which Letter of Credit covers certain obligations as specified in the Lease and which shall not be subject to cancellation or expiration for any reason except as otherwise provided in the Lease. As a condition to the effectiveness of this Amendment, within 30 days following the execution and delivery of this Amendment by Tenant, Tenant shall provide Landlord with a replacement Letter of Credit (the “Replacement Letter of Credit”) meeting the requirements of the Lease in the amount of $500,000.00. The Replacement Letter of Credit. or a renewal or substitute therefor approved by Landlord, shall be kept in effect from the date of this Amendment through the 60th day following the Expiration Date of the Term, as may be extended (the “Extended LC Termination Date”) and shall otherwise satisfy the requirements set forth in the Lease. The Replacement Letter of Credit shall be in the initial amount of $500,000.00 and thereafter, so long as no Event of Default is continuing under the Lease prior to a reduction date, the amount of the Replacement Letter of Credit may be reduced at the request of Tenant by: (i) $200,000.00 as of November 30, 2019, and (ii) $200,000.00 as of November 30, 2020, and subject to the foregoing conditions, from and after November 30, 2020, the Replacement Letter of Credit shall be in the amount of $100,000.00. If the Replacement Letter of Credit would otherwise expire prior to the Extended LC Termination Date, Tenant shall deliver to Landlord an extension or renewal of the Replacement Letter of Credit, or a substitute Replacement Letter of Credit.

 

8.                                      Landlord, at its sole cost and expense, shall provide standard Building lobby directory and suite entry signage. Any additional signage shall be subject to Landlord’s prior written consent and comply with the terms of the Lease.

 

6


 

9.                                      In accordance with the following provisions, Landlord grants Tenant a continuing right of refusal (Tenant’s right to lease under this paragraph being referred to as Tenant’s “Right of First Refusal”) to lease any space on the 7th or 8th floor of the Building which is either unoccupied and not subject to a lease or currently occupied but with a lease expiring during the Term (the “Right of First Refusal Space”). Tenant’s Right of First Refusal is subordinate to all rights of extension, expansion, or first offer or refusal as to the Right of First Refusal Space in favor of other tenants in the Building in place as of the date of this Amendment or other tenants in the Building following the date of this Amendment to the extent Tenant fails to timely exercise the Right of First Refusal described herein, and in any event is subordinate to any rights of extension granted to any Third Party Tenant with respect to the Right of First Refusal Space offered to Tenant and which Tenant fails to timely exercise pursuant to the terms hereof. If Landlord receives a bona fide third party offer to lease the Right of First Refusal Space (or a portion thereof) that Landlord desires to accept or Landlord has received a bona fide third party offer and desires to make a final offer to such third party (the “Third Party Tenant”), before entering into a binding agreement with the Third Party Tenant, Landlord shall give notice to Tenant of the space included in such final offer (the “3rd Party Offer Space”) and the material terms of such final offer (not including the identity of such third party) (the “3rd Party Offer”) and the terms applicable to leasing 3rd Party Offer Space to Tenant as determined in accordance with the following provisions (the “3rd Party Offer Notice”). Tenant has 5 business days after receiving Landlord’s 3rd Party Offer Notice within which to notify Landlord whether it elects to lease such 3rd Party Offer Space on the terms set forth in the 3rd Party Offer Notice, which election must be for all of the 3rd Party Offer Space. If Tenant fails to timely notify Landlord, it will be conclusively presumed that Tenant has waived its Right of First Refusal as to the 3rd Party Offer Space and Landlord shall be free to lease the 3rd Party Offer Space to such third party specific to the 3rd Party Offer Notice only on substantially the same financial terms as in the 3rd Party Offer Notice; provided, however, if (x) Landlord fails to lease the Right of First Refusal Space substantially in accordance with the 3rd Party Offer Notice; (y) Landlord proposes to lease on financial terms not set forth in the 3rd Party Offer Notice that are “materially more favorable” than the financial terms set forth in the 3rd Party Offer Notice; or (z) the Right of Refusal Space becomes available for leasing after termination or expiration of a lease with the Third Party Tenant, Landlord shall be obligated again to give notice to Tenant under this Section prior to leasing such Right of First Refusal Space to a third party. For purposes of this Section, “financial terms” shall mean and refer to: base rent; operating expense prorations and passthroughs; rental escalations; and rent and tenant finish concessions. For purposes of this Section, “materially more favorable” shall mean: a reduction in the effective rent (calculated on the basis of amortizing, on a straight-line basis, over the term of such lease the total rent less any concessions or inducements) of more than 5%. The completion of the improvements in and serving the 3rd Party Offer Space and commencement of Tenant’s right to occupy the 3rd Party Offer Space shall be generally determined in accordance with the Work Letter attached to the Lease, with timing to be adjusted to reflect the date on which a space plan is approved for the 3rd Party Offer Space, assuming that such space plan is required to be submitted by Tenant within 30 business days of Tenant’s receipt of the 3rd Party Offer Notice.

 

10.                               The introductory sentence of Section 2 of the Addendum attached to the Lease is hereby deleted in its entirety and shall be replaced by the following in lieu thereof: “Landlord grants Tenant 2 options (each an “Option”) to extend the Term of the Lease each for an additional period of 5 years (each an “Option Term”).” Except as otherwise provided herein, the terms and

 

7


 

conditions set forth in Section 2 of the Addendum attached to the Lease are hereby ratified and affirmed.

 

11.                               Section 5 of the Addendum attached to the Lease is hereby deleted in its entirety and shall be of no further force or effect.

 

12.                               Landlord and Tenant represent and warrant to the other that neither has employed any broker with respect to this Lease and has no knowledge of any broker’s involvement in this transaction except Cushman & Wakefield of Colorado, Inc., which is representing Landlord, and JLL, which is representing Tenant (collectively, the “Brokers”). Each party shall indemnify the other against any expense incurred by a party as a result of any claim for commissions or fees by any other broker, finder, or agent, whether or not meritorious, employed by the other party or claiming by, through, or under the other party, other than the Brokers. Tenant acknowledges Landlord is not liable for any representations by the Brokers regarding the Premises, Building, Building Complex, or this Amendment.

 

13.                               If there is any conflict between the terms of this Amendment and the terms of the Lease, the terms of this Amendment govern. The Lease as hereby amended is in full force and effect, is hereby ratified and affirmed by the parties, and is binding upon the parties in accordance with its terms. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any one or more counterpart signature pages may be removed from one counterpart of the Amendment and annexed to another counterpart of the Amendment to form a completely executed original instrument without impairing the legal effect of the signature thereon. Signatures transmitted by facsimile or other static electronic form shall be binding as originals on the parties hereto.

 

14.                               Time is of the essence herein.

 

[Remainder of Page Intentionally Left Blank — Signatures Follow]

 

8


 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

 

LANDLORD:

TENANT:

 

 

FSP 1001 17TH STREET LLC,

PING IDENTITY CORPORATION,

a Delaware limited liability company

a Delaware corporation

 

 

 

 

 

By:

FSP Property Management LLC, its asset manager

 

By:

/s/ Lauren Romer

 

 

 

 

Print Name: Lauren Romer

 

By:

/s/ William S. Friend, Jr.

 

Print Title: VP, General Counsel

 

William S. Friend, Jr.,

 

 

Executive Vice President -

 

 

Regional Director

 

 

9


 

EXHIBIT A
TO
FIRST AMENDMENT TO LEASE AGREEMENT

 

 

10


 

EXHIBIT B
TO
FIRST AMENDMENT TO LEASE AGREEMENT

 

COMMENCEMENT DATE MEMORANDUM

 

THIS COMMENCEMENT DATE MEMORANDUM is made and entered into as of [                  , 201 ] by and between FSP 1001 17th STREET LLC, a Delaware limited liability company (“Landlord”), and PING IDENTITY CORPORATION, a Delaware corporation (“Tenant”).

 

RECITALS:

 

1.                                      Landlord and Tenant are parties to a certain First Amendment to Lease Agreement dated as of [          ,       ] (“Amendment”) which amends that certain Lease Agreement dated January 21, 2011 between Landlord and Tenant (“Lease”), relating to certain Existing Premises and Expansion Space located in the building commonly known as 1001 17th Street located at 1001 17th Street, Denver, Colorado 80202. Terms not otherwise defined herein shall have the meanings set forth in the Amendment.

 

2.                                      Landlord and Tenant desire to confirm the Delivery Date, Expansion Commencement Date, Expiration Date, the agreed upon rentable square footage of the Expansion Space, and such other matters as may be provided hereunder.

 

ACKNOWLEDGMENTS:

 

Pursuant to Section 1.C. of the Amendment and in consideration of the facts set forth in the Recitals, Landlord and Tenant acknowledge and agree as follows:

 

1.                                      All capitalized terms not otherwise defined in this Memorandum have the meanings ascribed to them in the Amendment.

 

2.                                      The Delivery Date under the Lease is [               ]. The Expansion Commencement Date under the Lease is [               ].

 

3.                                      Tenant confirms Landlord has delivered possession of the Premises to Tenant and Tenant has accepted the Premises.

 

4.                                      The Expiration Date of the Lease is [               ], unless the Lease is sooner terminated in accordance with the terms and conditions of the Lease.

 

5.                                      Tenant must exercise its Option to the renewal Term, if at all, by notifying Landlord no later than [               ], subject to the conditions and limitations set forth in the Lease.

 

6.                                      The initial renewal Term expires on [               ].

 

11


 

7.                                      Landlord’s architect re-measured the Expansion Premises based on the Final Plans and certified that the rentable square footage of the Premises inclusive of the Expansion Space and the Existing Premises is approximately [               ] rentable square feet, and accordingly, the Base Rent, Tenant’s Pro Rata Share and the number of parking spaces to which Tenant is entitled is as follows:

 

Base Rent for the Existing Premises is as follows:

 

[             -                 ]

 

[$           per month]

[             -                 ]

 

[$           per month]

[             -                 ]

 

[$           per month]

[             -                 ]

 

[$           per month]

[             -                 ]

 

[$           per month]

[             -                 ]

 

[$           per month]

[             -                 ]

 

[$           per month]

 

 

 

 

Base Rent for the Expansion Space is as follows:

 

[             -                 ]

 

[$           per month]

[             -                 ]

 

[$           per month]

[             -                 ]

 

[$           per month]

[             -                 ]

 

[$           per month]

[             -                 ]

 

[$           per month]

[             -                 ]

 

[$           per month]

[             -                 ]

 

[$           per month]

 

 

 

 

Tenant’s Pro Rata Share is [             %]

 

Tenant is allocated [     ] unreserved garage parking spaces.

 

Landlord and Tenant each caused this Memorandum to be executed by its duly authorized representative as of the day and date written above. This Memorandum may be executed in counterparts, each of which is an original and all of which constitute one instrument.

 

 

LANDLORD:

 

 

 

 

 

By:

 

 

Name:

 

 

Its:

 

 

12


 

 

TENANT:

 

 

 

 

 

By:

 

 

Name:

 

 

Its:

 

 

13





Exhibit 10.12

 

SECOND AMENDMENT TO LEASE AGREEMENT

 

THIS SECOND AMENDMENT TO LEASE AGREEMENT (“Amendment”) is entered into effective as of the 6 day of December, 2017, by and between FSP 1001 17TH STREET LLC, a Delaware limited liability company (“Landlord”), and PING IDENTITY CORPORATION, a Delaware corporation (“Tenant”).

 

RECITALS

 

A.            Landlord’s predecessor-in-interest and Tenant entered into that certain Lease Agreement dated January 21, 2011 (“Base Lease”), as amended by that certain First Amendment to Lease Agreement dated November 12, 2015 (“First Amendment”; the Base Lease as amended by the First Amendment is referred to herein as the “Lease”), which pertains to those certain premises currently consisting of approximately 38,558 rentable square feet known as Suites 100 and 800 (“Existing Premises”) in the building located at 1001 17th Street, Denver, Colorado 80202 (“Building”). Except for such terms and words as are defined herein, any other capitalized terms and words used herein shall have the meaning attributed to them as set out in the Lease.

 

B.            Tenant desires to lease from Landlord, and Landlord desires to lease to Tenant, additional space in the Building.

 

C.            Landlord and Tenant desire to memorialize the expansion of the Existing Premises, and otherwise desire to amend certain terms of the Lease as provided herein.

 

NOW, THEREFORE, in consideration of the mutual obligations and covenants contained in this Amendment and the Lease, as amended, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

 

1.             In addition to the Existing Premises, Landlord leases to Tenant and Tenant hereby leases from Landlord additional space in the Building consisting of approximately 4,905 rentable square feet of space located on the 8th floor of the Building which will be known as Suite 830 (the “Suite 830 Space”), as shown on Exhibit A hereto and made a part hereof by reference, on all of the terms of the Lease as herein amended, on the following basis:

 

A.            Tenant’s right to possession of the Suite 830 Space and its obligations under the Lease for the Suite 830 Space shall commence on the date Landlord delivers possession of the Suite 830 Space to Tenant (“Expansion Date”) in the condition required hereunder, which Expansion Date is estimated to be on or about December 1, 2017.

 

B.            The Term of the Lease for the Suite 830 Space shall be coterminous with the Term of the Lease for the Existing Premises and shall terminate on the Expiration Date.

 

C.            As of the Expansion Date, all references to Premises in the Lease shall include the Existing Premises and the Suite 830 Space and Tenant’s occupancy of the Suite 830 Space shall be subject to all terms of the Lease as herein specifically amended. Subject to the following terms and conditions, as of the Expansion Date, the Premises described in the Lease shall consist of the Existing Premises and the Suite 830 Space for a total of approximately 43,463 rentable square feet of space as outlined on Exhibit A hereto and made a part hereof by this

 


 

reference. At the request of Landlord or Tenant, the parties will evidence the Expansion Date and such other matters set forth therein in an agreement substantially in the form of Exhibit B attached hereto.

 

D.            For periods prior to the Expansion Date, Tenant shall continue to pay Base Rent and Additional Rent for its use and occupancy of the Existing Premises in accordance with the terms of the Lease. Commencing on Expansion Date, Tenant shall pay Base Rent for its use and occupancy of the Suite 830 Space, which Base Rent shall be in addition to the Base Rent due with respect to the Existing Premises, pursuant to the terms of the Lease and in accordance with the following payment schedule:

 

Period

 

Annual PSF for 
Suite 830 Space

 

Monthly Base Rent
for the Suite 830
Space

 

Expansion Date through November 30, 2018*

 

$

22.00

 

$

8,992.50

*

December 1, 2018 through November 30, 2019

 

$

22.50

 

$

9,196.88

 

December 1, 2019 through November 30, 2020

 

$

23.00

 

$

9,401.25

 

December 1, 2020 through November 30, 2021

 

$

23.50

 

$

9,605.63

 

December 1, 2021 through November 30, 2022

 

$

24.00

 

$

9,810.00

 

December 1, 2022 through Expiration Date

 

$

24.50

 

$

10,014.38

 

 


*Notwithstanding anything to the contrary, Tenant may occupy the Suite 830 Space and Base Rent applicable to the Suite 830 Space (but not Tenant’s Pro Rata Share of Operating Expenses applicable to the Suite 830 Space or any Rent payable for the Existing Premises) will be abated for a period commencing on the Expansion Date and expiring on April 30, 2018.

 

2.             Prior to the Expansion Date, Tenant shall continue to pay Additional Rent for the Existing Premises only in accordance with the terms of the Lease. Commencing on the Expansion Date and for the duration of the Term, in addition to Base Rent, Tenant shall be obligated to pay Additional Rent and all other sums payable by Tenant in accordance with the Lease applicable to both the Suite 830 Space and the Existing Premises, including, without limitation, payment of Tenant’s Pro Rata Share of Operating Expenses. From and after the Expansion Date, Tenant’s Pro Rata Share shall be 6.63%.

 

3.             Subject to the terms hereof, Tenant accepts the Existing Premises and the Suite 830 Space in their “as is” condition and Landlord shall have no obligation to remodel or make or pay for improvements to the Existing Premises or the Suite 830 Space except as otherwise required hereby (it being acknowledged that nothing herein shall limit Landlord’s maintenance and repair obligations described in the Lease).

 

A.            Landlord and Tenant acknowledge that Tenant is in possession of the Existing Premises pursuant to the terms of the Lease and accepts possession of the Existing Premises in its “as is” condition as of the date hereof subject to the provisions of the Lease, as amended hereby.

 

3


 

B.            Landlord shall deliver and Tenant shall accept the Suite 830 Space in its “as is” condition. Landlord shall provide Tenant with an allowance of up to $147,150.00 (the “Expansion Allowance”) to be applied in accordance with the terms hereof.

 

C.            Tenant may utilize the Expansion Allowance only for improvements to the Suite 830 Space (the “Expansion Improvements”) pursuant to the Final Plans (as hereafter defined). The Expansion Allowance may be used only for hard and soft construction costs associated with the design and construction of the Suite 830 Space and toward costs associated with: (a) data/telecommunications cabling and equipment to include security, (b) consultant fees related to design and engineering, and (c) consultant fees related to the design and construction of the Expansion Improvements. Landlord’s payment of the Expansion Allowance shall be subject to all of the following items (i)-(v) being completed to Landlord’s reasonable satisfaction and the Expansion Allowance shall be due and payable by Landlord on the 45th day after the date on which the last of the following items has been completed to Landlord’s reasonable satisfaction: (i) Tenant submits to Landlord an affidavit that all payrolls, bills for materials and any equipment and other indebtedness connected with the Expansion Improvements for which Landlord or its property might in any way be responsible, have been paid or otherwise satisfied; (ii) Tenant submits to Landlord any other data, to the extent and in such form as may be designated by Landlord, which establishes the final cost of the Expansion Improvements and the payment or satisfaction of all Tenant’s construction obligations, such as receipts, releases and waivers of liens arising out of the Expansion Improvements; (iii) Landlord is provided with a certificate by Tenant’s architect reflecting that the Expansion Improvements are complete in accordance with the Final Plans approved by Landlord; (iv) Landlord is provided with all certificates or similar sign-offs necessary for occupancy of the Suite 830 Space issued by the appropriate governmental authority permitting use of the Suite 830 Space in accordance with such approved Final Plans; and (v) Tenant has executed such other close-out documents as may be reasonably requested by Landlord. Tenant shall be responsible for any costs of the Expansion Improvements which are in excess of the Expansion Allowance. Subject to the following, unless otherwise agreed by Landlord and Tenant, the Expansion Allowance shall remain available for Tenant’s use through and until December 31, 2018 (“Outside Date”) and following the Outside Date Tenant shall forfeit to Landlord any remaining unused balance of the Expansion Allowance.

 

D.            Tenant is responsible for the diligent completion of the Expansion Improvements substantially in accordance with the plans and specifications approved by Landlord (the “Final Plans”), and shall be responsible for the construction contract, construction management, the bidding process, and selection of contractors, engineers and construction manager, all subject to Landlord’s consent as provided in the Lease. The Expansion Improvements shall be accomplished by Tenant as an Alteration, as such term is used in the Lease, and shall be subject to all of the terms and conditions of the Lease (including, without limitation, Article 12 thereof). Landlord’s prior written approval, such approval not to be unreasonably withheld, conditioned or delayed, of Tenant’s Final Plans for the Expansion Improvements shall be required and Landlord shall have the right to reasonably approve Tenant’s contractors, subcontractors, engineers and construction managers engaged to construct the Expansion Improvements. Landlord shall approve or provide comments to Tenant’s proposed plans and specifications within 10 business days of receipt. Landlord shall be entitled to a construction management fee equal to 1% of the Tenant’s hard costs of construction for supervision and oversight of the Expansion

 

4


 

Improvements which shall be deducted by Landlord from the Expansion Allowance, as well as any amounts due Landlord in accordance herewith.

 

4.             Effective as of the Expansion Date, Tenant’s Parking Allotment shall be increased to reflect 43 unreserved garage parking spaces (based on 1 unreserved garage parking space for every 1,000 rentable square foot leased by Tenant), the use of which shall be subject to the terms of the Lease, as hereby amended. The Parking Rate currently charged by Landlord as of the date hereof is $195.00 per month per unreserved parking space, $235.00 per month per parking space in the reserved area, and $300.00 per month per designated reserved parking space. The Parking Rates are subject to increase in accordance with the terms of the Lease.

 

5.             Landlord and Tenant represent and warrant to the other that neither has employed any broker with respect to this Lease and has no knowledge of any broker’s involvement in this transaction except Cushman & Wakefield of Colorado, Inc., which is representing Landlord (“Landlord’s Broker”). Each party shall indemnify the other against any expense incurred by a party as a result of any claim for commissions or fees by any other broker, finder, or agent, whether or not meritorious, employed by the other party or claiming by, through, or under the other party, other than Landlord’s Broker. Tenant acknowledges Landlord is not liable for any representations by Landlord’s Broker regarding the Premises, Building, Building Complex, or this Amendment.

 

6.             If there is any conflict between the terms of this Amendment and the terms of the Lease, the terms of this Amendment govern. The Lease as hereby amended is in full force and effect, is hereby ratified and affirmed by the parties, and is binding upon the parties in accordance with its terms. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any one or more counterpart signature pages may be removed from one counterpart of the Amendment and annexed to another counterpart of the Amendment to form a completely executed original instrument without impairing the legal effect of the signature thereon. Signatures transmitted by facsimile or other static electronic form shall be binding as originals on the parties hereto.

 

7.             Time is of the essence herein.

 

[Remainder of Page Intentionally Left Blank — Signatures Follow]

 

5


 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

 

LANDLORD:

TENANT:

 

 

FSP 1001 17TH STREET LLC,

PING IDENTITY CORPORATION,

a Delaware limited liability company

a Delaware corporation

 

 

By:

FSP Property Management LLC, its asset manager

By:

/s/ Aaron LaPoint

 

 

 

 

Print Name: Aaron LaPoint

 

By:

/s/ William S. Friend, Jr.

 

Print Title: CHRO

 

 

William S. Friend, Jr.,

 

 

 

Executive Vice President -

 

 

 

Regional Director

 

 


 

EXHIBIT A
TO
SECOND AMENDMENT TO LEASE AGREEMENT

 

SUITE 830 SPACE

 

 





Exhibit 10.13

 

THIRD AMENDMENT TO LEASE AGREEMENT

 

THIS THIRD AMENDMENT TO LEASE AGREEMENT (“Amendment”) is entered into effective as of the 21st day of August, 2018 (“Effective Date”), by and between FSP 1001 17TH STREET LLC, a Delaware limited liability company (“Landlord”), and PING IDENTITY CORPORATION, a Delaware corporation (“Tenant”).

 

RECITALS

 

A.                                    Landlord’s predecessor-in-interest and Tenant entered into that certain Lease Agreement dated January 21, 2011 (“Base Lease”), as amended by that certain First Amendment to Lease Agreement (“First Amendment”) dated November 12, 2015, and that certain Second Amendment to Lease Agreement dated December 6, 2017 (“Second Amendment”; the Base Lease as amended by the First Amendment and the Second Amendment is referred to herein as the “Lease”), which pertains to those certain premises currently consisting of approximately 43,463 rentable square feet (the “Existing Premises”) known as Suites 100 and 800 (which are together referred to herein as the “Remaining Premises”) and Suite 830 (“Suite 830”) in the building located at 1001 17th Street, Denver, Colorado 80202 (“Building”).  Except for such terms and words as are defined herein, any other capitalized terms and words used herein shall have the meaning attributed to them as set out in the Lease.

 

B.                                    On or about June 30, 2016, Roaring Fork Intermediate, LLC, a Delaware limited liability company (“Roaring Fork”) contributed capital to Tenant, and in connection with the entering of this Amendment, Landlord and Tenant desire to add Roaring Fork as a guarantor of the Lease.

 

C.                                    Tenant desires to surrender a portion of the Existing Premises and lease from Landlord additional space in the Building, and Landlord desires to accept the surrender of a portion of the Existing Premises and lease to Tenant additional space in the Building.

 

D.                                    Landlord and Tenant desire to memorialize the expansion of the Existing Premises and otherwise desire to amend certain terms of the Lease as provided herein.

 

NOW, THEREFORE, in consideration of the mutual obligations and covenants contained in this Amendment and the Lease, as amended, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

 

1.                                      In addition to the Existing Premises, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord additional space in the Building consisting of approximately 32,923 rentable square feet of space which comprise the entire 9th floor of the Building (the “9th Floor Space”), as shown on Exhibit A hereto and made a part hereof by reference, on all of the terms of the Lease as herein amended, on the following basis:

 

A.                                    Tenant’s right to possession of the 9th Floor Space and its obligations under the Lease for the 9th Floor Space shall commence on the date Tenant completes the 9th Floor Improvements (as hereafter defined) in the 9th Floor Space (“Expansion Date”), but in no event later than February 1, 2019.  Tenant shall exercise reasonable diligence to complete the 9th Floor Improvements on or before December 1, 2018.

 

1


 

B.                                    The Term of the Lease for the 9th Floor Space shall be coterminous with the Term of the Lease for the Existing Premises and shall terminate on the Expiration Date; provided, however, the term of the Lease for both the 9th Floor Space and the Existing Premises shall be extended through April 30, 2026 (“New Expiration Date”); provided, further, however, the New Expiration Date shall be extended by one month for each month or partial month that the Expansion Date occurs after December 1, 2018.  For example, if the Expansion Date occurs on January 15, 2019, the New Expiration Date of the Lease shall be extended by two (2) full calendar months to June 30, 2026.  Tenant shall retain the Option to renew the Term of the Lease as provided in Section 2 of the Addendum to the Base Lease, subject to and in accordance with the terms thereof.

 

C.                                    For periods from and after the Effective Date until the Expansion Date, Tenant may occupy Suite 830 in its current “as is” condition, at no rental cost to Tenant, but subject to all of the other terms and conditions of the Lease. Except for the payment of Rent, Suite 830 shall be deemed a part of the Premises for all purposes of the Lease, Landlord shall have no obligation to pay the Expansion Allowance (as defined in the Second Amendment) or otherwise pay for or make improvements to Suite 830. On or before the Expansion Date, Tenant shall surrender Suite 830 to Landlord in broom clean condition and otherwise as required by the Lease and the parties shall have no further rights or obligations under the Second Amendment.

 

D.                                    As of the Expansion Date, all references to Premises in the Lease shall include the Remaining Premises and the 9th Floor Space and Tenant’s occupancy of the 9th Floor Space shall be subject to all terms of the Lease as herein specifically amended. Subject to the following terms and conditions, as of the Expansion Date, the Premises described in the Lease shall consist of the Remaining Premises and the 9th Floor Space for a total of approximately 71,481 rentable square feet of space as outlined on Exhibit A hereto and made a part hereof by this reference. At the request of Landlord or Tenant, the parties will evidence the Expansion Date, the New Expiration Date, and such other matters set forth therein in an agreement substantially in the form of Exhibit B attached hereto.

 

E.                                     For periods prior to the Expansion Date, Tenant shall continue to pay Base Rent and Additional Rent for its use and occupancy of the Existing Premises (subject to Section 1.C above) in accordance with the terms of the Lease, as herein amended. Commencing on Expansion Date, Tenant shall pay Base Rent for its use and occupancy of the 9th Floor Space, which Base Rent shall be in addition to the Base Rent due with respect to the Existing Premises, pursuant to the terms of the Lease and in accordance with the following payment schedule;

 

Period

 

Annual PSF
for 9th Floor
Space

 

Monthly Base Rent
for the 9th Floor

Space

 

Expansion Date through November 30, 2019*

 

$

23.00

 

$

63,102.42

 

December 1, 2019 through November 30, 2020

 

$

23.00

 

$

63,102.42

 

December 1, 2020 through November 30, 2021

 

$

23.50

 

$

64,474.21

 

December 1, 2021 through November 30, 2022

 

$

24.00

 

$

65,846.00

 

December 1, 2022 through November 30, 2023

 

$

24.50

 

$

67,217.79

 

December 1, 2023 through November 30, 2024

 

$

25.00

 

$

68,589.58

 

December 1, 2024 through November 30, 2025

 

$

25.50

 

$

69,961.38

 

December 1, 2025 through New Expiration Date

 

$

26.00

 

$

71,333.17

 

 


*Notwithstanding anything to the contrary, Tenant may occupy the 9th Floor Space and Base Rent applicable to the 9th Floor Space (but not Tenant’s Pro Rata Share of Operating Expenses applicable to the 9th Floor Space or any Rent payable for the Existing Premises) will be abated for a period commencing on the Expansion Date and expiring 12 months thereafter.

 

2


 

F.                                      From and after the Effective Date through the New Expiration Date, Tenant shall pay Base Rent for its use and occupancy of the Remaining Premises, pursuant to the terms of the Lease and in accordance with the following payment schedule:

 

Period

 

Annual PSF
for
Remaining
Premises

 

Monthly Base
Rent for 
Remaining

Premises

 

December 1, 2017 through November 30, 2018

 

$

22.00

 

$

70,689.67

 

December 1, 2018 through November 30, 2019

 

$

22.50

 

$

72,296.25

 

December 1, 2019 through November 30, 2020

 

$

23.00

 

$

73,902.83

 

December 1, 2020 through November 30, 2021

 

$

23.50

 

$

75,509.42

 

December 1, 2021 through November 30, 2022

 

$

24.00

 

$

77,116.00

 

December 1, 2022 through November 30, 2023

 

$

24.50

 

$

78,722.58

 

December 1, 2023 through November 30, 2024

 

$

25.00

 

$

80,329.17

 

December 1, 2024 through November 30, 2025

 

$

25.50

 

$

81,935.75

 

December 1, 2025 through New Expiration Date

 

$

26.00

 

$

83,542.33

 

 

2.                                      Prior to the Expansion date, Tenant shall continue to pay Additional Rent for the Existing Premises in accordance with the terms of the Lease. Commencing on the Expansion Date and for the duration of the term, in addition to Base Rent, Tenant shall be obligated to pay Additional Rent and all other sums payable by Tenant in accordance with the Lease applicable to both the 9th Floor Space and the Remaining Premises, including, without limitation, payment of Tenant’s Pro Rata Share of Operating Expenses. From and after the Expansion Date, Tenant’s Pro Rata Share shall be 10.904%.

 

3.                                      Subject to the terms hereof, Tenant accepts the Existing Premises and the 9th Floor Space in their current “as is” condition as of the date of this Amendment and Landlord shall have no obligation to remodel or make or pay for improvements to the Existing Premises or the 9th Floor Space except as otherwise required herein (it being acknowledged that nothing herein shall limit Landlord’s maintenance and repair obligations described in the Lease), as follows:

 

A.                                    Landlord and Tenant acknowledge that Tenant is in possession of the Existing Premises pursuant to the terms of the Lease and accepts possession of the Existing Premises in its “as is” condition as of the date hereof subject to the provisions of the Lease, as amended hereby. Landlord shall deliver and tenant shall accept the 9th Floor Space in its “as is” condition.

 

3


 

B.                                    Landlord shall provide Tenant with an allowance of up to $4,938.45 to be used for the cost of the initial test-fit of the 9th Floor Space.  Landlord shall provide Tenant with an allowance for improvements to be made to the 9th Floor Space of up to $2,139,995.00 (the “9th Floor Allowance”).  The 9th Floor Allowance may be used only for hard and soft construction costs associated with the design and construction of the 9th Floor Space (the “9th Floor Improvements”) and toward costs associated with: (a) consultant fees related to design and engineering, and (b) consultant fees related to the design and construction of the 9th Floor Improvements. Tenant may use up to $230,461.00 of the 9th Floor Allowance for costs of data/telecommunications cabling and equipment to include security for the 9th Floor Space and for relocation costs.  Landlord shall also provide Tenant with an allowance for improvements to be made to the Remaining Premises of up to $578,370.00 (the “Additional Allowance”) to be applied in accordance with the terms hereof.  Tenant may utilize the Additional Allowance for improvements to the Remaining Premises (the “Remaining Premises Improvements”) or for the 9th Floor Improvements. The 9th Floor Allowance and the Additional Allowance are sometimes referred to herein together as the “Allowance”, Landlord’s payment of the Allowance shall be subject to all of the following items (i)-(v) being completed to Landlord’s reasonable satisfaction and the Allowance shall be due and payable by Landlord on the 45th day after the date on which the last of the following items has been completed to Landlord’s reasonable satisfaction:  (i) Tenant submits to Landlord an affidavit that all payrolls, bills for materials and any equipment and other indebtedness connected with the 9th Floor Improvements and the Remaining Premises Improvements for which Landlord or its property might in any way be responsible, have been paid or otherwise satisfied; (ii) Tenant submits to Landlord any other data, to the extent and in such form as may be designated by Landlord, which establishes the final cost of the 9th Floor Improvements and the Remaining Premises Improvements and the payment or satisfaction of all Tenant’s construction obligations, such as receipts, releases and waivers of liens arising out of the 9th Floor Improvements and the Remaining Premises Improvements; (iii) Landlord is provided with a certificate by Tenant’s architect reflecting that the 9th Floor Improvements and the Remaining Premises Improvements are complete in accordance with the Final Plans approved by Landlord; (iv) Landlord is provided with all certificates or similar sign-offs necessary for occupancy of the 9th Floor Space issued by the appropriate governmental authority permitting use of the 9th Floor Space in accordance with such approved Final Plans; and (v) Tenant has executed such other close-out documents as may be reasonably requested by Landlord. Tenant shall be responsible for any costs of the 9th Floor Improvements and the Remaining Premises Improvements which are in excess of the Allowance. Subject to the following, unless otherwise agreed by Landlord and Tenant, the Allowance shall remain available for Tenant’s use through and until December 31, 2020 (“Outside Date”), and following the Outside Date, Tenant shall forfeit to Landlord any remaining unused balance of the Allowance.

 

C.                                    Tenant is responsible for the diligent completion of the 9th Floor Improvements and the Remaining Premises Improvements substantially in accordance with the plans and specifications approved by Landlord (the “Final Plans”), and shall be responsible for the construction contract, construction management, the bidding process, and selection of architect, contractors, engineers and construction manager, all subject to Landlord’s consent as provided in the Lease.  The 9th Floor Improvements and the Remaining Premises Improvements shall be accomplished by Tenant as an Alteration, as such term is used in the Lease, and shall be subject to all of the terms and conditions of the Lease (including, without limitation, Article 12 thereof). Landlord’s prior written approval, such approval not to be unreasonably withheld, conditioned or

 

4


 

delayed, of Tenant’s Final Plans for the 9th Floor Improvements and the Remaining Premises Improvements shall be required and Landlord shall have the right to reasonably approve Tenant’s architect, contractors, subcontractors, engineers and construction managers engaged to construct the 9th Floor Improvements and the Remaining Premises Improvements. Landlord shall approve or provide comments to Tenant’s proposal plans and specifications within 10 business days of receipt. Landlord shall be entitled to a construction management fee equal to the lesser of: (i) 1% of the Tenant’s hard costs of construction for supervision and oversight of the 9th Floor Improvements and the Remaining Premises Improvements, or (ii) the actual out of pocket costs and expenses incurred by Landlord in connection with the 9th Floor Improvements and the Remaining Premises Improvements, which construction management fee shall be deducted by Landlord from the Allowance, as well as any amounts due Landlord in accordance herewith. Tenant at its sole cost and expense shall remove any of the 9th Floor Improvements as Landlord may designate at the time of approval of the Final Plans and restore the affected area to its original condition at the expiration or earlier termination of the Term of the Lease.  The removal and restoration obligations with respect to future Alterations shall be subject to and in accordance with the terms of the Lease.

 

D.                                    Notwithstanding the foregoing to the contrary, and in addition to the burdens and obligations set forth in Section 10 of the Base Lease, if, as a condition to the issuance of the building permit for Tenant’s or its agent’s construction of any ordinary and customary general office use tenant improvements in the 9th Floor Space with an occupancy density of no more than 1 person for every 100 rentable square feet of general office space leased and 1 person for every 15 rentable square feet for conference and training rooms leased by Tenant (and not for any use other than business office occupancy and without regard to density which may exceed such threshold and without regard to any other alterations or improvements to be completed by or for Tenant in the 9th Floor Space including the 9th Floor Improvements), the applicable building inspector for the City and County of Denver, Colorado delivers written notice to Tenant or its agents requiring the installation of an additional restroom or restrooms on the 9th floor of the Building, then such notice shall be considered an indication that the 9th floor of the Building is not in compliance with the ADA or other applicable laws in effect as of such date (any of the foregoing, a “Non-Compliance Condition”) and Landlord shall comply with the terms hereof so long as Tenant delivers to Landlord written notice (the “Non-Compliance Notice”) of such Non Compliance Condition described hereinabove on or before the date which is ten (10) business days after Tenant becomes aware of such Non-Compliance Condition, but in no event will such Non-Compliance Notice be effective unless the Non-Compliance Notice is delivered on or before the date which is ninety (90) days following the Effective Date (“Non-Compliance Outside Date”).  If Tenant timely delivers a Non-Compliance Notice on or before the Non-Compliance Date, then Tenant’s sole remedy shall be that Landlord shall, at Landlord’s sole cost and expense (which shall not be included in Operating Expenses), do that which is necessary to correct such applicable Non-Compliance Condition within a reasonable period of time after Landlord’s receipt of such applicable Non-Compliance Notice, including installation of one (1) additional unisex restroom but not any additional restrooms) (“Landlord’s Additional Restroom Requirement”) on the 9th floor of the Building in order to remedy such Non-Compliance Condition pursuant to the terms hereof. Landlord shall use all commercially reasonable efforts to correct such applicable Non-Compliance Condition, including working with Tenant to apply for a variance from the applicable Building Department if additional restrooms are required beyond the 1 additional unisex restroom, if applicable, within thirty (30) days (or such longer period thereafter as is reasonably practicable

 

5


 

under the circumstances) after Landlord’s receipts of such applicable Non-Compliance Notice. If Tenant fails to deliver a Non-Compliance Notice to Landlord with respect to an applicable Non-Compliance Condition on or prior to the Non-Compliance Outside Date, then Landlord shall have no obligation to perform the applicable work described above (but the release of such obligation shall not relieve Landlord of its other obligations under the Lease, as hereby amended, including, without limitation, Sections 10 and 11 of the Base Lease). For avoidance of doubt, notwithstanding anything to the contrary herein, whether there exists a Non-Compliance Condition, Tenant shall be responsible for the installation, at Tenant’s cost, of any additional restrooms that may be required in excess of Landlord’s Additional Restroom Requirement.

 

4.                                      As part of the 9th Floor Improvements, Tenant may be permitted to construct a new staircase between the 9th Floor Space and the Remaining Premises on the 8th floor (the “Staircase Work”). All plans and specifications for the Staircase Work shall be subject to Landlord’s prior written approval pursuant to Section 3 above, and Tenant shall be responsible for all costs and expenses Landlord may incur for the review of the Staircase Work plans and specifications by its contractors, architects and engineers. Tenant shall not commence the Staircase Work until it has received all necessary governmental approvals and permits, and shall obtain at its sole cost and expense, all such necessary governmental approvals and permits required for the Staircase Work prior to commencing the Staircase Work. Landlord shall have the right to require its contractors to perform any Staircase Work affecting the structure, including but not limited to any work related to floor or ceiling penetrations and drilling and removal of Building core. Landlord shall have the right to supervise all Staircase Work performed by Tenant’s contractors and to impose such conditions and restrictions on the Staircase Work as may be reasonably necessary to minimize disruption to other tenants and occupants of the Building during the course of the Staircase Work. Tenant at its sole cost and expense shall remove the staircase and restore the affected area to its original condition at the expiration or earlier termination of the Term of the Lease.

 

5.                                      Landlord, at its sole cost and expense, shall provide Tenant with Building standard suite entry signage for the 9th Floor Space. Provided Tenant remains as one of the 4 largest tenants in the Building based on rentable square feet leased, and there is no event of default. Tenant, at its sole cost and expense, shall have the non-exclusive right to place one panel on the office tower monument sign.

 

6.                                      Effective as of the Expansion Date, “Tenant’s Parking Allotment shall be increased to reflect up to 71 unreserved garage parking spaces (based on 1 unreserved garage parking space for every 1,000 rentable square foot leased by Tenant), the use of which shall be subject to the terms of the Lease, as hereby amended.  Tenant shall have the right, by notice to Landlord on or prior to the first anniversary of the Effective Date, to license from Landlord directly or through the operator of the parking garage, if applicable, up to Tenant’s Parking Allotment. Tenant shall forfeit its right to any parking spaces of Tenant’s Parking Allotment not licensed by Tenant within such 1 year anniversary period and Landlord shall be relieved of its obligations to make such parking spaces available thereafter for Tenant’s use; provided, however, so long as parking spaces are available, in Landlord’s sole determination, upon Tenant’s written request. Tenant shall have the right to license available parking spaces to the extent of Tenant’s Perking Allotment. The Parking Rate currently charged by Landlord as of the date hereof is $200.00 per month per unreserved parking space, $250.00 per month per parking space in the reserved area, and $300.00 per month

 

6


 

per designated reserved parking space. The Parking Rates are subject to increase in accordance with the terms of the Lease.

 

7.                                      In accordance with the following provisions, and in addition to the Right of First Refusal set forth in the First Amendment, Landlord grants Tenant a one-time right of refusal (Tenant’s right to lease under this paragraph being referred to as Tenant’s “10th Floor ROFR Space”) to lease any space on the 10th floor of the Building which is either unoccupied and not subject to a lease or currently occupied but with a lease expiring during the Term (the “10th Floor ROFR Space”). Tenant’s 10th Floor ROFR is subordinate to all rights of extension, expansion, or first offer or refusal as to the 10th Floor ROFR Space in favor of other tenants in the Building in place as of the date of this Amendment or other tenants in the Building following the date of this Amendment to the extent Tenant fails to timely exercise the 10th Floor ROFR described herein, and in any event is subordinate to any rights of extension granted to any Third Party Tenant with respect to the 10th Floor ROFR Space offered to Tenant and which Tenant fails to timely exercise pursuant to the terms hereof. If Landlord receives a bona fide third party offer to lease the 10th Floor ROFR Space (or a portion thereof) that Landlord desires to accept or Landlord has received a bona fide third party offer and desires to make a final offer to such third party (each a “Third Party Tenant”), before entering into a binding agreement with the Third Party Tenant, Landlord shall give notice to Tenant of the space included in such final offer (the “3rd Party Offer Space”) and the material terms of such final offer (not including the identity of such third party) (the “3rd Party Offer”) and the terms applicable to leasing 3rd Party Offer Space to Tenant as determined in accordance with the following provision (the “3rd Party Offer Notice”). Tenant has 7 business days after receiving Landlord’s 3rd Party Offer Notice within which to notify Landlord whether it elects to lease such 3rd Party Offer Space on the terms set forth in the 3rd Party Offer Notice, which election must be for all of the 3rd Party Offer Space. If Tenant fails to timely notify Landlord, it will be conclusively presumed that Tenant has waived its 10th Floor ROFR as to the 3rd Party Offer Space and Landlord shall be free to lease the 3rd Party Offer Space to such third party specific to the 3rd Party Offer Notice. The completion of the improvements in and serving the 3rd Party Offer Space and commencement of Tenant’s right to occupy the 3rd Party Offer Space shall be generally determined in accordance with the Work Letter attached to the Lease, with timing to be adjusted to reflect the date on which a space plan is approved for the 3rd Party Offer Space, assuming that such space plan is required to be submitted by Tenant within 30 business days of Tenant’s receipt of the 3rd Party Offer Notice; provided, however, if within 12 months after the date of this Amendment, Tenant notifies Landlord that it elects to lease any portion of the 10th Floor ROFR Space or the Right of First Refusal Space pursuant to this Section 7 or Section 9 of the First Amendment, respectively, then the Base Rent, tenant improvement allowances and abated rent terms shall be the same as for the 9th Floor Space set forth in this Amendment, with the tenant improvement allowances and abated rent pro rated for the remaining term, as appropriate.

 

8.                                      Section 7 of the First Amendment is hereby deleted in its entirety, and replaced with the following in lieu thereof:

 

As of the date of this Amendment, Tenant has on deposit with Landlord the Letter of Credit as financial assurance for the performance of Tenant’s obligations under this Lease currently in the amount of $500,000.00, which Letter of Credit covers certain obligations as specified in the Lease and which shall not be subject to

 

7


 

cancellation or expiration for any reason except as otherwise provided in the Lease. The letter of Credit, or a renewal or substitute therefor approved by Landlord, shall be kept in effect from the date of this Amendment through the 60th day following the New Expiration Date, as may be extended (the “Extended LC Termination Date”) and shall otherwise satisfy the requirements set forth in the Lease. As provided above, the Letter of Credit shall be in the initial amount of $500,000.00 as of the date of this Amendment and thereafter, so long as no Event of Default is continuing under the Lease prior to a reduction date, the amount of the Letter of Credit may be reduced at the request of Tenant by: (i) $200,000.00 as of November 30, 2022, and (ii) $200,000.00 as of November 30, 2023, and subject to the foregoing conditions, from and after November 30, 2024, the Letter of Credit shall be in the amount of $100,000.00. If the Letter or Credit would otherwise expire prior to the Extended LC Termination Date, Tenant shall deliver to Landlord an extension or renewal of the Letter or Credit, or a substitute Letter of Credit.

 

9.                                      As a condition of Landlord entering into this Amendment, concurrent with the execution and delivery of this Amendment and effective as of the date of this Amendment, Tenant shall cause Roaring Fork to execute and deliver to Landlord a Guaranty (the “RF Guaranty”) in a form substantial similar to the form attached hereto as Exhibit C,  guaranteeing Tenant’s obligations under the Lease, together with evidence of the authority and authorization for the for the execution and delivery of the RF Guaranty by Roaring Fork, and evidence of good standing of such entity. The RF Guaranty shall be in addition to and will supplement the Letter of Credit from Tenant.

 

10.                               Landlord and Tenant represent and warrant to the other that neither has employed any broker with respect to this Lease and has no knowledge of any broker’s involvement in this transaction except Cushman & Wakefield of Colorado, Inc., which is representing Landlord (“Landlord’s Broker”), and Newmark Knight Frank, which is representing Tenant (“Tenant’s Broker”). Each party shall indemnify the other against any expense incurred by a party as a result of any claim for commissions or fees by any other broker, finder, or agent, whether or not meritorious, employed by the other party or claiming by, through, or under the other party, other than Landlord’s Broker and Tenant’s Broker, Tenant acknowledges Landlord is not liable for any representations by Landlord’s Broker or Tenant’s Broker regarding the Premises, Building, Building Complex, or this Amendment.

 

11.                               If there is any conflict between the terms of this Amendment and the terms of the Lease, the terms of this Amendment govern. The Lease as hereby amended is in full force and effect, is hereby ratified and affirmed by the parties, and is binding upon the parties in accordance with its terms. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any one or more counterpart signature pages may be removed from one counterpart of the Amendment and annexed to another counterpart of the Amendment to form a completely executed original instrument without impairing the legal effect of the signature thereon. Signatures transmitted by facsimile or other static electronic form shall be binding as originals on the parties hereto.

 

12.                               Time is of the essence herein.

 

8


 

[Remainder of Page Intentionally Left Blank — Signatures Follow]

 

9


 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

 

LANDLORD:

TENANT:

 

 

FSP 1001 17TH STREET LLC,

PING IDENTITY CORPORATION,

a Delaware limited liability company

A Delaware corporation

 

 

 

 

By:

FSP Property Management LLC, its asset manager

By:

/s/ Lauren Romer

 

Print Name:

Lauren Romer

 

By:

/s/ William S. Friend, Jr.

 

Print Title:

Chief Legal Officer

 

William S. Friend, Jr.,

 

 

Executive Vice President —

 

 

Regional Director

 

 

10


 

EXHIBIT A
TO
THIRD AMENDMENT TO LEASE AGREEMENT

 

9th FLOOR SPACE

 

 

11


 

EXHIBIT B
TO
THIRD AMENDMENT TO LEASE AGREEMENT

 

FORM OF COMMENCEMENT DATE MEMORANDUM

 

COMMENCEMENT DATE MEMORANDUM

 

THIS COMMENCEMENT DATE MEMORANDUM is made and entered into as of                     , 201    by and between FSP 1001 17TH STREET LLC, a Delaware limited liability company (“Landlord”), and PING IDENTITY CORPORATION, a Delaware corporation (“Tenant”).

 

RECITALS:

 

1.                                      Landlord and Tenant are parties to a certain Third Amendment to Lease Agreement dated as of          , 2018 (“Amendment”) which amends that certain Lease Agreement dated January 21, 2011, that certain First Amendment to Lease Agreement dated November 12, 2015 and that certain Second Amendment to Lease Agreement dated December 6, 2017, between Landlord and Tenant (collectively, as amended the “Lease”), relating to those certain Existing Premises and the 9th Floor Space located in the building commonly known as 1001 17th Street located at 1001 17th Street, Denver, Colorado 80202. Terms not otherwise defined herein shall have the meanings set forth in the Amendment.

 

2.                                      Landlord and Tenant desire to confirm the Expansion Date, New Expiration Date, the agreed upon rentable square footage of the 9th Floor Space, and such other matters as may be provided hereunder.

 

ACKNOWLEDGMENTS:

 

Pursuant to Section 1.C of the Amendment and in consideration of the facts set forth in the Recitals, Landlord and Tenant acknowledge and agree as follows:

 

1.                                      All capitalized terms not otherwise defined in this Memorandum have the meaning: ascribed to them in the Amendment.

 

2.                                      The Expansion Date under the Lease is [          ].  The New Expiration Date under the Lease is [          ].

 

3.                                      Tenant confirms Landlord has delivered possession of the Suite 830 Space to Tenant and Tenant has accepted the 9th Floor Space.

 

Landlord and Tenant each caused this Memorandum to be executed by its duly authorized representative as of the day and date written above. This Memorandum may be executed in counterparts, each of which is an original and all of which constitute one instrument.

 

[Remainder of Page Intentionally Left Blank — Signatures Follow]

 

12


 

 

LANDLORD:

 

 

 

FSP 1001 17TH STREET, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

 

 

Name:

 

 

Its:

 

 

 

 

TENANT:

 

 

 

PING IDENTITY CORPORATION,

 

a Delaware corporation

 

 

 

 

 

By:

 

 

Name:

 

 

Its:

 

 

13


 

EXHIBIT C
TO
THIRD AMENDMENT TO LEASE AGREEMENT

 

FORM OF GUARANTY OF LEASE

 

GUARANTY OF LEASE

 

THIS GUARANTY OF LEASE (“Guaranty”) is dated as of August    , 2018, and is made and entered into by ROARING FORK INTERMEDIATE, LLC, a Delaware limited liability company (“Guarantor”), to be effective as of the Effective Date set forth in the Amendment.

 

RECITALS

 

A.                                    Pursuant to that certain Lease Agreement dated January 21, 2011, as amended (the “Lease”), by and between FSP 1001 17TH STREET LLC, a Delaware limited liability company (“Landlord”), and PING IDENTITY CORPORATION, a Delaware corporation (“Tenant”), Landlord leased to Tenant certain Premises at the real property located at 1001 17th Street, Denver, Colorado 80202. Initially capitalized words not otherwise defined herein have the meaning set forth in the Lease, as modified by that certain Third Amendment Lease Agreement (the “Amendment”).

 

B.                                    The Guarantor will be benefited if Tenant continues to lease the Premises from Landlord, because Guarantor has an interest, directly or indirectly, in the lease transaction.

 

C.                                    Landlord has declined to execute or deliver the Amendment unless Guarantor unconditionally guarantees Tenant’s obligations under the Lease pursuant to this Guaranty.

 

D.                                    Unless otherwise defined in this Guaranty, all capitalized terms used in this Guaranty have the same definitions as are set forth in the Lease.

 

AGREEMENT

 

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor agrees, covenants, represents and warrants as set forth below.

 

1.                                      Guaranty.  Guarantor hereby unconditionally guarantees the timely payment and performance of all rent, charges, and obligations of Tenant under the Lease and all other documents evidencing or securing the obligations under the Lease, including, without limitation, Tenant’s obligations to pay all Base Rent and Additional Rent and to perform all maintenance and indemnity obligations under the Lease (collectively, the “Guarantied Obligations”).  This Guaranty is an absolute guaranty of payment and performance and not of collection. This Guaranty will survive the termination of the Lease and will continue in full force and effect with respect to any of Tenant’s obligations under the Lease which are not fully performed upon the termination of the Lease.

 

2.                                      Rights of Landlord.  Guarantor authorizes Landlord to, at any time and from time to time, in Landlord’s discretion, (a) take and hold, and apply, any security for the Guaranteed

 

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Obligations; (b) accept additional or substituted security; (c) subordinate, compromise or release any security; (d) release Tenant or any other person from its liability for all or any part of the Guarantied Obligations; (e) participate in any settlement offered by Tenant or any guarantor, whether in liquidation, reorganization, receivership, bankruptcy or otherwise; (f) release, substitute or add any one or more guarantors or endorsers; (g) assign this Guaranty and/or the Guarantied Obligations in whole or in part; or (h) modify, extend and/or amend the Guarantied Obligations.  Landlord may take any of the foregoing actions upon any terms and conditions as Landlord may elect, without giving notice to Guarantor or obtaining the consent of Guarantor and without affecting the liability of Guarantor to Landlord.

 

3.                                      Independent Obligations.  Guarantor’s obligations under this Guaranty are independent of those of Tenant or of any other guarantor.  Landlord may bring a separate action against Guarantor without proceeding (either before, after or concurrently) against Tenant or any other guarantor or person or any security held by Landlord and without pursuing any other remedy.  Landlord’s rights under this Guaranty shall not be exhausted by any action of Landlord until all of the Guarantied Obligations have been fully performed.

 

4.                                      Waiver of Defenses.  Guarantor waives all of the following, whether created or imposed by or under statute, common law, or otherwise:

 

4.1                               Any right to require Landlord to proceed against Tenant or any other person or any security now or hereafter held by Landlord or to pursue any other remedy whatsoever.

 

4.2                               Any defense based upon any legal disability of Tenant or any guarantor. or any discharge or limitation of the liability of Tenant or any guarantor to Landlord, or any restraint or stay applicable to actions against Tenant or any other guarantor, whether such disability, discharge, limitation, restraint or stay is consensual, or by order of a court or other governmental authority, or arising by operation of law or any liquidation, reorganization, receivership, bankruptcy, insolvency or debtor-relief proceeding, or from any other cause.

 

4.3                               All setoffs, counterclaims, presentment, demand, protest or notice of any kind, except for any notice which may be expressly required by the provisions of this Guaranty.

 

4.4                               Any defense based upon the modification, renewal, extension or other alteration of the Guarantied Obligations, or of the documents executed in connection therewith.

 

4.5                               Any defense based upon the negligence of Landlord, including, without limitation, the failure to file a claim in any bankruptcy of the Tenant or any guarantor.

 

4.6                               Any defense based upon a statute of limitations and any defense based upon Landlord’s delay in enforcing this Guaranty.

 

4.7                               All rights of subrogation, reimbursement, indemnity, all rights to enforce any remedy that Landlord may have against Tenant, and all rights to participate in any security held by Landlord for the Guarantied Obligations until the Guarantied Obligation have been paid and performed in full.

 

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4.8                               Any defense based upon or arising out of any defense that the Tenant or any other person may have to the performance of any part of the Guarantied Obligations other than Landlord’s prior material breach.

 

4.9                               Any defense based upon the death, incapacity, lack of authority or termination of existence or revocation hereof by any person or entity or persons or entities, or the substitution of any party hereto.

 

4.10                        Any defense based upon or related to Guarantor’s lack of knowledge as to Tenant’s financial condition.

 

4.11                        Any and all rights to revoke this Guaranty in whole or in part.

 

4.12                        Any defense based upon any action taken or omitted by Landlord in any bankruptcy or other insolvency proceeding involving Tenant including any election to have Landlord’s claim allowed as secured, partially secured or unsecured, any action taken by the Landlord in connection with a motion to assume, assign or reject the Lease, any extension of credit by the Landlord to the Tenant in any such proceeding, and the taking and holding by the Landlord of any security for any such extension of Credit

 

4.13                        All rights and defenses arising out of an election of remedies by Landlord, even though that election of remedies impairs or destroys Guarantor’s right of subrogation and/or reimbursement against Tenant.

 

5.                                      Bankruptcy.

 

5.1                               Until all of the Guarantied Obligations have been paid and performed in full, Guarantor shall not, without the prior written consent of Landlord, commence, or join with any other person in commencing, any bankruptcy, reorganization, or insolvency proceeding against Tenant.  The obligations of Guarantor under this Guaranty shall not be altered, limited, or affected by any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation, or arrangement of Tenant, or by any defense Tenant may have by reason of any order, decree, or decision of any court or administrative body resulting from any such proceeding.  No limitation upon or stay of the enforcement of any obligation of Tenant by virtue of any such proceeding shall limit or stay Landlord’s enforcement of Guarantor’s payment or performance of such obligation under this Guaranty.  In furtherance of the foregoing, Guarantor agrees that if acceleration of the time for payment of any amount payable by Tenant under the Lease or in respect of the other Guarantied Obligations is stayed for any reason, all such amounts which would be subject to acceleration shall nonetheless be deemed to be accelerated for purposes of this Guaranty and the full amount thereof shall be payable by Guarantor hereunder forthwith upon demand.

 

5.2                               Guarantor shall file in any bankruptcy or other proceeding in which the filing of claims is required or permitted by law all claims that Guarantor may have against Tenant relating to any indebtedness of Tenant to Guarantor, and will upon request assign to Landlord all rights of Guarantor thereunder.  In all such cases, whether in administration, bankruptcy, or otherwise, the person or persons authorized to pay such claim shall pay to Landlord the amount payable on such claim.  Guarantor hereby assigns to Landlord all of the Guarantor’s rights to any such payments

 

16


 

or distributions to which Guarantor would otherwise be entitled; provided, however, that Guarantor’s obligations hereunder shall not be satisfied except to the extent that Landlord receives cash by reason of any such payment or distribution.  If Landlord receives anything hereunder other than cash, the same shall be held as collateral for amounts due under this Guaranty.

 

6.                                      Costs and Expenses.  Guarantor agrees to pay, upon Landlord’s demand, Landlord’s reasonable out-of-pocket costs and expenses, including but not limited to attorneys’ fees, costs and disbursements, incurred in any effort to collect or enforce any of the Guarantied Obligations or this Guaranty, regardless whether any lawsuit is filed, and in the representation of Landlord in any insolvency, bankruptcy, reorganization or similar proceeding relating to Tenant or Guarantor.  Until paid to Landlord, such sums will bear interest from the date such costs and expenses are incurred at the rate set forth in the Lease for past due obligations.  The obligations of the Guarantor under this Section shall include payment of all such costs and expenses incurred by Landlord in enforcing any judgments.

 

7.                                      Reinstatment.  The liability of Guarantor hereunder shall be reinstated and revived, and the rights of Landlord will continue, with respect to any amount at any time paid on account of the Guarantied Obligations which Landlord is thereafter required to restore or return or which is avoided in connection with the bankruptcy, insolvency, or reorganization of Tenant or otherwise, all as though such amount had not been paid.  The determination as to whether any such payment or performance must be restored or returned will be made by Landlord in its sole discretion; provided, however, that if Landlord chooses to contest any such matter, Guarantor agrees to indemnify, defend and hold harmless Landlord from all costs and expenses (including, without limitation, reasonable legal fees and disbursements) of such contest.  Further, upon demand from Landlord, Guarantor will restore or return such payment or performance directly on Landlord’s behalf in furtherance of Guarantor’s obligations hereunder.  Landlord will be under no obligation to return or deliver this Guaranty to Guarantor, notwithstanding the payment of the Guarantied Obligations.  If this Guaranty is nevertheless returned to Guarantor or is otherwise released, then the provisions of this Guaranty shall survive such return of release, and the liability of Guarantor under this Guaranty shall be reinstated and continued under the circumstances provided herein notwithstanding such return or release.

 

8.                                      Subordination.  Any indebtedness of Tenant to Guarantor now or hereafter existing shall be, and such indebtedness hereby is, deferred, postponed and subordinated to payment and performance of the Guarantied Obligations.  Any payment made to Guarantor by Tenant or any third party with respect to the indebtedness subordinated hereunder at any time when an Event of Default exists under the Lease or while any Guarantied Obligations are otherwise then payable or performable shall be held in trust by Guarantor for the benefit of Landlord and shall be turned over to Landlord immediately upon receipt thereof for application by Landlord against the Guarantied Obligations.  Any lien, charge or claim which Guarantor now has or hereafter may have on or to any real or personal property of Tenant (including without limitation any real property subject of the Lease, the personal property located thereon, any rights therein and related thereto, and the revenue and/or income realized therefrom) and any security for any loans, advances or other indebtedness of Tenant to Guarantor, shall be, and hereby is subordinated to the payment and performance of the Guarantied Obligations.

 

17


 

9.                                      Representations and Warranties.  Guarantor, and each of the persons or entities executing this Guaranty as Guarantor individually, makes the following representations and warranties, which are deemed to be continuing representations and warranties until payment and performance in full of the Guarantied Obligations.

 

9.1                               Guarantor has all the requisite power and authority to execute, deliver and be legally bound by this Guaranty on the terms and conditions herein stated.

 

9.2                               Guarantor has all the requisite power and authority to transact any other business with Landlord as necessary to fulfill the terms of this Guaranty.

 

9.3                               This Guaranty constitutes the legal, valid and binding obligations of Guarantor enforceable against Guarantor in accordance with its terms,

 

9.4                               Neither the execution and delivery of this Guaranty nor the consummation of the transaction contemplated hereby will, with or without notice and/or lapse of time, (a) constitute a breach of any of the terms and provisions of any note, contract, document, agreement or undertaking, whether written or oral, to which Guarantor is a party to or to which Guarantor’s property is subject; (b) accelerate or constitute any event entitling the holder of any indebtedness of Guarantor to accelerate the maturity of any such indebtedness; (c) conflict with or result in a breach of any writ, order, injunction or decree against Guarantor of any court or governmental agency or instrumentality; or (d) conflict with or be prohibited by any federal, state, local or other governmental law, statute, rule or regulation.

 

9.5                               No consent of any other person not heretofore obtained and no consent, approval or authorization of any person or entity is required in connection with the valid execution. delivery or performance by Guarantor of this Guaranty.

 

9.6                               Guarantor will receive substantial and material benefits from the continued leasing of the Premises to Tenant and the consideration received by Guarantor for this Guaranty is sufficient in all respects.

 

9.7                               Guarantor presently has and will at all times maintain sufficient assets and tangible net worth to timely pay and perform all of the Guarantied Obligations, and Guarantor will not take any action nor participate in any transaction which would materially impair Guarantor’s ability to so pay and perform the Guarantied Obligations.

 

9.8                               Neither this Guaranty nor any other statement furnished by Guarantor to Landlord in connection with the transactions contemplated hereby (including. without limitation, any financial statements or other business information) contains any untrue statement of material fact or omits to state a material fact necessary in order to make the statements contained herein or therein true and not misleading.

 

10.                               Joint and Several Liability.  The obligations waivers, promises, representations and warranties set forth herein are the joint and several undertakings of each of the persons or entities executing this Guaranty as a Guarantor and of any other guarantors or other persons or entities obligated from time to time with respect to the Guarantied Obligations. Landlord may proceed hereunder against any one or more of said persons or entities without waiving its rights to proceed

 

 

18


 

against any of the others. Any married person who executes this Guaranty agrees that recourse may be had against his or her separate and community property.

 

11.                               Inducement; No Assignment.  Guarantor acknowledges that the undertakings given in this Guaranty are given in consideration of Landlord’s entering into the Lease and that Landlord would not enter into the Lease but for the execution and delivery of this Guaranty. Guarantor’s obligations hereunder are personal to Guarantor and Guarantor may not assign or delegate any of its obligations under this Guaranty without Landlord’s prior written consent, which consent may be withheld in Landlord’s sole and absolute discretion.

 

12.                               Guarantor Information.  Guarantor will promptly supply such financial statements and business information regarding Guarantor and may reasonably be requested from time to time by Landlord or any lender or prospective purchaser of Landlord for the purpose of evaluating the creditworthiness of Guarantor and Guarantor’s ability to perform its obligations under this Guaranty.

 

13.                               Tenant’s Financial Condition.  Guarantor is relying upon its own knowledge and has made such investigation as Guarantor has deemed necessary with respect to Tenant’s financial condition. Guarantor assumes full responsibility for keeping fully informed of the financial condition of Tenant and all other circumstances affecting Tenant’s ability to pay and preform its obligations under the Lease, and agrees that Landlord will have no duty to report to Guarantor any information which Landlord receives about Tenant’s financial condition or any circumstances bearing on Tenant’s ability to perform. Guarantor agrees that Landlord has made no representations or assurances regarding Tenant’s financial condition or Tenant’s ability to pay and perform Tenant’s obligations under the Lease.

 

14.                               Default.  The occurrence of any one or more of the following events shall, at the election of Landlord, he deemed an event of default under this Guaranty: (a) Guarantor fails to pay any monetary Guarantied Obligation within five days after demand from Landlord; (b) Guarantor fails to perform any non-monetary Guarantied Obligation within 15 days after demand therefor from Landlord (or, if Guarantor is not able through the use of commercially reasonable efforts to perform such Guarantied Obligation within a 15 pay period, if Guarantor does not commence to perform such obligation within such 15 day period and diligently pursue such performance to completion within an additional 60 days after the expiration of the initial 15 day period); (c) Guarantor fails or neglects to perform, keep or observe any other term, provision, agreement or covenant contained in this Guaranty; (d) the commencement of any liquidation, reorganization, receivership, bankruptcy, assignment for the benefit of creditors or other similar proceeding by or against Guarantor; (e) if any representation or warranty made in this Guaranty shall be or become false in any material respect; or (f) the death, legal incapacity, dissolution or termination of the Guarantor.  Upon the occurrence of an event of default under this Guaranty, at the option of Landlord, the Guarantied Obligations shall be accelerated and shall all be due and payable and enforceable against Guarantor (regardless whether the Guarantied Obligations are then due and payable under the Lease or otherwise) and Landlord may, in its sole discretion, in addition to any other right or remedy provided by law or at equity, all of which are cumulative and non-exclusive, proceed to suit against the Guarantor.

 

19


 

15.                               Transfer by Landlord.  Landlord may sell, assign, or otherwise transfer its interest in the Premises, the Lease or this Guaranty at any time.  If Landlord transfers (other than for collateral security purposes) the ownership of Landlord’s interest in the Lease, this Guaranty shall, unless Landlord elects otherwise in writing, automatically apply in favor of the transferee with respect to all Guarantied Obligations arising or accruing from and after the date of the transfer.  In addition, this Guaranty shall remain in full force and effect in favor of the transferor with respect to all Guarantied Obligations arising or accruing under the Lease prior to the date of the transfer including, without limitation, all Guarantied Obligations relating to Tenant’s indemnity and insurance obligations (and similar obligations) under the Lease with respect to matters arising or accruing during the transferor’s period of ownership.

 

16.                               Severability. If any one or more of the covenants, provisions or terms of this Guaranty is, in any respect, held to be invalid, illegal or unenforceable for any reason, the remaining portion thereof and all other covenants, conditions, provisions, and terms of this Guaranty will not be affected by such holding, but will remain valid and in force to the fullest extent permitted by law.

 

17.                               Notices.  All notices, demands and other communications with, to, from or upon the Guarantor and the Landlord required or permitted hereunder shall be in writing, addressed to the parties at their respective addresses as follows: (a) with respect to Landlord, to the notice address(es) for Landlord under the Lease; and (b) with respect to Guarantor, unless a separate notice address is specified on the signature page of this Guaranty, to Guarantor in care of Tenant at the notice address(es) for Tenant under the Lease; or (c) as to either, at such other address as shall be designated in a written notice to the other complying with the terms of this Section.  All such communications shall be deemed effective upon the earliest of (i) actual delivery by personal delivery; (ii) four business days following deposit, first class postage prepaid, with the United States mail; (iii) if sent by certified postage prepaid mail, upon the earliest to occur of (A) four business days following deposit thereof in the United States mail, or (B) receipt (or refusal to accept delivery); or (iv) on the next business day after deposit with an overnight air courier with request for next business day delivery.

 

18.                               Miscellaneous.  No provision of this Guaranty or Landlord’s rights hereunder may be waived or modified nor can Guarantor be released from its obligations hereunder except by a writing executed by Landlord.  No such waiver shall be applicable except in the specific instance for which given. No delay or failure by Landlord to exercise any right or remedy against Tenant or Guarantor will be construed as a waiver of that right or remedy. All remedies of Landlord against Tenant and Guarantor are cumulative. This Guaranty shall be governed by and construed under the Laws of the State in which the Premises. The provisions of this Guaranty will bind and benefit the heirs, executors, administrators, legal representatives, successors and assigns of Guarantor and Landlord.  The term “Tenant” will mean not only the Tenant named herein but also any other person or entity at any time occupying all or any portion of the Premises or assuming or otherwise becoming liable (other than as a guarantor) for all or any part of the Guarantied Obligations.  This Guaranty constitutes the entire agreement between Guarantor and Landlord with respect to its subject matter, and supersedes all prior or contemporaneous agreements, representations and understandings.

 

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All headings in this Guaranty are for convenience only and shall be disregarded in construing the substantive provisions of this Guaranty.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, this Guaranty has been duly executed on behalf of Guarantor and delivered to Landlord as of the date set forth above, to be effective as of the Effective Date set forth in the Lease.

 

 

GUARANTOR:

 

 

 

ROARING FORK INTERMEDIATE, LLC,

 

a Delaware limited liability company

 

 

 

By:

 

 

Print Name:

 

 

Title:

 

 

 

 

Notice Address for Guarantor:

 

 

 

 

 

 

 

Attention:

 

 

Telephone:

 

 

Facsimile:

 

 

22





Exhibit 10.14

 

FOURTH AMENDMENT TO LEASE AGREEMENT

 

THIS FOURTH AMENDMENT TO LEASE AGREEMENT (“Amendment”) is entered into effective as of the 1st day of February, 2019 (“Effective Date”), by and between FSP 1001 17TH STREET LLC, a Delaware limited liability company (“Landlord”), and PING IDENTITY CORPORATION, a Delaware corporation (“Tenant”).

 

RECITALS

 

A.                                    Landlord’s predecessor-in-interest and Tenant entered into that certain Lease Agreement dated January 21, 2011 (“Base Lease”), as amended by that certain First Amendment to Lease Agreement (“First Amendment”) dated November 12, 2015, that certain Second Amendment to Lease Agreement (“Second Amendment”) dated December 6, 2017, and that certain Third Amendment to Lease Agreement (“Third Amendment”) dated August 21, 2018. The Base Lease as amended by the First Amendment, the Second Amendment and the Third Amendment is referred to herein as the “Lease”, which pertains to those certain premises consisting of approximately 76,386 rentable square feet of space (the “Premises”) known as Suite 830 (“Suite 830”), Suite 100, Suite 800, and the 9th floor in the building located at 1001 17th Street, Denver, Colorado 80202 (“Building”). Except for such terms and words as are defined herein, any other capitalized terms and words used herein shall have the meaning attributed to them as set out in the Lease.

 

B.                                    Tenant’s obligations under the Lease are guaranteed by Roaring Fork Intermediate, LLC, a Delaware limited liability company (“Guarantor”), pursuant to that certain Guaranty of Lease dated August 20, 2018 (“Guaranty”).

 

C.                                    Pursuant to the Lease, the Term of the Lease for Suite 830 expires on the Expansion Date (as defined in the Third Amendment).

 

D.                                    Tenant desires to extend its occupancy of Suite 830 for an additional six (6) months after the Expansion Date, and Landlord agrees to extend Tenant’s occupancy of Suite 830 subject to and upon the terms and conditions set forth herein.

 

E.                                     Landlord and Tenant desire to memorialize the extension of the Term of the Lease for Suite 830, and otherwise desire to amend certain terms of the Lease as provided herein.

 

NOW, THEREFORE, in consideration of the mutual obligations and covenants contained in this Amendment and the Lease, as amended, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

 

1.                                      The Term of the Lease for Suite 830 is hereby extended for an additional 6 months (the “Suite 830 Extension Period”), commencing on February 1, 2019, and expiring on July 31, 2019 (“Suite 830 Expiration Date”). Tenant has no right to extend or renew the Term of the Lease for Suite 830, and any options to extend or renew the Term of the Lease, including without limitation those set forth in Section 2 of the Addendum to the Base Lease, shall not apply to Suite 830.

 


 

2.                                      Landlord and Tenant acknowledge that Tenant is in possession of the Premises pursuant to the terms of the Lease. Landlord has no obligation to make improvements or alterations to Premises, and Tenant accepts the Premises in its “as is” condition as of the date hereof and for the duration of the Term.

 

3.                                      During the Suite 830 Extension Period, in addition to Base Rent payable for the other portions of the Premises as scheduled pursuant to the Lease, Tenant shall pay Base Rent for its use and occupancy of Suite 830, pursuant to the terms of the Lease and in accordance with the following payment schedule:

 

Period

 

Annual PSF
for Suite 830

 

Monthly Base Rent
for Suite 830

 

February 1, 2019 through July 31, 2019

 

$

22.50

 

$

9,196.88

 

 

4.                                      During the Suite 830 Extension Period, in addition to Base Rent and all other sums payable by Tenant pursuant to the Lease, Tenant shall be obligated to pay Additional Rent and all other sums payable by Tenant in accordance with the Lease applicable to Suite 830, including without limitation, Tenant’s Pro Rata Share of Operating Expenses. During the Suite 830 Extension Period, Tenant’s Pro Rata Share for the Premises shall be 11.652%.

 

5.                                      On or before the Suite 830 Expiration Date, Tenant shall surrender Suite 830 to Landlord in broom clean condition and otherwise as required by the Lease as provided in the Third Amendment. In the event Tenant fails to timely surrender Suite 830 as required herein, such holding over shall be subject to the terms and provisions of the Lease, including without limitation Sections 17 and Section 24 of the Base Lease. From and after the Suite 830 Expiration Date, the Premises shall consist of approximately 71,481 rentable square feet of space, and Tenant’s Pro Rata Share shall be 10.904%.

 

6.                                      Landlord and Tenant represent and warrant to the other that neither has employed any broker with respect to this Lease and has no knowledge of any brokers involvement in this transaction except Cushman & Wakefield of Colorado, Inc., which is representing Landlord (“Landlord’s Broker”), and Newmark Knight Frank, which is representing Tenant (“Tenant’s Broker”). Each party shall indemnify the other against any expense incurred by a party as a result of any claim for commissions or fees by any other broker, finder, or agent, whether or not meritorious, employed by the other party or claiming by, through, or under the other party, other than Landlord’s Broker and Tenant’s Broker. Tenant acknowledges Landlord is not liable for any representations by Landlord’s Broker or Tenant’s Broker regarding the Premises, Building, Building Complex, or this Amendment.

 

7.                                      If there is any conflict between the terms of this Amendment and the terms of the Lease, the terms of this Amendment govern. The Lease as hereby amended is in full force and effect, is hereby ratified and affirmed by the parties, and is binding upon the parties in accordance with its terms. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any one or more counterpart signature pages may be removed from one counterpart of the Amendment and annexed to another counterpart of the Amendment to form a completely executed original

 

2


 

instrument without impairing the legal effect of the signature thereon. Signatures transmitted by facsimile or other static electronic form shall be binding as originals on the parties hereto.

 

8.                                      Time is of the essence herein.

 

[Remainder of Page Intentionally Left Blank — Signatures Follow]

 

3


 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

 

LANDLORD:

TENANT:

 

 

FSP 1001 17TH STREET LLC,

PING IDENTITY CORPORATION,

a Delaware limited liability company

a Delaware corporation

 

 

By:

FSP Property Management LLC, its asset manager

By:

/s/ Lauren Romer

 

Print Name: Lauren Romer

By:

/s/ William S. Friend, Jr.

 

Print Title: Chief Legal Officer

 

William S. Friend, Jr.,

 

 

Executive Vice President -

 

 

Regional Director

 

 

 

 

GUARANTOR’S ACKNOWLEDGEMENT

 

By its signature below, the undersigned Guarantor acknowledges and approves the modifications of the Lease and the Guaranty as set forth in this Amendment and agree that the obligations under the Guaranty, including, but not limited to, the obligation to remain primarily and directly liable for payment obligations under the Lease, remain in full force and effect as to obligations arising under the Lease, as amended pursuant to this Amendment.

 

 

GUARANTOR:

 

 

 

ROARING FORK INTERMEDIATE, LLC,

 

a Delaware limited liability company

 

 

 

By:

/s/ Andre Durand

 

Print Name: Andre Durand

 

Title: Manager

 





Exhibit 10.15

 

FIFTH AMENDMENT TO LEASE AGREEMENT

 

THIS FIFTH AMENDMENT TO LEASE AGREEMENT (“Amendment”) is entered into as of 18th day of March, 2019 (“Effective Date”), by and between FSP 1001 17TH STREET LLC, a Delaware limited liability company (“Landlord”), and PING IDENTITY CORPORATION, a Delaware corporation (“Tenant”).

 

RECITALS

 

A.                                    Landlord’s predecessor-in-interest and Tenant entered into that certain Lease Agreement dated January 21, 2011 (“Base Lease”), as amended by that certain First Amendment to Lease Agreement (“First Amendment”) dated November 12, 2015, that certain Second Amendment to Lease Agreement (“Second Amendment”) dated December 6, 2017, that certain Third Amendment to Lease Agreement (“Third Amendment”) dated August 21, 2018, and that certain Fourth Amendment to Lease Agreement (“Fourth Amendment”) dated effective February 1, 2019. The Base Lease as amended by the First Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment is referred to herein as the “Lease”, which pertains to those certain premises consisting of approximately 76,386 rentable square feet of space (the “Existing Premises”) located in Suite 830 (“Suite 830”), Suite 100, Suite 800, and the 9th floor in the building located at 1001 17th Street, Denver, Colorado 80202 (“Building”). Except for such terms and words as are defined herein, any other capitalized terms and words used herein shall have the meaning attributed to them as set out in the Lease.

 

B.                                    Tenant desires to lease from Landlord additional space in the Building, and Landlord desires to lease to Tenant additional space in the Building.

 

C.                                    The Lease is guaranteed to by Roaring Fork Intermediate, LLC, a Delaware limited liability company (“Guarantor”), pursuant to that certain Guaranty of Lease dated August 26, 2018 (“Guaranty”).

 

D.                                    Landlord and Tenant desire to memorialize the expansion of the Existing Premises, and otherwise desire to amend certain terms of the Lease as provided herein.

 

NOW, THEREFORE, in consideration of the mutual obligations and covenants contained in this Amendment and the Lease, as amended, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

 

1.                                      The Term of the Lease for Suite 830 is scheduled to expire on July 31, 2019 (the “Suite 830 Expiration Date”). Thereafter, the Existing Premises shall consist of approximately 71,481 rentable square feet comprised of Suite 100, Suite 800 and the 9th Floor of the Building. On or before the Suite 830 Expiration Date, Tenant shall surrender Suite 830 to Landlord in broom clean condition and otherwise as required by the Lease as provided in the Third Amendment and the Fourth Amendment. If Tenant fails to timely surrender Suite 830 as required therein, such holding over shall continue to be subject to the terms and provisions of the Lease, including without limitation Sections 17 and Section 24 of the Base Lease.

 

2.                                      In addition to the Existing Premises, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord additional space in the Building consisting of approximately 18,375

 


 

rentable square feet of space known as Suite 1100 on the 11th floor of the Building (“Suite 1100”), as shown on Exhibit A hereto and made part hereof by reference, on all the terms of the Lease as herein amended, on the following basis:

 

A.                                    Landlord will use commercially reasonable efforts to deliver Suite 1100 to Tenant on or before June 1, 2019 (the “Estimated Delivery Date”) for the purpose or Tenant conducting the Suite 1100 Improvements (as hereinafter defined). The actual date of delivery of Suite 1100 to Tenant, whether such occurs before or after the Estimated Delivery Date, shall be referred to herein as the “Delivery Date”. Notwithstanding the foregoing, if Landlord is delayed in delivering possession of Suite 1100 to Tenant by the Estimated Delivery Date due to any reason, including the holdover or unlawful possession of such space by any third party, or for any other reason, such delay shall not be a default by Landlord, render the Lease or this Amendment void or voidable, or otherwise render Landlord liable for damages, and tenant’s sole and exclusive remedy for any such delay shall be a resulting day for day postponement of the Delivery Date (and a corresponding day for day postponement of the Suite 1100 Expansion Date, as hereinafter defined). Tenant’s access to Suite 1100 between the Delivery Date and the Suite 1100 Expansion Date shall be subject to the terms and conditions of the Lease, as amended hereby, except that Tenant shall not be required to pay Base Rent and Tenant’s Pro Rata Share of Operating Expenses for any days of such early access. Tenant’s right to possession and use of Suite 1100 for the Permitted Use and its obligations under the Lease for Suite 1100, subject to the foregoing terms and conditions, shall commence on the earlier to occur of (“Suite 1100 Expansion Date”) (i) the date Tenant completes the Suite 1100 Improvements (as hereinafter defined) in Suite 1100, (ii) October 1, 2019, or (iii) the date Tenant takes possession of any portion of Suite 1100 and uses any portion of Suite 1100 for the Permitted Use.

 

B.                                    Following the Suite 1100 Expansion Date, the Term of the Lease for Suite 1100 shall be coterminous with the Term of the Lease for the Existing Premises and shall terminate on the Expiration Date. Tenant shall retain the Option to renew the Term of the Lease for the entirety of the then-existing Premises in accordance with the procedure set forth in Section 2 of the Addendum to the Base Lease, subject to and in accordance with the terms thereof.

 

C.                                    As of the Suite 1100 Expansion Date, all references to Premises in the Lease shall include the Existing Premises inclusive of the Remaining Premises (as defined in the Third Amendment), Suite 1100, and to the extent applicable, Suite 830, and Tenant’s occupancy of Suite 1100 shall be subject to all terms of the Lease as herein specifically amended. Subject to the following terms and conditions, as of the Suite 1100 Expansion Date, the Premises described in the Lease shall consist of the Existing Premises (less Suite 830 as applicable) and Suite 1100 for a total of approximately 89,856 rentable square feet of space as outlined on Exhibit A hereto and made a part hereof by this reference. At the request of Landlord or Tenant, the parties will evidence the Suite 1100 Expansion Date and such other matters set forth therein in an agreement substantially in the form of Exhibit B attached hereto.

 

D.                                    For periods prior to the Suite 1100 Expansion Date, Tenant shall continue to pay Base Rent and Additional Rent for its use and occupancy of the Existing Premises in accordance with the terms of the Lease, as herein amended. Commencing on Suite 1100 Expansion Date, Tenant shall pay Base Rent for its use and occupancy of Suite 1100, which Base Rent shall

 

2


 

be in addition to the Base Rent due with respect to the Existing Premises, pursuant to the terms of the Lease and in accordance with the following payment schedule:

 

Period

 

Annual PSF
for Suite 110

 

Monthly Base Rent
for Suite 1100

 

Suite 1100 Expansion Date through November 30, 2020*

 

$

23.00

 

$

35,218.75

 

December 1, 2020 through November 30, 2021

 

$

23.50

 

$

35,984.38

 

December 1, 2021 through November 30, 2022

 

$

24.00

 

$

36,750.00

 

December 1, 2022 through November 30, 2023

 

$

24.50

 

$

37,515.63

 

December 1, 2023 through November 30, 2024

 

$

25.00

 

$

38,281.25

 

December 1, 2024 through November 30, 2025

 

$

25.50

 

$

39,046.88

 

December 1, 2015 through June 30, 2026

 

$

26.00

 

$

39,812.50

 

 


*  Notwithstanding anything to the contrary. Tenant may occupy Suite 1100 and Base Rent applicable to Suite 1100 (but not Tenant’s Pro Rata Share of Operating Expenses applicable to Suite 1100 or any Rent payable for the Existing Promises) will be abated for a period commencing on the Suite 1100 Expansion Date and expiring 150 calendar days thereafter.

 

3.                                      Prior to the Suite 1100 Expansion Date, Tenant shall continue to pay Additional Rent for the Existing Premises in accordance with the terms of the Lease. Commencing on the Suite 1100 Expansion Date and for the duration of the Term, in addition to Base Rent, Tenant shall be obligated to pay Additional Rent and all other sums payable by Tenant in accordance with the Lease applicable to both the Existing Premises and Suite 1100, including, without limitation, payment of tenants Pro Rata Share of Operating Expenses. From and after the Suite 1100 Expansion Date, Tenant’s Pro Rata Share shall be 13.707%.

 

4.                                      Subject to the terms hereof, Tenant accepts the Existing Premises and Suite 1100 in their current “as is” condition as of the date of this Amendment and Landlord shall have no obligation to remodel or make or pay for improvements to the Existing Premises or Suite 1100 except as otherwise required herein (it being acknowledged that nothing herein shall limit Landlord’s maintenance and repair obligations described in the Lease), as follows:

 

A.                                    Landlord and Tenant acknowledge that Tenant is in possession of the Existing Premises pursuant to the terms of the Lease and accepts possession or the Existing Premises in its “as is” condition as of the date hereof subject to the provisions of the Lease, as amended hereby. Landlord shall deliver and Tenant shall accept Suite 1100 in its “as is” condition.

 

B.                                    Landlord shall provide Tenant with an allowance of up to $2,756.25 to be used for the cost of the initial test-fit of Suite 1100. Landlord shall provide Tenant with an allowance for improvements to be made to Suite 1100 of up to $1,084,125.00 (the “Allowance”). The Allowance may be used only for hard and soft construction costs associated with the design and construction of Suite 1100 (the “Suite 1100 Improvements”) and toward costs associated with: (a) consultant fees related to design and engineering, and (b) consultant fees related to the design and construction of the Suite 1100 Improvements. Tenant may use up to $110,250.00 of the Allowance for moving expenses and cabling costs. Landlord’s payment of the Allowance shall be subject to all of the following items (i)-(v) being completed to Landlord’s reasonable satisfaction and the Allowance shall be due and payable by Landlord on the 45th day after the date on which

 

3


 

the last of the following items has been completed to Landlord’s reasonable satisfaction: (i) Tenant submits to Landlord an affidavit that all payrolls, bills for materials and any equipment and other indebtedness connected with the Suite 1100 Improvements for which Landlord or its property might in any way be responsible, have been paid or otherwise satisfied; (ii) Tenant submits to Landlord any other data, to the extent and in such form as may be designated by Landlord, which establishes the final cost of the Suite 1100 Improvements and the payment or satisfaction of all Tenant’s construction obligations, such as receipts, releases and waivers of liens arising out of the Suite 1100 Improvements; (iii) Landlord is provided with a certificate by Tenant’s architect reflecting that the Suite 1100 Improvements are complete in accordance will the Final Plans approved by Landlord; (iv) Landlord is provided with all certificates or similar sign-offs necessary for occupancy of Suite 1100 issued by the appropriate governmental authority permitting use of Suite 1100 in accordance with such approved Final Plans; and (v) Tenant has executed such other close-out documents as may be reasonably requested by Landlord. Tenant shall be responsible for any costs of the Suite 1100 Improvements which are in excess of the Allowance. Subject to the following, unless otherwise agreed by Landlord and Tenant, the Allowance shall remain available for Tenant’s use through and until December 31, 2020 (“Outside Date”), and following the Outside Date, if not previously requested, Tenant shall forfeit to Landlord any remaining unused balance of the Allowance. If following substantial completion of the Suite 1100 Improvements and prior to the Outside Date, there remains an outstanding balance of the Allowance (the “Unused Allowance”), then Tenant may use the Unused Allowance for hard and soft construction costs associated with the design and construction (the “Excess Improvements”) of other portions of the Premises, as may then exist, and such Excess Improvements shall be accomplished by Tenant as an Alteration, as such term is used in the Lease, and shall be subject to all of the terms and conditions of the Lease (including, without limitation, Article 12 thereof); provided, however, in no event may Tenant use any portion of the Unused Allowance nor may the Unused Allowance be applied towards moving expenses or as a credit against future Rent payments.

 

C.                                    Tenant is responsible for the diligent completion of the Suite 1100 Improvements substantially in accordance with the plans and specifications approved by Landlord (the “Final Plans”), and shall be responsible for the construction contract, construction management, the bidding process, and selection of architect, contractors, engineers and construction manager, all subject to Landlord’s consent as provided in the Lease. The Suite 1100 Improvements shall be accomplished by Tenant as an Alteration, as such term is used in the Lease, and shall be subject to all of the terms and conditions of the Lease (including, without limitation, Article 12 thereof). Landlord’s prior written approval, such approval not to be unreasonably withheld, conditioned or delayed, of Tenant’s Final Plans for the Suite 1100 Improvements shall be required and Landlord shall have the right to reasonably approve Tenant’s architect, contractors, subcontractors, engineers and construction managers engaged to construct the Suite 1100 Improvements. Landlord shall approve or provide comments to Tenant’s proposed plans and specifications within 10 business days of receipt. Landlord shall be entitled to a construction management fee equal to the lesser of: (i) 1% of the Tenant’s hard costs of construction for supervision and oversight of the Suite 1100 Improvements, or (ii) the actual out of pocket costs and expenses incurred by Landlord in connection with the Suite 1100 Improvements, which construction management fee shall be deducted by Landlord from the Allowance, as well as any amounts due Landlord in accordance herewith. Tenant at its sole cost and expense shall remove any of the Suite 1100 Improvements as Landlord may designate at the time of approval of the Final Plans and restore the affected area to its original condition at the expiration or earlier termination

 

4


 

of the Term of the Lease. The removal and restoration obligations with respect to future Alterations shall be subject to and in accordance with the terms of the Lease.

 

5.                                      Effective as of the Suite 1100 Expansion Date, Tenant’s Parking Allotment shall be increased by 19 garage parking spaces (the “Suite 1100 Allotment”), based on 1 unreserved garage parking space for every 1,000 rentable square foot leased by Tenant, the use of which shall be subject to the terms of the Lease, as hereby amended. Tenant shall have the right, by notice to Landlord on or prior to October 1, 2020, to license from Landlord directly or through the operator of the parking garage, if applicable, all or any portion of the Suite 1100 Allotment, and up to 10 of the parking spaces in the Suite 1100 Allotment may be designated reserved parking spaces (collectively, the “Reserved Parking Spaces”) with any remaining parking spaces being deemed to be unreserved parking spaces. Any Reserved Parking Spaces licensed by Tenant shall be located on Level P2 or Level P3 of the parking garage structure (the “Garage”) in the Building Complex, and Landlord shall designate on such parking levels of the Garage the location of any such Reserved Parking Spaces in its reasonable determination, it being acknowledged that the Reserved Parking Space may not be contiguous to each other. Tenant shall forfeit its right to any parking spaces of Suite 1100 Allotment not licensed by Tenant on or before such date and Landlord shall be relieved of its obligations to make such parking spaces available thereafter for Tenant’s use; provided, however, so long as parking spaces area available, in Landlord’s sole determination, upon Tenant’s written request, Landlord shall use commercially reasonable efforts to make available for Tenant to license any such available parking spaces up to a maximum amount of Tenant’s Parking Allotment. The Parking Rate currently charged by Landlord as of the date hereof is $200.00 per month per unreserved parking space, $250.00 per month per parking space in the reserved area, and $300.00 per month per designed reserved parking space. The Parking Rates are subject to increase in accordance with the terms of the Lease.

 

6.                                      In accordance with the following provisions, and in addition to the Rights of First Refusal set forth in the First Amendment and the Third Amendment, from and after the Suite 1100 Expansion Date, Landlord grants Tenant a one-time right of refusal (Tenant’s right to lease under this paragraph being referred to as Tenant’s “11th Floor ROFR”) to lease any space on the 11th floor of the Building which is either unoccupied and not subject to a lease or currently occupied but with a lease expiring during the Term (the “11th Floor ROFR Space”). Tenant’s 11th Floor ROFR is subordinate to all rights of extension, expansion, or first offer or refusal as to the 11th Floor ROFR Space in favor of other tenants in the Building in place as of the Suite 1100 Expansion Date or other tenants in the Building following the Suite 1100 Expansion Date to the extent Tenant fails to timely exercise the 11th Floor ROFR described herein, and in any event is subordinate to any rights of extension granted to any Third Party Tenant with respect to the 11th Floor ROFR Space offered to Tenant and which Tenant fails to timely exercise pursuant to the terms hereof. If Landlord receives a bona fide third party offer to lease the 11th Floor ROFR Space (or a portion thereof) that Landlord desires to accept or Landlord has received a bona fide third party offer and desires to make a final offer to such third party (each a “Third Party Tenant”), before entering into a binding agreement with the Third Party Tenant, Landlord shall give notice to Tenant of the space included in such final offer (the “3rd Party Offer Space”) and the material terms of such final offer (not including the identity of such third party) (the “3rd Party Offer”) and the terms applicable to leasing 3rd Party Offer Space to Tenant as determined in accordance with the following provisions (the “3rd Party Offer Notice”). Tenant has 7 business days after receiving Landlord’s 3rd Party Offer Notice within which to notify Landlord whether it elects to lease such 3rd Party Offer Space

 

5


 

on the terms set forth in the 3rd Party Offer Notice, which election must be for all of the 3rd Party Offer Space. If Tenant fails to timely notify Landlord, it will be conclusively presumed that Tenant has waived its 11th Floor ROFR as to the 3rd Party Offer Space and Landlord shall be free to lease the 3rd Party Offer Space to such third party specific to the 3rd Party Offer Notice. The completion of the improvements in and serving the 3rd Party Offer Space and commencement of Tenant’s right to occupy the 3rd Party Offer Space shall be generally determined in accordance with the Work Letter attached to the Lease, with timing to be adjusted to reflect the date on which a space plan is approved for the 3rd Party Offer Space, assuming that such space plan is required to be submitted by Tenant within 30 business days of Tenant’s receipt of the 3rd Party Offer Notice.

 

7.                                      Landlord and Tenant represent and warrant to the other that neither has employed any broker with respect to this Lease and has no knowledge of any broker’s involvement in this transaction except Cushman & Wakefield of Colorado, Inc., which is representing Landlord (“Landlord’s Broker”), and Newmark Knight Frank, which is representing Tenant (“Tenant’s Broker”). Each party shall indemnify the other against any expense incurred by a party as a result of any claim for commissions or fees by any other broker, finder, or agent, whether or not meritorious, employed by the other party or claiming by, through, or under the other party, other than Landlord’s Broker and Tenant’s Broker. Tenant acknowledges Landlord is not liable for any representations by Landlord’s Broker or Tenant’s Broker regarding the Premises, Building, Building Complex, or this Amendment.

 

8.                                      If there is any conflict between the terms of this Amendment and the terms of the Lease, the terms of this Amendment govern. The Lease as hereby amended is in full force and effect, is hereby ratified and affirmed by the parties, and is binding upon the parties in accordance with its terms. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any one or more counterpart signature pages may be removed from one counterpart of the Amendment and annexed to another counterpart of the Amendment to form a completely executed original instrument without impairing the legal effect of the signature thereon. Signatures transmitted by facsimile or other static electronic form shall be binding as originals on the parties hereto.

 

9.                                      Time is of the essence herein.

 

[Remainder of Page Intentionally Left Blank — Signatures Follow]

 

6


 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

 

LANDLORD:

 

TENANT:

 

 

 

FSP 1001 17TH STREET LLC,
a Delaware limited liability company

 

PING IDENTITY CORPORATION,
a Delaware corporation

 

 

 

 

By: FSP Property Management LLC, its asset manager

 

By:

/s/ Lauren Romer

 

 

Print Name:

Lauren Romer

 

 

Print Title:

Chief Legal Officer

 

 

 

 

By:

/s/ William S. Friend, Jr.

 

 

 

William S. Friend, Jr.,
Executive Vice President - Regional Director

 

 

 

GUARANTOR’S ACKNOWLEDGEMENT

 

By its signature below, the undersigned Guarantor acknowledges and approves the modifications of the Lease and the Guaranty as set forth in this Amendment and agree that the obligations under the Guaranty, including, but not limited to, the obligation to remain primarily and directly liable for payment obligations under the Lease, remain in full force and effect as to obligations arising under the Lease, as amended pursuant to this Amendment.

 

 

GUARANTOR:

 

 

 

ROARING FORK INTERMEDIATE, LLC,

 

a Delaware limited liability company

 

 

 

 

By:

/s/ Andre Durand

 

Print Name:

Andre Durand

 

Title:

Treasurer

 


 

EXHIBIT A
TO
FIFTH AMENDMENT TO LEASE AGREEMENT

 

Suite 1100

 

 


 

EXHIBIT B
TO
FIFTH AMENDMENT TO LEASE AGREEMENT

 

FORM OF COMMENCEMENT DATE MEMORANDUM

 

COMMENCEMENT DATE MEMORANDUM

 

THIS COMMENCEMENT DATE MEMORANDUM is made and entered into as of            , 201   by and between FSP 1001 17TH STREET LLC, a Delaware limited liability company (“Landlord”), and PING IDENTITY CORPORATION, a Delaware corporation (“Tenant”)

 

RECITALS:

 

1.                                      Landlord and Tenant are parties to a certain Fifth Amendment to Lease Agreement dated as of               , 2019 (“Amendment”) which amends that certain Lease Agreement dated January 21, 2011 as amended by that certain First Amendment to Lease Agreement dated November 12, 2015, that certain Second Amendment to Lease Agreement dated December 6, 2017, that certain Third Amendment to Lease Agreement dated August 21, 2018, and that certain Fourth Amendment to Lease Agreement dated effective February 1, 2019, between Landlord and Tenant (collectively, as amended the “Lease”), relating to those certain Existing Premises and Suite 1100 located in the building located at 1001 17th Street, Denver, Colorado 80202. Terms not otherwise defined herein shall have the meanings set forth in the Amendment.

 

2.                                      Landlord and Tenant desire to confirm the Suite 1100 Expansion Date, the agreed upon rentable square footage of Suite 1100, and such other matters as may be provided hereunder.

 

ACKNOWLEDGMENTS:

 

Pursuant to Section 1.C. of the Amendment and in consideration of the facts set forth in the Recitals, Landlord and Tenant acknowledge and agree as follows:

 

1.                                      All capitalized terms not otherwise defined in this Memorandum have the meanings ascribed to them in the Amendment.

 

2.                                      The Suite 1100 Expansion Date under the Lease is [        ].

 

3.                                      Tenant confirms Landlord has delivered possession of Suite 1100 to Tenant and Tenant has accepted Suite 1100.

 

Landlord and Tenant each caused this Memorandum to be executed by its duly authorized representative as of the day and date written above. This Memorandum may be executed in counterparts, each of which is an original and all of which constitute one instrument.

 

[Remainder of Page Intentionally Left Blank - Signatures Follow]

 


 

 

LANDLORD:

 

 

 

FSP 1001 17TH STREET LLC,

 

a Delaware limited liability company

 

 

 

By: FSP Property Management LLC, its asset manager

 

 

 

 

By:

 

 

William S. Friend, Jr.,

 

Executive Vice President —Regional Director

 

 

 

TENANT:

 

 

 

PING IDENTITY CORPORATION,

 

a Delaware corporation

 

 

 

 

By:

 

 

Name:

 

 

Its:

 

 





Exhibit 10.16

 

June 20, 2016

 

André Durand

 

Re:                             Employment with Ping Identity Corporation

 

Dear André:

 

This is your employment agreement with Ping Identity Corporation, a Delaware corporation (as such company’s name may change from time to time and such company’s successors and assigns, the “Company”). It sets forth the terms of your continued employment by the Company, which shall be effective as of the closing (the “Closing”) of the transactions (the “Transaction”) contemplated by that certain Agreement and Plan of Merger, dated as of May 27, 2016, by and among you, the Company, Roaring Fork Holding, Inc., a Delaware corporation (“Parent”), Roaring Fork Intermediate, LLC, a Delaware limited liability company, Roaring Fork Merger Sub, Inc., a Delaware corporation, and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative of the Securityholders (as defined therein), pursuant to which the Company shall become a wholly-owned subsidiary of Parent on the date of the Closing (the “Closing Date”). We are very excited about this opportunity and value the role that you will serve on our team going forward.

 

1.                                      You will be the Chief Executive Officer of the Company, reporting to the Board of Directors of the Company (the “Board”). In this capacity, you will have the responsibilities and duties consistent with such position.

 

2.                                      Your starting base salary will be $350,000 per year, less deductions and withholdings required by law or authorized by you, and will be subject to review annually for any increases or decreases; provided, however, that any decreases shall not be greater than 10% in the aggregate of your then current base salary, which decrease would only be implemented in conjunction with a general decrease affecting the executive management team. Your base salary will be paid by the Company in regular installments in accordance with the Company’s general payroll practices as in effect from time to time.

 

For the calendar year ending December 31, 2016, your cash bonus opportunities (the “2016 Bonus Opportunities”) will be substantially similar to the cash bonus opportunities applicable to you under the bonus plans and targets in effect prior to the Closing Date, subject to any adjustments to such plans or targets that may be agreed upon between you and the Board. For the avoidance of doubt, based on such plans, at achievement of 100% of the applicable target(s), your 2016 Bonus Opportunities will equal 65% of your base salary. Your 2016 Bonus Opportunities may be subject to, as may be agreed upon by you and the Board, the Board’s determination as to your achievement of predetermined thresholds, which may include management by objectives (“MBO”s) targets and financial targets such as bookings, revenue, recurring revenue, gross profit and/or EBITDA targets. Notwithstanding the foregoing, no changes will be made to 2016 bonus opportunities applicable to you immediately prior to the Closing Date, including but not limited to changes in the applicable

 


 

time and form of payment, to the extent that any such change would result in adverse tax consequences being imposed on you under Code Section 409A (as defined below).

 

For each bonus period beginning on and after January 1, 2017, you will be eligible to receive a bonus of up to 65% of your base salary per year (the “Bonus”). This Bonus will be awarded at the sole discretion of the Board, based upon the Board’s determination as to your achievement of predetermined thresholds, which may include MBO targets and financial targets such as bookings, revenue, recurring revenue, gross profit and/or EBITDA targets. In addition, you will be eligible for an additional bonus of up to 35% of your base salary per year (the “Stretch Bonus”), awarded at the sole discretion of the Board, based on the Board’s determination as to your achievement of “stretch” targets.

 

Except to the extent your 2016 Bonus Opportunities are based upon the bonus plans and targets in effect prior to the Closing Date (subject to adjustment, as described above), and except as otherwise set forth above with respect to bonus periods beginning on and after January 1, 2017, the bonus formulas, MBOs, performance milestones and all other elements of your bonus opportunities shall be established by the Board, in its sole discretion after consultation with you, and communicated in writing (including email) to you from time to time. Any bonus earned for a fiscal year shall be paid within 30 days after the Board has received, reviewed and approved the applicable fiscal year’s final audited financial statements. In any event, payment of any bonus that becomes due with respect to a fiscal year shall be paid in the calendar year following the calendar year in which the fiscal year ends, subject, in each case, to your continued employment on the applicable payment date.

 

3.                                      You will also be eligible to participate in the health, dental and vision insurance plans and other employee benefit plans established by the Company or its affiliates for its employees from time to time, in accordance with the terms of such plans and applicable law, so long as they remain generally available to such employees. The Company reserves the right to amend or terminate any employee benefit plans at any time in its sole discretion, subject to the terms of such employee benefit plans and applicable law.

 

4.                                      During your employment, your position shall be based in Denver, Colorado. Your duties may involve extensive domestic and international travel.

 

5.                                      You will be eligible to receive a certain amount of incentive equity (the “Incentive Equity”) of Parent, which Incentive Equity shall be issued under Parent’s 2016 Stock Option Plan (as amended, restated or otherwise modified from time to time, the “Option Plan”) and which shall represent approximately 2.000% of the fully diluted equity interests of Parent at the time of issuance. Such Incentive Equity will be subject to the terms (including the vesting terms and the participation threshold or exercise price, as the case may be) set forth in the Option Plan and the grant agreement to which you will be a party (the “Grant Agreement,” substantially in the form attached hereto as Exhibit C). The grant of such Incentive Equity is subject to Parent’s Board of Directors’ approval and the execution of the Grant Agreement. Our intent to recommend such approval is not a promise of compensation and is not intended to create any obligation on the part of the Company or Parent. Further details on the Incentive Equity and any specific grant of Incentive Equity to you will be provided upon approval of such grant by the Board of Directors of Parent.

 

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Your Incentive Equity, if granted, will vest as follows, each as more fully set forth in the Grant Agreement (it being understood that such vesting shall be subject to your continued employment by the Company through the applicable vesting event):

 

·                                          2/3 of the Incentive Equity would be subject to time-based vesting over 4 years, with 25% vesting upon the one-year anniversary of the Closing Date and the remainder of the time-based grant at a rate of 1/16th per quarter thereafter (the vesting of any such unvested time-based Incentive Equity would be accelerated upon a change of control of Parent); and

 

·                                          1/3 of the Incentive Equity would vest if any equity buy-out investment fund managed or controlled by Vista Equity Partners, and any of such funds’ respective portfolio companies (collectively, “Vista”) received cumulative cash distributions or other cash proceeds, contributions and/or net sale proceeds in respect of the securities of Parent or its subsidiaries held by Vista or any loans provided to Parent or its subsidiaries by Vista (“Vista’s Return”) such that Vista’s Return equals or exceeds 300% of the aggregate debt and equity investment by Vista in Parent and its subsidiaries (calculated pursuant to the formula set forth in the Grant Agreement).

 

6.                                      There are some formalities that you need to complete as a condition of your employment:

 

·                                          You must carefully consider and sign the Company’s standard “Confidentiality, Invention Assignment, Non-Solicit, Non-Compete and Arbitration Agreement” (attached to this letter as Exhibit A). Because the Company and its affiliates are engaged in a continuous program of research, development, production and marketing in connection with their business, we wish to reiterate that it is critical for the Company and its affiliates to preserve and protect its proprietary information and its rights in inventions.

 

·                                          So that the Company has proper records of inventions that may belong to you, we ask that you also complete Schedule 1 attached to Exhibit A.

 

·                                          You and the Company mutually agree that any disputes that may arise regarding your employment will be submitted to binding arbitration pursuant to the arbitration clause set forth in Section 10 of Exhibit A. As a condition of your employment, you will need to carefully consider and voluntarily agree to the arbitration clause set forth in Section 10 of Exhibit A.

 

7.                                      We also wish to remind you that, as a condition of your employment, you are expected to abide by the Company’s, its subsidiaries’ and affiliates’ policies and procedures, which may be amended from time to time, at the Company’s sole discretion.

 

8.                                      Your employment with the Company is at will. The Company may terminate your employment at any time with or without notice, and for any reason or no reason. Notwithstanding any provision to the contrary contained in Exhibit A, you shall be entitled to terminate your employment with the Company at any time and for any reason or no reason by giving notice in writing to the Company of not less than 4 weeks (“Notice Period”), unless otherwise agreed to in writing by you and the Company. In the event of such notice, the Company reserves the right, in its discretion, to give immediate effect to your resignation in lieu of requiring or allowing you to continue work throughout the Notice Period. You shall continue to be an employee of the Company during the Notice Period, and thus owe to the Company the same duty of loyalty you owed it prior

 

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to giving notice of your termination. The Company may, during the Notice Period, relieve you of all of your duties and prohibit you from entering the Company’s offices.

 

9.                                      If the Company terminates your employment without “Cause” or you voluntarily terminate your employment for a “Good Reason,” you will be entitled to receive a severance payment equal to 12 months of your then applicable base salary, less deductions and withholdings required by law or authorized by you (the “Severance Pay”). For purposes of this section, “Cause” and “Good Reason” have the meaning set forth in Exhibit B attached hereto. The Company will not be required to pay the Severance Pay unless (i) you execute and deliver to the Company an agreement (“Release Agreement”) in a form satisfactory to the Company releasing from all liability (other than the payments and benefits contemplated by this letter) the Company, each member and affiliate of the Company, and any of their respective past or present investors, members, officers, directors, managers, employees or agents and you do not revoke such Release Agreement during any applicable revocation period, (ii) such Release Agreement is executed and delivered (and no longer subject to revocation, if applicable) within 60 days following termination, and (iii) your continued compliance with the provisions of Sections 2 through 8 of Exhibit A, the terms of this letter and any agreement between you and the Company and the provisions of the Release Agreement. The Severance Pay shall be paid in installments in accordance with the Company’s general payroll practices at the time of termination starting on the 60th day following your termination of employment, provided you have executed, delivered, and not revoked the Release Agreement during such revocation period for the Release Agreement described above; provided that to the extent any portion of the Severance Pay is “nonqualified deferred compensation” as that term is contemplated by Code Section 409A (as defined below), such amount shall not be paid until the 60th day following termination.

 

If you timely and properly elect health continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse you for the difference between the monthly COBRA health premium paid by you for yourself and your dependents and the monthly premium amount paid by similarly situated active Company employees. You shall be eligible to receive such reimbursement until the earliest of: (i) the 12-month anniversary of the termination date; (ii) the date you are no longer eligible to receive COBRA continuation coverage; and (iii) the date on which you become eligible to receive substantially similar coverage from another employer or other source. Notwithstanding the foregoing, if the Company’s making payments under this Section 9 would violate the nondiscrimination rules under Section 105(h) of the Internal Revenue Code of 1986, as amended (the “Code”), or the applicable to non-grandfathered health plans under the Patient Protection and Affordable Care Act (“PPACA”), or result in the imposition of penalties under the Code and/or PPACA and the related regulations and guidance promulgated thereunder, the parties agree to reform this Section 9 in a manner as necessary to comply with applicable law, while, to the extent permitted by applicable law, preserve intended economic benefit.

 

10.                               You shall not make any statement regarding your employment or the termination of your employment (for whatever reason) that is not agreed to by the Company. You shall not make any statement that would libel, slander or disparage the Company, any member of the Company or its affiliates or any of their respective past or present officers, directors, managers, stockholders, employees or agents.

 

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11.                               While we look forward to a long and profitable relationship, you will be an at-will employee of the Company as described in Section 8 of this letter and Section 9 of Exhibit A. Any statements or representations to the contrary (and, indeed, any statements contradicting any provision in this letter) are, and should be regarded by you, as ineffective. Further, your participation in any benefit program or other Company program, if any, is not to be regarded as assuring you of continuing employment for any particular period of time.

 

12.                               Please note that because of employer regulations adopted in the Immigration Reform and Control Act of 1986, within 3 business days of starting your new position you will need to present documentation establishing your identity and demonstrating that you have authorization to work in the United States. If you have questions about this requirement, which applies to U.S. citizens and non-U.S. citizens alike, you may contact our personnel office.

 

13.                               It should also be understood that all offers of employment are conditioned on the Company’s completion of a satisfactory background check. The Company reserves the right to perform background checks during the term of your employment, subject to compliance with applicable laws. You will be required to execute forms authorizing such a background check.

 

14.                               This letter along with its Exhibits and the documents referred to herein constitute the entire agreement and understanding of the parties with respect to the subject matter of this letter, and supersede all prior understandings and agreements, including but not limited to employment agreements, severance agreements, and bonus agreements, whether oral or written, between or among you and the Company, Parent or any of their respective predecessors or affiliates with respect to the specific subject matter hereof, including that certain Employment Agreement, dated September 13, 2005, by and between you and the Company and the Participation Agreement, dated December 9, 2014, by and between you and the Company. Waivers or modifications of this letter agreement are valid only if in writing and duly executed by each of the parties hereto.

 

15.                               In the event of a conflict between the terms of this letter and the provisions of Exhibit A, the terms of this letter shall prevail.

 

16.                               Notwithstanding any other provision herein, the Company shall be entitled to withhold from any amounts otherwise payable hereunder any amounts required to be withheld in respect to federal, state or local taxes. The intent of the parties is that payments and benefits under this letter be exempt from, or comply with, Code Section 409A and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this letter shall be interpreted to be in compliance therewith. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on you by Code Section 409A or damages for failing to comply with Code Section 409A. A termination of employment shall not be deemed to have occurred for purposes of any provision of this letter providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this letter, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” For purposes of Code Section 409A, your right to receive any installment payments pursuant to this letter shall be treated as a right to receive a series of separate and distinct payments. To the extent that reimbursements or other in-kind benefits under this letter constitute “nonqualified

 

5


 

deferred compensation” for purposes of Code Section 409A, (A) all such expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by you, (B) any right to such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (C) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year. Notwithstanding any other provision of this letter to the contrary, in no event shall any payment under this letter that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

 

If you are deemed at the time of your separation from service to be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), to the extent delayed commencement of any portion of the compensation or benefits to which you are entitled under this Agreement is required in order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) (any such delayed commencement, a “Payment Delay”), such compensation or benefits shall not be provided to you prior to the earlier of (1) the expiration of the 6-month period measured from the date of your “separation from service” with the Company or (2) the date of your death. Upon the earlier of such dates, all payments and benefits deferred pursuant to the Payment Delay shall be paid in a lump sum to you, and any remaining compensation and benefits due under the Agreement shall be paid or provided as otherwise set forth herein. The determination of whether you are a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i) as of the time of his separation from service shall be made by the Company in accordance with the terms of Code Section 409A and applicable guidance thereunder (including without limitation Treasury Regulation Section 1.409A-1(i) and any successor provision thereto).

 

In the event the Company determines that any compensation or benefit payable hereunder may violate applicable requirements of Code Section 409A, the Company may adopt such amendments to this Agreement or take any other actions that the Company in its reasonable discretion determines are necessary or appropriate for such compensation or benefit to either (a) be exempt from the requirements of Code Section 409A or comply with the applicable requirements of Code Section 409A or (b) in the absence of the ability to do either of the foregoing set forth in clause (a), make such amendments to this Agreement that will preserve the economic benefit intended to be provided to you hereunder had the adverse tax consequences imposed under Code Section 409A not applied.

 

17.                               This letter and the offer contained herein are conditioned on the Closing of the Transaction. The effective date of the commencement of your employment pursuant to the terms of this letter shall be the date of the Closing of the Transaction but in any event shall not commence prior to the date of the Closing. If the Transaction does not occur, this offer shall be terminated and neither party shall have any obligation to the other by reason of this letter.

 

If you decide to accept the terms of this letter, and I hope you will, please signify your acceptance of these conditions of employment by signing and dating the enclosed copy of this letter and its Exhibit A and returning them to me, not later than June 30, 2016. Should you have anything that you wish to discuss, please do not hesitate to contact me at (312) 229-9537.

 

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*              *              *              *

 

7


 

By signing this letter and Exhibit A attached hereto, you represent and warrant that you have had the opportunity to seek the advice of independent counsel before signing and have either done so, or have freely chosen not to do so, and either way, you sign this letter voluntarily.

 

 

Very truly yours,

 

 

 

 

 

/s/ Michael Fosnaugh

 

Michael Fosnaugh

 

I have read and understood this letter and Exhibit A attached and hereby acknowledge, accept and agree to the terms set forth therein.

 

/s/ André Durand

 

Date signed:

June 21, 2016

ANDRÉ DURAND

 

 

 

LIST OF EXHIBITS

 

Exhibit A: Confidentiality, Invention Assignment, Non-Solicit, Non-Compete and Arbitration Agreement

 

Exhibit B: Certain Definitions

 

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EXHIBIT A

 

CONFIDENTIALITY, INVENTION ASSIGNMENT, NON SOLICIT, NON-COMPETE AND ARBITRATION AGREEMENT (COLORADO)

 

As a condition of your employment and continued employment with Ping Identity Corporation (as such company’s name may change from time to time and such company’s successors and assigns, the “Company”), you and the Company agree to the following:

 

For purposes of this Agreement, references to the “Group” means the Company, and its affiliates (whether a parent, subsidiary, or sister entity to the Company) engaged in the same line of business or contemplated business as the Company.

 

1.                                      CONSIDERATION FOR AGREEMENT

 

You understand that the Group is engaged in a continuous program of research, development, production and marketing in connection with its business and that it is critical for the Group to preserve and protect its “Proprietary Information” (as defined in Section 2 below), its rights in “Inventions” (as defined in Section 4 below) and in all related intellectual property rights. You acknowledge that, as a result of your employment with the Group and/or its predecessors, you have and/or may receive confidential information, trade secrets, and/or specialized training from the Company, each of which constitutes good and valuable consideration in support of your obligations made under this Confidentiality, Invention Assignment, Non-Solicit, Non-Compete and Arbitration Agreement (this “Agreement”). As additional consideration, you may also have the opportunity to develop valuable business relationships with employees, agents, suppliers, and customers of the Group and to use the Group’s resources and goodwill in the marketplace to develop those relationships. Finally, by your signature below, you acknowledge that your continued employment with the Company (subject to Section 9), which the Company would not allow but for your execution of this Agreement, is also consideration in support of your return promise to maintain the confidentiality of all specialized knowledge and confidential information as well as your promise to adhere to the other restrictions listed in this Agreement, including but not limited to those restrictions described in Section 7 of this Agreement.

 

2.                                      PROPRIETARY INFORMATION

 

You understand that your employment creates a relationship of confidence and trust with respect to any information of a confidential or secret nature that may be disclosed to you or created by you that relates to the business of the Group or to the business of its customers, licensees, suppliers or any other party with whom the Group agrees to hold information of such party in confidence (the “Proprietary Information”).

 

You understand and agree that the term “Proprietary Information” includes but is not limited to information of all types contained in any medium (paper, electronic, in your memory, or otherwise stored or recorded), whether oral or written and regardless of whether it is marked as confidential, proprietary or a trade secret. “Proprietary Information” includes, without limitation, the following information and materials, whether having existed, now existing or developed or created by you or on your behalf during your

 

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term of employment with the Company or its predecessor:

 

A)                                   All information and materials relating to the existing software products and software in the various stages of research and development, including, but not limited to, source codes, object codes, design specifications, design notes, flow charts, graphics, graphical user interfaces, coding sheets, product plans, know-how, negative know how, test plans, business investment analysis, marketing and functional requirements, algorithms, product bugs and customer technical support cases which relate to the software;

 

B)                                   Internal business information, procedures and policies, including, but not limited to, licensing techniques, vendor names, other vendor information, business plans, financial information, budgets, forecasts, product margins, product costs, service and/or operation manuals and related documentation including drawings, and other such information, whether written or oral, which relates to the way the Group conducts its business;

 

C)                                   All legal rights, including but not limited to, trade secrets, pending patents, Inventions (as that term is defined in section 4 below) and other discoveries, claims, litigation and/or arbitrations involving the Group, pending trademarks, copyrights, proposed advertising, public relations and promotional campaigns and like properties maintained in confidence;

 

D)                                   Any and all customer sales and marketing information, including but not limited to sales forecasts, marketing and sales promotion plans, product launch plans, sales call reports, competitive intelligence information, customer information, customer lists, customers needs Confidentiality, Invention Assignment, Non-Solicit, Non-Compete and Arbitration Agreement (Colorado) and buying habits, sales and marketing studies and reports, internal price list, discount matrix, customer data, customer contracts, pricing structures, customer negotiations, customer relations materials, customer service materials, past customers, and the type, quantity and specifications of products purchased, leased or licensed by customers of the Group;

 

E)                                    Any information obtained while working for the Group which gives the Group a competitive edge;

 

F)                                     Any other knowledge or information regarding the property, business, and affairs of the Group which the Group endeavors to keep confidential or which the Group believes to be confidential; and

 

G)                                   Any and all other trade secrets, as that term is defined under applicable laws.

 

You understand and agree to treat and preserve Proprietary Information and materials as strictly confidential. Except as authorized by the Company’s Chief Executive Officer (but in all cases preserving confidentiality by following Company policies and obtaining appropriate non-disclosure agreements), you further agree that, during your employment with the Company or thereafter, you will not directly or indirectly transmit or disclose Proprietary Information to any person, corporation, or

 

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other entity for any reason or purpose whatsoever.

 

You understand and agree that the Proprietary Information is the exclusive property of the Group, and that, during your employment, you will use and disclose Proprietary Information only for the Group’s benefit and in accordance with any restrictions placed on its use or disclosure by the Group. After termination of your employment for any reason, you will not use in any manner or disclose any Proprietary Information, except to the extent compelled by applicable law; provided that in the event you receive notice of any effort to compel disclosure of Proprietary Information for any reason, you will promptly and in advance of disclosure notify Company of such notice and fully cooperate with all lawful Company or Group efforts (through their counsel or otherwise) to resist or limit such disclosure.

 

Proprietary Information does not include information (i) that was or becomes generally available to you on a non-confidential basis, if the source of this information was not reasonably known to you to be bound by a duty of confidentiality, or (ii) that was or becomes generally available to the public, other than as a result of a disclosure by you, directly or indirectly or any other breach of this Agreement.

 

3.                                      THIRD PARTY INFORMATION. You recognize that the Group has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Group’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. You agree that you owe the Group and such third parties, during the term of your employment, and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation (except as necessary in carrying out your work for the Group consistent with the Group’s agreement with such third party) or to use it for the benefit of anyone other than for the Group or such third party (consistent with the Company’s agreement with such third party) without the express written authorization of the board of directors of the Company. All rights and benefits afforded to the Company under this Agreement shall apply equally to the owner of the third party information with respect to the third party information, and such third party is an intended third party beneficiary of this Agreement, with respect to the third party information. You further agree to conform to the Company’s privacy policies, as amended from time to time.

 

4.                                      INVENTIONS

 

4.1                               Prior Inventions. You have attached hereto as Schedule 1 a complete and accurate list describing all Inventions (as defined below) which were discovered, created, invented, developed or reduced to practice by you prior to the commencement of your employment by the Company and have not been legally assigned or licensed to the Company (collectively: “Prior Inventions”), which belong solely to you or belong to you jointly with others, which relates in any way to any of the Group’s current, proposed or reasonably anticipated businesses, products or research or development and which are not assigned to the Group hereunder; or have initialed Schedule 1 to indicate you have no Prior Inventions to disclose. If, in the course of your employment with the Company, you incorporate or cause to be incorporated into a Group product, service, process, file, system, application or program a Prior Invention owned by you or in which you have an interest, you hereby grant the Group member a non-exclusive, royalty-free, irrevocable, perpetual, worldwide, sublicensable and assignable license to make, have made, copy,

 

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modify, make derivative works of, use, offer to sell, sell or otherwise distribute such Prior Invention as part of or in connection with such product, process, file, system, application or program.

 

4.2                               Disclosure of Inventions. You will promptly disclose in confidence to the Company all Inventions that you make or conceive or first reduce to practice or create, either alone or jointly with others, during the period of your employment, and for a period of 3 months thereafter, whether or not in the course of your employment, and whether or not such Inventions are patentable, copyrightable or protectable as trade secrets. For purposes of this Agreement, “Inventions” means without limitation, formulas, algorithms, processes, techniques, concepts, designs, developments, technology, ideas, patentable and unpatentable inventions and discoveries, copyrights and works of authorship in any media now known or hereafter Confidentiality, Invention Assignment, Non-Solicit, Non-Compete and Arbitration Agreement (Colorado) invented (including computer programs, source code, object code, hardware, firmware, software, mask work, applications, files, Internet site content, databases and compilations, documentation and related items) patents, trade and service marks, logos, trade dress, corporate names and other source indicators and the good will of any business symbolized thereby, trade secrets, know-how, confidential and proprietary information, documents, analyses, research and lists (including current and potential customer and user lists) and all applications and registrations and recordings, improvements and licenses related to any of the foregoing. You recognize that Inventions or Proprietary Information relating to your activities while working for the Company, and conceived, reduced to practice, created, derived, developed, or made by you, alone or with others, within 3 months after termination of your employment may have been conceived, reduced to practice, created, derived, developed, or made, as applicable, in significant part while you were employed by the Company. Accordingly, you agree that such Inventions and Proprietary Information shall be presumed to have been conceived, reduced to practice, created, derived, developed, or made, as applicable, during your employment with the Company and are to be assigned to the Company pursuant to this Agreement and applicable law unless and until you have established the contrary by clear and convincing evidence.

 

4.3                               Work for Hire; Assignment of Inventions. You acknowledge and agree that any copyrightable works prepared by you, either alone or jointly with others, within the scope of your employment are “works made for hire” under the Copyright Act and that the Company will be considered the author and owner of such copyrightable works. Any copyrightable works the Company or a Group member specially commissions from you while you are employed with the Company shall be deemed a work made for hire under the Copyright Act and if for any reason a work cannot be so designated as a work made for hire, you agree to and hereby assign to the Company all right, title and interest in and to said work(s) and the related copyright(s). You agree to and hereby grant the Company a non-exclusive, royalty-free, irrevocable, perpetual, worldwide, sublicensable and assignable license to make, have made, copy, modify, make derivative works of, use, publicly perform, display or otherwise distribute any copyrightable works you create during the time you are employed with the Company that for any reason do not qualify as a work made for hire, that were not specially commissioned by the Group, or both, but that relate in any way to the business of the Group. You agree that all Inventions that (i) are developed using equipment, supplies, facilities Proprietary Information,

 

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or trade secrets of the Group, (ii) result from work performed by you for the Group and/or on Company time, or (iii) relate to the Group’s business or current or anticipated research and development (the “Assigned Inventions”), will be the sole and exclusive property of the Company and you agree to and hereby irrevocably assign the Assigned Inventions to the Company.

 

4.4                               Assignment of Other Rights. In addition to the foregoing assignment of Assigned Inventions to the Company, you hereby irrevocably transfer and assign to the Company: (i) all worldwide patents, patent applications, copyrights, mask works, trade secrets and other intellectual property rights in any Assigned Inventions; and (ii) any and all “Moral Rights” (as defined below) that you may have in or with respect to any Assigned Inventions. You also hereby forever waive and agree never to assert any and all Moral Rights you may have in or with respect to any Assigned Inventions, even after termination of your work on behalf of the Company. “Moral Rights” mean any rights to claim authorship of any Assigned Inventions, to object to or prevent the modification of any Assigned Inventions, or to withdraw from circulation or control the publication or distribution of any Assigned Inventions, and any similar right, existing under judicial or statutory law of any country in the world, or under any treaty, regardless of whether or not such right is denominated or generally referred to as a “moral right”.

 

4.5                               Assistance. Whether during or after your employment, and without additional compensation, you agree to do any act and/or execute any document deemed necessary or desirable by the Company in furtherance of perfecting, prosecuting, recording, maintaining, enforcing and protecting the Group’s right, title and interest in and to, any of the Assigned Inventions. In the event that the Company is unable for any reason to secure your signature to any document required to file, prosecute, register or memorialize the ownership and/or assignment of, or to enforce, any intellectual property, you hereby irrevocably designate and appoint the Company’s duly authorized officers and agents as your agents and attorneys-in-fact to act for and on your behalf and stead to (i) execute, file, prosecute, register and/or memorialize the assignment and/or ownership of any Assigned Invention; (ii) to execute and file any documentation required for such enforcement and (iii) do all other lawfully permitted acts to further the filing, prosecution, registration, memorialization of assignment and/or ownership of, issuance of and enforcement of any Assigned Inventions, all with the same legal force and effect as if executed by you.

 

4.6                               Applicability to Past Activities. To the extent you have been engaged to provide services by the Company or its predecessor for a period of time before the effective date of this Agreement (the “Prior Engagement Period”), you agree that if and to the extent that, during the Prior Engagement Period: (i) you received access to any information from or on behalf of the Company that would have been Proprietary Information if you had received access to such information during the period of your employment with the Company under this Agreement; or Confidentiality, Invention Assignment, Non-Solicit. Non-Compete and Arbitration Agreement (Colorado) (ii) you conceived, created, authored, invented, developed or reduced to practice any item, including any intellectual property rights with respect thereto, that would have been an Invention if conceived, created, authored, invented, developed or reduced to practice during the period of your employment with the Company under this Agreement; then any such information shall be deemed Proprietary Information hereunder and any such item shall be deemed an Invention hereunder, and

 

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this Agreement shall apply to such information or item as if conceived, created, authored, invented, developed or reduced to practice under this Agreement.

 

5.                                      NO BREACH OF PRIOR AGREEMENT. You represent that your performance of all the terms of this Agreement and your duties as an employee of the Company will not breach any invention assignment, proprietary information, confidentiality, noncompetition, nonsolicitation, noninterference, or similar agreement with any former employer or other party. You represent that you will not bring with you to the Company or use in the performance of your duties for the Company any documents or materials or intangibles of a former employer or third party that are not in the public domain or have not been legally transferred or licensed to the Company.

 

6.                                      DUTY OF LOYALTY. You understand that your employment with the Company requires your undivided attention and effort during normal business hours. While you are employed by the Company, you will not, without the Company’s express prior written consent, (i) engage in any other business activity, unless such activity is for passive investment purposes only and will not require you to render any services, (ii) be engaged or interested, directly or indirectly, alone or with others, in any trade, business or occupation in competition with the Group, (iii) make preparations, alone or with others, to compete with the Group in the future, or (iv) appropriate for your own benefit business opportunities pertaining to the Group’s business. The obligations imposed on you under the Section 6 are in addition to, and do not supplant, any similar obligations you may have to the Group under the common law or by statute.

 

7.                                      DUTY OF NON INTERFERENCE

 

For purposes of this Section, “solicit” means any direct or indirect communication of any kind, regardless of who initiates it, that in any way invites, advises, encourages or requests any person to take or refrain from taking any action.

 

7.1                               Non-Solicitation of Employees/Consultants. During your employment with the Group and for a period of one (1) year thereafter, you will not directly or indirectly hire, attempt to hire, recruit, offer employment, lure or entice away, or in any other manner persuade or otherwise solicit anyone who is then an employee or consultant of the Group (or who was an employee or consultant of the Group within the 6 months preceding the date of any such prohibited conduct) to resign from the Group or to apply for or accept employment with, or otherwise provide services to, you or any third party, for your own benefit or for the benefit of any other person or entity.

 

7.2                               Non-Solicitation of Suppliers/Customers. During your employment with the Group and for a period of one (1) year thereafter, you will not directly or indirectly (i) solicit or accept from any Protected Customer any business involving the sale or provision of Restricted Products (as defined in section 7.3); (ii) request, advise or otherwise solicit any Protected Customer or supplier of the Group not to do business with the Group, or to curtail, reduce, cancel, or withdraw its business from the Group; (iii) aid in any way any other entity in obtaining business from any Protected Customer involving the sale or provision of Restricted Products (as defined in section 7.3); or (iv) otherwise interfere with any transaction, agreement, business relationship, and/or business opportunity between the Group and any Protected Customer or supplier. “Protected Customer” means any actual or prospective customer to

 

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whom the Company or a Group member or their predecessor sold its products or services or solicited to sell its products or services during your last 2 years of employment and, (a) with whom you dealt on behalf of the Company or a Group member or their predecessor; (b) whose dealings with the Company or a Group member or their predecessor were coordinated or supervised by you; (c) about whom you obtained Proprietary Information as a result of your association with the Company or a Group member or their predecessor; (d) to whom you provided services or (e) who received products or services the sale or provision of which resulted in compensation, commissions or earnings for you.

 

7.3                               Non-Competition. During your employment with the Company and for a period of one (1) year thereafter (the “Restricted Period”), you will not directly or indirectly, whether as an employee, officer, director, consultant, owner, manager, advisor, investor, or otherwise, in any state in which the Group conducts business or has customers (i) render advice or services to, or otherwise assist, any person, association, or entity who is engaged, directly or indirectly, in the Restricted Business; (ii) hold a 2.5% or greater equity, voting or profit participation interest in any person, association, or entity who is engaged, directly or indirectly, in the Restricted Business or (iii) carry on or be in any way engaged, concerned or interested in or have business dealings with the Restricted Business. For purposes of this section, “Restricted Business” means the business of researching into, developing, manufacturing, distributing, selling, supplying or otherwise dealing with Restricted Products. “Restricted Products” means products or services which are of the same or materially similar kind as the products or services (including but not limited to technical and product support, professional services, technical advice and other customer services) researched Confidentiality, Invention Assignment, Non-Solicit, Non-Compete and Arbitration Agreement (Colorado) into, developed, manufactured, distributed, sold or supplied by the Group and with which you were directly connected during your employment with the Company or its predecessor or about which you have received or developed Proprietary Information by reason of your employment with the Company or its predecessor. Notwithstanding the foregoing, with prior written consent from the Company which shall not be unreasonably withheld, you may accept employment or otherwise be engaged in or involved with a competitor of the Group that has multiple lines of business provided that, during the Restricted Period, you are employed by or provide services for a business unit of such competitor that is not engaged or otherwise involved with the Restricted Business. Nothing contained in this Section 7 shall prohibit you from owning of a passive investment interest of not more than 2.5% in a company with publicly traded equity securities, and whether on your own behalf or on behalf of others. You agree that the Restricted Period shall be extended by a period equal the length of any violation of this Section 7.3.

 

7.4                               Employment by Customers. For a period of one (1) year following termination of your employment for any reason, you will not accept employment with any customer of the Group in a capacity of service that could otherwise be offered as a service by the Company for such customer without the Company’s express written permission.

 

7.5                               Acknowledgements of Law. You acknowledge the following provisions of Colorado law, set forth in Colorado Revised Statutes § 8-2-113(2):

 

Any covenant not to compete which restricts the right of any person to receive

 

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compensation for performance of skilled or unskilled labor for any employer shall be void, but this subsection (2) shall not apply to:

 

(b)                                 Any contract for the protection of trade secrets;

 

(d)                                 Executive and management personnel and officers and employees who constitute professional staff to executive and management personnel.

 

You acknowledge that this Agreement is a contract for the protection of trade secrets within the meaning of § 8-2-113(2)(b) and is intended to protect the Proprietary Information identified above and that you are an executive or manager, or professional staff to an executive or manager, within the meaning of § 8-2-113(2)(d).

 

8.                                      OBLIGATIONS UPON TERMINATION

 

8.1                               Return of Company Property. At the time of leaving the employ of the Company, you will deliver to the Company (and will not keep in your possession or deliver to anyone else) (i) any and all documents and materials of any nature (including physical and electronic copies) pertaining to your work, including without limitation devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items and (ii) all property belonging to the Group or any third party which provided property to you in connection with your employment such as computer, laptops, personal digital assistants, cell phones, MP3 players, electronic organizers and other devices, cards, car, keys, security devices or any other item belonging to the Group. Upon Company request, you will execute a document confirming your compliance with this provision and the terms of this Agreement.

 

8.2                               Notification of New Employer. Before you accept employment or enter in to any consulting or other professional or business engagement with any other person or entity while any of Section 7 is in effect, you will provide such person or entity with written notice of the provisions of Section 7 and will deliver a copy of the notice to the Company. You hereby grant consent to notification by the Company to your new employer about your rights and obligations under this Agreement.

 

8.3                               Withholding. To the extent allowed by law, you agree to allow Company to deduct from your final paycheck(s) any amounts due as a result of your employment, including but not limited to, any expense advances or business charges incurred by you on behalf of the Group, charges for property damaged or not returned when requested, and any other charges incurred by you payable to the Group. You agree to execute any authorization form as may be provided by Company to effectuate this provision.

 

9.                                      AT WILL EMPLOYMENT

 

This Agreement does not constitute a contract of employment for any definite period of time. You acknowledge and agree that nothing in this Agreement modifies the at-will nature of your employment with Company, which permits either yourself or Company to terminate your employment at any time and without cause.

 

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10.                               ARBITRATION

 

10.1                        In the event of any controversy or dispute between you and the Company or between you and any affiliate or an agent of Company, including but not limited to directors, officers, managers, other employees or members of the Group, who are being sued in any capacity, as to all or any part of this Agreement, any other agreement, any dispute or controversy whatsoever pertaining to or arising out of the relationship between you and the Company and/or the Group or the dissolution or termination of same, and/or the arbitrability thereof (collectively, “Arbitrable Disputes” as further defined below) shall, subject to Section 11.1 herein, be resolved exclusively by binding arbitration solely between yourself and the Company and/or person or entity described above, conducted in Denver, Colorado. The arbitration shall be governed by the Federal Arbitration Act, Confidentiality, Invention Assignment, Non-Solicit, Non-Compete and Arbitration Agreement (Colorado) 9 U.S.C. Section 1 et seq, as amended, and shall be administered in accordance with the procedures set forth in the Dispute Resolution Addendum appended hereto as Schedule 2 (the “Addendum”), all of which are incorporated into this Agreement by this reference.

 

10.2                        Arbitrable Disputes shall include any and all disputes not specifically exempted from arbitration herein, including, but not limited to, any alleged violations of federal, state or local constitutions, statutes, laws, ordinances, regulations or common law, any claims of wrongful termination, unlawful discrimination, harassment or retaliation, including but not limited to Title VII of the 1964 Civil Rights Act, The Equal Pay Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Fair Labor Standards Act and similar state and local statutes, any claims of breach of contract or any implied covenant of good faith and fair dealing, any claims of adverse treatment in violation of public policy, and any disputes arising from, under or regarding this Agreement, including the formation, validity, interpretation, effect or breach of the Agreement. For avoidance of doubt, all disputes regarding the validity of this Agreement, the validity of the arbitration provisions of this Agreement, or whether any particular claim or matter is included within the scope of the arbitration provisions of this Agreement, arc Arbitrable Disputes subject to arbitration as described herein.

 

Specifically excluded from Arbitrable Disputes are disputes or claims arising from or related to workers’ compensation and unemployment insurance, and any claims which are expressly excluded from binding arbitration by statute or public policy, or which are expressly required to be arbitrated under a different procedure.

 

10.3                        While you are not required to do so before serving an arbitration demand under Section (g) of the Addendum, nothing in this Agreement shall prevent you from filing or maintaining an administrative charge or complaint with a government agency, including but not limited to, the Equal Employment Opportunity Commission, the Department of Labor and the National Labor Relations Board or any equivalent state or local agency. For the avoidance of doubt, if you choose not to file an administrative charge or complaint before commencing an arbitration in accordance with this Section 10 and the Addendum, your arbitration demand must be served, subject to Section 10.5, within the applicable time period for filing a charge with the relevant agency in order to be timely filed.

 

10.4                        This binding arbitration procedure shall supplant and replace claims in court (except as specified herein), and you expressly waive the right to a civil court action before a jury.

 

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10.5                        In accordance with Section (g) of the Addendum and to the extent permitted by applicable law, any arbitration relating to or arising from any Arbitrable Dispute shall be commenced by service of an arbitration demand on or before the earlier of: (i) the expiration of the limitations period provided by applicable law; or (ii) the one-year anniversary of the accrual of the aggrieved party’s claim.

 

10.6                        All Arbitrable Disputes under this Agreement must be brought in your individual capacity, and not as a plaintiff or class member in any purported class, representative or collective proceeding. You agree that the arbitrator is not empowered to consolidate claims of different individuals into one proceeding, or to hear an arbitration as a class arbitration. To the extent the arbitrator determines that this class/collective action waiver is invalid, for any reason, this entire Section 10 shall be null and void but only with regard to that particular proceeding in which the arbitrator invalidated this class/collective action waiver and this Section 10 shall remain in full force and effect with respect to any Arbitrable Disputes other than that covered by such class/collective action proceeding.

 

10.7                        Notwithstanding the foregoing, the waiver of the jury trial right shall survive even in the event this Section 10 is deemed null and void.

 

11.                               GENERAL

 

11.1                        Injunctive Relief. Notwithstanding the arbitration provisions in Section 10 or anything else to the contrary in this Agreement, you and the Company understand and agree that the parties’ actions or potential actions concerning obligations under Sections 2, 3, 4, 6 or 7 of this Agreement may result in irreparable and continuing damage to the other party for which monetary damages will not be sufficient, and agree that both parties will be entitled to seek, in addition to its other rights and remedies hereunder or at law and both before or while an arbitration is pending between the parties under Section 10 of this Agreement, a temporary restraining order, preliminary injunction or similar injunctive relief from a court of competent jurisdiction in order to preserve the status quo or prevent irreparable injury pending the full and final resolution of the dispute through arbitration, without the necessity of showing any actual damages or that monetary damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned injunctive relief shall be in addition to, not in lieu of, legal remedies, monetary damages or other available forms of relief through arbitration proceedings. This Section shall not be construed to limit the obligation for either party to pursue arbitration under Section 10 with respect to any Arbitrable Disputes.

 

11.2                        Severability; Modification; Partial Invalidity. Each provision of this Agreement is severable from every other provision of this Agreement. If the scope of any restriction contained in this Agreement is too broad to permit enforcement of such restriction to its full extent, then such restriction shall be enforced to the maximum extent permitted by law, and the parties consent and agree that such scope may be accordingly modified in any proceeding brought to enforce such restriction. If any provision of this Agreement or the application of such provision is held unenforceable for any reason, then such provision shall be modified to the extent to render it enforceable (except as otherwise provided in Section 10.6 above), or, if held impossible to modify, then severed from this Agreement and the remainder of this Agreement shall not be affected.

 

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11.3                        Waiver of Breach. The failure of Company at any time, or from time to time, to require performance of any of your obligations under this Agreement shall not be deemed a waiver of and shall in no manner affect Company’s right to enforce any provision of this Agreement at a subsequent time. The waiver by Company of any rights arising out of any breach shall not be construed as a waiver of any rights arising out of any subsequent breach.

 

11.4                        Assignment. This Agreement will be binding upon your heirs, executors, administrators and other legal representatives and will be for the benefit of the Group, its successors, its assigns and licensees. This Agreement, and your rights and obligations hereunder, may not be assigned by you; however, the Company may freely assign its rights hereunder.

 

11.5                        Notice. Unless your offer letter provides otherwise, you agree to use reasonable efforts to provide Company 14 days’ notice to terminate your employment with Company; provided, however, that this provision shall not change the at-will nature of the employment relationship between you and Company.

 

11.6                        Non-Disparagement. During and after your employment with the Company, except to the extent compelled or required by law, you agree you shall not disparage the Group, its customers and suppliers or their respective officers, directors, agents, servants, employees, attorneys, shareholders, successors or assigns or their respective products or services, in any manner (including but not limited to, verbally or via hard copy, websites, blogs, social media forums or any other medium); provided, however, that nothing in this Section shall prevent you from: engaging in concerted activity relative to the terms and conditions of your employment and in communications protected under the National Labor Relations Act, filing a charge or providing information to any governmental agency, or from providing information in response to a subpoena or other enforceable legal process or as otherwise required by law.

 

11.7                        Applicable Law. This Agreement shall be governed by the laws of the State of Colorado, irrespective of its choice of law rules.

 

11.8                        Entire Agreement. This Agreement along with Schedules 1 and 2 and the documents referred to herein and the corresponding employment and option grant agreements constitute the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and supersede all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the specific subject matter hereof. Notwithstanding the foregoing, this Agreement does not supplant any rights the Group may have under the common law or by statute. Additionally, and notwithstanding the above language of this Section 11.8, you acknowledge and agree that the restrictive covenants you executed in favor of the Company (the “Prior Agreement”) shall remain in full force and effect; however, in the event of any inconsistency between the Prior Agreement and this Agreement, the terms and provisions of this Agreement and its attachments shall govern. If any of Section 7 of this Agreement is deemed void, voidable, or otherwise invalid in legal proceedings and is not modified in accordance with Section 11.2 of this Agreement, you agree that you shall comply with, and the Company may seek to enforce such provisions of the Prior Agreement against you. Headings are provided for convenience only and do not modify, broaden, define or restrict any provision. No modification of or amendment to this

 

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Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by the parties.

 

11.9                        Survival. Any termination of this Agreement, regardless of how such termination may occur, shall not operate to terminate Sections 2, 3, 4, 5, 7, 8, 10 and 11 which shall survive any such termination and remain valid, enforceable and in full force and effect.

 

By:

/s/ Lauren Romer

 

By:

/s/ André Durand

Name:

Lauren Romer

 

Name:

André Durand

Title:

VP, GC

 

Date:

June 21, 2016

Date:

June 21, 2016

 

 

 

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Schedule 1

 

List of Employee’s Prior Inventions

 

                                    By initialing here, I represent and warrant that I have no Prior Inventions, as that term is defined in the Agreement to which this Schedule 1 is attached.

 

OR

 

/s/ ü                          Below is a complete and accurate list of Prior Inventions, as that term is defined in the Agreement to which this Schedule 1 is attached.

 

Zoomfoot is a photo sharing website/service. I made an investment in this service in 2007.

 

 

By:

/s/ André Durand

 

Name:

André Durand

 

Date:

June 21, 2016

 

 

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Schedule 2

 

Dispute Resolution Addendum

 

a.                                      For purposes of this Addendum, all capitalized terms shall have the meaning set forth in the Confidentiality, Invention Assignment, Non Solicit, Non-Compete and Arbitration Agreement (the “Agreement”) to which this Addendum is appended. “Employee” means the individual employed by or performing services for the Company or any affiliate who signed the Agreement.

 

b.                                      Except in the event either party seeks injunctive relief in accordance with Section 11.1 of the Agreement, Employee and Company agree that., prior to the service of an Arbitration Demand in accordance with paragraph h below, the parties shall negotiate in good faith for a period of 30 days to resolve any Arbitrable Dispute privately, amicably and confidentially. Such 30 day period shall run from the date of the first written contact by one party of the other, specifically citing this paragraph, to discuss the potential Arbitrable Dispute.

 

c.                                       All Arbitrable Disputes shall be resolved only by final and binding arbitration conducted privately and confidentially by a single arbitrator selected as specified in this Addendum.

 

d.                                      Wavier of Class Action and Collective Action Claims. Except as otherwise required by law, both parties expressly intend and agree that: (a) class action and collective action procedures shall neither be asserted nor applied for in any arbitration conducted pursuant to this arbitration agreement; (b) each party will not assert class or collective action claims against the other in arbitration or otherwise; and (c) the parties shall only submit their own, individual claims in arbitration and will not seek to represent the interests of any other person. The arbitrator shall not consolidate more than one person’s claims in the arbitration, and may not otherwise preside over any form of a collective or class proceeding.

 

e.                                       The parties understand and agree that the Agreement evidences a transaction involving interstate commerce within the meaning of 9 U.S.C. § 2, and that the Addendum shall therefore be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1, et seq.

 

f.                                        The arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to determine the arbitrability of disputes and to resolve any dispute relating to the interpretation, applicability, or enforceability of the Agreement and this Addendum. The Arbitrator shall conduct and preside over such hearings as the arbitrator deems appropriate.

 

g.                                       Shortening of Limitations Period Within Which to File an Arbitration Demand. To the extent permitted by applicable law, any arbitration relating to or arising from any Arbitrable Dispute shall be commenced by service of an arbitration demand on or before the earlier of: (i) the expiration of the limitations period provided by applicable law; or (ii) the one-year anniversary of the accrual of the aggrieved party’s claim (whichever applies, the “Limitations Period for Arbitrable Disputes”). If a party timely commences an arbitration under this Addendum and the responding party has a counterclaim against the claimant that would have been timely had it been asserted on the date the claimant served its arbitration demand but that thereafter was extinguished

 

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by this section g, then, this Addendum shall not time-bar the counterclaim so long as it is asserted no later than the date specified in section h, below, for the filing of a response to the arbitration demand. Otherwise, all claims that were or could have been brought by the aggrieved party against the other party shall be forever barred.

 

h.                                      To commence an arbitration pursuant to this Agreement, a party shall serve a written arbitration demand (the “Demand”) on the other party by certified mail, return receipt requested or by personal service prior to the expiration of Limitations Period for Arbitrable Disputes. The claimant shall attach a copy of the Agreement and this Addendum to the Demand, which shall also describe the Arbitrable Dispute in sufficient detail to advise the respondent of the nature and basis of the dispute, state the date on which the dispute first arose, list the names and addresses of every person, including without limitation current or former employees of Company or any affiliate, whom the claimant believes does or may have information relating to the dispute, including a short description of the matter(s) about which each person is believed to have knowledge, and state with particularity the relief requested by the claimant, including a specific monetary amount, if the claimant seeks a monetary award of any kind. Within 30 days after receiving the Demand, the respondent shall mail to the claimant a written response to the Demand (the “Response”) that may include one or more counterclaims and that shall describe in reasonable detail the respondent’s position in connection with the dispute and any counterclaim asserted. The Response shall also, if applicable, state the date on which any counterclaim first arose, list the names and addresses of every person, including without limitation current or former employees of Company or any affiliate, whom the respondent believes does or may have information relating to the dispute including a short description of the matter(s) about which each person is believed to have knowledge, and state with particularity the relief requested by the respondent, including a specific monetary amount, if the respondent seeks a monetary award of any kind. Both parties acknowledge that they have an ongoing duty to supplement the list of persons that either side believes does or may have information relating to the dispute.

 

i.                                          Promptly after service of the Response, the parties shall confer in good faith to attempt to agree upon a suitable arbitrator. If the parties are unable to agree upon an arbitrator, the claimant shall request from the American Arbitration Association (“AAA”) a list of 9 potential arbitrators randomly selected from the AAA’s employment arbitration panel for the area in which the hearing is required to take place or, if no employment arbitration panel exists for that area, then from the AAA’s commercial arbitration panel for that area (the “List”). The Company shall bear the cost of obtaining the List, which the AAA shall provide simultaneously to the claimant and the respondent by fax, email, hand delivery or any other expeditious mode of delivery. The AAA shall not administer the arbitration or have any role in the arbitration other than providing the List, unless the parties both agree otherwise in writing. No later than 5 business days after the List is received by the parties, or within such other time period as agreed by the parties in writing, they shall conduct a meeting or conference call during which they shall alternate in striking names from the List, beginning with the claimant. After each party has stricken 4 names from the List, the one remaining individual shall be appointed to serve as arbitrator and shall thereafter resolve the Arbitrable Dispute in accordance with this Addendum.

 

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j.                                         Notwithstanding the choice-of-law principles of any jurisdiction, the arbitrator shall be bound by and shall resolve all Arbitrable Disputes in accordance with the substantive law of the State of Colorado or federal law as enunciated by the federal courts situated in the Tenth Circuit, whichever apply to the claim and Federal rules of evidence, including, without limitation, all relevant privileges and the attorney work product doctrine.

 

k.                                      All facts relating to or concerning the Arbitrable Dispute and arbitration, including without limitation the existence of the arbitration, the nature of the claims and defenses asserted, and the outcome of the arbitration shall be confidential and shall not be disclosed by the claimant, the respondent or the arbitrator without the prior written consent of both the claimant and the respondent. Notwithstanding the foregoing confidentiality obligation, the claimant and respondent may divulge information rendered confidential pursuant to this Addendum to the extent necessary to prosecute or defend the arbitration or any related judicial proceeding, and the Company may disclose such information to its employees and agents in the ordinary course of their performance of their duties for the Company.

 

l.                                          Before the arbitration hearing, each party shall be entitled to take discovery depositions of 3 fact witnesses and, in addition, the discovery deposition of every expert witness expected to testify for the opposing party at the arbitration hearing; provided that to the extent the arbitrator concludes that applicable law would render this subsection (1) unconscionable or otherwise unenforceable, the arbitrator shall have the authority to order additional depositions sufficient to protect the enforceability of this subsection (I). Upon the written request of either party, the other party shall promptly produce documents relevant to the Arbitrable Dispute or reasonably likely to lead to the discovery of admissible evidence. Each party acknowledges that each has an ongoing duty to supplement the production of documents in response to any request received from the party. The manner, timing and extent of any further discovery shall be committed to the arbitrator’s sound discretion, provided that the arbitrator shall upon a showing of reasonable cause permit any party to take a preservation deposition of any witness for use in at any hearing in lieu of live testimony, and provided further that under no circumstances shall the arbitrator allow more depositions or interrogatories than permitted by the presumptive limitations set forth in F.R.Civ.P. 30(a)(2)(A) and 33(a). The arbitrator shall levy appropriate sanctions, including an award of reasonable attorneys’ fees, against any party that fails to cooperate in good faith in discovery permitted by this Addendum or ordered by the arbitrator.

 

m.                                  Either party shall have the right to subpoena witnesses and documents for the arbitration as well as documents relevant to the case from third parties. The arbitrator shall have the jurisdiction to hear and rule upon pre-hearing disputes and is authorized to hold pre-hearing conferences by telephone or in person, as the arbitrator deems advisable. The arbitrator shall have the authority to entertain a motion to dismiss, a motion for summary judgment and/or any other dispositive motion by any party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure. Either party, at its expense, may arrange and pay the cost of a court reporter to provide a stenographic record of the proceedings; provided, however, that if both parties desire a stenographic record or access to such record, the cost of the court reporter and such record shall be shared equally. Should any party refuse or neglect to appear

 

24


 

for, or participate in the arbitration hearing, the arbitrator shall have the authority to decide the dispute based upon whatever evidence is presented. Either party, upon request at the close of the hearing, shall be given leave to file a post-hearing brief. The time for filing such brief shall be set by the arbitrator.

 

n.                                      The arbitrator shall have no power to modify or deviate from the provisions of this Addendum unless both claimant and respondent consent to such modification or deviation. To the extent that any matter necessary to the efficient and timely completion of the arbitration is not governed by this Addendum, the arbitrator shall, after conferring with the parties, have the power to enter rulings and establish standards necessary, in his or her sound discretion, to resolve the matter.

 

o.                                      The Company shall bear the costs of the arbitrator only to the extent required by applicable law. Except as otherwise set forth in this Addendum, each party shall pay for its own costs and attorneys’ fees incurred by such party, if any. However, if any party prevails on a statutory claim which affords the prevailing party attorneys’ fees and costs, or if there is a written agreement providing for attorneys’ fees and costs, the arbitrator may award reasonable attorneys’ fees and costs to the prevailing party. Any dispute as to the reasonableness of any fee or cost shall be resolved by the arbitrator.

 

p.                                      Within 30 days after the arbitration hearing is closed or after any dispositive motion is fully briefed, the arbitrator shall issue a written award setting forth his or her decision and the reasons therefor. The arbitrator’s award shall be final, nonappealable and binding upon the parties, subject only to the provisions of 9 U.S.C. § 10, and may be entered as a judgment in any court of competent jurisdiction.

 

q.                                      The parties agree that reliance upon courts of law and equity can add significant costs and delays to the process of resolving disputes. Accordingly, they recognize that an essence of this Agreement is to provide for the submission of all Arbitrable Disputes to binding arbitration. Therefore, if any provision of this Addendum is found to be in conflict with a mandatory provision of applicable law or is otherwise void or voidable, the parties understand and agree that each such provision shall be reformed to render it enforceable, but only to the extent absolutely necessary to render the provision enforceable and only in view of the parties’ express desire that Arbitrable Disputes be resolved by arbitration and, to the greatest extent permitted by law, in accordance with the principles, limitations and procedures set forth in this Addendum.

 

r.                                         Either party may bring an action in court to compel arbitration under this Addendum and the Agreement, and to confirm, vacate or enforce an arbitration award, and each party shall bear its own attorney fees and costs and other expenses of such action.

 

By:

/s/ Lauren Romer

 

By:

/s/ André Durand

Name:

Lauren Romer

 

Name:

André Durand

Title:

VP, GC

 

Date:

June 21, 2016

Date:

June 21, 2016

 

 

 

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EXHIBIT B

 

Certain Definitions

 

“Cause” means any of the following: (i) a material failure by you to perform your responsibilities or duties to the Company under this letter or those other lawful responsibilities or duties as requested from time to time by the Board, after demand for performance has been given by the Board that identifies how you have not performed your responsibilities or duties; (ii) your engagement in illegal or improper conduct or in gross misconduct in the fulfillment of your responsibilities or duties to the Company; (iii) your commission or conviction of, or plea of guilty or nolo contendere to, a felony, a crime involving moral turpitude or any other act or omission that the Company in good faith believes may harm the standing and reputation of the Company; (iv) a material breach of your duty of loyalty to the Company or your material breach of the Company’s written code of conduct and business ethics or Section 2 through 8 of the Confidentiality, Invention Assignment, Non-Solicit, Non-Compete and Arbitration Agreement, or any other agreement between you and the Company; (v) dishonesty, fraud, gross negligence or repetitive negligence committed without regard to corrective direction in the course of discharge of your duties as an employee; (vi) your personal bankruptcy or insolvency; or (vii) excessive and unreasonable absences from your duties for any reason (other than authorized vacation or sick leave) or as a result of your Disability (as defined below).

 

“Disability” means your inability to perform the essential functions of your job, with or without accommodation, for an extended period but not less than 60 business days in any consecutive 6-month period, as determined in the reasonable discretion of the Company.

 

“Good Reason” means that you voluntarily terminate your employment with the Company if there should occur, without your written consent:

 

(a)                                 a material, adverse change in your duties or responsibilities with the Company, provided that a change in title or a change in the person or office to which you report, shall not, by itself, constitute such a material, adverse change;

 

(b)                                 an aggregate reduction in your then current base salary by more than 10% or a reduction in your base salary by less than 10% which is not applied to other executive officers;

 

(c)                                  the material breach by the Company of any offer letter or employment agreement between you and the Company;

 

(d)                                 a relocation of your primary place of work to a location more than fifty (50) miles from Denver, Colorado; and/or

 

(e)                                  the board of directors fails to approve the granting of the Incentive Equity.

 

provided, however that in each case above, (i) you must first give the Company written notice of any of the foregoing within 30 business days following the first occurrence of such event in a written explanation specifying the basis for your belief that you are entitled to terminate your employment for Good Reason, (ii) the Company must have 30 days to cure such event and (iii)

 

B-1


 

provided that the Company does not reasonably cure such event, you must actually resign your employment within 30 days following the cure period described in (ii). Otherwise, any claim of such circumstances as “Good Reason” shall be deemed irrevocably waived by you.

 

All references to the Company in these definitions shall include parent, subsidiary, affiliate and successor entities of the Company.

 

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Exhibit 10.17

 

November 2, 2018

 

B. Kristian Nagel
c/o Ping Identity
1001 17th Street
Denver, CO 80202

 

Re:          Employment with Ping Identity Corporation

 

Dear Kris:

 

This is your employment agreement with Ping Identity Corporation, a Delaware corporation, (as such company’s name may change from time to time; and such company’s successors and assigns, the “Company”). The effective date of the commencement of your employment by the Company pursuant to the terms of this letter shall be December 3, 2018 (the “Effective Date”) or as mutually agreed between you and the Chief Executive Officer of the Company. We are very excited about this opportunity and value the role that you will serve on our team going forward.

 

1.             You will be the Chief Operating Officer of the Company, reporting to the Chief Executive Officer of the Company, or any other Officer as directed by the Board of Directors of the Company (the “Board”). In this capacity, you will have the responsibilities and duties consistent with such position.

 

2.             Your base salary will be $350,000 per year, less deductions and withholdings required by law or authorized by you, and will be subject to review annually for any increases or decreases; provided, however, that any decreases shall not be greater than 10% of your then current base salary, which decrease would only be implemented in conjunction with a general decrease affecting the executive management team. Your base salary will be paid by the Company in regular installments in accordance with the Company’s general payroll practices as in effect from time to time.

 

For the calendar year ending December 31, 2018, you will be eligible to receive a bonus in an amount equal to 80% of your annual base salary prorated for the period of your service for the Company (i.e., from the Effective Date through December 31, 2018), provided that you are still employed by the Company through December 31, 2018 (the “2018 Bonus”). For each bonus period beginning on and after January 1, 2019, you will be eligible for (a) a target bonus of up to 80% of your base salary per year (the “Target Bonus”), awarded at the sole discretion of the Board, based on the Board’s determination as to your achievement of performance targets based on a combination of MBOs and financial targets, and (b) an additional bonus of up to 20% of your base salary per year (the “Stretch Bonus”), awarded at the sole discretion of the Board, based on the Board’s determination as to your achievement of “stretch” targets.

 

Except as otherwise set forth above, the bonus formulas, MBOs, performance milestones and all other elements of your bonus opportunities shall be established by the Board, in its sole discretion after consultation with you, and communicated in writing (including email) to you from time to time. Any bonus earned for a fiscal year shall be paid within 30 days after the Board has received, reviewed and approved the applicable fiscal year’s final audited financial statements. In

 


 

any event, payment of any bonus that becomes due with respect to a fiscal year shall be paid in the calendar year following the calendar year in which the fiscal year ends, subject, in each case, to your continued employment on December 31 of the year in which the bonus was earned.

 

3.             You will also be eligible to participate in the health, dental and vision insurance plans and other employee benefit plans established by the Company or its affiliates for its employees from time to time, in accordance with the terms of such plans and applicable law, so long as they remain generally available to such employees. The Company reserves the right to amend or terminate any employee benefit plans at any time in its sole discretion, subject to the terms of such employee benefit plans and applicable law.

 

4.             During your employment, your position shall be based in Denver, CO. Your duties may involve extensive domestic and international travel. As such, you will be required to be in Denver during Ping’s normal business working hours, and for other functions as required for your role as COO (with the exception of business travel and time off). To support you Ping will reimburse you for an apartment in Denver, to be mutually agreed upon by you and the CEO.

 

5.             The Company is aware that your prior employer is Vindicia, Inc. (“Vindicia”) and that Vindicia was acquired by Amdocs, Inc. (“Amdocs”). The Company is also aware that in connection with such acquisition (the “Acquisition”), you entered into a new offer letter/employment agreement with Vindicia as a condition to the closing of such acquisition (the “Revised Vindicia Offer”). The Company is further aware of (i) the non—competition covenant set forth in Exhibit 2 of your Non—Competition Agreement with Vindicia, that, to the Company’s knowledge based on what you have communicated to the Company, was executed upon your initial employment start date with Vindicia prior to the Acquisition (the “Non—Competition Covenant”) and signed again as a condition of closing; and (ii) the No Solicitation of Customers clause set forth in the Revised Vindicia Offer (the “No Solicitation Covenant”, and together with the Non—Competition Covenant, the “Restrictive Covenants”). You agree that you will not use any of Vindicia’s and/or Amdocs’ confidential, proprietary and/or trade secret information or infringe the intellectual property rights of Vindicia and/or Amdocs while employed by the Company. You agree that you will not disclose to the Company, bring onto the Company’s premises, or induce the Company to use any confidential, proprietary and/or trade secret information belonging to Vindicia and/or Amdocs. If at any time you believe that your work for Company may require you to use or disclose the confidential, proprietary and/or trade secret information of Vindicia and/or Amdocs, you agree to notify the Company immediately so that the Company may attempt to prevent any improper disclosure. The Company agrees to defend and indemnify you against any claim brought against you and/or the Company by Vindicia and/or Amdocs based on the Restrictive Covenants, so long as (A) you comply with the conditions set forth herein with respect to the confidential, proprietary and trade secret information of Vindicia and/or Amdocs; (B) you make good faith efforts to avoid soliciting any customers known to you that fall under, or may fall under, the definition of “Customers” as defined in the Revised Vindicia Offer; and (C) in no event shall this Agreement obligate the Company to indemnify you for any claims related to the No Solicitation of Company Employees clause set forth in the Revised Vindicia Offer, nor any claims resulting from any other restrictive covenants set forth tit any documentation you may have executed with Vindicia or Amdocs (including, but not limited to, any other restrictive covenants that may be included in the Revised Vindicia Offer). In no event does any of the foregoing affect any of your obligations under Exhibit A hereto.

 

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6.             You will be eligible to receive a certain amount of incentive equity (the “Incentive Equity”) of Roaring Fork Holding, Inc., a Delaware corporation and indirect sole parent of the Company (“Parent”), which Incentive Equity shall be issued under Parent’s 2016 Stock Option Plan (as amended, restated or otherwise modified from time to time, the “Option Plan”). Such Incentive Equity will be subject to the terms (including the vesting terms and the participation threshold or exercise price, as the case may be) set forth in the Option Plan and the grant agreement to which you will be a party (the “Grant Agreement”). The grant of such Incentive Equity is subject to Parent’s Board of Directors’ approval and the execution of the Grant Agreement. Our intent to recommend such approval is not a promise of compensation and is not intended to create any obligation on the part of the Company or Parent. Further details on the Incentive Equity and any specific grant of Incentive Equity to you will be provided upon approval of such grant by the Board of Directors of Parent.

 

Your Incentive Equity, if granted, will vest as follows, each as more fully set forth in the Grant Agreement (it being understood that such vesting shall be subject to your continued employment by the Company through the applicable vesting event):

 

·              2/3 of the Incentive Equity would be subject to time—based vesting over 4 years, with 25% vesting upon the one—year anniversary of the Grant Date (as defined in the Grant Agreement) and the remainder of the time—based grant at a rate of 1/16th per quarter thereafter (the vesting of any such unvested time—based Incentive Equity would be accelerated upon a change of control of Parent); and

 

·              1/3 of the Incentive Equity would vest if any equity buy—out investment fund managed or controlled by Vista Equity Partners, and any of such funds’ respective portfolio companies (collectively, “Vista”) received cumulative cash distributions or other cash proceeds, contributions and/or net sale proceeds in respect of the securities of Parent or its subsidiaries held by Vista or any loans provided to Parent or its subsidiaries by Vista (“Vista’s Return”) such that Vista’s Return equals or exceeds 300% of the aggregate debt and equity investment by Vista in Parent and its subsidiaries (calculated pursuant to the formula set forth in the Grant Agreement).

 

7.             There are some formalities that you need to complete as a condition of your employment:

 

· You must carefully consider and sign the Company’s standard “Employment and Restrictive Covenants Agreement — California” (attached to this letter as Exhibit A). Because the Company and its affiliates are engaged in a continuous program of research, development, production and marketing in connection with their business, we wish to reiterate that it is critical for the Company and its affiliates to preserve and protect its proprietary information and its rights in inventions.

 

· So that the Company has proper records of inventions that may belong to you, we ask that you also complete Schedule 1 attached to Exhibit A.

 

· You and the Company mutually agree that any disputes that may arise regarding your employment will be submitted to binding arbitration pursuant to the arbitration clause set forth in

 

3


 

Section 14 of Exhibit A. As a condition of your employment, you will need to carefully consider and voluntarily agree to the arbitration clause set forth in Section 14 of Exhibit A.

 

8.             We also wish to remind you that, as a condition of your employment, you are expected to abide by the Company’s, its subsidiaries’ and affiliates’ policies and procedures, which may be amended from time to time, at the Company’s sole discretion.

 

9.             Your employment with the Company is at will. The Company may terminate your employment at any time with or without notice, and for any reason or no reason. Notwithstanding any provision to the contrary contained in Exhibit A, you shall be entitled to terminate your employment with the Company at any time and for any reason or no reason by giving notice in writing to the Company of not less than 4 weeks (“Notice Period”), unless otherwise agreed to in writing by you and the Company. In the event of such notice, the Company reserves the right, in its discretion, to give immediate effect to your resignation in lieu of requiring or allowing you to continue work throughout the Notice Period. You shall continue to be an employee of the Company during the Notice Period, and thus owe to the Company the same duty of loyalty you owed it prior to giving notice of your termination. The Company may, during the Notice Period, relieve you of all of your duties and prohibit you from entering the Company’s offices.

 

10.          If the Company terminates your employment without “Cause” or you voluntarily terminate your employment for a “Good Reason,” you will be entitled to receive a severance payment equal to six months base pay, less deductions and withholdings required by law or authorized by you (the “Severance Pay”). For purposes of this section, “Cause” and “Good Reason” have the meaning set forth in Exhibit B attached hereto. The Company will not be required to pay the Severance Pay unless (i) you execute and deliver to the Company an agreement (“Release Agreement”) in a form satisfactory to you and the Company releasing from all liability (other than the payments and benefits contemplated by this letter) the Company, each member and affiliate of the Company, and any of their respective past or present investors, members, officers, directors, managers, employees or agents and you do not revoke such Release Agreement during any applicable revocation period, (ii) such Release Agreement is executed and delivered (and no longer subject to revocation, if applicable) within 60 days following termination, and (iii) your continued compliance with the provisions of Sections 2 through 8 of Exhibit A, the terms of this letter and any agreement between you and the Company and the provisions of the Release Agreement. The Severance Pay shall be paid in a lump sum on the 60th day following your termination of employment, provided you have executed, delivered, and not revoked the Release Agreement during such revocation period for the Release Agreement described above; provided that to the extent any portion of the Severance Pay is “nonqualified deferred compensation” as that term is contemplated by Code Section 409A (as defined below), such amount shall not be paid until the 60th day following termination.

 

11.          You shall not make any statement that would libel, slander or disparage the Company, any member of the Company or its affiliates or any of their respective past or present officers, directors, managers, stockholders, employees or agents.

 

12.          While we look forward to a long and profitable relationship, you will be an at—will employee of the Company as described in Section 8 of this letter and Section 9 of Exhibit A. Any statements or representations to the contrary (and, indeed, any statements contradicting any

 

4


 

provision in this letter) are, and should be regarded by you, as ineffective. Further, your participation in any benefit program or other Company program, if any, is not to be regarded as assuring you of continuing employment for any particular period of time.

 

13.          Please note that because of employer regulations adopted in the Immigration Reform and Control Act of 1986, within 3 business days of starting your new position you will need to present documentation establishing your identity and demonstrating that you have authorization to work in the United States. If you have questions about this requirement, which applies to U.S. citizens and non—U.S. citizens alike, you may contact our personnel office.

 

14.          It should also be understood that all offers of employment are conditioned on the Company’s completion of a satisfactory background check. The Company reserves the right to perform background checks during the term of your employment, subject to compliance with applicable laws. You will be required to execute forms authorizing such a background check.

 

15.          This letter along with its Exhibits and the documents referred to herein constitute the entire agreement and understanding of the parties with respect to the subject matter of this letter, and supersede all prior understandings and agreements, including but not limited to employment agreements, severance agreements, and bonus agreements, whether oral or written, between or among you and the Company, Parent or any of their respective predecessors or affiliates with respect to the specific subject matter hereof. Waivers or modifications of this letter agreement are valid only if in writing and duly executed by each of the parties hereto.

 

16.          In the event of a conflict between the terms of this letter and the provisions of Exhibit A, the terms of this letter shall prevail.

 

17.          Notwithstanding any other provision herein, the Company shall be entitled to withhold from any amounts otherwise payable hereunder any amounts required to be withheld in respect to federal, state or local taxes. The intent of the parties is that payments and benefits under this letter be exempt from, or comply with, Code Section 409A and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this letter shall be interpreted to be in compliance therewith. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on you by Code Section 409A or damages for failing to comply with Code Section 409A. A termination of employment shall not be deemed to have occurred for purposes of any provision of this letter providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this letter, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” For purposes of Code Section 409A, your right to receive any installment payments pursuant to this letter shall be treated as a right to receive a series of separate and distinct payments. To the extent that reimbursements or other in—kind benefits under this letter constitute “nonqualified deferred compensation” for purposes of Code Section 409A, (A) all such expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by you, (B) any right to such reimbursement or in—kind benefits shall not be subject to liquidation or exchange for another benefit, and (C) no such reimbursement, expenses eligible for reimbursement, or in—kind benefits provided in any

 

5


 

taxable year shall in any way affect the expenses eligible for reimbursement, or in—kind benefits to be provided, in any other taxable year. Notwithstanding any other provision of this letter to the contrary, in no event shall any payment under this letter that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

 

If you are deemed at the time of your separation from service to be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), to the extent delayed commencement of any portion of the compensation or benefits to which you are entitled under this Agreement is required in order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) (any such delayed commencement, a “Payment Delay”), such compensation or benefits shall not be provided to you prior to the earlier of (1) the expiration of the 6—month period measured from the date of your “separation from service” with the Company or (2) the date of your death. Upon the earlier of such dates, all payments and benefits deferred pursuant to the Payment Delay shall be paid in a lump sum to you, and any remaining compensation and benefits due under the Agreement shall be paid or provided as otherwise set forth herein. The determination of whether you are a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i) as of the time of his separation from service shall be made by the Company in accordance with the terms of Code Section 409A and applicable guidance thereunder (including without limitation Treasury Regulation Section 1.409A—1(i) and any successor provision thereto).

 

In the event the Company determines that any compensation or benefit payable hereunder may violate applicable requirements of Code Section 409A, the Company may adopt such amendments to this Agreement or take any other actions that the Company in its reasonable discretion determines are necessary or appropriate for such compensation or benefit to either (a) be exempt from the requirements of Code Section 409A or comply with the applicable requirements of Code Section 409A or (b) in the absence of the ability to do either of the foregoing set forth in clause (a), make such amendments to this Agreement that will preserve the economic benefit intended to be provided to you hereunder had the adverse tax consequences imposed under Code Section 409A not applied.

 

18.          The effective date of the commencement of your employment pursuant to the terms of this letter shall be on or before December 3, 2018, or as mutually agreed between you and the Chief Executive Officer of the Company.

 

If you decide to accept the terms of this letter, and I hope you will, please signify your acceptance of these conditions of employment by signing and dating the enclosed copy of this letter and its Exhibit A and returning them to me and/or Aaron LaPoint, not later than November 2, 2018. Should you have anything that you wish to discuss, please do not hesitate to contact Aaron at (720) 878—3972.

 

*      *      *      *

 

6


 

By signing this letter and Exhibit A attached hereto, you represent and warrant that you have had the opportunity to seek the advice of independent counsel before signing and have either done so, or have freely chosen not to do so, and either way, you sign this letter voluntarily.

 

 

Very truly yours,

 

 

 

 

 

/s/ André Durand

 

André Durand

 

Chief Executive Officer

 

I have read and understood this letter and Exhibit A attached and hereby acknowledge, accept and agree to the terms set forth therein.

 

 

/s/ B. Kristian Nagel

 

Date signed:

11/4/18

B. Kristian Nagel

 

 

LIST OF EXHIBITS

 

Exhibit A: Employment and Restrictive Covenants Agreement — California

 

Exhibit B: Certain Definitions

 

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EXHIBIT A

EMPLOYMENT AND RESTRICTIVE COVENANTS AGREEMENT — CALIFORNIA

 

This Employment and Restrictive Covenants Agreement (the “Agreement”) is made effective October 1, 2018 (the “Effective Date”), by and between Ping Identity Corporation (together with its affiliates and related companies, hereafter referenced as “Company”) and B. Kristian Nagel (hereafter referenced as “Employee”).

 

1.                                      PURPOSE. In connection with Employee’s employment by the Company (the “Employment”), Employee and the Company wish to set forth the terms and conditions under which Employee will be employed by the Company, and certain restrictions applicable to Employee as a result of the Employment with the Company. This Agreement is intended: to allow the parties to engage in the Employment, with the Company giving Employee access to the Company’s customers, employees, and Confidential Information (as that term is defined below); to protect the Company’s business, information, and relationships against unauthorized competition, solicitation, recruitment, use, or disclosure; and to clarify Employee’s legal rights and obligations.

 

2.                                      THE BUSINESS OF THE COMPANY. The Company is engaged in the business of investing and operating in software and technology—enabled businesses, including a continuous program of research, development, production and marketing (collectively the “Business” of the Company). Employee acknowledges that the Company has a legitimate interest in protecting its Confidential Information, trade secrets, customer relationships, customer goodwill, employee relationships, and the special investment and training given to Employee.

 

3.                                      “AT WILL” EMPLOYMENT OF EMPLOYEE. Employee shall perform such duties or responsibilities as assigned to Employee from time to time. The Parties acknowledge that Employee’s employment by the Company at all times is and shall remain “at will,” and may be terminated by either Party at any time, with or without notice and with or without cause. Employee acknowledges that but for Employee’s execution of this Agreement, Employee would not be employed by the Company.

 

a.                                      Employee acknowledges that Employee’s duties shall entail Employee’s contact with the Company’s customers to whom Employee is introduced, to which Employee is assigned, whose accounts Employee shall oversee, or for which Employee otherwise is directly or indirectly responsible. Employee further acknowledges that Employee will be given the use of the Company’s Confidential Information. Employee acknowledges that the Company’s goodwill with its customers and customer prospects, as well as the Company’s Confidential Information, are among the most valuable assets of the Company’s Business. Accordingly, Employee hereby agrees, acknowledges, covenants, represents and warrants that at all times during Employee’s employment with the Company, Employee will faithfully perform Employee’s duties with the utmost loyalty to the Company, and will owe a fiduciary duty and duty of loyalty to the Company. Employee agrees that during employment, Employee will do nothing disloyal or adverse to the Company or the Company’s Business, or which creates any

 

B - 1


 

conflict of interest with the Company or the Business of the Company. Employee will abide by the policies of the Company at all times during Employee’s employment, and acknowledges that the Company may unilaterally change its policies, practices, and procedures at any time, at the sole discretion of the Company. Employee understands and acknowledges that all equipment, communication devices, physical property, documents, information, data bases, furniture, accessories, premises, and any other items provided to Employee while employed by Company, shall at all times remain the sole property of the Company, and as such, Employee shall have no reasonable expectation of privacy when using such items.

 

b.                                      Employee acknowledges that Employee will be afforded an investment of time, training, money, trust, exposure to the public, or exposure to customers, vendors, suppliers, investors, joint venture partners, or other business relationships of the Company during the course of the Employment, and Employee’s position gives Employee a high level of influence or credibility with the Company’s customers, vendors, suppliers, or other business relationships. Employee understands and acknowledges that Employee will possess specialized skills, learning, abilities, customer contacts, or customer information by reason of working for the Company.

 

c.                                       Employee acknowledges that, through Employee’s employment with the Company, Employee may customarily and regularly solicit customers and/or prospective customers for the Company, and/or engage in making sales or obtaining orders or contracts for products or services.

 

d.                                      Employee understands that the Company has specifically instructed him/her to refrain from bringing to the Company any documents or materials or intangibles of a former employer or third party that are not in the public domain, or have not been legally transferred or licensed to the Company, or that might constitute the confidential information or trade secrets of a prior employer. Employee agrees that when performing duties on behalf of the Company, he/she will not breach any invention assignment, proprietary information, confidentiality, noncompetition, nonsolicitation or other similar agreement with any former employer or other party.

 

4.                                      DUTY OF LOYALTY. Employee understands that his/her employment and provision of services on behalf of the Company requires Employee’s undivided attention and effort. Accordingly, during Employee’s employment, Employee agrees that he/she will not, without the Company’s express prior written consent, (i) engage in any other business activity, unless such activity is for passive investment purposes not otherwise prohibited by this Agreement and will not require Employee to render any services, (ii) be engaged or interested, directly or indirectly, alone or with others, in any trade, business or occupation in competition with the Company, (iii) take steps, alone or with others, to engage in competition with the Company in the future, or (iv) appropriate for Employee’s own benefit business opportunities pertaining to the Company’s Business.

 

B - 2


 

5.                                      INVENTIONS.

 

a.                                      Prior Inventions. Attached hereto as Schedule 1 is a complete and accurate list describing all Inventions (as defined below) which were conceived, discovered, created, invented, developed and/or reduced to practice by Employee prior to the commencement of his/her Employment that have not been legally assigned or licensed to the Company (collectively: “Prior Inventions”). If there are no such Prior Inventions, Employee shall initial Schedule 1 to indicate Employee has no Prior Inventions to disclose.

 

Employee acknowledges and agrees that if in the course of Employee’s employment, Employee incorporates or causes to be incorporated into a Company product, service, process, file, system, application or program a Prior Invention, Employee will grant the Company a non—exclusive, royalty—free, irrevocable, perpetual, worldwide, sublicensable and assignable license to make, have made, copy, modify, make derivative works of, use, offer to sell, sell or otherwise distribute such Prior Invention as part of or in connection with such product, process, file, system, application or program.

 

b.                                      Disclosure and Assignment of Inventions. Employee agrees to promptly disclose to the Company in writing all Inventions (as defined below) that Employee conceives, develops and/or first reduces to practice or create, either alone or jointly with others, during the period of Employee’s Employment, and for a period of three (3) months thereafter, whether or not in the course of Employee’s Employment. Employee further assigns and agrees to assign all of Employee’s rights, title and interest in the Inventions to the Company. In the event that the Company is unable for any reason to secure Employee’s signature to any document required to file, prosecute, register or memorialize the ownership and/or assignment of any Invention, Employee hereby irrevocably designates and appoints the Company’s duly authorized officers and agents as Employee’s agents and attorneys—in—fact to act for and on Employee’s behalf and stead to (i) execute, file, prosecute, register and/or memorialize the assignment and/or ownership of any Invention; (ii) to execute and file any documentation required for such enforcement and (iii) do all other lawfully permitted acts to further the filing, prosecution, registration, memorialization of assignment and/or ownership of, issuance of and enforcement of any Inventions, all with the same legal force and effect as if executed by Employee.

 

Employee acknowledges that he/she is not entitled to use the Inventions for Employee’s own benefit or the benefit of anyone except the Company without written permission from the Company, and then only subject to the terms of such permission. Employee further agrees that Employee will communicate to the Company, as directed by the Company, any facts known to Employee and testify in any legal proceedings, sign all lawful papers, make all rightful oaths, execute all divisionals, continuations,

 

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continuations—in—part, foreign counterparts, or reissue applications, all assignments, all registration applications and all other instruments or papers to carry into full force and effect, the assignment, transfer and conveyance hereby made or to be made and generally do everything possible for title to the Inventions to be clearly and exclusively held by the Company as directed by the Company.

 

For purposes of this Agreement, “Inventions” means, without limitation, any and all formulas, algorithms, processes, techniques, concepts, designs, developments, technology, ideas, patentable and unpatentable inventions and discoveries, copyrights and works of authorship in any media now known or hereafter invented (including computer programs, source code, object code, hardware, firmware, software, mask work, applications, files, internet site content, databases and compilations, documentation and related items) patents, trade and service marks, logos, trade dress, corporate names and other source indicators and the good will of any business symbolized thereby, trade secrets, know—how, confidential and proprietary information, documents, analyses, research and lists (including current and potential customer and user lists) and all applications and registrations and recordings, improvements and licenses that (i) relate in any manner, whether at the time of conception, design or reduction to practice, to the Company’s Business or its actual or demonstrably anticipated research or development; (ii) result from any work performed by Employee on behalf of the Company; or (iii) result from the use of the Company’s equipment, supplies, facilities, Confidential Information or Trade Secrets.

 

Employee recognizes that Inventions or proprietary information relating to Employee’s activities while working for the Company, and conceived, reduced to practice, created, derived, developed, or made by Employee, alone or with others, within three (3) months after termination of Employee’s employment may have been conceived, reduced to practice, created, derived, developed, or made, as applicable, in significant part while Employee was employed by the Company. Accordingly, Employee agrees that such Inventions and proprietary information shall be presumed to have been conceived, reduced to practice, created, derived, developed, or made, as applicable, during Employee’s employment with the Company and are to be assigned to the Company pursuant to this Agreement and applicable law unless and until Employee has established the contrary by clear and convincing evidence.

 

c.                                       Work for Hire. Employee acknowledges and agrees that any copyrightable works prepared by Employee within the scope of Employee’s employment are “works made for hire” under the Copyright Act and that the Company will be considered the author and owner of such copyrightable works. Any copyrightable works the Company specially commissions from Employee while Employee is employed also shall be deemed a work made for hire under the Copyright Act and if for any reason such work cannot be so

 

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designated as a work made for hire, Employee agrees to and hereby assigns to the Company, as directed by the Company, all right, title and interest in and to said work(s). Employee further agrees to and hereby grants the Company, as directed by the Company, a non—exclusive, royalty—free, irrevocable, perpetual, worldwide, sublicensable and assignable license to make, have made, copy, modify, make derivative works of, use, publicly perform, display or otherwise distribute any copyrightable works Employee creates during Employee’s Employment.

 

d.                                      Assignment of Other Rights. In addition to the foregoing assignment of Inventions to the Company, Employee hereby irrevocably transfers and assigns to the Company: (i) all worldwide patents, patent applications, copyrights, mask works, trade secrets and other intellectual property rights in any Inventions; and (ii) any and all “Moral Rights” (as defined below) that Employee may have in or with respect to any Inventions. Employee also hereby forever waives and agrees never to assert any and all Moral Rights Employee may have in or with respect to any Inventions, even after termination of Employee’s work on behalf of the Company. “Moral Rights” mean any rights to claim authorship of any Inventions, to object to or prevent the modification of any Inventions, or to withdraw from circulation or control the publication or distribution of any Inventions, and any similar right, existing under applicable judicial or statutory law of any country in the world, or under any treaty, regardless of whether or not such right is denominated or generally referred to as a “moral right.”

 

e.                                       Applicability to Past Activities. To the extent Employee has been engaged to provide services by the Company or its predecessor for a period of time before the effective date of this Agreement (the “Prior Engagement Period”), Employee agrees that if and to the extent that, during the Prior Engagement Period: (i) Employee received access to any information from or on behalf of the Company that would have been proprietary information if Employee had received access to such information during the period of Employee’s Employment with the Company under this Agreement; or (ii) Employee conceived, created, authored, invented, developed or reduced to practice any item, including any intellectual property rights with respect thereto, that would have been an Invention if conceived, created, authored, invented, developed or reduced to practice during the period of Employee’s Employment with the Company under this Agreement; then any such information shall be deemed proprietary information hereunder and any such item shall be deemed an Invention hereunder, and this Agreement shall apply to such information or item as if conceived, created, authored, invented, developed or reduced to practice under this Agreement.

 

f.                                        Employee shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—(A) is made—(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of

 

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reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

 

g.                                       Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. § 1833(b). Accordingly, the parties to this Agreement have the right to disclose in confidence trade secrets to federal, state, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law. The parties also have the right to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure.

 

h.                                      Nothing in this agreement prohibits me from reporting possible violations of federal law or regulation to any governmental agency or entity including, but not limited to, the Department of Justice, the Securities and Exchange Commission, Congress, and any agency Inspector General, or from making other disclosures that are protected under the whistleblower provisions of federal law or regulation. I do not need the prior authorization of my supervisor or anyone else affiliated with the Company to make any such reports or disclosures, and I am not required to notify my supervisor or anyone else affiliated with the Company that I have made such reports or disclosures.

 

i.                                          Assignment Exception — California Labor Code § 2870

 

Section 2870 of the California Labor Code exempts from this assignment provision any invention as to which Employee can prove the following:

 

i.                                          It was developed entirely on Employee’s own time; and

 

ii.                                      No equipment, supplies, facility or trade secret of the Company or any of its affiliated entities was used in its development; and

 

iii.                                    It neither

 

1.                                      relates at the time of its conception or reduction to practice to the business of the Company or to the Company’s actual or demonstrably anticipated research and development; nor

 

2.                                      results from any work performed by Employee for the Company.

 

The provisions of this Agreement requiring assignment to the Company do not apply to any invention which qualifies fully under the provisions of

 

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Section 2870 of the California Labor Code. Employee will advise the Company promptly in writing of any inventions, original works of authorship, developments, improvements or trade secrets that Employee believes meet the criteria in (i), (ii), and (iii) above; and Employee will at that time provide to the Company in writing all evidence necessary to substantiate that belief. Employee understands that the Company will keep in confidence and will not disclose to third parties without Employee’s consent any confidential information disclosed in writing to the Company relating to inventions that qualify fully under the provisions of Section 2870 of the California Labor Code.

 

6.                                      NONDISCLOSURE AGREEMENT.

 

a.                                      Employee expressly agrees that, throughout the term of Employee’s Employment with the Company and at all times following the termination of Employee’s Employment from the Company, for so long as the information remains confidential, Employee will not use or disclose any Confidential Information disclosed to Employee by the Company, other than for the purpose to carry out the Employment for the benefit of the Company (but in all cases preserving confidentiality by following the Company’s policies and obtaining appropriate non-disclosure agreements). Employee shall not, directly or indirectly, use or disclose any Confidential Information to third parties, nor permit the use by or disclosure of Confidential Information by third parties. Employee agrees to take all reasonable measures to protect the secrecy of and avoid disclosure or use of Confidential Information in order to prevent it from falling into the public domain or into the possession of any Competing Business or any persons other than those persons authorized under this Agreement to have such information for the benefit of the Company. Employee agrees to notify the Company in writing of any actual or suspected misuse, misappropriation, or unauthorized disclosure of Confidential Information that may come to Employee’s attention. Employee acknowledges that if Employee discloses or uses knowledge of the Company’s Confidential Information to gain an advantage for Employee, for any Competing Business, or for any other person or entity other than the Company, such an advantage so obtained would be unfair and detrimental to the Company.

 

b.                                      Employee expressly agrees that Employee’s duty of non—use and non—disclosure shall continue indefinitely for any information of the Company that constitutes a Trade Secret under applicable law, so long as such information remains a Trade Secret.

 

7.                                      RETURN OF COMPANY PROPERTY AND MATERIALS. Any Confidential Information, trade secrets, materials, equipment, information, documents, electronic data, or other items that have been furnished by the Company to Employee in connection with the Employment are the exclusive property of the Company and shall be promptly returned to the Company by Employee, accompanied by all copies of such documentation, immediately when the Employment

 

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has been terminated or concluded, or otherwise upon the written request of the Company. Employee shall not retain any copies of any Company information or other property after the Employment ends, and shall cooperate with the Company to ensure that all copies, both written and electronic, are immediately returned to the Company. Employee shall cooperate with Company representatives and allow such representatives to oversee the process of erasing and/or permanently removing any such Confidential Information or other property of the Company from any computer, personal digital assistant, phone, or other electronic device, or any cloud—based storage account or other electronic medium owned or controlled by Employee.

 

8.                                      LIMITED NONCOMPETE AGREEMENT. Employee expressly agrees that Employee will not (either directly or indirectly, by assisting or acting in concert with others) Compete with the Company during Employee’s employment with the Company.

 

9.                                      NONSOLICITATION OF CUSTOMERS/PROSPECTIVE CUSTOMERS. Employee expressly agrees that during Employee’s employment with the Company, Employee will not (either directly or indirectly, by assisting or acting in concert with others), on behalf of himself/herself or any other person, business, entity, including but not limited to on behalf of a Competing Business, call upon, solicit, or attempt to call upon or solicit any business from any Customer or Prospective Customer for the purpose of providing services substantially similar to the Services.

 

10.                               NONRECRUITMENT OF EMPLOYEES. Employee expressly agrees that during the Restricted Period, Employee will not, on behalf of himself/herself or any other person, business, or entity (either directly or indirectly, by assisting or acting in concert with others), solicit, recruit, or encourage, or attempt to solicit, recruit, or encourage any of the Company’s employees, in an effort to hire such employees away from the Company, or to encourage any of the Company’s employees to leave employment with the Company to work for a Competing Business.

 

11.                               REMEDIES; INDEMNIFICATION. Employee agrees that the obligations set forth in this Agreement are necessary and reasonable in order to protect the Company’s legitimate business interests and (without limiting the foregoing) that the obligations set forth in Sections 8, 9 and 10 are necessary and reasonable in order to protect the Company’s legitimate business interests in protecting its Confidential Information, Trade Secrets, customer and employee relationships and the goodwill associated therewith. Employee expressly agrees that due to the unique nature of the Company’s Confidential Information, and its relationships with its Customers and other employees, monetary damages would be inadequate to compensate the Company for any breach by Employee of the covenants and agreements set forth in this Agreement. Accordingly, Employee agrees and acknowledges that any such violation or threatened violation shall cause irreparable injury to the Company and that, in addition to any other remedies that may be available in law, in equity, or otherwise, the Company shall be entitled: (a) to obtain injunctive relief against the threatened breach of this Agreement or the continuation of any such breach by Employee, without the necessity of proving actual damages; and (b) to be indemnified by Employee from any loss or harm; and (c) to recover any costs or attorneys’ fees, arising out of or in connection with any breach by Employee or enforcement action relating to Employee’ s obligations under this Agreement.

 

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12.          INJUNCTIVE RELIEF; TOLLING. Notwithstanding the arbitration provisions contained herein, or anything else to the contrary in this Agreement, Employee understands that the violation of any restrictive covenants of this Agreement may result in irreparable and continuing damage to the Company for which monetary damages will not be sufficient, and agrees that Company will be entitled to seek, in addition to its other rights and remedies hereunder or at law and both before or while an arbitration is pending between the parties under this Agreement, a temporary restraining order, preliminary injunction or similar injunctive relief from a court of competent jurisdiction in order to preserve the status quo or prevent irreparable injury pending the full and final resolution of the dispute through arbitration, without the necessity of showing any actual damages or that monetary damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned injunctive relief shall be in addition to, not in lieu of, legal remedies, monetary damages or other available forms of relief through arbitration proceedings. This Section shall not be construed to limit the obligation for either party to pursue arbitration. The Restricted Period as defined in this Agreement may be extended during the pendency of any litigation (including appeals) or arbitration proceeding, in order to give the Company the full protection of the restrictive covenants as described in this Agreement.

 

13.          DEFINITIONS. For all purposes throughout this Agreement, the terms defined below shall have the respective meanings specified in this section.

 

a.                                      “Customer” of the Company shall mean any business or entity with which Employee had Material Contact, for the purpose of providing Services, during the twelve (12) months preceding Employee’s termination date.

 

b.                                      “Compete” shall mean to provide Competitive Services, whether Employee is acting on behalf of himself/herself, or in conjunction, with or in concert with any other entity, person, or business, including activities performed while working for or on behalf of a Customer.

 

c.                                       “Competitive Services” shall mean the business or process of researching into, developing, manufacturing, distributing, selling, supplying or otherwise dealing with (including but not limited to technical and product support, professional services, technical advice and other customer services) identity and access management software and solutions that enable clients to manage, integrate and coordinate their workforce, customer and partner identities through single—sign on, multi—factor authentication, provisioning, application catalog, directory and access, and any other services of the type or similar to the type provided, conducted, authorized, or offered by the Company or any predecessor within the two (2) years prior to the termination of your employment.

 

d.                                      “Competing Business” shall mean any entity, including but not limited to any person, company, partnership, corporation, limited liability company, association, organization or other entity that provides Competitive Services.

 

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e.                                       “Confidential Information” shall mean sensitive business information having actual or potential value to the Company or its affiliates because it is not generally known to the general public or ascertainable by a Competing Business, and which has been disclosed to Employee, or of which Employee will become aware, as a consequence of the Employment with the Company, including any information related to: the Company’s investment strategies, management planning information, business plans, operational methods, market studies, marketing plans or strategies, patent information, business acquisition plans, past, current and planned research and development, formulas, methods, patterns, processes, procedures, instructions, designs, inventions, operations, engineering, services, drawings, equipment, devices, technology, software systems, price lists, sales reports and records, sales books and manuals, code books, financial information and projections, personnel data, names of customers, customer lists and contact information, customer pricing and purchasing information, lists of targeted prospective customers, supplier lists, product/service and marketing data and programs, product/service plans, product development, advertising campaigns, new product designs or roll out, agreements with third parties, or any such similar information. Confidential Information shall also include the track record and investment performance of Vista Equity Partners and its affiliated investment funds, as well as any information disclosed to the Company by a third party (including, but not limited to, current or prospective customers) that the Company is obliged to treat as confidential. Confidential Information may be in written or non—written form, as well as information held on electronic media or networks, magnetic storage, cloud storage service, or other similar media. The Company has invested and will continue to invest extensive time, resources, talent, and effort to develop its Confidential Information, all of which generates goodwill for the Company. Employee acknowledges that the Company has taken reasonable and adequate steps to control access to the Confidential Information and to prevent unauthorized disclosure, which could cause injury to the Company. This definition shall not limit any broader definition of “confidential information” or any equivalent term under applicable state or federal law.

 

f.                                        Material Contact” shall mean actual contact between Employee and a Customer with whom Employee dealt on behalf of the Company; or whose dealings with the Company were coordinated or supervised by Employee; or who received goods or services from the Company that resulted in payment of commissions or other compensation to Employee; or about whom Employee obtained Confidential Information because of Employee’s Employment with the Company; or whom employee contacted with the intent of establishing or strengthening a business or professional relationship for the Company.

 

g.                                       “Prospective Customer” shall mean any business or entity with whom Employee had Material Contact, for the purpose of attempting to sell or

 

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provide Services, and to whom Employee provided a bid, quote for Services, or other Confidential Information of the Company, during the twelve (12) months preceding Employee’s termination date.

 

h.                                      Restricted Period” shall mean the entire term of Employee’s employment with the Company and a two (2) year period immediately following the termination of Employee’s employment, unless otherwise delineated or described in the “end notes and exceptions” at the end of this Agreement.

 

i.                                          “Restricted Territory” shall mean the geographic area in which or with respect to which Employee provided or attempted to provide any Services or performed operations on behalf of the Company as of the date of termination or during the twelve (12) months preceding Employee’s termination date.

 

j.                                         “Trade Secrets” shall mean the business information of the Company that is competitively sensitive and which qualifies for trade secrets protection under applicable trade secrets laws, including but not limited to the Defend Trade Secrets Act. This definition shall not limit any broader definition of “trade secret” or any equivalent term under any applicable local, state or federal law.

 

k.                                      “Services” shall mean the types of work product, processes and work—related activities relating to the Business of the Company performed by Employee during the Employment.

 

14.          MANDATORY ARBITRATION CLAUSE; NO JURY TRIAL. A Party may bring an action in court to obtain a temporary restraining order, preliminary injunction or other provisional remedy available under California Code of Civil Procedure § 1281.8 in response to any violation or threatened violation of the restrictive covenants set forth in this Agreement, or for any other purpose for which a provisional remedy may be obtained pursuant that statute. Otherwise, Employee expressly agrees and acknowledges that the Company and Employee will utilize binding arbitration to resolve all disputes that may arise out of the employment context.

 

a.                                      Both the Company and Employee hereby agree that any claim, dispute, and/or controversy that Employee may have against the Company (or its owners, directors, officers, managers, employees, agents, insurers and parties, affiliated with its employee benefit and health plans), or that the Company may have against Employee, arising from, related to, or having any relationship or connection whatsoever to the Employment, shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act (9 U.S.C. §§ 1, et seq.) in conformity with the Federal Rules of Civil Procedure. Included within the scope of this Agreement are all disputes including, but not limited to, any claims alleging employment discrimination, harassment, hostile environment, retaliation, whistleblower protection, wrongful discharge, constructive discharge, failure to grant leave, failure to reinstate, failure to accommodate, tortious

 

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conduct, breach of contract, and/or any other claims Employee may have against the Company for any exemption misclassification, unpaid wages or overtime pay, benefits, payments, bonuses, commissions, vacation pay, leave pay, workforce reduction payments, costs or expenses, emotional distress, pain and suffering, or other alleged damages arising out of the Employment or termination. Also included are any claims based on or arising under Title VII, 42 USC Section 1981, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act, Sarbanes—Oxley, the California Fair Employment and Housing Act, the California Labor Code, all as amended, or any other state or federal law or regulation, equitable law, or otherwise relating in any way to the employment relationship.

 

b.                                      Nothing herein, however, shall prevent Employee from filing and pursuing proceedings before the United States Equal Employment Opportunity Commission or similar state agency (although if Employee chooses to pursue any type of claim for relief following the exhaustion of such administrative remedies, such claim would be subject to resolution under these mandatory arbitration provisions). In addition, nothing herein shall prevent Employee from filing an administrative claim for unemployment benefits or workers’ compensation benefits.

 

c.                                       Nothing in the confidentiality or nondisclosure or other provisions of this Agreement shall be construed to limit Employee’s right to respond accurately and fully to any question, inquiry or request for information when required by legal process or from initiating communications directly with, or responding to any inquiry from, or providing testimony before, any self—regulatory organization or state or federal regulatory authority, regarding the Company, Employee’s Employment, or this Agreement. Employee is not required to contact the Company regarding the subject matter of any such communications before engaging in such communications. Employee also understands that Employee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (1) is made (a) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and (b) solely for the purpose of reporting or investigating a suspected violation of law; or (2) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Employee also understands that disclosure of trade secrets to attorneys, in legal proceedings if disclosed under seal, or pursuant to court order is also protected under 18 U.S. Code §1833 when disclosure is made in connection with a retaliation lawsuit based on the reporting of a suspected violation of law.

 

d.                                      In addition to any other requirements imposed by law, the arbitrator selected shall be a qualified individual mutually selected by the Parties, and shall be subject to disqualification on the same grounds as would apply to a judge.

 

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All rules of pleading, all rules of evidence, all statutes of limitations, all rights to resolution of the dispute by means of motions for summary judgment, and judgment on the pleadings shall apply and be observed. Resolution of the dispute shall be based solely upon the law governing the claims and defenses pleaded, and the arbitrator may not invoke any basis (including but not limited to, notions of “just cause”) other than such controlling law. Likewise, all communications during or in connection with the arbitration proceedings are privileged. The arbitrator shall have the authority to award appropriate substantive relief under relevant laws, including the damages, costs and attorneys’ fees that would be available under such laws.

 

e.                                       Employee’s initial share of the arbitration fee shall be in an amount equal to the filing fee as would be applicable in a court proceeding, or $100, whichever is less. Beyond the arbitration filing fee, Employer will bear all other fees, expenses and charges of the arbitrator.

 

f.                                        Employee understands and agrees that all claims against the Company must be brought in Employee’s individual capacity and not as a plaintiff or class member in any purported class or representative proceeding. Employee understands that there is no right or authority for any dispute to be heard or arbitrated on a collective action basis, class action basis, as a private attorney general, or on bases involving claims or disputes brought in a representative capacity on behalf of the general public, on behalf of other Company employees (or any of them) or on behalf of other persons alleged to be similarly situated. Employee understands that there are no bench or jury trials and no class actions or representative actions permitted under this Agreement. The Arbitrator shall not consolidate claims of different employees into one proceeding, nor shall the Arbitrator have the power to hear an arbitration as a class action, collective action, or representative action. The interpretation of this subsection shall be decided by a judge, not the Arbitrator. Notwithstanding the provisions in Paragraph 21 below, this subparagraph (f) is material to the arbitration provisions of Paragraph 14 herein and cannot be severed from Paragraph 14. In the event it is determined that this subparagraph (f) is unenforceable with regard to a claim, dispute and/or controversy as set forth in subparagraph (a) above, this will render Paragraph 14 unenforceable in its entirety. Severance of Paragraph 14 from the Agreement shall not affect the enforcement of the remainder of the Agreement.

 

g.                                       Procedure. Employee and Company agree that prior to the service of an Arbitration Demand, the parties shall negotiate in good faith for a period of thirty (30) days in an effort to resolve any arbitrable dispute privately, amicably and confidentially. To commence an arbitration pursuant to this Agreement, a party shall serve a written arbitration demand (the “Demand”) on the other party by hand delivery or via overnight delivery service (in a manner that provides proof of receipt by respondent). The

 

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Demand shall be served before expiration of the applicable statute of limitations. The Demand shall describe the arbitrable dispute in sufficient detail to advise the respondent of the nature and basis of the dispute, state the date on which the dispute first arose, list the names and addresses of every person whom the claimant believes does or may have information relating to the dispute, including a short description of the matter(s) about which each person is believed to have knowledge, and state with particularity the relief requested by the claimant, including a specific monetary amount, if the claimant seeks a monetary award of any kind, If respondent does not provide a written Response to the Demand, all allegations will be considered denied. The parties shall confer in good faith to attempt to agree upon a suitable arbitrator, and if unable to do so, they will select an arbitrator from the American Arbitration Association (“AAA”)’s employment arbitration panel for the area. The arbitrator shall allow limited discovery, as appropriate in his or her discretion. The arbitrator’s award shall include a written reasoned opinion.

 

h.                                      Unless Employee initials in the space at the end of this paragraph, Employee understands, agrees, and consents to this binding arbitration provision, and Employee and the Company hereby each expressly waive the right to trial by jury of any claims arising out of Employment with the Company. By initialing below, Employee opts out of the binding arbitration provisions of Paragraph 14, including the class action waiver. Employee’s Initials:

 

15.          NOTICE OF VOLUNTARY TERMINATION OF EMPLOYMENT. Unless otherwise stated in Employee’s offer letter of employment, Employee agrees to use reasonable efforts to provide the Company fourteen (14) days written notice of Employee’s intent to terminate Employee’s Employment; provided, however, that this provision shall not change the at—will nature of the employment relationship between Employee and the Company. It shall be within the Company’s sole discretion to determine whether Employee should continue to perform services on behalf of the Company during this notice period.

 

16.          NON—DISPARAGEMENT. During and after Employee’s Employment with the Company, except to the extent compelled or required by law, Employee agrees he/she shall not disparage the Company, its customers and suppliers or their respective officers, directors, agents, servants, employees, attorneys, shareholders, successors or assigns or their respective products or services, in any manner (including but not limited to, verbally or via hard copy, websites, blogs, social media forums or any other medium); provided, however, that nothing in this Section shall prevent Employee from: engaging in concerted activity relative to the terms and conditions of Employee’s Employment and in communications protected under the National Labor Relations Act, filing a charge or providing information to any governmental agency, or from providing information in response to a subpoena or other enforceable legal process or as otherwise required by law.

 

17.          NOTIFICATION OF NEW EMPLOYER. Before Employee accepts Employment or enters into any consulting, independent contractor, or other professional or

 

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business engagement with any other person or entity while any of the provisions of Sections 8, 9 or 10 of this Agreement are in effect, Employee will provide such person or entity with written notice of the provisions of Sections 8, 9 and/or 10 and will deliver a copy of that notice to the Company. While any of Sections 8, 9 or 10 of this Agreement are in effect, Employee agrees that, upon the request of the Company, Employee will furnish the Company with the name and address of any new employer or entity for whom Employee provides contractor or consulting services, as well as the capacity in which Employee will be employed or otherwise engaged. Employee hereby consents to the Company’s notifying Employee’s new employer about Employee’s responsibilities, restrictions and obligations under this Agreement.

 

18.          REIMBURSEMENT TO COMPANY. To the extent allowed by applicable law, Employee agrees to reimburse the Company for any amounts due as a result of the Employment, including, but not limited to, any unused business expense advances, charges for Company property that Employee fails to return when requested or that Employee lost or damaged as the result of a dishonest, willful or grossly negligent act, and any other charges incurred that are payable to the Company. Employee agrees to enter into a repayment arrangements and execute instruments or documents as may be provided by Company to effectuate this provision.

 

19.          NO RIGHTS GRANTED. Nothing in this Agreement shall be construed as granting to Employee any rights under any patent, copyright, or other intellectual property right of the Company, nor shall this Agreement grant Employee any rights in or to Confidential Information of the Company other than the limited right to review and use such Confidential Information solely for the purpose of participating in the Employment for the benefit of the Company.

 

20.          SUCCESSORS AND ASSIGNS. This Agreement will be binding upon Employee’s heirs, executors, administrators and other legal representatives and will be for the benefit of the Company, its successors, its assigns and licensees. This Agreement, and Employee’s rights and obligations hereunder, may not be assigned by Employee; however, the Company may assign its rights hereunder without Employee’s consent, whether in connection with any sale, transfer or other disposition of any or all of its business or assets or otherwise.

 

21.          SEVERABILITY AND REFORMATION. Employee and the Company agree that if any particular paragraphs, subparagraphs, phrases, words, or other portions of this Agreement are determined by an appropriate court, arbitrator, or other tribunal to be invalid or unenforceable as written, they shall be modified as necessary to comport with the reasonable intent and expectations of the parties and in favor of providing maximum reasonable protection to the Company’s legitimate business interests. Such modification shall not affect the remaining provisions of this Agreement. If such provisions cannot be modified to be made valid or enforceable, then they shall be severed from this Agreement, and all remaining terms and provisions shall remain enforceable,

 

22.          ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the entire agreement between the Parties relating to the subject matters contained herein. No term of this Agreement, including Section 3 (“At Will Employment”), may be amended or modified unless made in writing and executed by both Employee and an authorized agent of the Company. This Agreement replaces and supersedes all prior representations, understandings, or agreements,

 

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written or oral, between Employee and the Company with regard to restrictive covenants, post—employment restrictions, and mandatory arbitration.

 

23.          WAIVER. Failure to fully enforce any provision of this Agreement by either Party shall not constitute a waiver of any term hereof by such Party; no waiver shall be recognized unless expressly made in writing, and executed by the Party that allegedly made such waiver.

 

24.          CONSTRUCTION. The Parties agree that this Agreement has been reviewed by each Party, each Party had an opportunity to make suggestions about the provisions of the Agreement, and each Party had sufficient opportunity to obtain the advice of legal counsel on matters of contract interpretation, if desired. The Parties agree that this Agreement shall not be construed or interpreted more harshly against one Party merely because one Party was the original drafter of the Agreement.

 

25.          COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same legally recognized instrument.

 

26.          THIRD—PARTY BENEFICIARIES. Employee specifically acknowledges and agrees that the direct and indirect subsidiaries, parents, owners, and affiliated companies of the Company are intended to be beneficiaries of this Agreement and shall have every right to enforce the terms and provisions of this Agreement in accordance with the provisions of this Agreement.

 

27.          NOTICES. Notices regarding this Agreement shall be sent via email or to the mailing addresses of the Parties as set forth in the signature block to this Agreement.

 

28.          GOVERNING LAW AND FORUM SELECTION. This Agreement shall be governed by and construed in accordance with the Federal Arbitration Act. Any non—arbitration—covered disputes shall be resolved under the substantive laws and in the jurisdiction of the state where Employee most recently worked for the Company.

 

B - 16


 

The Parties have executed this Employment and Restrictive Covenants Agreement, which is effective as of the Effective Date written above.

 

For Employee:

For Company:

 

 

Signature:

/s/ B. Kristian Nagel

 

Signature:

/s/ Andre Durand

 

 

 

 

Printed Name:

B. Kristian Nagel

 

Printed Name:

Andre Durand

 

 

 

 

Address:

 

 

Address:

 

 

 

 

 

 

 

 

 

 

Email:

 

 

Title:

CEO

 

 

 

 

Date:

11/4/18

 

Date:

11-5-2018

 

B - 17


 

Schedule 1
(List of Employee’s Prior Inventions)

 

/s/ BKN      By initialing here, I represent and warrant that I have no Prior Inventions, as that term is defined in the Agreement to which this Schedule 1 is attached.

 

OR

 

                    Below is a complete and accurate list of Prior Inventions, as that term is defined in the Agreement to which this Schedule 1 is attached.

 

 

For Employee:

 

Signature:

/s/ B. Kristian Nagel

 

 

 

 

Printed Name:

B. Kristian Nagel

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

Email:

 

 

 

 

 

Date:

11/4/18

 

 

B - 18


 

EXHIBIT B

 

Certain Definitions

 

Cause” means any of the following: (i) a material failure by you to perform your responsibilities or duties to the Company under this letter or those other lawful responsibilities or duties as requested from time to time by the Board, after written demand for performance has been given by the Board that identifies how you have not performed your responsibilities or duties, and granting you a minimum of 10 business days to cure the alleged deficiencies; (ii) your engagement in illegal or improper conduct or in gross misconduct in the fulfillment of your responsibilities or duties to the Company; (iii) your commission or conviction of, or plea of guilty or nolo contendere to, a felony, a crime involving moral turpitude or any other act or omission that the Company in good faith believes may harm the standing and reputation of the Company; (iv) a material breach of your duty of loyalty to the Company or your material breach of the Company’s written code of conduct and business ethics or Section 2 through 8 of the Confidentiality, Invention Assignment, Non—Solicit, Non—Compete and Arbitration Agreement, or any other agreement between you and the Company; (v) dishonesty, fraud, gross negligence or repetitive negligence committed without regard to corrective direction in the course of discharge of your duties as an employee; (vi) your personal bankruptcy or insolvency; or (vii) excessive and unreasonable absences from your duties for any reason (other than authorized vacation or sick leave) or as a result of your Disability (as defined below).

 

Disability” means your inability to perform the essential functions of your job, with or without accommodation, for an extended period but not less than 60 business days in any consecutive 6—month period, as determined in the reasonable discretion of the Company.

 

Good Reason” means that you voluntarily terminate your employment with the Company if there should occur, without your written consent:

 

(a)           a material, adverse change in your duties or responsibilities with the Company, provided that a change in title or a change in the person or office to which you report, shall not, by itself, constitute such a material, adverse change;

 

(b)           an aggregate reduction in your then current base salary by more than 10% or a reduction in your base salary by less than 10% which is not applied to similarly ranked employees;

 

(c)           the material breach by the Company of any offer letter or employment agreement between you and the Company; and/or

 

(d)           a requirement of relocation of your primary residence to a location more than fifty (50) miles from Los Gatos, California.

 

provided, however, that in each case above, (i) you must first give the Company written notice of any of the foregoing within 30 business days following the first occurrence of such event in a written explanation specifying the basis for your belief that you are entitled to terminate your employment for Good Reason, (ii) the Company must, have 30 days to cure such event and (iii) provided that the Company does not reasonably cure such event, you must actually resign your

 

B - 19


 

employment within 30 days following the cure period described in (ii). Otherwise, any claim of such circumstances as “Good Reason” shall be deemed irrevocably waived by you.

 

All references to the Company in these definitions shall include parent, subsidiary, affiliate and successor entities of the Company.

 

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Exhibit 10.18

 

October 22, 2018

 

Bernard Harguindeguy
c/o Ping Identity
1001 17
th Street
Denver, CO 50202

 

Re:          Employment with Ping Identity Corporation

 

Dear Bernard:

 

This is your employment agreement with Ping Identity Corporation, a Delaware corporation, (as such company’s name may change from time to time and such company’s successors and assigns, the “Company”). The effective date of the commencement of your employment by the Company pursuant to the terms of this letter shall be October 1, 2018 (the “Effective Date”). We are very excited about this opportunity and value the role that you will serve on our team going forward.

 

1.             You will be the Senior Vice President and Chief Technology Officer of the Company, reporting to the Chief Executive Officer of the Company, or any other officer as directed by the Board of Directors of the Company (the “Board”). In this capacity, you will have the responsibilities and duties consistent with such position.

 

2.             Your base salary will be $300,000 per year, less deductions and withholdings required by law or authorized by you, and will be subject to review annually for any increases or decreases; provided, however, that any decreases shall not be greater than 10% of your then current base salary, which decrease would only be implemented in conjunction with a general decrease affecting the executive management team. Your base salary will be paid by the Company in regular installments in accordance with the Company’s general payroll practices as in effect from time to time.

 

For the calendar year ending December 31, 2018, you will be eligible to receive a bonus in an amount equal to 50% of your annual base salary prorated for the period of you service for the Company (i.e., from the Effective Date through December 31, 2018), provided that you are still employed by the Company on the date that the Company pays year-end bonuses (the “2018 Bonus”). For each bonus period beginning on and after January 1, 2019, you will be eligible for an additional bonus of up to 10% of your base salary per year (the “Stretch Bonus”), awarded at the sole discretion of the Board, based on the Board’s determination as to your achievement of “stretch” targets.

 

Except as otherwise set forth above, the bonus formulas, MBOs, performance milestones and all other elements of your bonus opportunities shall be established by the Board, in its sole discretion after consultation with you, and communicated in writing (including email) to you from time to time. Any bonus earned for a fiscal year shall be paid within 30 days after the Board has received, reviewed and approved the applicable fiscal year’s final audited financial statements. In any event, payment of any bonus that becomes due with respect to a fiscal year shall be paid in the calendar year following the calendar year in which the fiscal year ends, subject, in each case, to your continued employment on the applicable payment date.

 


 

3.             You will also be eligible to participate in the health, dental and vision insurance plans and other employee benefit plans established by the Company or its affiliates for its employees from time to time, in accordance with the terms of such plans and applicable law, so long as they remain generally available to such employees. The Company reserves the right to amend or terminate any employee benefit plans at any time in its sole discretion, subject to the terms of such employee benefit plans and applicable law.

 

4.             During your employment, your principal place of employment will be your home office from which you will work remotely. Your duties may involve extensive domestic and international travel.

 

5.             You will be eligible to receive a certain amount of incentive equity (the “Incentive Equity”) of Roaring Fork Holding, Inc., a Delaware corporation and indirect sole parent of the Company (“Parent”), which Incentive Equity shall be issued under Parent’s 2016 Stock Option Plan (as amended, restated or otherwise modified from time to time, the “Option Plan”). Such Incentive Equity will be subject to the terms (including the vesting terms and the participation threshold or exercise price, as the case may be) set forth in the Option Plan and the grant agreement to which you will be a party (the “Grant Agreement”). The grant of such Incentive Equity is subject to Parent’s Board of Directors’ approval and the execution of the Grant Agreement. Our intent to recommend such approval is not a promise of compensation and is not intended to create any obligation on the part of the Company or Parent. Further details on the Incentive Equity and any specific grant of Incentive Equity to you will be provided upon approval of such grant by the Board of Directors of Parent.

 

Your Incentive Equity, if granted, will vest as follows, each as more fully set forth in the Grant Agreement (it being understood that such vesting shall be subject to your continued employment by the Company through the applicable vesting event):

 

·              2/3 of the Incentive Equity would be subject to time-based vesting over 4 years, with 25% vesting upon the one-year anniversary of the Grant Date (as defined in the Grant Agreement) and the remainder of the time-based grant at a rate of 1/16th per quarter thereafter (the vesting of any such unvested time-based Incentive Equity would be accelerated upon a change of control of Parent); and

 

·              1/3 of the Incentive Equity would vest if any equity buy-out investment fund managed or controlled by Vista Equity Partners, and any of such funds’ respective portfolio companies (collectively, “Vista”) received cumulative cash distributions or other cash proceeds, contributions and/or net sale proceeds in respect of the securities of Parent or its subsidiaries held by Vista or any loans provided to Parent or its subsidiaries by Vista (“Vista’s Return”) such that Vista’s Return equals or exceeds 300% of the aggregate debt and equity investment by Vista in Parent and its subsidiaries (calculated pursuant to the formula set forth in the Grant Agreement).

 

6.             There are some formalities that you need to complete as a condition of your employment:

 

·              You must carefully consider and sign the Company’s standard “Employment and Restrictive Covenants Agreement” (attached to this letter as Exhibit A). Because the Company

 

2


 

and its affiliates are engaged in a continuous program of research, development, production and marketing in connection with their business, we wish to reiterate that it is critical for the Company and its affiliates to preserve and protect its proprietary information and its rights in inventions.

 

·              So that the Company has proper records of inventions that may belong to you, we ask that you also complete Schedule 1 attached to Exhibit A.

 

·              You and the Company mutually agree that any disputes that may arise regarding your employment will be submitted to binding arbitration pursuant to the arbitration clause set forth in Section 14 of Exhibit A.  As a condition of your employment, you will need to carefully consider and voluntarily agree to the arbitration clause set forth in Section 14 of Exhibit A.

 

7.             We also wish to remind you that, as a condition of your employment, you are expected to abide by the Company’s, its subsidiaries’ and affiliates’ policies and procedures, which may be amended from time to time, at the Company’s sole discretion.

 

8.             Your employment with the Company is at will. The Company may terminate your employment at any time with or without notice, and for any reason or no reason. Notwithstanding any provision to the contrary contained in Exhibit A, you shall be entitled to terminate your employment with the Company at any time and for any reason or no reason by giving notice in writing to the Company of not less than 4 weeks (“Notice Period”), unless otherwise agreed to in writing by you and the Company. In the event of such notice, the Company reserves the right, in its discretion, to give immediate effect to your resignation in lieu of requiring or allowing you to continue work throughout the Notice Period, provided that the Company pays your Base Salary in lieu of the Notice Period. You shall continue to be an employee of the Company during the Notice Period, and thus owe to the Company the same duty of loyalty you owed it prior to giving notice of your termination. The Company may, during the Notice Period, relieve you of all of your duties and prohibit you from entering the Company’s offices.

 

9.             If your employment is terminated for any reason, you shall be entitled to (i) all accrued but unpaid Base Salary through the date of termination of your employment, (ii) any unpaid or unreimbursed expenses incurred prior to the date of termination in accordance with the Company’s reimbursement policy and (iii) any benefits accrued and vested as of the date of termination under the employee benefit plans of the Company in accordance with the terms and conditions thereof.

 

10.          If the Company terminates your employment without “Cause” or you voluntarily terminate your employment for a “Good Reason,” you will be entitled to receive a severance payment equal to 1 month of your then applicable base salary per full year of service completed with the Company or its subsidiaries at the time of your termination, up to a maximum of 3 months, less deductions and withholdings required by law or authorized by you (the “Severance Pay”). For purposes of this section, “Cause” and “Good Reason” have the meaning set forth in Exhibit B attached hereto. The Company will not be required to pay the Severance Pay unless (i) you execute and deliver to the Company an agreement (“Release Agreement”) in a form satisfactory to the Company releasing from all liability (other than the payments and benefits contemplated by this letter) the Company, each member and affiliate of the Company, and any of their respective past or present investors, members, officers, directors, managers, employees or agents and you do

 

3


 

not revoke such Release Agreement during any applicable revocation period, (ii) such Release Agreement is executed and delivered (and no longer subject to revocation, if applicable) within 60 days following termination, and (iii) your continued compliance with the provisions of Sections 2 through 8 of Exhibit A, the terms of this letter and any agreement between you and the Company and the provisions of the Release Agreement. The Severance Pay shall be paid in installments in accordance with the Company’s general payroll practices at the time of termination starting on the 60th day following your termination of employment, provided you have executed, delivered, and not revoked the Release Agreement during such revocation period for the Release Agreement described above; provided that to the extent any portion of the Severance Pay is “nonqualified deferred compensation” as that term is contemplated by Code Section 409A (as defined below), such amount shall not be paid until the 60th day following termination. Nothing in this paragraph, or in general in this letter, shall change or modify the terms of the Security Purchase Agreement, by and among the Company, the Sellers (as defined therein) and you, as the Stockholders’ Representative (as defined therein), dated as of April 5, 2018, except that this letter shall serve as your “Employment Agreement” referenced therein.

 

11.          You shall not make any statement regarding your employment or the termination of your employment (for whatever reason) that is not agreed to by the Company. You shall not make any statement that would libel, slander or disparage the Company, any member of the Company or its affiliates or any of their respective past or present officers, directors, managers, stockholders, employees or agents.

 

12.          While we look forward to a long and profitable relationship, you will be an at-will employee of the Company as described in Section 8 of this letter and Section 9 of Exhibit A Any statements or representations to the contrary (and, indeed, any statements contradicting any provision in this letter) are, and should be regarded by you, as ineffective. Further, your participation in any benefit program or other Company program, if any, is not to be regarded as assuring you of continuing employment for any particular period of time.

 

13.          Please note that because of employer regulations adopted in the Immigration Reform and Control Act of 1986, within 3 business days of starting your new position you will need to present documentation establishing your identity and demonstrating that you have authorization to work in the United States. If you have questions about this requirement, which applies to U.S. citizens and non-U.S. citizens alike, you may contact our personnel office.

 

14.          It should also be understood that all offers of employment are conditioned on the Company’s completion of a satisfactory background check. The Company reserves the right to perform background checks during the term of your employment, subject to compliance with applicable laws. You will be required to execute forms authorizing such a background check.

 

15.          This letter along with its Exhibits and the documents referred to herein constitute the entire agreement and understanding of the parties with respect to the subject matter of this letter, and supersede all prior understandings and agreements, including but not limited to employment agreements, severance agreements, and bonus agreements, whether oral or written, between or among you and the Company, Parent or any of their respective predecessors or affiliates with respect to the specific subject matter hereof. Waivers or modifications of this letter agreement are valid only if in writing and duly executed by each of the parties hereto.

 

4


 

16.          In the event of a conflict between the terms of this letter and the provisions of Exhibit A, the terms of this letter shall prevail.

 

17.          Notwithstanding any other provision herein, the Company shall be entitled to withhold from any amounts otherwise payable hereunder any amounts required to be withheld in respect to federal, state or local taxes. The intent of the parties is that payments and benefits under this letter be exempt from, or comply with, Code Section 409A and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this letter shall be interpreted to be in compliance therewith. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on you by Code Section 409A or damages for failing to comply with Code Section 409A. A termination of employment shall not be deemed to have occurred for purpose of any provision of this letter providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this letter, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” For purposes of Code Section 409A, your right to receive any installment payments pursuant to this letter shall be treated as a right to receive a series of separate and distinct payments. To the extent that reimbursements or other in-kind benefits under this letter constitute “nonqualified deferred compensation” for purposes of Code Section 409A, (A) all such expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by you, (B) any right to such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (C) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year. Notwithstanding any other provision of this letter to the contrary, in no event shall any payment under this letter that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

 

If you are deemed at the time of your separation from service to be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), to the extent delayed commencement of any portion of the compensation or benefits to which you are entitled under this Agreement is required in order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) (any such delayed commencement, a “Payment Delay”), such compensation or benefits shall not be provided to you prior to the earlier of (1) the expiration of the 6-month period measured from the date of your “separation from service” with the Company or (2) the date of your death. Upon the earlier of such dates, all payments and benefits deferred pursuant to the Payment Delay shall be paid in a lump sum to you, and any remaining compensation and benefits due under the Agreement shall be paid or provided as otherwise set forth herein. The determination of whether you are a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i) as of the time of his separation from service shall be made by the Company in accordance with the terms of Code Section 409A and applicable guidance thereunder (including without limitation Treasury Regulation Section 1.409A-1(i) and any successor provision thereto).

 

In the event the Company determines that any compensation or benefit payable hereunder may violate applicable requirements of Code Section 409A, the Company may adopt such

 

5


 

amendments to this Agreement or take any other actions that the Company in its reasonable discretion determines are necessary or appropriate for such compensation or benefit to either (a) be exempt from the requirements of Code Section 409A or comply with the applicable requirements of Code Section 409A or (b) in the absence of the ability to do either of the foregoing set forth in clause (a), make such amendments to this Agreement that will preserve the economic benefit intended to be provided to you hereunder had the adverse tax consequences imposed under Code Section 409A not applied.

 

18.          The effective date of the commencement of your employment pursuant to the terms of this letter shall be on or before October 1, 2018, as mutually agreed between you and the Chief Executive Officer of the Company.

 

If you decide to accept the terms of this letter, and I hope you will, please signify your acceptance of these conditions of employment by signing and dating the enclosed copy of this letter and its Exhibit A and returning them to me and/or Aaron LaPoint, not later than October 15, 2018 Should you have anything that you wish to discuss, please do not hesitate to contact Aaron at (720) 878-3972.

 

*              *              *              *

 

6


 

By signing this letter and Exhibit A attached hereto, you represent and warrant that you have had the opportunity to seek the advice of independent counsel before signing and have either done so, or have freely chosen not to do so, and either way, you sign this letter voluntarily.

 

 

Very truly yours,

 

 

 

 

 

/s/ André Durand

 

André Durand

 

Chief Executive Officer

 

I have read and understood this letter and Exhibit A attached and hereby acknowledge, accept and agree to the terms set forth therein.

 

/s/ Bernard Harguindeguy

 

Date signed:

November 8, 2018

Bernard Harguindeguy

 

 

 

 

 

LIST OF EXHIBITS

 

Exhibit A:  Employment and Restrictive Covenants Agreement

 

Exhibit B:  Certain Definitions

 


 

EXHIBIT A

 

EMPLOYMENT AND RESTRICTIVE COVENANTS AGREEMENT

 

This Employment and Restrictive Covenants Agreement (the “Agreement’) is made effective October 1, 2018 (the “Effective Date”), by and between Ping Identity Corporation (together with its affiliates and related companies, hereafter referenced as “Company’) and Bernard Harguindeguy (hereafter referenced as “Employee”).

 

1.                                      PURPOSE. In connection with Employee’s employment by the Company (the “Employment”), Employee and the Company wish to set forth the terms and conditions under which Employee will be employed by the Company, and certain restrictions applicable to Employee as a result of the Employment with the Company. This Agreement is intended: to allow the parties to engage in the Employment, with the Company giving Employee access to the Company’s customers, employees, and Confidential Information (as that term is defined below); to protect the Company’s business, information, and relationships against unauthorized competition, solicitation, recruitment, use, or disclosure; and to clarify Employee’s legal rights and obligations.

 

2                                         THE BUSINESS OF THE COMPANY. The Company is engaged in the business of investing and operating in software and technology-enabled businesses. including a continuous program of research, development, production and marketing (collectively the “Business” of the Company). Employee acknowledges that the Company has a legitimate interest in protecting its Confidential Information, trade secrets, customer relationships, customer goodwill, employee relationships, and the special investment and training given to Employee.

 

3.                                      “AT WILL” EMPLOYMENT OF EMPLOYEE. Employee, shall perform such duties or responsibilities as assigned to Employee from time to time The Parties acknowledge that Employee’s employment by the Company at all times is and shall remain “at will,” and may be terminated by either Party at any time, with or without notice and with or without cause. Employee acknowledges that but for Employee’s execution of this Agreement, Employee would not be employed by the Company.

 

a.                                      Employee acknowledges that Employee’s duties shall entail Employee’s contact with the Company’s customers to whom Employee is introduced, to which Employee is assigned, whose accounts Employee shall oversee, or for which Employee otherwise is directly or indirectly responsible. Employee further acknowledges that Employee will be given the use of the Company’s Confidential Information. Employee acknowledges that the Company’s goodwill with its customers and customer prospects, as well as the Company’s Confidential Information, are among the most valuable assets of the Company’s Business. Accordingly, Employee hereby agrees, acknowledges, covenants, represents and warrants that at all times during Employee’s employment with the Company, Employee will faithfully perform Employee’s duties with the utmost loyalty to the Company, and will owe a fiduciary duty and duty of loyalty to the Company. Employee agrees that during employment, Employee will do nothing disloyal or adverse to the Company or the Company’s Business, or which creates any conflict

 

A-1


 

of interest with the Company or the Business of the Company. Employee will abide by the policies of the Company at all times during Employee’s employment and acknowledges that the Company may unilaterally change its policies, practices, and procedures at any time, at the sole discretion of the Company. Employee understands and acknowledges that all equipment, communication devices, physical property, documents. information, data bases, furniture, accessories, premises, and any other items provided to Employee while employed by Company, shall at all times remain the sole property of the Company, and as such, Employee shall have no reasonable expectation of. privacy when using such items.

 

b.                                      Employee acknowledges that Employee will be afforded an investment of time, training, money, trust, exposure to the public, or exposure to customers, vendors, suppliers, investors, joint venture partners, or other business relationships of the Company during the course of the Employment, and Employee’s position gives Employee a high level of influence or credibility with the Company’s customers, vendors, suppliers, or other business relationships. Employee understands and acknowledges that Employee will possess specialized skills, learning, abilities, customer contacts, or customer information by reason of working for the Company.

 

c.                                       Employee acknowledges that, through Employee’s employment with the Company, Employee may customarily and regularly solicit customers and/or prospective customers for the Company, and/or engage in making sales or obtaining orders or contracts for products or services.

 

d                                         Employee understands that the Company has specifically instructed him/her to refrain from bringing to the Company any documents or materials or intangibles of a former employer or third party that are not in the public domain, or have not been legally transferred or licensed to the Company, or that might constitute the confidential information or trade secrets of a prior employer. Employee agrees that when performing duties on behalf of the Company, he/she will not breach any invention assignment, proprietary information, confidentiality, noncompetition, nonsoliciation or other similar agreement with any former employer or other party.

 

4.                                      DUTY OF LOYALTY. Employee understands that his/her employment and provision of services on behalf of the Company requires Employee’s undivided attention and effort. Accordingly, during Employee’s employment, Employee agrees that he/she will not, without the Company’s express prior written consent. (i) engage in any other business activity, unless such activity is for passive investment purposes not otherwise prohibited by this Agreement and will not require Employee to render any services, (ii) be engaged or interested, directly or indirectly, alone or with others, in any trade, business or occupation in competition with the Company, (iii) take steps, alone or with others, to engage in competition with the Company in the future, or (iv) appropriate for Employee’s own benefit business opportunities pertaining to the Company’s Business.

 

A-2


 

5.                                      INVENTIONS.

 

a.                                      Prior Inventions. Attached hereto as Schedule 1 is a complete and accurate list describing all Inventions (as defined below) which were conceived, discovered, created, invented, developed and/or reduced to practice by Employee prior to the commencement of his/her Employment that have not been legally assigned or licensed to the Company (collectively: “Prior Inventions”). If there are no such Prior Inventions, Employee shall initial Schedule 1 to indicate Employee has no Prior Inventions to disclose.

 

Employee acknowledges and agrees that if in the course of Employee’s employment, Employee incorporates or causes to be incorporated into a Company product, service, process, file, system, application or program a Prior Invention, Employee will grant the Company a non-exclusive, royalty-free, irrevocable, perpetual, worldwide, sublicensable and assignable license to make, have made, copy, modify, make derivative works of, use, offer to sell, sell or otherwise distribute such Prior Invention as part of or in connection with such product, process, file, system, application or program.

 

b.                                      Disclosure and Assignment of Inventions. Employee agrees to promptly disclose to the Company in writing all Inventions (as defined below) that Employee conceives, develops and/or first reduces to practice or create, either alone or jointly with others, during the period of Employee’s Employment, and for a period of three (3) months thereafter, whether or not in the course of Employee’s Employment. Employee further assigns and agrees to assign all of Employee’s rights, title and interest in the Inventions to the Company. In the event that the Company is unable for any reason to secure Employee’s signature to any document required to file, prosecute, register or memorialize the ownership and/or assignment of any Invention, Employee hereby irrevocably designates and appoints the Company’s duly authorized officers and agents as Employee’s agents and attorneys-in-fact to act for and on Employee’s behalf and stead to (i) execute, file, prosecute, register and/or memorialize the assignment and/or ownership of any Invention; (ii) to execute and file any documentation required for such enforcement and (iii) do all other lawfully permitted acts to further the filing, prosecution, registration, memorialization of assignment and/or ownership of, issuance of and enforcement of any Inventions, all with the same legal force and effect as if executed by Employee.

 

Employee acknowledges that he/she is not entitled to use the Inventions for Employee’s own benefit or the benefit of anyone except the Company without written permission from the Company, and then only subject to the terms of such permission.  Employee further agrees that Employee will communicate to the Company, as directed by the Company, any facts known to Employee and testify in any legal proceedings, sign all lawful papers, make all rightful oaths, execute all divisionals, continuations, continuations-in-part, foreign counterparts, or reissue applications, all assignments, all registration applications and all other instruments or papers to carry into full force and effect, the assignment, transfer and conveyance hereby made or to be made and generally do everything possible for title to the

 

A-3


 

Inventions to be clearly and exclusively held by the Company as directed by the Company.

 

For purposes of this Agreement, “Inventions” means, without limitation, any and all formulas, algorithms, processes, techniques, concepts, designs developments, technology, ideas, patentable and unpatentable inventions and discoveries, copyrights and works of authorship in any media now known or hereafter invented (including computer programs, source code, object code, hardware, firmware, software, mask work, applications, files, internet site content, databases and compilations, documentation and related items) patents, trade and service marks, logos, trade dress, corporate names and other source indicators and the good will of any business symbolized thereby, trade secrets, know-how, confidential and proprietary information, documents, analyses, research and lists (including current and potential customer and user lists) and all applications and registrations and recordings, improvements and licenses that (i) relate in any manner, whether at the time of conception, design or reduction to practice, to the Company’s Business or its actual or demonstrably anticipated research or development; (ii) result from any work performed by Employee on behalf of the Company; or (iii) result from the use of the Company’s equipment, supplies, facilities, Confidential Information or Trade Secrets.

 

Employee recognizes that Inventions or proprietary information relating to Employee’s activities while working for the Company, and conceived, reduced to practice, created, derived, developed, or made by Employee, alone or with others, within three (3) months after termination of Employee’s employment may have been conceived, reduced to practice, created, derived, developed, or made, as applicable, in significant part while Employee was employed by the Company. Accordingly, Employee agrees that such Inventions and proprietary information shall be presumed to have been conceived, reduced to practice, created, derived, developed, or made, as applicable, during Employee’s employment with the Company and are to be assigned to the Company pursuant to this Agreement and applicable law unless and until Employee has established the contrary by clear and convincing evidence.

 

c.                                       Work for Hire. Employee acknowledges and agrees that any copyrightable works prepared by Employee within the scope of Employee’s employment are “works made for hire” under the Copyright Act and that the Company will be considered the author and owner of such copyrightable works. Any copyrightable works the Company specially commissions from Employee while Employee is employed also shall be deemed a work made for hire under the Copyright Act and if for any reason such work cannot be so designated as a work made for hire, Employee agrees to and hereby assigns to the Company, as directed by the Company, all right, title and interest in and to said work(s). Employee further agrees to and hereby grants the Company, as directed by the Company, a non-exclusive, royalty-free, irrevocable, perpetual, worldwide, sublicensable and assignable license to make, have made, copy, modify, make derivative works of, use, publicly perform, display or

 

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otherwise distribute any copyrightable works Employee creates during Employee’s Employment.

 

d.                                      Assignment of Other Rights. In addition to the foregoing assignment of Inventions to the Company, Employee hereby irrevocably transfers and assigns to the Company: (i) all worldwide patents, patent applications, copyrights, mask works, trade secrets and other intellectual property rights in any Inventions; and (ii) any and all “Moral Rights” (as defined below) that Employee may have in or with respect to any Inventions Employee also hereby forever waives and agrees never to assert any and all Moral Rights Employee may have in or with respect to any Inventions, even after termination of Employee’s work on behalf of the Company. “Moral Rights” mean any rights to claim authorship of any Inventions, to object to or prevent the modification of any Inventions, or to withdraw from circulation or control the publication or distribution of any Inventions, and any similar right, existing under applicable judicial or statutory law of any country in the world, or under any treaty, regardless of whether or not such right is denominated or generally referred to as a “moral right.”

 

e.                                       Applicability to Past Activities. To the extent Employee has been engaged to provide services by the Company or its predecessor for a period of time before the effective date of this Agreement (the “Prior Engagement Period”), Employee agrees that if and to the extent that, during the Prior Engagement Period: (i) Employee received access to any information from or on behalf of the Company that would have been proprietary information if Employee had received access to such information during the period of Employee’s Employment with the Company under this Agreement; or (ii) Employee conceived, created, authored, invented, developed or reduced to practice any item, including any intellectual property rights with respect thereto, that would have been an Invention if conceived, created, authored, invented, developed or reduced to practice during the period of Employee’s Employment with the Company under this Agreement; then any such information shall be deemed proprietary information hereunder and any such item shall be deemed an Invention hereunder, and this Agreement shall apply to such information or item as if conceived, created, authored, invented, developed or reduced to practice under this Agreement.

 

f.                                        Employee shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—(A) is made—(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

 

g                                          Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b)or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. § 1833(b). Accordingly, the parties to this Agreement have the right to disclose in confidence trade secrets to federal, state, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of

 

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law. The parties also have the right to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure.

 

h.                                      Nothing in this agreement prohibits me from reporting possible violations of federal law or regulation to any governmental agency or entity including, but not limited to, the Department of Justice, the Securities and Exchange Commission, Congress, and any agency Inspector General, or from making other disclosures that are protected under the whistleblower provisions of federal law or regulation. I do not need the prior authorization of my supervisor or anyone else affiliated with the Company to make any such reports or disclosures, and I am not required to notify my supervisor or anyone else affiliated with the Company that I have made such reports or disclosures.

 

i.                                          Assignment Exception - California Labor Code §2870

 

Section 2870 of the California Labor Code exempts from this assignment provision any invention as to which Employee can prove the following:

 

i.                                          It was developed entirely on Employee’s own time; and

 

ii.                                      No equipment, supplies, facility or trade secret of the Company or any of its affiliated entities was used in its development; and

 

iii.                                    It neither

 

1.                                      relates at the time of its conception or reduction to practice to the business of the Company or to the Company’s actual or demonstrably anticipated research and development; nor

 

2.                                      results from any work performed by Employee for the Company.

 

The provisions of this Agreement requiring assignment to the Company do not apply to any invention which qualifies fully under the provisions of Section 2870 of the California Labor Code. Employee will advise the Company promptly in writing of any inventions, original works of authorship, developments, improvements or trade secrets that Employee believes meet the criteria in (i), (ii), and (iii) above; and Employee will at that time provide to the Company in writing all evidence necessary to substantiate that belief. Employee understands that the Company will keep in confidence and will not disclose to third parties without Employee’s consent any confidential information disclosed in writing to the Company relating to inventions that qualify fully under the provisions of Section 2870 of the California Labor Code.

 

6.                                      NONDISCLOSURE AGREEMENT.

 

a.                                      Employee expressly agrees that, throughout the term of Employee’s Employment with the Company and at all times following the termination of Employee’s

 

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Employment from the Company, for so long as the information remains confidential, Employee will not use or disclose any Confidential Information disclosed to Employee by the Company, other than for the purpose to carry out the Employment for the benefit of the Company (but in all cases preserving confidentiality by following the Company’s policies and obtaining appropriate non- disclosure agreements). Employee shall not, directly or indirectly, use or disclose any Confidential Information to third parties, nor permit the use by or disclosure of Confidential Information by third parties. Employee agrees to take all reasonable measures to protect the secrecy of and avoid disclosure or use of Confidential Information in order to prevent it from falling into the public domain or into the possession of any Competing Business or any persons other than those persons authorized under this Agreement to have such information for the benefit of the Company. Employee agrees to notify the Company in writing of any actual or suspected misuse, misappropriation, or unauthorized disclosure of Confidential Information that may come to Employee’s attention. Employee acknowledges that if Employee discloses or uses knowledge of the Company’s Confidential Information to gain an advantage for Employee, for any Competing Business, or for any other person or entity other than the Company, such an advantage so obtained would be unfair and detrimental to the Company.

 

b.                                      Employee expressly agrees that Employee’s duty of non-use and non-disclosure shall continue indefinitely for any information of the Company that constitutes a Trade Secret under applicable law, so long as such information remains a Trade Secret.

 

7.                                      RETURN OF COMPANY PROPERTY AND MATERIALS. Any Confidential Information, trade secrets, materials, equipment, information, documents, electronic data, or other items that have been furnished by the Company to Employee in connection with the Employment are the exclusive property of the Company and shall be promptly returned to the Company by Employee, accompanied by all copies of such documentation, immediately when the Employment has been terminated or concluded, or otherwise upon the written request of the Company. Employee shall not retain any copies of any Company information or other property after the Employment ends, and shall cooperate with the Company to ensure that all copies, both written and electronic, are immediately returned to the Company. Employee shall cooperate with Company representatives and allow such representatives to oversee the process of erasing and/or permanently removing any such Confidential Information or other property of the Company from any computer, personal digital assistant, phone, or other electronic device, or any cloud-based storage account or other electronic medium owned or controlled by Employee.

 

8.                                      LIMITED NONCOMPETE AGREEMENT. Employee expressly agrees that Employee will not (either directly or indirectly, by assisting or acting in concert with others) Compete with the Company during Employee’s employment with the Company.

 

9.                                      NONSOLICITATION OF CUSTOMERS/PROSPECTIVE CUSTOMERS. Employee expressly agrees that during Employee’s employment with the Company, Employee will not (either directly or indirectly, by assisting or acting in concert with others), on behalf of himself/herself or any other person, business, entity, including but not limited to on behalf of a

 

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Competing Business, call upon, solicit, or attempt to call upon or solicit any business from any Customer or Prospective Customer for the purpose of providing services substantially similar to the Services.

 

10.                               NONRECRUITMENT OF EMPLOYEES. Employee expressly agrees that during the Restricted Period, Employee will not, on behalf of himself/herself or any other person, business, or entity (either directly or indirectly, by assisting or acting in concert with others), solicit, recruit, or encourage, or attempt to solicit, recruit, or encourage any of the Company’s employees, in an effort to hire such employees away from the Company, or to encourage any of the Company’s employees to leave employment with the Company to work for a Competing Business.

 

11.                               REMEDIES; INDEMNIFICATION.  Employee agrees that the obligations set forth in this Agreement are necessary and reasonable in order to protect the Company’s legitimate business interests and (without limiting the foregoing) that the obligations set forth in Sections 8, 9 and 10 are necessary and reasonable in order to protect the Company’s legitimate business interests in protecting its Confidential Information, Trade Secrets, customer and employee relationships and the goodwill associated therewith. Employee expressly agrees that due to the unique nature of the Company’s Confidential Information, and its relationships with its Customers and other employees, monetary damages would be inadequate to compensate the Company for any breach by Employee of the covenants and agreements set forth in this Agreement. Accordingly, Employee agrees and acknowledges that any such violation or threatened violation shall cause irreparable injury to the Company and that, in addition to any other remedies that may be available in law, in equity, or otherwise, the Company shall be entitled: (a) to obtain injunctive relief against the threatened breach of this Agreement or the continuation of any such breach by Employee, without the necessity of proving actual damages; and (b) to be indemnified by Employee from any loss or harm; and (c) to recover any costs or attorneys’ fees, arising out of or in connection with any breach by Employee or enforcement action relating to Employee’s obligations under this Agreement.

 

12.                               INJUNCTIVE RELIEF; TOLLING. Notwithstanding the arbitration provisions contained herein, or anything else to the contrary in this Agreement, Employee understands that the violation of any restrictive covenants of this Agreement may result in irreparable and continuing damage to the Company for which monetary damages will not be sufficient, and agrees that Company will be entitled to seek, in addition to its other rights and remedies hereunder or at law and both before or while an arbitration is pending between the parties under this Agreement a temporary restraining order, preliminary injunction or similar injunctive relief from a court of competent jurisdiction in order to preserve the status quo or prevent irreparable injury pending the full and final resolution of the dispute through arbitration, without the necessity of showing any actual damages or that monetary damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned injunctive relief shall be in addition to, not in lieu of, legal remedies, monetary damages or other available forms of relief through arbitration proceedings. This Section shall not be construed to limit the obligation for either party to pursue arbitration. The Restricted Period as defined in this Agreement may be extended during the pendency of any litigation (including appeals) or arbitration proceeding, in order to give the Company the full protection of the restrictive covenants as described in this Agreement.

 

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13.          DEFINITIONS. For all purposes throughout this Agreement, the terms defined below shall have the respective meanings specified in this section.

 

a.                                      Customer” of the Company shall mean any business or entity with which Employee had Material Contact, for the purpose of providing Services, during the twelve (12) months preceding Employee’s termination date.

 

b.                                      Compete” shall mean to provide Competitive Services, whether Employee is acting on behalf of himself/herself, or in conjunction, with or in concert with any other entity, person, or business, including activities performed while working for or on behalf of a Customer.

 

c.                                       Competitive Services” shall mean the business or process of researching into, developing, manufacturing, distributing, selling, supplying or otherwise dealing with (including but not limited to technical and product support, professional services, technical advice and other customer services) identity and access management software and solutions that enable clients to manage, integrate and coordinate their workforce, customer and partner identities through single-sign on, multi-factor authentication, provisioning, application catalog, directory and access, and any other services of the type or similar to the type provided, conducted, authorized, or offered by the Company or any predecessor within the two (2) years prior to the termination of your employment.

 

d.                                      Competing Business” shall mean any entity, including but not limited to any person, company, partnership, corporation, limited liability company, association, organization or other entity that provides Competitive Services.

 

e.                                       Confidential Information” shall mean sensitive business information having actual or potential value to the Company or its affiliates because it is not generally known to the general public or ascertainable by a Competing Business, and which has been disclosed to Employee, or of which Employee will become aware, as a consequence of the Employment with the Company, including any information related to: the Company’s investment strategies, management planning information, business plans, operational methods, market studies, marketing plans or strategies, patent information, business acquisition plans, past, current and planned research and development, formulas, methods, patterns, processes, procedures, instructions, designs, inventions, operations, engineering, services, drawings, equipment, devices, technology, software systems, price lists, sales reports and records, sales books and manuals, code books, financial information and projections, personnel data, names of customers, customer lists and contact information, customer pricing and purchasing information, lists of targeted prospective customers, supplier lists, product/service and marketing data and programs, product/service plans, product development, advertising campaigns, new product designs or roll out, agreements with third parties, or any such similar information. Confidential Information shall also include the track record and investment performance of Vista Equity Partners and its affiliated investment funds, as well as any information disclosed to the Company by a third party

 

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(including, but not limited to, current or prospective customers) that the Company is obliged to treat as confidential. Confidential Information may be in written or non-written form, as well as information held on electronic media or networks, magnetic storage, cloud storage service, or other similar media. The Company has invested and will continue to invest extensive time, resources, talent, and effort to develop its Confidential Information, all of which generates goodwill for the Company. Employee acknowledges that the Company has taken reasonable and adequate steps to control access to the Confidential Information and to prevent unauthorized disclosure, which could cause injury to the Company. This definition shall not limit any broader definition of “confidential information” or any equivalent term under applicable state or federal law.

 

f.                                        Material Contact” shall mean actual contact between Employee and a Customer with whom Employee dealt on behalf of the Company; or whose dealings with the Company were coordinated or supervised by Employee; or who received goods or services from the Company that resulted in payment of commissions or other compensation to Employee; or about whom Employee obtained Confidential Information because of Employee’s Employment with the Company; or whom employee contacted with the intent of establishing or strengthening a business or professional relationship for the Company.

 

g.                                       Prospective Customer” shall mean any business or entity with whom Employee had Material Contact, for the purpose of attempting to sell or provide Services, and to whom Employee provided a bid, quote for Services, or other Confidential Information of the Company, during the twelve (12) months preceding Employee’s termination date.

 

h.                                      Restricted Period” shall mean the entire term of Employee’s employment with the Company and a two (2) year period immediately following the termination of Employee’s employment, unless otherwise delineated or described in the “end notes and exceptions” at the end of this Agreement.

 

i.                                          Restricted Territory” shall mean the geographic area in which or with respect to which Employee provided or attempted to provide any Services or performed operations on behalf of the Company as of the date of termination or during the twelve (12) months preceding Employee’s termination date.

 

j.                                         Trade Secrets” shall mean the business information of the Company that is competitively sensitive and which qualifies for trade secrets protection under applicable trade secrets laws, including but not limited to the Defend Trade Secrets Act. This definition shall not limit any broader definition of “trade secret” or any equivalent terms under any applicable local, state or federal law.

 

k.                                      Services” shall mean the types of work product, processes and work-related activities relating to the Business of the Company performed by Employee during the Employment.

 

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14.          MANDATORY ARBITRATION CLAUSE; NO JURY TRIAL. A Party may bring an action in court to obtain a temporary restraining order, preliminary injunction or other provisional remedy available under California Code of Civil Procedure § 1281.8 in response to any violation or threatened violation of the restrictive covenants set forth in this Agreement, or for any other purpose for which a provisional remedy may be obtained pursuant that statute. Otherwise, Employee expressly agrees and acknowledges that the Company and Employee will utilize binding arbitration to resolve all disputes that may arise out of the employment context.

 

a.                                      Both the Company and Employee hereby agree that any claim, dispute, and/or controversy that Employee may have against the Company (or its owners, directors, officers, managers, employees, agents, insurers and parties affiliated with its employee benefit and health plans), or that the Company may have against Employee, arising from, related to, or having any relationship or connection whatsoever to the Employment, shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act (9 U.S.C. §§ 1, et seq.) in conformity with the Federal Rules of Civil Procedure. Included within the scope of this Agreement are all disputes including, but not limited to, any claims alleging employment discrimination, harassment, hostile environment, retaliation, whistleblower protection, wrongful discharge, constructive discharge, failure to grant leave, failure to reinstate, failure to accommodate, tortious conduct, breach of contract, and/or any other claims Employee may have against the Company for any exemption misclassification, unpaid wages or overtime pay, benefits, payments bonuses, commissions, vacation pay, leave pay, workforce reduction payments, costs or expenses, emotional distress, pain and suffering, or other alleged damages arising out of the Employment or termination.  Also included are any claims based on or arising under Title VII, 42 USC Section 1981, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act, Sarbanes-Oxley, the California Fair Employment and Housing Act, the California Labor Code, all as amended, or any other state or federal law or regulation, equitable law, or otherwise relating in any way to the employment relationship.

 

b.                                      Nothing herein, however, shall prevent Employee from filing and pursuing proceedings before the United States Equal Employment Opportunity Commission or similar state agency (although if Employee chooses to pursue any type of claim for relief following the exhaustion of such administrative remedies, such claim would be subject to resolution under these mandatory arbitration provisions). In addition, nothing herein shall prevent Employee from filing an administrative claim for unemployment benefits or workers’ compensation benefits.

 

c                                          Nothing in the confidentiality or nondisclosure or other provisions of this Agreement shall be construed to limit Employee’s right to respond accurately and fully to any question, inquiry or request for information when required by legal process or from initiating communications directly with, or responding to any inquiry from, or providing testimony before, any self-regulatory organization or state or federal regulatory authority, regarding the Company, Employee’s Employment, or this Agreement. Employee is not required to contact the Company

 

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regarding the subject matter of any such communications before engaging in such communications. Employee also understands that Employee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (1) is made (a) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and (b) solely for the purpose of reporting or investigating a suspected violation of law; or (2) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Employee also understands that disclosure of trade secrets to attorneys, in legal proceedings if disclosed under seal, or pursuant to court order is also protected under 18 U.S. Code §1833 when disclosure is made in connection with a retaliation lawsuit based on the reporting of a suspected violation of law.

 

d.                                      In addition to any other requirements imposed by law, the arbitrator selected shall be a qualified individual mutually selected by the Parties, and shall be subject to disqualification on the same grounds as would apply to a judge. All rules of pleading, all rules of evidence, all statutes of limitations, all rights to resolution of the dispute by means of motions for summary judgment, and judgment on the pleadings shall apply and be observed. Resolution of the dispute shall be based solely upon the law governing the claims and defenses pleaded, and the arbitrator may not invoke any basis (including but not limited to, notions of “just cause”) other than such controlling law. Likewise, all communications during or in connection with the arbitration proceedings are privileged. The arbitrator shall have the authority to award appropriate substantive relief under relevant laws, including the damages, costs and attorneys’ fees that would be available under such laws.

 

e.                                       Employee’s initial share of the arbitration fee shall be in an amount equal to the filing fee as would be applicable in a court proceeding, or $100, whichever is less. Beyond the arbitration filing fee, Employer will bear all other fees, expenses and charges of the arbitrator.

 

f.                                        Employee understands and agrees that all claims against the Company must be brought in Employee’s individual capacity and not as a plaintiff or class member in any purported class or representative proceeding.  Employee understands that there is no right or authority for any dispute to be heard or arbitrated on a collective action basis, class action basis, as a private attorney general, or on bases involving claims or disputes brought in a representative capacity on behalf of the general public, on behalf of other Company employees (or any of them) or on behalf of other persons alleged to be similarly situated. Employee understands that there are no bench or jury trials and no class actions or representative actions permitted under this Agreement. The Arbitrator shall not consolidate claims of different employees into one proceeding, nor shall the Arbitrator have the power to hear an arbitration as a class action, collective action, or representative action. The interpretation of this subsection shall be decided by a judge, not the Arbitrator. Notwithstanding the provisions in Paragraph 21 below, this subparagraph (f) is material to the arbitration provisions of Paragraph 14 herein and cannot be severed from Paragraph 14. In the event it is determined that this subparagraph (f) is unenforceable with regard to a

 

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claim, dispute and/or controversy as set forth in subparagraph (a) above, this will render Paragraph 14 unenforceable in its entirety. Severance of Paragraph 14 from the Agreement shall not affect the enforcement of the remainder of the Agreement.

 

g.                                       Procedure. Employee and Company agree that prior to the service of an Arbitration Demand, the parties shall negotiate in good faith for a period of thirty (30) days in an effort to resolve any arbitrable dispute privately, amicably and confidentially. To commence an arbitration pursuant to this Agreement, a party shall serve a written arbitration demand (the “Demand”) on the other party by hand delivery or via overnight delivery service (in a manner that provides proof of receipt by respondent). The Demand shall be served before expiration of the applicable statute of limitations. The Demand shall describe the arbitrable dispute in sufficient detail to advise the respondent of the nature and basis of the dispute, state the date on which the dispute first arose, list the names and addresses of every person whom the claimant believes does or may have information relating to the dispute, including a short description of the matter(s) about which each person is believed to have knowledge, and state with particularity the relief requested by the claimant, including a specific monetary amount, if the claimant seeks a monetary award of any kind. If respondent does not provide a written Response to the Demand, all allegations will be considered denied. The parties shall confer in good faith to attempt to agree upon a suitable arbitrator, and if unable to do so, they will select an arbitrator from the American Arbitration Association (“AAA”)’s employment arbitration panel for the area. The arbitrator shall allow limited discovery, as appropriate in his or her discretion. The arbitrator’s award shall include a written reasoned opinion.

 

h.                                      Unless Employee initials in the space at the end of this paragraph, Employee understands, agrees, and consents to this binding arbitration provision, and Employee and the Company hereby each expressly waive the right to trial by jury of any claims arising out of Employment with the Company. By initialing below, Employee opts out of the binding arbitration provisions of Paragraph 14, including the class action waiver. Employee’s Initials:

 

15.          NOTICE OF VOLUNTARY TERMINATION OF EMPLOYMENT. Unless otherwise stated in Employee’s offer letter of employment, Employee agrees to use reasonable efforts to provide the Company fourteen (14) days written notice of Employee’s intent to terminate Employee’s Employment; provided, however, that this provision shall not change the at-will nature of the employment relationship between Employee and the Company. It shall be within the Company’s sole discretion to determine whether Employee should continue to perform services on behalf of the Company during this notice period.

 

16.          NON-DISPARAGEMENT. During and after Employee’s Employment with the Company, except to the extent compelled or required by law, Employee agrees he/she shall not disparage the Company, its customers and suppliers or their respective officers, directors, agents, servants, employees, attorneys, shareholders, successors or assigns or their respective products or services, in any manner (including but not limited to, verbally or via hard copy, websites, blogs,

 

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social media forums or any other medium); provided, however, that nothing in this Section shall prevent Employee from: engaging in concerted activity relative to the terms and conditions of Employee’s Employment and in communications protected under the National Labor Relations Act, filing a charge or providing information to any governmental agency, or from providing information in response to a subpoena or other enforceable legal process or as otherwise required by law.

 

17.          NOTIFICATION OF NEW EMPLOYER. Before Employee accepts Employment or enters into any consulting, independent contractor, or other professional or business engagement with any other person or entity while any of the provisions of Sections 8, 9 or 10 of this Agreement are in effect, Employee will provide such person or entity with written notice of the provisions of Sections 8, 9 and/or 10 and will deliver a copy of that notice to the Company. While any of Sections 8, 9 or 10 of this Agreement are in effect, Employee agrees that, upon the request of the Company, Employee will furnish the Company with the name and address of any new employer or entity for whom Employee provides contractor or consulting services, as well as the capacity in which Employee will be employed or otherwise engaged. Employee hereby consents to the Company’s notifying Employee’s new employer about Employee’s responsibilities, restrictions and obligations under this Agreement.

 

18.          REIMBURSEMENT TO COMPANY. To the extent allowed by applicable law, Employee agrees to reimburse the Company for any amounts due as a result of the Employment, including but not limited to, any unused business expense advances, charges for Company property that Employee fails to return when requested or that Employee lost or damaged as the result of a dishonest, willful or grossly negligent act, and any other charges incurred that are payable to the Company. Employee agrees to enter into a repayment arrangements and execute instruments or documents as may be provided by Company to effectuate this provision.

 

19.          NO RIGHTS GRANTED. Nothing in this Agreement shall be construed as granting to Employee any rights under any patent, copyright, or other intellectual property right of the Company, nor shall this Agreement grant Employee any rights in or to Confidential Information of the Company other than the limited right to review and use such Confidential Information solely for the purpose of participating in the Employment for the benefit of the Company.

 

20.          SUCCESSORS AND ASSIGNS. This Agreement will be binding upon Employee’s heirs, executors, administrators and other legal representatives and will be for the benefit of the Company, its successors, its assigns and licensees. This Agreement, and Employee’s rights and obligations hereunder, may not be assigned by Employee; however, the Company may assign its rights hereunder without Employee’s consent, whether in connection with any sale, transfer or other disposition of any or all of its business or assets or otherwise.

 

21.          SEVERABILITY AND REFORMATION. Employee and the Company agree that if any particular paragraphs, subparagraphs, phrases, words, or other portions of this Agreement are determined by an appropriate court, arbitrator, or other tribunal to be invalid or unenforceable as written, they shall be modified as necessary to comport with the reasonable intent and expectations of the parties and in favor of providing maximum reasonable protection to the Company’s legitimate business interests. Such modification shall not affect the remaining

 

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provisions of this Agreement. If such provisions cannot be modified to be made valid or enforceable, then they shall be severed from this Agreement, and all remaining terms and provisions shall remain enforceable.

 

22.          ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the entire agreement between the Parties relating to the subject matters contained herein. No term of this Agreement, including Section 3 (“At Will Employment”), may be amended or modified unless made in writing and executed by both Employee and an authorized agent of the Company. This Agreement replaces and supersedes all prior representations, understandings, or agreements, written or oral, between Employee and the Company with regard to restrictive covenants, post-employment restrictions, and mandatory arbitration.

 

23.          WAIVER. Failure to fully enforce any provision of this Agreement by either Party shall not constitute a waiver of any term hereof by such Party; no waiver shall be recognized unless expressly made in writing, and executed by the Party that allegedly made such waiver.

 

24.          CONSTRUCTION. The Parties agree that this Agreement has been reviewed by each Party, each Party had an opportunity to make suggestions about the provisions of the Agreement, and each Party had sufficient opportunity to obtain the advice of legal counsel on matters of contract interpretation, if desired. The Parties agree that this Agreement shall not be construed or interpreted more harshly against one Party merely because one Party was the original drafter of the Agreement.

 

25.          COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same legally recognized instrument.

 

26.          THIRD-PARTY BENEFICIARIES. Employee specifically acknowledges and agrees that the direct and indirect subsidiaries, parents, owners, and affiliated companies of the Company are intended to be beneficiaries of this Agreement and shall have every right to enforce the terms and provisions of this Agreement in accordance with the provisions of this Agreement.

 

27.          NOTICES. Notices regarding this Agreement shall be sent via email or to the mailing addresses of the Parties as set forth in the signature block to this Agreement

 

28.          GOVERNING LAW AND FORUM SELECTION. This Agreement shall be governed by and construed in accordance with the Federal Arbitration Act. Any non-arbitration covered disputes shall be resolved under the substantive laws and in the jurisdiction of the state where Employee most recently worked for the Company.

 

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The Parties have executed this Employment and Restrictive Covenants Agreement, which is effective as of the Effective Date written above.

 

 

For Employee:

For Company:

 

 

Signature:

/s/ Bernard Harguindeguy

 

Signature:

/s/ Andre Durand

 

 

 

 

 

Printed Name:

Bernard Harguindeguy

 

Printed Name:

Andre Durand

 

 

 

 

 

Address:

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Email:

bharguindeguy@pingidentity.com

 

Title:

CEO

 

 

 

 

 

Date:

November 8, 2018

 

Date:

 

 

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Schedule 1

 

(List of Employee’s Prior Inventions)

 

/s/ BJH      By initialing here, I represent and warrant that I have no Prior Inventions, as that term is defined in the Agreement to which this Schedule 1 is attached, OR

 

                  Below is a complete and accurate list of Prior Inventions, as that term is defined in the Agreement to which this Schedule I is attached.

 

For Employee:

 

Signature:

/s/ Bernard Harguindeguy

 

 

 

 

Printed Name:

Bernard Harguindeguy

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

Email:

bharguindeguy@pingidentity.com

 

 

 

 

Date:

November 8, 2018

 

 

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EXHIBIT B

 

Certain Definitions

 

Cause” means one or more of the following: (i) your repeated failure or refusal to perform your job duties under this letter, after written demand for performance has been given by the Company that identifies how you have not performed your duties and such failure, if susceptible of cure, has not been cured for a period of thirty (30) days after you receive notice from the Company; (ii) your commission or conviction of, or plea of guilty or nolo contendere to a felony, or a crime involving more turpitude; (iii) a breach of your duty of loyalty to the Company; (iv) a material breach by you of any material written agreement between you and the Company (including Sections 4 through 10 and 16 of that certain Employment and Restrictive Covenants Agreement - attached to this letter), after written notice of breach has been given to you and such breach, if susceptible of cure, has not been cured for a period of thirty (30) days after you receive notice from the Company; or (v) fraud in the course of discharge of your duties as an employee.

 

Good Reason” means one or more of the following: (A) a reduction in your base salary by more than ten (10) percent under this letter; (B) a change in title to a position below vice president, or a material and adverse change in duties or responsibilities in each case under this letter; provided that a change in the person or office to which you report, shall not, by itself, constitute such a material, adverse change; (C) the material breach by the Company of this letter; or (D) if a non-remote working location is established, the required relocation of your principal place of employment or engagement by more than 30 miles, ordinary course business travel excepted; provided, however, that in the case of each of the clauses (A) - (D) above, you shall have grounds for “Good Reason” only if (x) you provide written notice to the Company within 45 days of the initial occurrence of the circumstances constituting Good Reason; (y) the Company does not reasonably cure such circumstances within 30 days following receipt of such notice, and (z) you actually resigns within 30 days following the end of such cure period.

 

All references to the Company in these definitions shall include parent, subsidiary, affiliate and successor entities of the Company.

 

B-1





Exhibit 10.19

 

June 24, 2016

 

Lauren Romer

c/o Ping Identity Corporation

1001 17th Street, Suite 100

Denver, CO 80202

 

Re:          Employment with Ping Identity Corporation

 

Dear Ms. Romer:

 

This is your employment agreement with Ping Identity Corporation, a Delaware corporation (as such company’s name may change from time to time and such company’s successors and assigns, the “Company”). It sets forth the terms of your continued employment by the Company, which shall be effective as of the closing (the “Closing”) of the transactions (the “Transaction”) contemplated by that certain Agreement and Plan of Merger, dated as of May 27, 2016, by and among the Company, Roaring Fork Holding, Inc., a Delaware corporation (“Parent”), Roaring Fork Intermediate, LLC, a Delaware limited liability company, Roaring Fork Merger Sub, Inc., a Delaware corporation, André Durand, a stockholder of the Company, and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative of the Securityholders (as defined therein), pursuant to which the Company shall become a wholly-owned subsidiary of Parent on the date of the Closing (the “Closing Date”). We are very excited about this opportunity and value the role that you will serve on our team going forward.

 

1.             You will be the Vice President, General Counsel of the Company, reporting to the Chief Financial Officer of the Company, or any other officer as directed by the Board of Directors of the Company (the “Board”). In this capacity, you will have the responsibilities and duties consistent with such position.

 

2.             Your starting base salary will be $210,000 per year, less deductions and withholdings required by law or authorized by you, and will be subject to review annually for any increases or decreases; provided, however, that any decreases shall not be greater than 10% in the aggregate of your then current base salary, which decrease would only be implemented in conjunction with a general decrease affecting the executive management team. Your base salary will be paid by the Company in regular installments in accordance with the Company’s general payroll practices as in effect from time to time.

 

For the calendar year ending December 31, 2016, your cash bonus opportunities (the “2016 Bonus Opportunities”) will be substantially similar to the cash bonus opportunities applicable to you under the bonus plans and targets in effect prior to the Closing Date, subject to any adjustments to such plans or targets that may be agreed upon between you and the Board. For the avoidance of doubt, based on such plans, at achievement of 100% of the applicable target(s), your 2016 Bonus Opportunities will equal 40% of your base salary. Your 2016 Bonus Opportunities may be subject to, as may be agreed upon by you and the Board, the Board’s determination as to your achievement of predetermined thresholds, which may include management by objectives (“MBO”s) targets and financial targets such as bookings, revenue, recurring revenue, gross profit and/or EBITDA targets.

 


 

Notwithstanding the foregoing, no changes will be made to 2016 bonus opportunities applicable to you immediately prior to the Closing Date, including but not limited to changes in the applicable time and form of payment, to the extent that any such change would result in adverse tax consequences being imposed on you under Code Section 409A (as defined below).

 

For each bonus period beginning on and after January 1, 2017, you will be eligible to receive a bonus of up to 40% of your base salary per year (the “Bonus”). This Bonus will be awarded at the sole discretion of the Board, based upon the Board’s determination as to your achievement of predetermined thresholds, which may include MBO targets and financial targets such as bookings, revenue, recurring revenue, gross profit and/or EBITDA targets. In addition, you will be eligible for an additional bonus of up to 10% of your base salary per year (the “Stretch Bonus”), awarded at the sole discretion of the Board, based on the Board’s determination as to your achievement of “stretch” targets.

 

Except to the extent your 2016 Bonus Opportunities are based upon the bonus plans and targets in effect prior to the Closing Date (subject to adjustment, as described above), and except as otherwise set forth above with respect to bonus periods beginning on and after January 1, 2017, the bonus formulas, MBOs, performance milestones and all other elements of your bonus opportunities shall be established by the Board, in its sole discretion after consultation with you, and communicated in writing (including email) to you from time to time. Any bonus earned for a fiscal year shall be paid within 30 days after the Board has received, reviewed and approved the applicable fiscal year’s final audited financial statements. In any event, payment of any bonus that becomes due with respect to a fiscal year shall be paid in the calendar year following the calendar year in which the fiscal year ends, subject, in each case, to your continued employment on the applicable payment date.

 

3.             You will also be eligible to participate in the health, dental and vision insurance plans and other employee benefit plans established by the Company or its affiliates for its employees from time to time, in accordance with the terms of such plans and applicable law, so long as they remain generally available to such employees. The Company reserves the right to amend or terminate any employee benefit plans at any time in its sole discretion, subject to the terms of such employee benefit plans and applicable law.

 

4.             During your employment, your position shall be based in Denver, Colorado. Your duties may involve extensive domestic and international travel.

 

5.             You will be eligible to receive a certain amount of incentive equity (the “Incentive Equity”) of Parent, which Incentive Equity shall be issued under Parent’s 2016 Stock Option Plan (as amended, restated or otherwise modified from time to time, the “Option Plan”) and which shall represent approximately 0.150% of the fully diluted equity interests of Parent at the time of issuance. Such Incentive Equity will be subject to the terms (including the vesting terms and the participation threshold or exercise price, as the case may be) set forth in the Option Plan and the grant agreement to which you will be a party (the “Grant Agreement,” substantially in the form attached hereto as Exhibit C). The grant of such Incentive Equity is subject to Parent’s Board of Directors’ approval and the execution of the Grant Agreement. Our intent to recommend such approval is not a promise of compensation and is not intended to create any obligation on the part of the Company or Parent. Further details on the Incentive Equity and any specific grant of

 

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Incentive Equity to you will be provided upon approval of such grant by the Board of Directors of Parent.

 

Your Incentive Equity, if granted, will vest as follows, each as more fully set forth in the Grant Agreement (it being understood that such vesting shall be subject to your continued employment by the Company through the applicable vesting event):

 

·              2/3 of the Incentive Equity would be subject to time-based vesting over 4 years, with 25% vesting upon the one-year anniversary of the Closing Date and the remainder of the time-based grant at a rate of 1/16th per quarter thereafter (the vesting of any such unvested time-based Incentive Equity would be accelerated upon a change of control of Parent); and

 

·              1/3 of the Incentive Equity would vest if any equity buy-out investment fund managed or controlled by Vista Equity Partners, and any of such funds’ respective portfolio companies (collectively, “Vista”) received cumulative cash distributions or other cash proceeds, contributions and/or net sale proceeds in respect of the securities of Parent or its subsidiaries held by Vista or any loans provided to Parent or its subsidiaries by Vista (“Vista’s Return”) such that Vista’s Return equals or exceeds 300% of the aggregate debt and equity investment by Vista in Parent and its subsidiaries (calculated pursuant to the formula set forth in the Grant Agreement).

 

6.             There are some formalities that you need to complete as a condition of your employment:

 

·              You must carefully consider and sign the Company’s standard “Confidentiality, Invention Assignment, Non-Solicit, Non-Compete and Arbitration Agreement” (attached to this letter as Exhibit A). Because the Company and its affiliates are engaged in a continuous program of research, development, production and marketing in connection with their business, we wish to reiterate that it is critical for the Company and its affiliates to preserve and protect its proprietary information and its rights in inventions.

 

·              So that the Company has proper records of inventions that may belong to you, we ask that you also complete Schedule 1 attached to Exhibit A.

 

·              You and the Company mutually agree that any disputes that may arise regarding your employment will be submitted to binding arbitration pursuant to the arbitration clause set forth in Section 10 of Exhibit A. As a condition of your employment, you will need to carefully consider and voluntarily agree to the arbitration clause set forth in Section 10 of Exhibit A.

 

7.             We also wish to remind you that, as a condition of your employment, you are expected to abide by the Company’s, its subsidiaries’ and affiliates’ policies and procedures, which may be amended from time to time, at the Company’s sole discretion.

 

8.             Your employment with the Company is at will. The Company may terminate your employment at any time with or without notice, and for any reason or no reason. Notwithstanding any provision to the contrary contained in Exhibit A, you shall be entitled to terminate your employment with the Company at any time and for any reason or no reason by giving notice in writing to the Company of not less than 4 weeks (“Notice Period”), unless otherwise agreed to in writing by you and the Company. In the event of such notice, the Company reserves the right, in

 

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its discretion, to give immediate effect to your resignation in lieu of requiring or allowing you to continue work throughout the Notice Period. You shall continue to be an employee of the Company during the Notice Period, and thus owe to the Company the same duty of loyalty you owed it prior to giving notice of your termination. The Company may, during the Notice Period, relieve you of all of your duties and prohibit you from entering the Company’s offices.

 

9.           If the Company terminates your employment without “Cause” or you voluntarily terminate your employment for a “Good Reason,” you will be entitled to receive a severance payment equal to 1 month of your then applicable base salary per full year of service completed with the Company at the time of your termination, up to a maximum of 3 months, less deductions and withholdings required by law or authorized by you (the “Severance Pay”). For purposes of this section, “Cause” and “Good Reason” have the meaning set forth in Exhibit B attached hereto. The Company will not be required to pay the Severance Pay unless (i) you execute and deliver to the Company an agreement (“Release Agreement”) in a form satisfactory to the Company releasing from all liability (other than the payments and benefits contemplated by this letter) the Company, each member and affiliate of the Company, and any of their respective past or present investors, members, officers, directors, managers, employees or agents and you do not revoke such Release Agreement during any applicable revocation period, (ii) such Release Agreement is executed and delivered (and no longer subject to revocation, if applicable) within 60 days following termination, and (iii) your continued compliance with the provisions of Sections 2 through 8 of Exhibit A, the terms of this letter and any agreement between you and the Company and the provisions of the Release Agreement. The Severance Pay shall be paid in installments in accordance with the Company’s general payroll practices at the time of termination starting on the 60th day following your termination of employment provided you have executed, delivered, and not revoked the Release Agreement during such revocation period for the Release Agreement described above; provided that to the extent any portion of the Severance Pay is “nonqualified deferred compensation” as that term is contemplated by Code Section 409A (as defined below), such amount shall not be paid until the 60th day following termination.

 

If you timely and properly elect health continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse you for the difference between the monthly COBRA health premium paid by you for yourself and your dependents and the monthly premium amount paid by similarly situated active Company employees. You shall be eligible to receive such reimbursement until the earliest of: (i) the 12-month anniversary of the termination date; (ii) the date you are no longer eligible to receive COBRA continuation coverage; and (iii) the date on which you become eligible to receive substantially similar coverage from another employer or other source. Notwithstanding the foregoing, if the Company’s making payments under this Section 9 would violate the nondiscrimination rules under Section 105(h) of the Internal Revenue Code of 1986, as amended (the “Code”), or the applicable to non-grandfathered health plans under the Patient Protection and Affordable Care Act (“PPACA”), or result in the imposition of penalties under the Code and/or PPACA and the related regulations and guidance promulgated thereunder, the parties agree to reform this Section 9 in a manner as necessary to comply with applicable law, while, to the extent permitted by applicable law, preserve intended economic benefit.

 

10.          You shall not make any statement regarding your employment or the termination of your employment (for whatever reason) that is not agreed to by the Company. You shall not make any statement that would libel, slander or disparage the Company, any member of the

 

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Company or its affiliates or any of their respective past or present officers, directors, managers, stockholders, employees or agents.

 

11.          While we look forward to a long and profitable relationship, you will be an at-will employee of the Company as described in Section 8 of this letter and Section 9 of Exhibit A. Any statements or representations to the contrary (and, indeed, any statements contradicting any provision in this letter) are, and should be regarded by you, as ineffective. Further, your participation in any benefit program or other Company program, if any, is not to be regarded as assuring you of continuing employment for any particular period of time.

 

12.          Please note that because of employer regulations adopted in the Immigration Reform and Control Act of 1986, within 3 business days of starting your new position you will need to present documentation establishing your identity and demonstrating that you have authorization to work in the United States. If you have questions about this requirement, which applies to U.S. citizens and non-U.S. citizens alike, you may contact our personnel office.

 

13.          It should also be understood that all offers of employment are conditioned on the Company’s completion of a satisfactory background check. The Company reserves the right to perform background checks during the term of your employment, subject to compliance with applicable laws. You will be required to execute forms authorizing such a background check.

 

14.          This letter along with its Exhibits and the documents referred to herein constitute the entire agreement and understanding of the parties with respect to the subject matter of this letter, and supersede all prior understandings and agreements, including but not limited to employment agreements, severance agreements, and bonus agreements, whether oral or written, between or among you and the Company, Parent or any of their respective predecessors or affiliates with respect to the specific subject matter hereof, including that certain Offer Letter, dated June 1, 2010. Waivers or modifications of this letter agreement are valid only if in writing and duly executed by each of the parties hereto.

 

15.          In the event of a conflict between the terms of this letter and the provisions of Exhibit A, the terms of this letter shall prevail.

 

16.          Notwithstanding any other provision herein, the Company shall be entitled to withhold from any amounts otherwise payable hereunder any amounts required to be withheld in respect to federal, state or local taxes. The intent of the parties is that payments and benefits under this letter be exempt from, or comply with, Code Section 409A and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this letter shall be interpreted to be in compliance therewith. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on you by Code Section 409A or damages for failing to comply with Code Section 409A. A termination of employment shall not be deemed to have occurred for purposes of any provision of this letter providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this letter, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” For purposes of Code Section 409A, your right to receive any installment payments pursuant to

 

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this letter shall be treated as a right to receive a series of separate and distinct payments. To the extent that reimbursements or other in-kind benefits under this letter constitute “nonqualified deferred compensation” for purposes of Code Section 409A, (A) all such expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by you, (B) any right to such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (C) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year. Notwithstanding any other provision of this letter to the contrary, in no event shall any payment under this letter that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

 

If you are deemed at the time of your separation from service to be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), to the extent delayed commencement of any portion of the compensation or benefits to which you are entitled under this Agreement is required in order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) (any such delayed commencement, a “Payment Delay”), such compensation or benefits shall not be provided to you prior to the earlier of (1) the expiration of the 6-month period measured from the date of your “separation from service” with the Company or (2) the date of your death. Upon the earlier of such dates, all payments and benefits deferred pursuant to the Payment Delay shall be paid in a lump sum to you, and any remaining compensation and benefits due under the Agreement shall be paid or provided as otherwise set forth herein. The determination of whether you are a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i) as of the time of his separation from service shall be made by the Company in accordance with the terms of Code Section 409A and applicable guidance thereunder (including without limitation Treasury Regulation Section 1.409A-1(i) and any successor provision thereto).

 

In the event the Company determines that any compensation or benefit payable hereunder may violate applicable requirements of Code Section 409A, the Company may adopt such amendments to this Agreement or take any other actions that the Company in its reasonable discretion determines are necessary or appropriate for such compensation or benefit to either (a) be exempt from the requirements of Code Section 409A or comply with the applicable requirements of Code Section 409A or (b) in the absence of the ability to do either of the foregoing set forth in clause (a), make such amendments to this Agreement that will preserve the economic benefit intended to be provided to you hereunder had the adverse tax consequences imposed under Code Section 409A not applied.

 

17.          This letter and the offer contained herein are conditioned on the Closing of the Transaction. The effective date of the commencement of your employment pursuant to the terms of this letter shall be the date of the Closing of the Transaction but in any event shall not commence prior to the date of the Closing. If the Transaction does not occur, this offer shall be terminated and neither party shall have any obligation to the other by reason of this letter.

 

If you decide to accept the terms of this letter, and I hope you will, please signify your acceptance of these conditions of employment by signing and dating the enclosed copy of this

 

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letter and its Exhibit A and returning them to me, not later than June 30, 2016. Should you have anything that you wish to discuss, please do not hesitate to contact me at (303) 468-2850.

 

*      *      *    *

 

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By signing this letter and Exhibit A attached hereto, you represent and warrant that you have had the opportunity to seek the advice of independent counsel before signing and have either done so, or have freely chosen not to do so, and either way, you sign this letter voluntarily.

 

 

Very truly yours,

 

 

 

/s/ André Durand

 

André Durand

 

Chief Executive Officer

 

I have read and understood this letter and Exhibit A attached and hereby acknowledge, accept and agree to the terms set forth therein.

 

/s/ Lauren Romer

 

Date Signed:

6-28-16

Lauren Romer

 

 

LIST OF EXHIBITS

 

Exhibit A: Confidentiality, Invention Assignment, Non-Solicit, Non-Compete and Arbitration Agreement

 

Exhibit B: Certain Definitions

 

Exhibit C: Grant Agreement

 

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EXHIBIT A

 

CONFIDENTIALITY, INVENTION ASSIGNMENT, NON SOLICIT, NON-COMPETE AND ARBITRATION AGREEMENT (COLORADO)

 

As a condition of your continued employment with Ping Identity Corporation (as such company’s name may change from time to time and such company’s successors and assigns, the “Company”), you and the Company agree to the following:

 

For purposes of this Agreement, references to the “Group” means the Company, and its affiliates (whether a parent, subsidiary, or sister entity to the Company) engaged in the same line of business or contemplated business as the Company.

 

1.             CONSIDERATION FOR AGREEMENT.

 

You understand that the Group is engaged in a continuous program of research, development, production and marketing in connection with its business and that it is critical for the Group to preserve and protect its “Proprietary Information” (as defined in Section 2 below), its rights in “Inventions” (as defined in Section 4 below) and in all related intellectual property rights. You acknowledge that, as a result of your employment with the Group and/or its predecessors, you have and/or may receive confidential information, trade secrets, and/or specialized training from the Company, each of which constitutes good and valuable consideration in support of your obligations made under this Confidentiality, Invention Assignment, Non-Solicit, Non-Compete and Arbitration Agreement (this “Agreement”). As additional consideration, you may also have the opportunity to develop valuable business relationships with employees, agents, suppliers, and customers of the Group and to use the Group’s resources and goodwill in the marketplace to develop those relationships. Finally, by your signature below, you acknowledge that your continued employment with the Company (subject to Section 9), which the Company would not allow but for your execution of this Agreement, is also consideration in support of your return promise to maintain the confidentiality of all specialized knowledge and confidential information as well as your promise to adhere to the other restrictions listed in this Agreement, including but not limited to those restrictions described in Section 7 of this Agreement.

 

2.             PROPRIETARY INFORMATION.

 

You understand that your employment creates a relationship of confidence and trust with respect to any information of a confidential or secret nature that may be disclosed to you or created by you that relates to the business of the Group or to the business of its customers, licensees, suppliers or any other party with whom the Group agrees to hold information of such party in confidence (the “Proprietary Information”).

 

You understand and agree that the term “Proprietary Information” includes but is not limited to information of all types contained in any medium (paper, electronic, in your memory, or otherwise stored or recorded), whether oral or written and regardless of whether it is marked as confidential, proprietary or a trade secret. “Proprietary Information” includes, without limitation, the following information and materials, whether having existed, now existing or developed or created by you or on your behalf during your

 

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term of employment with the Company or its predecessor:

 

A)           All information and materials relating to the existing software products and software in the various stages of research and development, including, but not limited to, source codes, object codes, design specifications, design notes, flow charts, graphics, graphical user interfaces, coding sheets, product plans, know-how, negative know how, test plans, business investment analysis, marketing and functional requirements, algorithms, product bugs and customer technical support cases which relate to the software;

 

B)           Internal business information, procedures and policies, including, but not limited to, licensing techniques, vendor names, other vendor information, business plans, financial information, budgets, forecasts, product margins, product costs, service and/or operation manuals and related documentation including drawings, and other such information, whether written or oral, which relates to the way the Group conducts its business;

 

C)           All legal rights, including but not limited to, trade secrets, pending patents, Inventions (as that term is defined in section 4 below) and other discoveries, claims, litigation and/or arbitrations involving the Group, pending trademarks, copyrights, proposed advertising, public relations and promotional campaigns and like properties maintained in confidence;

 

D)           Any and all customer sales and marketing information, including but not limited to sales forecasts, marketing and sales promotion plans, product launch plans, sales call reports, competitive intelligence information, customer information, customer lists, customers needs and buying habits, sales and marketing studies and reports, internal price list, discount matrix, customer data, customer contracts, pricing structures, customer negotiations, customer relations materials, customer service materials, past customers, and the type, quantity and specifications of products purchased, leased or licensed by customers of the Group;

 

E)            Any information obtained while working for the Group which gives the Group a competitive edge;

 

F)             Any other knowledge or information regarding the property, business, and affairs of the Group which the Group endeavors to keep confidential or which the Group believes to be confidential; and

 

G)           Any and all other trade secrets, as that term is defined under applicable laws.

 

You understand and agree to treat and preserve Proprietary Information and materials as strictly confidential. Except as authorized by the Company’s Chief Executive Officer (but in all cases preserving confidentiality by following Company policies and obtaining appropriate non-disclosure agreements), you further agree that, during your employment with the Company or thereafter, you will not directly or indirectly transmit or disclose Proprietary Information to any person, corporation, or other entity for any reason or purpose whatsoever.

 

You understand and agree that the Proprietary Information is the exclusive property of the Group, and that, during your employment, you will use and disclose Proprietary Information only for the Group’s benefit and in accordance with any restrictions placed on its use or disclosure by

 

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the Group. After termination of your employment for any reason, you will not use in any manner or disclose any Proprietary Information, except to the extent compelled by applicable law; provided that in the event you receive notice of any effort to compel disclosure of Proprietary Information for any reason, you will promptly and in advance of disclosure notify Company of such notice and fully cooperate with all lawful Company or Group efforts (through their counsel or otherwise) to resist or limit such disclosure.

 

Proprietary Information does not include information (i) that was or becomes generally available to you on a non-confidential basis, if the source of this information was not reasonably known to you to be bound by a duty of confidentiality, or (ii) that was or becomes generally available to the public, other than as a result of a disclosure by you, directly or indirectly or any other breach of this Agreement.

 

3.             THIRD PARTY INFORMATION. You recognize that the Group has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Group’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. You agree that you owe the Group and such third parties, during the term of your employment, and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation (except as necessary in carrying out your work for the Group consistent with the Group’s agreement with such third party) or to use it for the benefit of anyone other than for the Group or such third party (consistent with the Company’s agreement with such third party) without the express written authorization of the Chief Executive Officer of the Company. All rights and benefits afforded to the Company under this Agreement shall apply equally to the owner of the third party information with respect to the third party information, and such third party is an intended third party beneficiary of this Agreement, with respect to the third party information. You further agree to conform to the Company’s privacy policies, as amended from time to time.

 

4.             INVENTIONS.

 

4.1          Prior Inventions. You have attached hereto as Schedule 1 a complete and accurate list describing all Inventions (as defined below) which were discovered, created, invented, developed or reduced to practice by you prior to the commencement of your employment by the Company and have not been legally assigned or licensed to the Company (collectively: “Prior Inventions”), which belong solely to you or belong to you jointly with others, which relates in any way to any of the Group’s current, proposed or reasonably anticipated businesses, products or research or development and which are not assigned to the Group hereunder; or have initialed Schedule 1 to indicate you have no Prior Inventions to disclose.

 

If, in the course of your employment with the Company, you incorporate or cause to be incorporated into a Group product, service, process, file, system, application or program a Prior Invention owned by you or in which you have an interest, you hereby grant the Group member a non-exclusive, royalty-free, irrevocable, perpetual, worldwide, sublicensable and assignable license to make, have made, copy, modify, make derivative works of, use, offer to sell, sell or otherwise distribute such Prior Invention as part of or in connection with such product, process, file, system, application or program.

 

4.2          Disclosure of Inventions. You will promptly disclose in confidence to the Company all Inventions that you make or

 

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conceive or first reduce to practice or create, either alone or jointly with others, during the period of your employment, and for a period of 3 months thereafter, whether or not in the course of your employment, and whether or not such Inventions are patentable, copyrightable or protectable as trade secrets. For purposes of this Agreement, “Inventions” means without limitation, formulas, algorithms, processes, techniques, concepts, designs, developments, technology, ideas, patentable and unpatentable inventions and discoveries, copyrights and works of authorship in any media now known or hereafter invented (including computer programs, source code, object code, hardware, firmware, software, mask work, applications, files, Internet site content, databases and compilations, documentation and related items) patents, trade and service marks, logos, trade dress, corporate names and other source indicators and the good will of any business symbolized thereby, trade secrets, know-how, confidential and proprietary information, documents, analyses, research and lists (including current and potential customer and user lists) and all applications and registrations and recordings, improvements and licenses related to any of the foregoing. You recognize that Inventions or Proprietary Information relating to your activities while working for the Company, and conceived, reduced to practice, created, derived, developed, or made by you, alone or with others, within 3 months after termination of your employment may have been conceived, reduced to practice, created, derived, developed, or made, as applicable, in significant part while you were employed by the Company. Accordingly, you agree that such Inventions and Proprietary Information shall be presumed to have been conceived, reduced to practice, created, derived, developed, or made, as applicable, during your employment with the Company and are to be assigned to the Company pursuant to this Agreement and applicable law unless and until you have established the contrary by clear and convincing evidence.

 

4.3          Work for Hire; Assignment of Inventions. You acknowledge and agree that any copyrightable works prepared by you, either alone or jointly with others, within the scope of your employment are “works made for hire” under the Copyright Act and that the Company will be considered the author and owner of such copyrightable works. Any copyrightable works the Company or a Group member specially commissions from you while you are employed with the Company shall be deemed a work made for hire under the Copyright Act and if for any reason a work cannot be so designated as a work made for hire, you agree to and hereby assign to the Company all right, title and interest in and to said work(s) and the related copyright(s). You agree to and hereby grant the Company a non-exclusive, royalty-free, irrevocable, perpetual, worldwide, sublicensable and assignable license to make, have made, copy, modify, make derivative works of, use, publicly perform, display or otherwise distribute any copyrightable works you create during the time you are employed with the Company that for any reason do not qualify as a work made for hire, that were not specially commissioned by the Group, or both, but that relate in any way to the business of the Group. You agree that all Inventions that (i) are developed using equipment, supplies, facilities Proprietary Information, or trade secrets of the Group, (ii) result from work performed by you for the Group and/or on Company time, or (iii) relate to the Group’s business or current or anticipated research and development (the “Assigned Inventions”), will be the sole and exclusive property of the Company and you agree to and hereby irrevocably assign the Assigned Inventions to the Company.

 

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4.4          Assignment of Other Rights. In addition to the foregoing assignment of Assigned Inventions to the Company, you hereby irrevocably transfer and assign to the Company: (i) all worldwide patents, patent applications, copyrights, mask works, trade secrets and other intellectual property rights in any Assigned Inventions; and (ii) any and all “Moral Rights” (as defined below) that you may have in or with respect to any Assigned Inventions. You also hereby forever waive and agree never to assert any and all Moral Rights you may have in or with respect to any Assigned Inventions, even after termination of your work on behalf of the Company. “Moral Rights” mean any rights to claim authorship of any Assigned Inventions, to object to or prevent the modification of any Assigned Inventions, or to withdraw from circulation or control the publication or distribution of any Assigned Inventions, and any similar right, existing under judicial or statutory law of any country in the world, or under any treaty, regardless of whether or not such right is denominated or generally referred to as a “moral right”.

 

4.5          Assistance. Whether during or after your employment, and without additional compensation, you agree to do any act and/or execute any document deemed necessary or desirable by the Company in furtherance of perfecting, prosecuting, recording, maintaining, enforcing and protecting the Group’s right, title and interest in and to, any of the Assigned Inventions. In the event that the Company is unable for any reason to secure your signature to any document required to file, prosecute, register or memorialize the ownership and/or assignment of, or to enforce, any intellectual property, you hereby irrevocably designate and appoint the Company’s duly authorized officers and agents as your agents and attorneys-in-fact to act for and on your behalf and stead to (i) execute, file, prosecute, register and/or memorialize the assignment and/or ownership of any Assigned Invention; (ii) to execute and file any documentation required for such enforcement and (iii) do all other lawfully permitted acts to further the filing, prosecution, registration, memorialization of assignment and/or ownership of, issuance of and enforcement of any Assigned Inventions, all with the same legal force and effect as if executed by you.

 

4.6          Applicability to Past Activities. To the extent you have been engaged to provide services by the Company or its predecessor for a period of time before the effective date of this Agreement (the “Prior Engagement Period”), you agree that if and to the extent that, during the Prior Engagement Period: (i) you received access to any information from or on behalf of the Company that would have been Proprietary Information if you had received access to such information during the period of your employment with the Company under this Agreement; or (ii) you conceived, created, authored, invented, developed or reduced to practice any item, including any intellectual property rights with respect thereto, that would have been an Invention if conceived, created, authored, invented, developed or reduced to practice during the period of your employment with the Company under this Agreement; then any such information shall be deemed Proprietary Information hereunder and any such item shall be deemed an Invention hereunder, and this Agreement shall apply to such information or item as if conceived, created, authored, invented, developed or reduced to practice under this Agreement.

 

5.             NO BREACH OF PRIOR AGREEMENT. You represent that your performance of all the terms of this Agreement and your duties as an employee of the Company will not breach any invention assignment, proprietary information, confidentiality, noncompetition, nonsolicitation, noninterference, or similar

 

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agreement with any former employer or other party. You represent that you will not bring with you to the Company or use in the performance of your duties for the Company any documents or materials or intangibles of a former employer or third party that are not in the public domain or have not been legally transferred or licensed to the Company.

 

6.             DUTY OF LOYALTY. You understand that your employment with the Company requires your undivided attention and effort during normal business hours. While you are employed by the Company, you will not, without the Company’s express prior written consent, (i) engage in any other business activity, unless such activity is for passive investment purposes only and will not require you to render any services, (ii) be engaged or interested, directly or indirectly, alone or with others, in any trade, business or occupation in competition with the Group, (iii) make preparations, alone or with others, to compete with the Group in the future, or (iv) appropriate for your own benefit business opportunities pertaining to the Group’s business. The obligations imposed on you under the Section 6 are in addition to, and do not supplant, any similar obligations you may have to the Group under the common law or by statute.

 

7.             DUTY OF NON INTERFERENCE.

 

For purposes of this Section, “solicit” means any direct or indirect communication of any kind, regardless of who initiates it, that in any way invites, advises, encourages or requests any person to take or refrain from taking any action.

 

7.1          Non-Solicitation of Employees / Consultants. During your employment with the Group and for a period of one (1) year thereafter, you will not directly or indirectly hire, attempt to hire, recruit, offer employment, lure or entice away, or in any other manner persuade or otherwise solicit anyone who is then an employee or consultant of the Group (or who was an employee or consultant of the Group within the 6 months preceding the date of any such prohibited conduct) to resign from the Group or to apply for or accept employment with, or otherwise provide services to, you or any third party, for your own benefit or for the benefit of any other person or entity.

 

7.2          Non-Solicitation of Suppliers / Customers. During your employment with the Group and for a period of one (1) year thereafter, you will not directly or indirectly (i) solicit or accept from any Protected Customer any business involving the sale or provision of Restricted Products (as defined in section 7.3); (ii) request, advise or otherwise solicit any Protected Customer or supplier of the Group not to do business with the Group, or to curtail, reduce, cancel, or withdraw its business from the Group; (iii) aid in any way any other entity in obtaining business from any Protected Customer involving the sale or provision of Restricted Products (as defined in section 7.3); or (iv) otherwise interfere with any transaction, agreement, business relationship, and/or business opportunity between the Group and any Protected Customer or supplier. “Protected Customer” means any actual or prospective customer to whom the Company or a Group member or their predecessor sold its products or services or solicited to sell its products or services during your last 2 years of employment and, (a) with whom you dealt on behalf of the Company or a Group member or their predecessor; (b) whose dealings with the Company or a Group member or their predecessor were coordinated or supervised by you; (c) about whom you obtained Proprietary Information as a result of your association with the Company or a Group member or their predecessor; (d) to whom you provided

 

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services or (e) who received products or services the sale or provision of which resulted in compensation, commissions or earnings for you.

 

7.3          Non-Competition. During your employment with the Company and for a period of one (1) year thereafter (the “Restricted Period”), you will not directly or indirectly, whether as an employee, officer, director, consultant, owner, manager, advisor, investor, or otherwise, in any state in which the Group conducts business or has customers (i) render advice or services to, or otherwise assist, any person, association, or entity who is engaged, directly or indirectly, in the Restricted Business; (ii) hold a 2.5% or greater equity, voting or profit participation interest in any person, association, or entity who is engaged, directly or indirectly, in the Restricted Business or (iii) carry on or be in any way engaged, concerned or interested in or have business dealings with the Restricted Business. For purposes of this section, “Restricted Business” means the business of researching into, developing, manufacturing, distributing, selling, supplying or otherwise dealing with Restricted Products. “Restricted Products” means products or services which are of the same or materially similar kind as the products or services (including but not limited to technical and product support, professional services, technical advice and other customer services) researched into, developed, manufactured, distributed, sold or supplied by the Group and with which you were directly connected during your employment with the Company or its predecessor or about which you have received or developed Proprietary Information by reason of your employment with the Company or its predecessor. Notwithstanding the foregoing, with prior written consent from the Company which shall not be unreasonably withheld, you may accept employment or otherwise be engaged in or involved with a competitor of the Group that has multiple lines of business provided that, during the Restricted Period, you are employed by or provide services for a business unit of such competitor that is not engaged or otherwise involved with the Restricted Business. Nothing contained in this Section 7 shall prohibit you from owning of a passive investment interest of not more than 2.5% in a company with publicly traded equity securities, and whether on your own behalf or on behalf of others. You agree that the Restricted Period shall be extended by a period equal the length of any violation of this Section 7.3.

 

7.4          Employment by Customers. For a period of one (1) year following termination of your employment for any reason, you will not accept employment with any customer of the Group in a capacity of service that could otherwise be offered as a service by the Company for such customer without the Company’s express written permission.

 

7.5          Acknowledgements of Law. You acknowledge the following provisions of Colorado law, set forth in Colorado Revised Statutes § 8-2-113(2):

 

Any covenant not to compete which restricts the right of any person to receive compensation for performance of skilled or unskilled labor for any employer shall be void, but this subsection (2) shall not apply to:

 

(b)           Any contract for the protection of trade secrets;

 

(d)           Executive and management personnel and officers and employees who constitute professional staff to executive and management personnel.

 

You acknowledge that this Agreement is a contract for the protection of trade secrets within the meaning of § 8-2113(2)(b) and is

 

15


 

intended to protect the Proprietary Information identified above and that you are an executive or manager, or professional staff to an executive or manager, within the meaning of § 8-2-113(2)(d).

 

8.             OBLIGATIONS UPON TERMINATION.

 

8.1          Return of Company Property. At the time of leaving the employ of the Company, you will deliver to the Company (and will not keep in your possession or deliver to anyone else) (i) any and all documents and materials of any nature (including physical and electronic copies) pertaining to your work, including without limitation devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items and (ii) all property belonging to the Group or any third party which provided property to you in connection with your employment such as computer, laptops, personal digital assistants, cell phones, MP3 players, electronic organizers and other devices, cards, car, keys, security devices or any other item belonging to the Group. Upon Company request, you will execute a document confirming your compliance with this provision and the terms of this Agreement.

 

8.2          Notification of New Employer. Before you accept employment or enter in to any consulting or other professional or business engagement with any other person or entity while any of Section 7 is in effect, you will provide such person or entity with written notice of the provisions of Section 7 and will deliver a copy of the notice to the Company. You hereby grant consent to notification by the Company to your new employer about your rights and obligations under this Agreement.

 

8.3          Withholding. To the extent allowed by law, you agree to allow Company to deduct from your final paycheck(s) any amounts due as a result of your employment, including but not limited to, any expense advances or business charges incurred by you on behalf of the Group, charges for property damaged or not returned when requested, and any other charges incurred by you payable to the Group. You agree to execute any authorization form as may be provided by Company to effectuate this provision.

 

9.             AT WILL EMPLOYMENT.

 

This Agreement does not constitute a contract of employment for any definite period of time. You acknowledge and agree that nothing in this Agreement modifies the at-will nature of your employment with Company, which permits either yourself or Company to terminate your employment at any time and without cause.

 

10.          ARBITRATION.

 

10.1        In the event of any controversy or dispute between you and the Company or between you and any affiliate or an agent of Company, including but not limited to directors, officers, managers, other employees or members of the Group, who are being sued in any capacity, as to all or any part of this Agreement, any other agreement, any dispute or controversy whatsoever pertaining to or arising out of the relationship between you and the Company and/or the Group or the dissolution or termination of same, and/or the arbitrability thereof (collectively, “Arbitrable Disputes” as further defined below) shall, subject to Section 11.1 herein, be resolved exclusively by binding arbitration solely between yourself and the Company and/or person or entity described above, conducted in Denver, Colorado. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C.

 

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Section 1 et seq, as amended, and shall be administered in accordance with the procedures set forth in the Dispute Resolution Addendum appended hereto as Schedule 2 (the “Addendum”), all of which are incorporated into this Agreement by this reference.

 

10.2        Arbitrable Disputes shall include any and all disputes not specifically exempted from arbitration herein, including, but not limited to, any alleged violations of federal, state or local constitutions, statutes, laws, ordinances, regulations or common law, any claims of wrongful termination, unlawful discrimination, harassment or retaliation, including but not limited to Title VII of the 1964 Civil Rights Act, The Equal Pay Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Fair Labor Standards Act and similar state and local statutes, any claims of breach of contract or any implied covenant of good faith and fair dealing, any claims of adverse treatment in violation of public policy, and any disputes arising from, under or regarding this Agreement, including the formation, validity, interpretation, effect or breach of the Agreement. For avoidance of doubt, all disputes regarding the validity of this Agreement, the validity of the arbitration provisions of this Agreement, or whether any particular claim or matter is included within the scope of the arbitration provisions of this Agreement, are Arbitrable Disputes subject to arbitration as described herein.

 

Specifically excluded from Arbitrable Disputes are disputes or claims arising from or related to workers’ compensation and unemployment insurance, and any claims which are expressly excluded from binding arbitration by statute or public policy, or which are expressly required to be arbitrated under a different procedure.

 

10.3        While you are not required to do so before serving an arbitration demand under Section (g) of the Addendum, nothing in this Agreement shall prevent you from filing or maintaining an administrative charge or complaint with a government agency, including but not limited to, the Equal Employment Opportunity Commission, the Department of Labor and the National Labor Relations Board or any equivalent state or local agency. For the avoidance of doubt, if you choose not to file an administrative charge or complaint before commencing an arbitration in accordance with this Section 10 and the Addendum, your arbitration demand must be served, subject to Section 10.5, within the applicable time period for filing a charge with the relevant agency in order to be timely filed.

 

10.4        This binding arbitration procedure shall supplant and replace claims in court (except as specified herein), and you expressly waive the right to a civil court action before a jury.

 

10.5        In accordance with Section (g) of the Addendum and to the extent permitted by applicable law, any arbitration relating to or arising from any Arbitrable Dispute shall be commenced by service of an arbitration demand on or before the earlier of: (i) the expiration of the limitations period provided by applicable law; or (ii) the one-year anniversary of the accrual of the aggrieved party’s claim.

 

10.6        All Arbitrable Disputes under this Agreement must be brought in your individual capacity, and not as a plaintiff or class member in any purported class, representative or collective proceeding. You agree that the arbitrator is not empowered to consolidate claims of different individuals into one proceeding, or to hear an arbitration as a class arbitration. To the extent the arbitrator determines that this class/collective

 

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action waiver is invalid, for any reason, this entire Section 10 shall be null and void but only with regard to that particular proceeding in which the arbitrator invalidated this class/collective action waiver and this Section 10 shall remain in full force and effect with respect to any Arbitrable Disputes other than that covered by such class/collective action proceeding.

 

10.7        Notwithstanding the foregoing, the waiver of the jury trial right shall survive even in the event this Section 10 is deemed null and void.

 

11.          GENERAL

 

11.1        Injunctive Relief. Notwithstanding the arbitration provisions in Section 10 or anything else to the contrary in this Agreement, you and the Company understand and agree that the parties’ actions or potential actions concerning obligations under Sections 2, 3, 4, 6 or 7 of this Agreement may result in irreparable and continuing damage to the other party for which monetary damages will not be sufficient, and agree that both parties will be entitled to seek, in addition to its other rights and remedies hereunder or at law and both before or while an arbitration is pending between the parties under Section 10 of this Agreement, a temporary restraining order, preliminary injunction or similar injunctive relief from a court of competent jurisdiction in order to preserve the status quo or prevent irreparable injury pending the full and final resolution of the dispute through arbitration, without the necessity of showing any actual damages or that monetary damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned injunctive relief shall be in addition to, not in lieu of, legal remedies, monetary damages or other available forms of relief through arbitration proceedings. This Section shall not be construed to limit the obligation for either party to pursue arbitration under Section 10 with respect to any Arbitrable Disputes.

 

11.2        Severability; Modification; Partial Invalidity. Each provision of this Agreement is severable from every other provision of this Agreement. If the scope of any restriction contained in this Agreement is too broad to permit enforcement of such restriction to its full extent, then such restriction shall be enforced to the maximum extent permitted by law, and the parties consent and agree that such scope may be accordingly modified in any proceeding brought to enforce such restriction. If any provision of this Agreement or the application of such provision is held unenforceable for any reason, then such provision shall be modified to the extent to render it enforceable (except as otherwise provided in Section 10.6 above), or, if held impossible to modify, then severed from this Agreement and the remainder of this Agreement shall not be affected.

 

11.3        Waiver of Breach. The failure of Company at any time, or from time to time, to require performance of any of your obligations under this Agreement shall not be deemed a waiver of and shall in no manner affect Company’s right to enforce any provision of this Agreement at a subsequent time. The waiver by Company of any rights arising out of any breach shall not be construed as a waiver of any rights arising out of any subsequent breach.

 

11.4        Assignment. This Agreement will be binding upon your heirs, executors, administrators and other legal representatives and will be for the benefit of the Group, its successors, its assigns and licensees. This Agreement, and your rights and obligations hereunder, may not be assigned by you; however, the Company may freely assign its rights hereunder.

 

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11.5                        Notice. Unless your offer letter provides otherwise, you agree to use reasonable efforts to provide Company 14 days’ notice to terminate your employment with Company; provided, however, that this provision shall not change the at-will nature of the employment relationship between you and Company.

 

11.6                        Non-Disparagement. During and after your employment with the Company, except to the extent compelled or required by law, you agree you shall not disparage the Group, its customers and suppliers or their respective officers, directors, agents, servants, employees, attorneys, shareholders, successors or assigns or their respective products or services, in any manner (including but not limited to, verbally or via hard copy, websites, blogs, social media forums or any other medium); provided, however, that nothing in this Section shall prevent you from: engaging in concerted activity relative to the terms and conditions of your employment and in communications protected under the National Labor Relations Act, filing a charge or providing information to any governmental agency, or from providing information in response to a subpoena or other enforceable legal process or as otherwise required by law.

 

11.7                        Applicable Law. This Agreement shall be governed by the laws of the State of Colorado, irrespective of its choice of law rules.

 

11.8                        Entire Agreement. This Agreement along with Schedules 1 and 2 and the documents referred to herein and the corresponding employment and option grant agreements constitute the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and supersede all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the specific subject matter hereof. Notwithstanding the foregoing, this Agreement does not supplant any rights the Group may have under the common law or by statute. Additionally, and notwithstanding the above language of this Section 11.8, you acknowledge and agree that the restrictive covenants you executed in favor of the Company (the “Prior Agreement”) shall remain in full force and effect; however, in the event of any inconsistency between the Prior Agreement and this Agreement, the terms and provisions of this Agreement and its attachments shall govern. If any of Section 7 of this Agreement is deemed void, voidable, or otherwise invalid in legal proceedings and is not modified in accordance with Section 11.2 of this Agreement, you agree that you shall comply with, and the Company may seek to enforce such provisions of the Prior Agreement against you. Headings are provided for convenience only and do not modify, broaden, define or restrict any provision. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by the parties.

 

11.9                        Survival. Any termination of this Agreement, regardless of how such termination may occur, shall not operate to terminate Sections 2, 3, 4, 5, 7, 8, 10 and 11 which shall survive any such termination and remain valid, enforceable and in full force and effect.

 

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PING IDENTITY CORPORATION

 

 

 

 

 

 

By:

/s/ André Durand

 

By:

/s/ Lauren Romer

Name:

Andre Durand

 

Name:

Lauren Romer

Title:

Chief Executive Officer

 

Date:

6-28-16

Date:

 

 

 

 

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Schedule 1
List of Employee’s Prior Inventions

 

/s/ x                  By initialing here, I represent and warrant that I have no Prior Inventions, as that term is defined in the Agreement to which this Schedule 1 is attached.

 

OR

 

o                                    Below is a complete and accurate list of Prior Inventions, as that term is defined in the Agreement to which this Schedule 1 is attached.

 

By:

/s/ Lauren Romer

 

 

Name:

Lauren Romer

 

 

Date:

6-28-16

 

 

 


 

Schedule 2
Dispute Resolution Addendum

 

a.                                      For purposes of this Addendum, all capitalized terms shall have the meaning set forth in the Confidentiality, Invention Assignment, Non Solicit, Non-Compete and Arbitration Agreement (the “Agreement”) to which this Addendum is appended. “Employee” means the individual employed by or performing services for the Company or any affiliate who signed the Agreement.

 

b.                                      Except in the event either party seeks injunctive relief in accordance with Section 11.1 of the Agreement, Employee and Company agree that, prior to the service of an Arbitration Demand in accordance with paragraph h below, the parties shall negotiate in good faith for a period of 30 days to resolve any Arbitrable Dispute privately, amicably and confidentially. Such 30 day period shall run from the date of the first written contact by one party of the other, specifically citing this paragraph, to discuss the potential Arbitrable Dispute.

 

c.                                       All Arbitrable Disputes shall be resolved only by final and binding arbitration conducted privately and confidentially by a single arbitrator selected as specified in this Addendum.

 

d.                                      Wavier of Class Action and Collective Action Claims. Except as otherwise required by law, both parties expressly intend and agree that: (a) class action and collective action procedures shall neither be asserted nor applied for in any arbitration conducted pursuant to this arbitration agreement; (b) each party will not assert class or collective action claims against the other in arbitration or otherwise; and (c) the parties shall only submit their own, individual claims in arbitration and will not seek to represent the interests of any other person. The arbitrator shall not consolidate more than one person’s claims in the arbitration, and may not otherwise preside over any form of a collective or class proceeding.

 

e.                                       The parties understand and agree that the Agreement evidences a transaction involving interstate commerce within the meaning of 9 U.S.C. § 2, and that the Addendum shall therefore be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1, et seq.

 

f.                                        The arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to determine the arbitrability of disputes and to resolve any dispute relating to the interpretation, applicability, or enforceability of the Agreement and this Addendum. The Arbitrator shall conduct and preside over such hearings as the arbitrator deems appropriate.

 

g.                                       Shortening of Limitations Period Within Which to File an Arbitration Demand. To the extent permitted by applicable law, any arbitration relating to or arising from any Arbitrable Dispute shall be commenced by service of an arbitration demand on or before the earlier of: (i) the expiration of the limitations period provided by applicable law; or (ii) the one-year anniversary of the accrual of the aggrieved party’s claim (whichever applies, the “Limitations Period for Arbitrable Disputes”). If a party timely commences an arbitration under this Addendum and the responding party has a counterclaim against the claimant that would have been timely had it been asserted on the date the claimant served its arbitration demand but that thereafter was extinguished by this section g, then, this Addendum shall not time-bar the counterclaim so long as it is asserted no later than the date specified in

 


 

section h, below, for the filing of a response to the arbitration demand. Otherwise, all claims that were or could have been brought by the aggrieved party against the other party shall be forever barred.

 

h.                                      To commence an arbitration pursuant to this Agreement, a party shall serve a written arbitration demand (the “Demand”) on the other party by certified mail, return receipt requested or by personal service prior to the expiration of Limitations Period for Arbitrable Disputes. The claimant shall attach a copy of the Agreement and this Addendum to the Demand, which shall also describe the Arbitrable Dispute in sufficient detail to advise the respondent of the nature and basis of the dispute, state the date on which the dispute first arose, list the names and addresses of every person, including without limitation current or former employees of Company or any affiliate, whom the claimant believes does or may have information relating to the dispute, including a short description of the matter(s) about which each person is believed to have knowledge, and state with particularity the relief requested by the claimant, including a specific monetary amount, if the claimant seeks a monetary award of any kind. Within 30 days after receiving the Demand, the respondent shall mail to the claimant a written response to the Demand (the “Response”) that may include one or more counterclaims and that shall describe in reasonable detail the respondent’s position in connection with the dispute and any counterclaim asserted. The Response shall also, if applicable, state the date on which any counterclaim first arose, list the names and addresses of every person, including without limitation current or former employees of Company or any affiliate, whom the respondent believes does or may have information relating to the dispute including a short description of the matter(s) about which each person is believed to have knowledge, and state with particularity the relief requested by the respondent, including a specific monetary amount, if the respondent seeks a monetary award of any kind. Both parties acknowledge that they have an ongoing duty to supplement the list of persons that either side believes does or may have information relating to the dispute.

 

i.                                          Promptly after service of the Response, the parties shall confer in good faith to attempt to agree upon a suitable arbitrator. If the parties are unable to agree upon an arbitrator, the claimant shall request from the American Arbitration Association (“AAA”) a list of 9 potential arbitrators randomly selected from the AAA’s employment arbitration panel for the area in which the hearing is required to take place or, if no employment arbitration panel exists for that area, then from the AAA’s commercial arbitration panel for that area (the “List”). The Company shall bear the cost of obtaining the List, which the AAA shall provide simultaneously to the claimant and the respondent by fax, email, hand delivery or any other expeditious mode of delivery. The AAA shall not administer the arbitration or have any role in the arbitration other than providing the List, unless the parties both agree otherwise in writing. No later than 5 business days after the List is received by the parties, or within such other time period as agreed by the parties in writing, they shall conduct a meeting or conference call during which they shall alternate in striking names from the List, beginning with the claimant. After each party has stricken 4 names from the List, the one remaining individual shall be appointed to serve as arbitrator and shall thereafter resolve the Arbitrable Dispute in accordance with this Addendum.

 

j.                                         Notwithstanding the choice-of-law principles of any jurisdiction, the arbitrator shall be bound by and shall resolve all Arbitrable Disputes in accordance with the

 


 

substantive law of the State of Colorado or federal law as enunciated by the federal courts situated in the Tenth Circuit, whichever apply to the claim and Federal rules of evidence, including, without limitation, all relevant privileges and the attorney work product doctrine.

 

k.                                      All facts relating to or concerning the Arbitrable Dispute and arbitration, including without limitation the existence of the arbitration, the nature of the claims and defenses asserted, and the outcome of the arbitration shall be confidential and shall not be disclosed by the claimant, the respondent or the arbitrator without the prior written consent of both the claimant and the respondent. Notwithstanding the foregoing confidentiality obligation, the claimant and respondent may divulge information rendered confidential pursuant to this Addendum to the extent necessary to prosecute or defend the arbitration or any related judicial proceeding, and the Company may disclose such information to its employees and agents in the ordinary course of their performance of their duties for the Company.

 

l.                                          Before the arbitration hearing, each party shall be entitled to take discovery depositions of 3 fact witnesses and, in addition, the discovery deposition of every expert witness expected to testify for the opposing party at the arbitration hearing; provided that to the extent the arbitrator concludes that applicable law would render this subsection (1) unconscionable or otherwise unenforceable, the arbitrator shall have the authority to order additional depositions sufficient to protect the enforceability of this subsection (I). Upon the written request of either party, the other party shall promptly produce documents relevant to the Arbitrable Dispute or reasonably likely to lead to the discovery of admissible evidence. Each party acknowledges that each has an ongoing duty to supplement the production of documents in response to any request received from the party. The manner, timing and extent of any further discovery shall be committed to the arbitrator’s sound discretion, provided that the arbitrator shall upon a showing of reasonable cause permit any party to take a preservation deposition of any witness for use in at any hearing in lieu of live testimony, and provided further that under no circumstances shall the arbitrator allow more depositions or interrogatories than permitted by the presumptive limitations set forth in F.R.Civ.P. 30(a)(2)(A) and 33(a). The arbitrator shall levy appropriate sanctions, including an award of reasonable attorneys’ fees, against any party that fails to cooperate in good faith in discovery permitted by this Addendum or ordered by the arbitrator.

 

m.                                  Either party shall have the right to subpoena witnesses and documents for the arbitration as well as documents relevant to the case from third parties. The arbitrator shall have the jurisdiction to hear and rule upon pre-hearing disputes and is authorized to hold pre-hearing conferences by telephone or in person, as the arbitrator deems advisable. The arbitrator shall have the authority to entertain a motion to dismiss, a motion for summary judgment and/or any other dispositive motion by any party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure. Either party, at its expense, may arrange and pay the cost of a court reporter to provide a stenographic record of the proceedings; provided, however, that if both parties desire a stenographic record or access to such record, the cost of the court reporter and such record shall be shared equally. Should any party refuse or neglect to appear for, or participate in the arbitration hearing, the arbitrator shall have the authority to decide the dispute based upon whatever evidence is presented. Either party, upon

 


 

request at the close of the hearing, shall be given leave to file a post-hearing brief. The time for filing such brief shall be set by the arbitrator. The arbitrator shall have no power to modify or deviate from the provisions of this Addendum unless both claimant and respondent consent to such modification or deviation. To the extent that any matter necessary to the efficient and timely completion of the arbitration is not governed by this Addendum, the arbitrator shall, after conferring with the parties, have the power to enter rulings and establish standards necessary, in his or her sound discretion, to resolve the matter.

 

n.                                      The Company shall bear the costs of the arbitrator only to the extent required by applicable law. Except as otherwise set forth in this Addendum, each party shall pay for its own costs and attorneys’ fees incurred by such party, if any. However, if any party prevails on a statutory claim which affords the prevailing party attorneys’ fees and costs, or if there is a written agreement providing for attorneys’ fees and costs, the arbitrator may award reasonable attorneys’ fees and costs to the prevailing party. Any dispute as to the reasonableness of any fee or cost shall be resolved by the arbitrator.

 

o.                                      Within 30 days after the arbitration hearing is closed or after any dispositive motion is fully briefed, the arbitrator shall issue a written award setting forth his or her decision and the reasons therefor. The arbitrator’s award shall be final, nonappealable and binding upon the parties, subject only to the provisions of 9 U.S.C. § 10, and may be entered as a judgment in any court of competent jurisdiction.

 

p.                                      The parties agree that reliance upon courts of law and equity can add significant costs and delays to the process of resolving disputes. Accordingly, they recognize that an essence of this Agreement is to provide for the submission of all Arbitrable Disputes to binding arbitration. Therefore, if any provision of this Addendum is found to be in conflict with a mandatory provision of applicable law or is otherwise void or voidable, the parties understand and agree that each such provision shall be reformed to render it enforceable, but only to the extent absolutely necessary to render the provision enforceable and only in view of the parties’ express desire that Arbitrable Disputes be resolved by arbitration and, to the greatest extent permitted by law, in accordance with the principles, limitations and procedures set forth in this Addendum.

 

q.                                      Either party may bring an action in court to compel arbitration under this Addendum and the Agreement, and to confirm, vacate or enforce an arbitration award, and each party shall bear its own attorney fees and costs and other expenses of such action.

 

PING IDENTITY CORPORATION

 

 

 

 

 

 

 

By:

/s/ Andre Durand

 

By:

/s/ Lauren Romer

Name:

Andre Durand

 

Name:

Lauren Romer

Title:

Chief Executive Officer

 

Date:

6-28-16

Date:

 

 

 


 

EXHIBIT B

 

Certain Definitions

 

Cause” means any of the following: (i) a material failure by you to perform your responsibilities or duties to the Company under this letter or those other lawful responsibilities or duties as requested from time to time by the Board, after demand for performance has been given by the Board that identifies how you have not performed your responsibilities or duties; (ii) your engagement in illegal or improper conduct or in gross misconduct in the fulfillment of your responsibilities or duties to the Company; (iii) your commission or conviction of, or plea of guilty or nolo contendere to, a felony, a crime involving moral turpitude or any other act or omission that the Company in good faith believes may harm the standing and reputation of the Company; (iv) a material breach of your duty of loyalty to the Company or your material breach of the Company’s written code of conduct and business ethics or Section 2 through 8 of the Confidentiality, Invention Assignment, Non-Solicit, Non-Compete and Arbitration Agreement, or any other agreement between you and the Company; (v) dishonesty, fraud, gross negligence or repetitive negligence committed without regard to corrective direction in the course of discharge of your duties as an employee; (vi) your personal bankruptcy or insolvency; or (vii) excessive and unreasonable absences from your duties for any reason (other than authorized vacation or sick leave) or as a result of your Disability (as defined below).

 

Disability” means your inability to perform the essential functions of your job, with or without accommodation, for an extended period but not less than 60 business days in any consecutive 6-month period, as determined in the reasonable discretion of the Company.

 

Good Reason” means that you voluntarily terminate your employment with the Company if there should occur, without your written consent:

 

(a)                                 a material, adverse change in your duties or responsibilities with the Company, provided that a change in title or a change in the person or office to which you report, shall not, by itself, constitute such a material, adverse change;

 

(b)                                 an aggregate reduction in your then current base salary by more than 10% or a reduction in your base salary by less than 10% which is not applied to similarly ranked employees;

 

(c)                                  the material breach by the Company of any offer letter or employment agreement between you and the Company;

 

(d)                                 a relocation of your primary place of work to a location more than fifty (50) miles from Denver, Colorado; and/or

 

(e)                                  the Board of Directors of Parent fails to approve the granting of the Incentive Equity.

 

provided, however, that in each case above, (i) you must first give the Company written notice of any of the foregoing within 30 business days following the first occurrence of such event

 

B-1


 

in a written explanation specifying the basis for your belief that you are entitled to terminate your employment for Good Reason, (ii) the Company must have 30 days to cure such event and (iii) provided that the Company does not reasonably cure such event, you must actually resign your employment within 30 days following the cure period described in (ii). Otherwise, any claim of such circumstances as “Good Reason” shall be deemed irrevocably waived by you.

 

All references to the Company in these definitions shall include parent, subsidiary, affiliate and successor entities of the Company.

 

B-2


 

EXHIBIT C

 

Grant Agreement

 

[See attached.]

 

C-1





Exhibit 10.20

 

July 7, 2016

 

Raj Dani

 

Re:          Employment with Ping Identity Corporation

 

Dear Mr. Dani:

 

This is your employment agreement with Ping Identity Corporation, a Delaware corporation (as such company’s name may change from time to time and such company’s successors and assigns, the “Company”). The effective date of the commencement of your employment by the Company pursuant to the terms of this letter shall be October 1, 2016, or such earlier date as mutually agreed between you and the Chief Executive Officer of the Company. We are very excited about this opportunity and value the role that you will serve on our team going forward.

 

1.             You will be the Chief Financial Officer of the Company, reporting to the Chief Executive Officer of the Company, or any other officer as directed by the Board of Directors of the Company (the “Board”). In this capacity, you will have the responsibilities and duties consistent with such position.

 

2.             Your starting base salary will be $325,000 per year, less deductions and withholdings required by law or authorized by you, and will be subject to review annually for any increases or decreases; provided, however, that any decreases shall not be greater than 10% in the aggregate of your then current base salary, which decrease would only be implemented in conjunction with a general decrease affecting the executive management team. Your base salary will be paid by the Company in regular installments in accordance with the Company’s general payroll practices as in effect from time to time.

 

You will be eligible to receive a bonus of up to 65% of your base salary per year (the “Bonus”). This Bonus will be awarded at the sole discretion of the Board, based upon the Board’s determination as to your achievement of predetermined thresholds, which may include MBO targets and financial targets such as bookings, revenue, recurring revenue, gross profit and/or EBITDA targets. In addition, starting January 1, 2017, you will be eligible for an additional bonus of up to 20% of your base salary per year (the “Stretch Bonus”), awarded at the sole discretion of the Board, based on the Board’s determination as to your achievement of “stretch” targets. For the calendar year ending December 31, 2016, you will be eligible to receive a pro rata portion of the Bonus.

 

Except as otherwise set forth above, the bonus formulas, MBOs, performance milestones and all other elements of your bonus opportunities shall be established by the Board, in its sole discretion after consultation with you, and communicated in writing (including email) to you from time to time. Any bonus earned for a fiscal year shall be paid within 30 days after the Board has received, reviewed and approved the applicable fiscal year’s final audited financial statements. In any event, payment of any bonus that becomes due with respect to a fiscal year shall be paid in the calendar year following the calendar year in which the fiscal year ends, subject, in each case, to your continued employment on the applicable payment date.

 


 

3.             You will also be eligible to participate in the health, dental and vision insurance plans and other employee benefit plans established by the Company or its affiliates for its employees from time to time, in accordance with the terms of such plans and applicable law, so long as they remain generally available to such employees. The Company reserves the right to amend or terminate any employee benefit plans at any time in its sole discretion, subject to the terms of such employee benefit plans and applicable law.

 

4.             During your employment, your position shall be based in Denver, Colorado. Your duties may involve extensive domestic and international travel. You shall be entitled to reimbursement of the reasonable out-of-pocket expenses incurred in moving to Denver, Colorado. In addition, to facilitate the relocation of your residence, from the date of commencement of your employment to the date of physical household relocation to Denver, such date to be mutually agreed between you and the Chief Executive Officer of the Company, but in no event later than June 1, 2017, you will be given a $2,500 per month allowance for temporary housing and travel between your temporary housing and current residence.

 

5.             You will be eligible to receive a certain amount of incentive equity (the “Incentive Equity”) of Roaring Fork Holding, Inc., a Delaware corporation (“Parent”), which Incentive Equity shall be issued under Parent’s 2016 Stock Option Plan (as amended, restated or otherwise modified from time to time, the “Option Plan”) and which shall represent approximately 0.55% of the fully diluted equity interests of Parent at the time of issuance. Such Incentive Equity will be subject to the terms (including the vesting terms and the participation threshold or exercise price, as the case may be) set forth in the Option Plan and the grant agreement to which you will be a party (the “Grant Agreement”). The grant of such Incentive Equity is subject to Parent’s Board of Directors’ approval and the execution of the Grant Agreement. Our intent to recommend such approval is not a promise of compensation and is not intended to create any obligation on the part of the Company or Parent. Further details on the Incentive Equity and any specific grant of Incentive Equity to you will be provided upon approval of such grant by the Board of Directors of Parent.

 

Your Incentive Equity, if granted, will vest as follows, each as more fully set forth in the Grant Agreement (it being understood that such vesting shall be subject to your continued employment by the Company through the applicable vesting event):

 

·              2/3 of the Incentive Equity would be subject to time-based vesting over 4 years, with 25% vesting upon the one-year anniversary of the date of the commencement of your employment, and the remainder of the time-based grant at a rate of 1/16th per quarter thereafter (the vesting of any such unvested time-based Incentive Equity would be accelerated upon a change of control of Parent); and

 

·              1/3 of the Incentive Equity would vest if any equity buy-out investment fund managed or controlled by Vista Equity Partners, and any of such funds’ respective portfolio companies (collectively, “Vista”) received cumulative cash distributions or other cash proceeds, contributions and/or net sale proceeds in respect of the securities of Parent or its subsidiaries held by Vista or any loans provided to Parent or its subsidiaries by Vista (“Vista’s Return”) such that Vista’s Return equals or exceeds 300% of the aggregate debt and equity investment by Vista in Parent and its subsidiaries (calculated pursuant to the formula set forth in the Grant Agreement).

 

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6.             There are some formalities that you need to complete as a condition of your employment:

 

·              You must carefully consider and sign the Company’s standard “Confidentiality, Invention Assignment, Non-Solicit, Non-Compete and Arbitration Agreement” (attached to this letter as Exhibit A). Because the Company and its affiliates are engaged in a continuous program of research, development, production and marketing in connection with their business, we wish to reiterate that it is critical for the Company and its affiliates to preserve and protect its proprietary information and its rights in inventions.

 

·              So that the Company has proper records of inventions that may belong to you, we ask that you also complete Schedule 1 attached to Exhibit A.

 

·              You and the Company mutually agree that any disputes that may arise regarding your employment will be submitted to binding arbitration pursuant to the arbitration clause set forth in Section 10 of Exhibit A. As a condition of your employment, you will need to carefully consider and voluntarily agree to the arbitration clause set forth in Section 10 of Exhibit A.

 

7.             We also wish to remind you that, as a condition of your employment, you are expected to abide by the Company’s, its subsidiaries’ and affiliates’ policies and procedures, which may be amended from time to time, at the Company’s sole discretion.

 

8.             Your employment with the Company is at will. The Company may terminate your employment at any time with or without notice, and for any reason or no reason. Notwithstanding any provision to the contrary contained in Exhibit A, you shall be entitled to terminate your employment with the Company at any time and for any reason or no reason by giving notice in writing to the Company of not less than 4 weeks (“Notice Period”), unless otherwise agreed to in writing by you and the Company. In the event of such notice, the Company reserves the right, in its discretion, to give immediate effect to your resignation in lieu of requiring or allowing you to continue work throughout the Notice Period. You shall continue to be an employee of the Company during the Notice Period, and thus owe to the Company the same duty of loyalty you owed it prior to giving notice of your termination. The Company may, during the Notice Period, relieve you of all of your duties and prohibit you from entering the Company’s offices.

 

9.             If the Company terminates your employment without “Cause” or you voluntarily terminate your employment for a “Good Reason,” you will be entitled to receive a severance payment equal to nine (9) months of your then applicable base salary, less deductions and withholdings required by law or authorized by you (the “Severance Pay”). For purposes of this section, “Cause” and “Good Reason” have the meaning set forth in Exhibit B attached hereto. The Company will not be required to pay the Severance Pay unless (i) you execute and deliver to the Company an agreement (“Release Agreement”) in a form satisfactory to the Company releasing from all liability (other than the payments and benefits contemplated by this letter) the Company, each member and affiliate of the Company, and any of their respective past or present investors, members, officers, directors, managers, employees or agents and you do not revoke such Release Agreement during any applicable revocation period, (ii) such Release Agreement is executed and delivered (and no longer subject to revocation, if applicable) within 60 days following termination, and (iii) your continued compliance with the provisions of Sections 2

 

3


 

through 8 of Exhibit A, the terms of this letter and any agreement between you and the Company and the provisions of the Release Agreement. The Severance Pay shall be paid in installments in accordance with the Company’s general payroll practices at the time of termination starting on the 60th day following your termination of employment, provided you have executed, delivered, and not revoked the Release Agreement during such revocation period for the Release Agreement described above; provided that to the extent any portion of the Severance Pay is “nonqualifed deferred compensation” as that term is contemplated by Code Section 409A (as defined below), such amount shall not be paid until the 60th day following termination.

 

10.          You shall not make any statement regarding your employment or the termination of your employment (for whatever reason) that is not agreed to by the Company. You shall not make any statement that would libel, slander or disparage the Company, any member of the Company or its affiliates or any of their respective past or present officers, directors, managers, stockholders, employees or agents.

 

11.          While we look forward to a long and profitable relationship, you will be an at-will employee of the Company as described in Section 8 of this letter and Section 9 of Exhibit A. Any statements or representations to the contrary (and, indeed, any statements contradicting any provision in this letter) are, and should be regarded by you, as ineffective. Further, your participation in any benefit program or other Company program, if any, is not to be regarded as assuring you of continuing employment for any particular period of time.

 

12.          Please note that because of employer regulations adopted in the Immigration Reform and Control Act of 1986, within 3 business days of starting your new position you will need to present documentation establishing your identity and demonstrating that you have authorization to work in the United States. If you have questions about this requirement, which applies to U.S. citizens and non-U.S. citizens alike, you may contact our personnel office.

 

13.          It should also be understood that all offers of employment are conditioned on the Company’s completion of a satisfactory background check. The Company reserves the right to perform background checks during the term of your employment, subject to compliance with applicable laws. You will be required to execute forms authorizing such a background check.

 

14.          This letter along with its Exhibits and the documents referred to herein constitute the entire agreement and understanding of the parties with respect to the subject matter of this letter, and supersede all prior understandings and agreements, including but not limited to employment agreements, severance agreements, and bonus agreements, whether oral or written, between or among you and the Company, Parent or any of their respective predecessors or affiliates with respect to the specific subject matter hereof. Waivers or modifications of this letter agreement are valid only if in writing and duly executed by each of the parties hereto.

 

15.          In the event of a conflict between the terms of this letter and the provisions of Exhibit A, the terms of this letter shall prevail.

 

16.          Notwithstanding any other provision herein, the Company shall be entitled to withhold from any amounts otherwise payable hereunder any amounts required to be withheld in respect to federal, state or local taxes. The intent of the parties is that payments and benefits under

 

4


 

this letter be exempt from, or comply with, Code Section 409A and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this letter shall be interpreted to be in compliance therewith. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on you by Code Section 409A or damages for failing to comply with Code Section 409A. A termination of employment shall not be deemed to have occurred for purposes of any provision of this letter providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this letter, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” For purposes of Code Section 409A, your right to receive any installment payments pursuant to this letter shall be treated as a right to receive a series of separate and distinct payments. To the extent that reimbursements or other in-kind benefits under this letter constitute “nonqualified deferred compensation” for purposes of Code Section 409A, (A) all such expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by you, (B) any right to such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (C) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year. Notwithstanding any other provision of this letter to the contrary, in no event shall any payment under this letter that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

 

If you are deemed at the time of your separation from service to be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), to the extent delayed commencement of any portion of the compensation or benefits to which you are entitled under this Agreement is required in order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) (any such delayed commencement, a “Payment Delay”), such compensation or benefits shall not be provided to you prior to the earlier of (1) the expiration of the 6-month period measured from the date of your “separation from service” with the Company or (2) the date of your death. Upon the earlier of such dates, all payments and benefits deferred pursuant to the Payment Delay shall be paid in a lump sum to you, and any remaining compensation and benefits due under the Agreement shall be paid or provided as otherwise set forth herein. The determination of whether you are a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i) as of the time of his separation from service shall be made by the Company in accordance with the terms of Code Section 409A and applicable guidance thereunder (including without limitation Treasury Regulation Section 1.409A-1(i) and any successor provision thereto).

 

In the event the Company determines that any compensation or benefit payable hereunder may violate applicable requirements of Code Section 409A, the Company may adopt such amendments to this Agreement or take any other actions that the Company in its reasonable discretion determines are necessary or appropriate for such compensation or benefit to either (a) be exempt from the requirements of Code Section 409A or comply with the applicable requirements of Code Section 409A or (b) in the absence of the ability to do either of the foregoing set forth in clause (a), make such amendments to this Agreement that will preserve the economic

 

5


 

benefit intended to be provided to you hereunder had the adverse tax consequences imposed under Code Section 409A not applied.

 

17.          If you decide to accept the terms of this letter, and I hope you will, please signify your acceptance of these conditions of employment by signing and dating the enclosed copy of this letter and its Exhibit A and returning them to me, not later than July 15, 2016. Should you have anything that you wish to discuss, please do not hesitate to contact me at (303) 468-2850.

 

*              *              *              *

 

6


 

By signing this letter and Exhibit A attached hereto, you represent and warrant that you have had the opportunity to seek the advice of independent counsel before signing and have either done so, or have freely chosen not to do so, and either way, you sign this letter voluntarily.

 

 

 

Very truly yours,

 

 

 

 

 

/s/ André Durand

 

André Durand

 

Chief Executive Officer

 

I have read and understood this letter and Exhibit A attached and hereby acknowledge, accept and agree to the terms set forth therein.

 

/s/ Raj Dani

 

Date Signed:

7-13-16

Raj Dani

 

 

 

 

LIST OF EXHIBITS

 

Exhibit A: Confidentiality, Invention Assignment, Non-Solicit, Non-Compete and Arbitration Agreement

 

Exhibit B: Certain Definitions

 


 

EXHIBIT A

 

CONFIDENTIALITY, INVENTION ASSIGNMENT, NON SOLICIT,
NON-COMPETE AND ARBITRATION AGREEMENT (COLORADO)

 

As a condition of your employment with Ping Identity Corporation (as such company’s name may change from time to time and such company’s successors and assigns, the “Company”), you and the Company agree to the following:

 

For purposes of this Agreement, references to the “Group” means the Company, and its affiliates (whether a parent, subsidiary, or sister entity to the Company) engaged in the same line of business or contemplated business as the Company.

 

1.             CONSIDERATION FOR AGREEMENT.

 

You understand that the Group is engaged in a continuous program of research, development, production and marketing in connection with its business and that it is critical for the Group to preserve and protect its “Proprietary Information” (as defined in Section 2 below), its rights in “Inventions” (as defined in Section 4 below) and in all related intellectual property rights. You acknowledge that, as a result of your employment with the Group and/or its predecessors, you have and/or may receive confidential information, trade secrets, and/or specialized training from the Company, each of which constitutes good and valuable consideration in support of your obligations made under this Confidentiality, Invention Assignment, Non-Solicit, Non-Compete and Arbitration Agreement (this “Agreement”). As additional consideration, you may also have the opportunity to develop valuable business relationships with employees, agents, suppliers, and customers of the Group and to use the Group’s resources and goodwill in the marketplace to develop those relationships. Finally, by your signature below, you acknowledge that your employment with the Company (subject to Section 9), which the Company would not allow but for your execution of this Agreement, is also consideration in support of your return promise to maintain the confidentiality of all specialized knowledge and confidential information as well as your promise to adhere to the other restrictions listed in this Agreement, including but not limited to those restrictions described in Section 7 of this Agreement.

 

2.             PROPRIETARY INFORMATION.

 

You understand that your employment creates a relationship of confidence and trust with respect to any information of a confidential or secret nature that may be disclosed to you or created by you that relates to the business of the Group or to the business of its customers, licensees, suppliers or any other party with whom the Group agrees to hold information of such party in confidence (the “Proprietary Information”).

 

You understand and agree that the term “Proprietary Information” includes but is not limited to information of all types contained in any medium (paper, electronic, in your memory, or otherwise stored or recorded), whether oral or written and regardless of whether it is marked as confidential, proprietary or a trade secret. “Proprietary Information” includes, without limitation, the following information and materials, whether having existed, now existing or developed or created by you or on your behalf during your

 

8


 

term of employment with the Company or its predecessor:

 

A)           All information and materials relating to the existing software products and software in the various stages of research and development, including, but not limited to, source codes, object codes, design specifications, design notes, flow charts, graphics, graphical user interfaces, coding sheets, product plans, know-how, negative know how, test plans, business investment analysis, marketing and functional requirements, algorithms, product bugs and customer technical support cases which relate to the software;

 

B)           Internal business information, procedures and policies, including, but not limited to, licensing techniques, vendor names, other vendor information, business plans, financial information, budgets, forecasts, product margins, product costs, service and/or operation manuals and related documentation including drawings, and other such information, whether written or oral, which relates to the way the Group conducts its business;

 

C)           All legal rights, including but not limited to, trade secrets, pending patents, Inventions (as that term is defined in section 4 below) and other discoveries, claims, litigation and/or arbitrations involving the Group, pending trademarks, copyrights, proposed advertising, public relations and promotional campaigns and like properties maintained in confidence;

 

D)           Any and all customer sales and marketing information, including but not limited to sales forecasts, marketing and sales promotion plans, product launch plans, sales call reports, competitive intelligence information, customer information, customer lists, customers needs and buying habits, sales and marketing studies and reports, internal price list, discount matrix, customer data, customer contracts, pricing structures, customer negotiations, customer relations materials, customer service materials, past customers, and the type, quantity and specifications of products purchased, leased or licensed by customers of the Group;

 

E)            Any information obtained while working for the Group which gives the Group a competitive edge;

 

F)             Any other knowledge or information regarding the property, business, and affairs of the Group which the Group endeavors to keep confidential or which the Group believes to be confidential; and

 

G)           Any and all other trade secrets, as that term is defined under applicable laws.

 

You understand and agree to treat and preserve Proprietary Information and materials as strictly confidential. Except as authorized by the Company’s Chief Executive Officer (but in all cases preserving confidentiality by following Company policies and obtaining appropriate non-disclosure agreements), you further agree that, during your employment with the Company or thereafter, you will not directly or indirectly transmit or disclose Proprietary Information to any person, corporation, or other entity for any reason or purpose whatsoever.

 

You understand and agree that the Proprietary Information is the exclusive property of the Group, and that, during your employment, you will use and disclose Proprietary Information only for the Group’s benefit and in accordance with any restrictions placed on its use or disclosure by

 

9


 

the Group. After termination of your employment for any reason, you will not use in any manner or disclose any Proprietary Information, except to the extent compelled by applicable law; provided that in the event you receive notice of any effort to compel disclosure of Proprietary Information for any reason, you will promptly and in advance of disclosure notify Company of such notice and fully cooperate with all lawful Company or Group efforts (through their counsel or otherwise) to resist or limit such disclosure,

 

Proprietary Information does not include information (i) that was or becomes generally available to you on a non-confidential basis, if the source of this information was not reasonably known to you to be bound by a duty of confidentiality, or (ii) that was or becomes generally available to the public, other than as a result of a disclosure by you, directly or indirectly or any other breach of this Agreement.

 

3. THIRD PARTY INFORMATION. You recognize that the Group has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Group’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. You agree that you owe the Group and such third parties, during the term of your employment, and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation (except as necessary in carrying out your work for the Group consistent with the Group’s agreement with such third party) or to use it for the benefit of anyone other than for the Group or such third party (consistent with the Company’s agreement with such third party) without the express written authorization of the Chief Executive Officer of the Company. All rights and benefits afforded to the Company under this Agreement shall apply equally to the owner of the third party information with respect to the third party information, and such third party is an intended third party beneficiary of this Agreement, with respect to the third party information. You further agree to conform to the Company’s privacy policies, as amended from time to time.

 

4.             INVENTIONS.

 

4.1          Prior Inventions. You have attached hereto as Schedule 1 a complete and accurate list describing all Inventions (as defined below) which were discovered, created, invented, developed or reduced to practice by you prior to the commencement of your employment by the Company and have not been legally assigned or licensed to the Company (collectively: “Prior Inventions”), which belong solely to you or belong to you jointly with others, which relates in any way to any of the Group’s current, proposed or reasonably anticipated businesses, products or research or development and which are not assigned to the Group hereunder; or have initialed Schedule 1 to indicate you have no Prior Inventions to disclose.

 

If, in the course of your employment with the Company, you incorporate or cause to be incorporated into a Group product, service, process, file, system, application or program a Prior Invention owned by you or in which you have an interest, you hereby grant the Group member a non-exclusive, royalty-free, irrevocable, perpetual, worldwide, sublicensable and assignable license to make, have made, copy, modify, make derivative works of, use, offer to sell, sell or otherwise distribute such Prior Invention as part of or in connection with such product, process, file, system, application or program.

 

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4.2          Disclosure of Inventions. You will promptly disclose in confidence to the Company all Inventions that you make or conceive or first reduce to practice or create, either alone or jointly with others, during the period of your employment, and for a period of 3 months thereafter, whether or not in the course of your employment, and whether or not such Inventions are patentable, copyrightable or protectable as trade secrets. For purposes of this Agreement, “Inventions” means without limitation, formulas, algorithms, processes, techniques, concepts, designs, developments, technology, ideas, patentable and unpatentable inventions and discoveries, copyrights and works of authorship in any media now known or hereafter invented (including computer programs, source code, object code, hardware, firmware, software, mask work, applications, files, Internet site content, databases and compilations, documentation and related items) patents, trade and service marks, logos, trade dress, corporate names and other source indicators and the good will of any business symbolized thereby, trade secrets, know-how, confidential and proprietary information, documents, analyses, research and lists (including current and potential customer and user lists) and all applications and registrations and recordings, improvements and licenses related to any of the foregoing. You recognize that Inventions or Proprietary Information relating to your activities while working for the Company, and conceived, reduced to practice, created, derived, developed, or made by you, alone or with others, within 3 months after termination of your employment may have been conceived, reduced to practice, created, derived, developed, or made, as applicable, in significant part while you were employed by the Company. Accordingly, you agree that such Inventions and Proprietary Information shall be presumed to have been conceived, reduced to practice, created, derived, developed, or made, as applicable, during your employment with the Company and are to be assigned to the Company pursuant to this Agreement and applicable law unless and until you have established the contrary by clear and convincing evidence.

 

4.3          Work for Hire; Assignment of Inventions. You acknowledge and agree that any copyrightable works prepared by you, either alone or jointly with others, within the scope of your employment are “works made for hire” under the Copyright Act and that the Company will be considered the author and owner of such copyrightable works. Any copyrightable works the Company or a Group member specially commissions from you while you are employed with the Company shall be deemed a work made for hire under the Copyright Act and if for any reason a work cannot be so designated as a work made for hire, you agree to and hereby assign to the Company all right, title and interest in and to said work(s) and the related copyright(s). You agree to and hereby grant the Company a non-exclusive, royalty-free, irrevocable, perpetual, worldwide, sublicensable and assignable license to make, have made, copy, modify, make derivative works of, use, publicly perform, display or otherwise distribute any copyrightable works you create during the time you are employed with the Company that for any reason do not qualify as a work made for hire, that were not specially commissioned by the Group, or both, but that relate in any way to the business of the Group. You agree that all Inventions that (i) are developed using equipment, supplies, facilities Proprietary Information, or trade secrets of the Group, (ii) result from work performed by you for the Group and/or on Company time, or (iii) relate to the Group’s business or current or anticipated research and development (the “Assigned Inventions”), will be the sole and exclusive property of the Company and you agree to

 

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and hereby irrevocably assign the Assigned Inventions to the Company.

 

4.4          Assignment of Other Rights. In addition to the foregoing assignment of Assigned Inventions to the Company, you hereby irrevocably transfer and assign to the Company: (i) all worldwide patents, patent applications, copyrights, mask works, trade secrets and other intellectual property rights in any Assigned Inventions; and (ii) any and all “Moral Rights” (as defined below) that you may have in or with respect to any Assigned Inventions. You also hereby forever waive and agree never to assert any and all Moral Rights you may have in or with respect to any Assigned Inventions, even after termination of your work on behalf of the Company. “Moral Rights” mean any rights to claim authorship of any Assigned Inventions, to object to or prevent the modification of any Assigned Inventions, or to withdraw from circulation or control the publication or distribution of any Assigned Inventions, and any similar right, existing under judicial or statutory law of any country in the world, or under any treaty, regardless of whether or not such right is denominated or generally referred to as a “moral right”.

 

4.5          Assistance. Whether during or after your employment, and without additional compensation, you agree to do any act and/or execute any document deemed necessary or desirable by the Company in furtherance of perfecting, prosecuting, recording, maintaining, enforcing and protecting the Group’s right, title and interest in and to, any of the Assigned Inventions, In the event that the Company is unable for any reason to secure your signature to any document required to file, prosecute, register or memorialize the ownership and/or assignment of, or to enforce, any intellectual property, you hereby irrevocably designate and appoint the Company’s duly authorized officers and agents as your agents and attorneys-in-fact to act for and on your behalf and stead to (i) execute, file, prosecute, register and/or memorialize the assignment and/or ownership of any Assigned Invention; (ii) to execute and file any documentation required for such enforcement and (iii) do all other lawfully permitted acts to further the filing, prosecution, registration, memorialization of assignment and/or ownership of, issuance of and enforcement of any Assigned Inventions, all with the same legal force and effect as if executed by you.

 

4.6          Applicability to Past Activities. To the extent you have been engaged to provide services by the Company or its predecessor for a period of time before the effective date of this Agreement (the “Prior Engagement Period”), you agree that if and to the extent that, during the Prior Engagement Period: (i) you received access to any information from or on behalf of the Company that would have been Proprietary Information if you had received access to such information during the period of your employment with the Company under this Agreement; or (ii) you conceived, created, authored, invented, developed or reduced to practice any item, including any intellectual property rights with respect thereto, that would have been an Invention if conceived, created, authored, invented, developed or reduced to practice during the period of your employment with the Company under this Agreement; then any such information shall be deemed Proprietary Information hereunder and any such item shall be deemed an Invention hereunder, and this Agreement shall apply to such information or item as if conceived, created, authored, invented, developed or reduced to practice under this Agreement.

 

5.             NO BREACH OF PRIOR AGREEMENT. You represent that your performance of all the terms of this

 

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Agreement and your duties as an employee of the Company will not breach any invention assignment, proprietary information, confidentiality, noncompetition, nonsolicitation, noninterference, or similar agreement with any former employer or other party. You represent that you will not bring with you to the Company or use in the performance of your duties for the Company any documents or materials or intangibles of a former employer or third party that are not in the public domain or have not been legally transferred or licensed to the Company.

 

6.             DUTY OF LOYALTY. You understand that your employment with the Company requires your undivided attention and effort during normal business hours. While you are employed by the Company, you will not, without the Company’s express prior written consent, (i) engage in any other business activity, unless such activity is for passive investment purposes only and will not require you to render any services, (ii) be engaged or interested, directly or indirectly, alone or with others, in any trade, business or occupation in competition with the Group, (iii) make preparations, alone or with others, to compete with the Group in the future, or (iv) appropriate for your own benefit business opportunities pertaining to the Group’s business. The obligations imposed on you under the Section 6 are in addition to, and do not supplant, any similar obligations you may have to the Group under the common law or by statute.

 

7.             DUTY OF NON INTERFERENCE.

 

For purposes of this Section, “solicit” means any direct or indirect communication of any kind, regardless of who initiates it, that in any way invites, advises, encourages or requests any person to take or refrain from taking any action.

 

7.1          Non-Solicitation of Employees/Consultants.  During your employment with the Group and for a period of one (1) year thereafter, you will not directly or indirectly hire, attempt to hire, recruit, offer employment, lure or entice away, or in any other manner persuade or otherwise solicit anyone who is then an employee or consultant of the Group (or who was an employee or consultant of the Group within the 6 months preceding the date of any such prohibited conduct) to resign from the Group or to apply for or accept employment with, or otherwise provide services to, you or any third party, for your own benefit or for the benefit of any other person or entity.

 

7.2          Non-Solicitation of Suppliers/Customers. During your employment with the Group and for a period of one (1) year thereafter, you will not directly or indirectly (i) solicit or accept from any Protected Customer any business involving the sale or provision of Restricted Products (as defined in section 7.3); (ii) request, advise or otherwise solicit any Protected Customer or supplier of the Group not to do business with the Group, or to curtail, reduce, cancel, or withdraw its business from the Group; (iii) aid in any way any other entity in obtaining business from any Protected Customer involving the sale or provision of Restricted Products (as defined in section 7.3); or (iv) otherwise interfere with any transaction, agreement, business relationship, and/or business opportunity between the Group and any Protected Customer or supplier. “Protected Customer” means any actual or prospective customer to whom the Company or a Group member or their predecessor sold its products or services or solicited to sell its products or services during your last 2 years of employment and, (a) with whom you dealt on behalf of the Company or a Group member or their predecessor; (b) whose dealings with

 

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the Company or a Group member or their predecessor were coordinated or supervised by you; (c) about whom you obtained Proprietary Information as a result of your association with the Company or a Group member or their predecessor; (d) to whom you provided services or (e) who received products or services the sale or provision of which resulted in compensation, commissions or earnings for you.

 

7.3          Non-Competition. During your employment with the Company and for a period of one (1) year thereafter (the “Restricted Period”), you will not directly or indirectly, whether as an employee, officer, director, consultant, owner, manager, advisor, investor, or otherwise, in any state in which the Group conducts business or has customers (i) render advice or services to, or otherwise assist, any person, association, or entity who is engaged, directly or indirectly, in the Restricted Business; (ii) hold a 2.5% or greater equity, voting or profit participation interest in any person, association, or entity who is engaged, directly or indirectly, in the Restricted Business or (iii) carry on or be in any way engaged, concerned or interested in or have business dealings with the Restricted Business. For purposes of this section, “Restricted Business” means the business of researching into, developing, manufacturing, distributing, selling, supplying or otherwise dealing with Restricted Products. “Restricted Products” means products or services which are of the same or materially similar kind as the products or services (including but not limited to technical and product support, professional services, technical advice and other customer services) researched into, developed, manufactured, distributed, sold or supplied by the Group and with which you were directly connected during your employment with the Company or its predecessor or about which you have received or developed Proprietary Information by reason of your employment with the Company or its predecessor. Notwithstanding the foregoing, with prior written consent from the Company which shall not be unreasonably withheld, you may accept employment or otherwise be engaged in or involved with a competitor of the Group that has multiple lines of business provided that, during the Restricted Period, you are employed by or provide services for a business unit of such competitor that is not engaged or otherwise involved with the Restricted Business. Nothing contained in this Section 7 shall prohibit you from owning of a passive investment interest of not more than 2.5% in a company with publicly traded equity securities, and whether on your own behalf or on behalf of others. You agree that the Restricted Period shall be extended by a period equal the length of any violation of this Section 7.3.

 

7.4          Employment by Customers. For a period of one (1) year following termination of your employment for any reason, you will not accept employment with any customer of the Group in a capacity of service that could otherwise be offered as a service by the Company for such customer without the Company’s express written permission.

 

7.5          Acknowledgements of Law. You acknowledge the following provisions of Colorado law, set forth in Colorado Revised Statutes § 8-2-113(2):

 

Any covenant not to compete which restricts the right of any person to receive compensation for performance of skilled or unskilled labor for any employer shall be void, but this subsection (2) shall not apply to:

 

(b)   Any contract for the protection of trade secrets;

 

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(d)   Executive and management personnel and officers and employees who constitute professional staff to executive and management personnel.

 

You acknowledge that this Agreement is a contract for the protection of trade secrets within the meaning of § 8-2-113(2)(b) and is intended to protect the Proprietary Information identified above and that you are an executive or manager, or professional staff to an executive or manager, within the meaning of § 8-2-113(2)(d).

 

8.             OBLIGATIONS UPON TERMINATION.

 

8.1          Return of Company Property. At the time of leaving the employ of the Company, you will deliver to the Company (and will not keep in your possession or deliver to anyone else) (i) any and all documents and materials of any nature (including physical and electronic copies) pertaining to your work, including without limitation devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items and (ii) all property belonging to the Group or any third party which provided property to you in connection with your employment such as computer, laptops, personal digital assistants, cell phones, MP3 players, electronic organizers and other devices, cards, car, keys, security devices or any other item belonging to the Group. Upon Company request, you will execute a document confirming your compliance with this provision and the terms of this Agreement.

 

8.2          Notification of New Employer. Before you accept employment or enter in to any consulting or other professional or business engagement with any other person or entity while any of Section 7 is in effect, you will provide such person or entity with written notice of the provisions of Section 7 and will deliver a copy of the notice to the Company. You hereby grant consent to notification by the Company to your new employer about your rights and obligations under this Agreement.

 

8.3          Withholding. To the extent allowed by law, you agree to allow Company to deduct from your final paycheck(s) any amounts due as a result of your employment, including but not limited to, any expense advances or business charges incurred by you on behalf of the Group, charges for property damaged or not returned when requested, and any other charges incurred by you payable to the Group. You agree to execute any authorization form as may be provided by Company to effectuate this provision.

 

9.             AT WILL EMPLOYMENT.

 

This Agreement does not constitute a contract of employment for any definite period of time. You acknowledge and agree that nothing in this Agreement modifies the at-will nature of your employment with Company, which permits either yourself or Company to terminate your employment at any time and without cause.

 

10.          ARBITRATION.

 

10.1        In the event of any controversy or dispute between you and the Company or between you and any affiliate or an agent of Company, including but not limited to directors, officers, managers, other employees or members of the Group, who are being sued in any capacity, as to all or any part of this Agreement, any other agreement, any dispute or controversy whatsoever pertaining to or arising out of the relationship between you and the Company and/or the Group or the dissolution or termination of

 

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same, and/or the arbitrability thereof (collectively, “Arbitrable Disputes” as further defined below) shall, subject to Section 11.1 herein, be resolved exclusively by binding arbitration solely between yourself and the Company and/or person or entity described above, conducted in Denver, Colorado. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Section 1 et seq, as amended, and shall be administered in accordance with the procedures set forth in the Dispute Resolution Addendum appended hereto as Schedule 2 (the “Addendum”), all of which are incorporated into this Agreement by this reference.

 

10.2        Arbitrable Disputes shall include any and all disputes not specifically exempted from arbitration herein, including, but not limited to, any alleged violations of federal, state or local constitutions, statutes, laws, ordinances, regulations or common law, any claims of wrongful termination, unlawful discrimination, harassment or retaliation, including but not limited to Title VII of the 1964 Civil Rights Act, The Equal Pay Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Fair Labor Standards Act and similar state and local statutes, any claims of breach of contract or any implied covenant of good faith and fair dealing, any claims of adverse treatment in violation of public policy, and any disputes arising from, under or regarding this Agreement, including the formation, validity, interpretation, effect or breach of the Agreement. For avoidance of doubt, all disputes regarding the validity of this Agreement, the validity of the arbitration provisions of this Agreement, or whether any particular claim or matter is included within the scope of the arbitration provisions of this Agreement, are Arbitrable Disputes subject to arbitration as described herein.

 

Specifically excluded from Arbitrable Disputes are disputes or claims arising from or related to workers’ compensation and unemployment insurance, and any claims which are expressly excluded from binding arbitration by statute or public policy, or which are expressly required to be arbitrated under a different procedure.

 

10.3        While you are not required to do so before serving an arbitration demand under Section (g) of the Addendum, nothing in this Agreement shall prevent you from filing or maintaining an administrative charge or complaint with a government agency, including but not limited to, the Equal Employment Opportunity Commission, the Department of Labor and the National Labor Relations Board or any equivalent state or local agency. For the avoidance of doubt, if you choose not to file an administrative charge or complaint before commencing an arbitration in accordance with this Section 10 and the Addendum, your arbitration demand must be served, subject to Section 10.5, within the applicable time period for filing a charge with the relevant agency in order to be timely filed.

 

10.4        This binding arbitration procedure shall supplant and replace claims in court (except as specified herein), and you expressly waive the right to a civil court action before a jury.

 

10.5        In accordance with Section (g) of the Addendum and to the extent permitted by applicable law, any arbitration relating to or arising from any Arbitrable Dispute shall be commenced by service of an arbitration demand on or before the earlier of: (i) the expiration of the limitations period provided by applicable law; or (ii) the one-year anniversary of the accrual of the aggrieved party’s claim.

 

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10.6        All Arbitrable Disputes under this Agreement must be brought in your individual capacity, and not as a plaintiff or class member in any purported class, representative or collective proceeding. You agree that the arbitrator is not empowered to consolidate claims of different individuals into one proceeding, or to hear an arbitration as a class arbitration. To the extent the arbitrator determines that this class/collective action waiver is invalid, for any reason, this entire Section 10 shall be null and void but only with regard to that particular proceeding in which the arbitrator invalidated this class/collective action waiver and this Section 10 shall remain in full force and effect with respect to any Arbitrable Disputes other than that covered by such class/collective action proceeding.

 

10.7        Notwithstanding the foregoing, the waiver of the jury trial right shall survive even in the event this Section 10 is deemed null and void.

 

11.          GENERAL

 

11.1        Injunctive Relief. Notwithstanding the arbitration provisions in Section 10 or anything else to the contrary in this Agreement, you and the Company understand and agree that the parties’ actions or potential actions concerning obligations under Sections 2, 3, 4, 6 or 7 of this Agreement may result in irreparable and continuing damage to the other party for which monetary damages will not be sufficient, and agree that both parties will be entitled to seek, in addition to its other rights and remedies hereunder or at law and both before or while an arbitration is pending between the parties under Section 10 of this Agreement, a temporary restraining order, preliminary injunction or similar injunctive relief from a court of competent jurisdiction in order to preserve the status quo or prevent irreparable injury pending the full and final resolution of the dispute through arbitration, without the necessity of showing any actual damages or that monetary damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned injunctive relief shall be in addition to, not in lieu of, legal remedies, monetary damages or other available forms of relief through arbitration proceedings. This Section shall not be construed to limit the obligation for either party to pursue arbitration under Section 10 with respect to any Arbitrable Disputes.

 

11.2        Severability; Modification; Partial Invalidity. Each provision of this Agreement is severable from every other provision of this Agreement. If the scope of any restriction contained in this Agreement is too broad to permit enforcement of such restriction to its full extent, then such restriction shall be enforced to the maximum extent permitted by law, and the parties consent and agree that such scope may be accordingly modified in any proceeding brought to enforce such restriction. If any provision of this Agreement or the application of such provision is held unenforceable for any reason, then such provision shall be modified to the extent to render it enforceable (except as otherwise provided in Section 10.6 above), or, if held impossible to modify, then severed from this Agreement and the remainder of this Agreement shall not be affected.

 

11.3        Waiver of Breach. The failure of Company at any time, or from time to time, to require performance of any of your obligations under this Agreement shall not be deemed a waiver of and shall in no manner affect Company’s right to enforce any provision of this Agreement at a subsequent time. The waiver by Company of any rights arising out of any breach shall not be

 

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construed as a waiver of any rights arising out of any subsequent breach.

 

11.4        Assignment.  This Agreement will be binding upon your heirs, executors, administrators and other legal representatives and will be for the benefit of the Group, its successors, its assigns and licensees. This Agreement, and your rights and obligations hereunder, may not be assigned by you; however, the Company may freely assign its rights hereunder.

 

11.5        Notice.  Unless your offer letter provides otherwise, you agree to use reasonable efforts to provide Company 14 days’ notice to terminate your employment with Company; provided, however, that this provision shall not change the at-will nature of the employment relationship between you and Company.

 

11.6 Non-Disparagement. During and after your employment with the Company, except to the extent compelled or required by law, you agree you shall not disparage the Group, its customers and suppliers or their respective officers, directors, agents, servants, employees, attorneys, shareholders, successors or assigns or their respective products or services, in any manner (including but not limited to, verbally or via hard copy, websites, blogs, social media forums or any other medium); provided, however, that nothing in this Section shall prevent you from: engaging in concerted activity relative to the terms and conditions of your employment and in communications protected under the National Labor Relations Act, filing a charge or providing information to any governmental agency, or from providing information in response to a subpoena or other enforceable legal process or as otherwise required by law.

 

11.7 Applicable Law. This Agreement shall be governed by the laws of the State of Colorado, irrespective of its choice of law rules.

 

11.8        Entire Agreement. This Agreement along with Schedules 1 and 2 and the documents referred to herein and the corresponding employment and option grant agreements constitute the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and supersede all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the specific subject matter hereof. Notwithstanding the foregoing, this Agreement does not supplant any rights the Group may have under the common law or by statute. If any of Section 7 of this Agreement is deemed void, voidable, or otherwise invalid in legal proceedings and is not modified in accordance with Section 11.2 of this Agreement, you agree that you shall comply with, and the Company may seek to enforce such provisions of the Prior Agreement against you. Headings are provided for convenience only and do not modify, broaden, define or restrict any provision. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by the parties.

 

11.9        Survival. Any termination of this Agreement, regardless of how such termination may occur, shall not operate to terminate Sections 2, 3, 4, 5, 7, 8, 10 and 11 which shall survive any such termination and remain valid, enforceable and in full force and effect.

 

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PING IDENTITY CORPORATION

 

By:

/s/ André Durand

 

By:

/s/ Raj Dani

Name:

André Durand

 

Name:

Raj Dani

Title:

Chief Executive Officer

 

Date:

7-13-16

Date:

 

 

 

 

 

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Schedule 2

 

Dispute Resolution Addendum

 

a.             For purposes of this Addendum, all capitalized terms shall have the meaning set forth in the Confidentiality, Invention Assignment, Non Solicit, Non-Compete and Arbitration Agreement (the “Agreement”) to which this Addendum is appended. “Employee” means the individual employed by or performing services for the Company or any affiliate who signed the Agreement.

 

b.             Except in the event either party seeks injunctive relief in accordance with Section 11.1 of the Agreement, Employee and Company agree that, prior to the service of an Arbitration Demand in accordance with paragraph h below, the parties shall negotiate in good faith for a period of 30 days to resolve any Arbitrable Dispute privately, amicably and confidentially. Such 30 day period shall run from the date of the first written contact by one party of the other, specifically citing this paragraph, to discuss the potential Arbitrable Dispute.

 

c.             All Arbitrable Disputes shall be resolved only by final and binding arbitration conducted privately and confidentially by a single arbitrator selected as specified in this Addendum.

 

d.             Wavier of Class Action and Collective Action Claims. Except as otherwise required by law, both parties expressly intend and agree that: (a) class action and collective action procedures shall neither be asserted nor applied for in any arbitration conducted pursuant to this arbitration agreement; (b) each party will not assert class or collective action claims against the other in arbitration or otherwise; and (c) the parties shall only submit their own, individual claims in arbitration and will not seek to represent the interests of any other person. The arbitrator shall not consolidate more than one person’s claims in the arbitration, and may not otherwise preside over any form of a collective or class proceeding.

 

e.             The parties understand and agree that the Agreement evidences a transaction involving interstate commerce within the meaning of 9 U.S.C. § 2, and that the Addendum shall therefore be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1, et seq.

 

f.             The arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to determine the arbitrability of disputes and to resolve any dispute relating to the interpretation, applicability, or enforceability of the Agreement and this Addendum. The Arbitrator shall conduct and preside over such hearings as the arbitrator deems appropriate.

 

g.             Shortening of Limitations Period Within Which to File an Arbitration Demand. To the extent permitted by applicable law, any arbitration relating to or arising from any Arbitrable Dispute shall be commenced by service of an arbitration demand on or before the earlier of: (i) the expiration of the limitations period provided by applicable law; or (ii) the one-year anniversary of the accrual of the aggrieved party’s claim (whichever applies, the “Limitations Period for Arbitrable Disputes”). If a party timely commences an arbitration under this Addendum and the responding party has a counterclaim against the claimant that would have been timely had it been asserted on the date the claimant served its arbitration demand but that thereafter was extinguished by this section g, then, this Addendum shall

 

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not time-bar the counterclaim so long as it is asserted no later than the date specified in section h, below, for the filing of a response to the arbitration demand. Otherwise, all claims that were or could have been brought by the aggrieved party against the other party shall be forever barred.

 

h.             To commence an arbitration pursuant to this Agreement, a party shall serve a written arbitration demand (the “Demand”) on the other party by certified mail, return receipt requested or by personal service prior to the expiration of Limitations Period for Arbitrable Disputes. The claimant shall attach a copy of the Agreement and this Addendum to the Demand, which shall also describe the Arbitrable Dispute in sufficient detail to advise the respondent of the nature and basis of the dispute, state the date on which the dispute first arose, list the names and addresses of every person, including without limitation current or former employees of Company or any affiliate, whom the claimant believes does or may have information relating to the dispute, including a short description of the matter(s) about which each person is believed to have knowledge, and state with particularity the relief requested by the claimant, including a specific monetary amount, if the claimant seeks a monetary award of any kind. Within 30 days after receiving the Demand, the respondent shall mail to the claimant a written response to the Demand (the “Response”) that may include one or more counterclaims and that shall describe in reasonable detail the respondent’s position in connection with the dispute and any counterclaim asserted. The Response shall also, if applicable, state the date on which any counterclaim first arose, list the names and addresses of every person, including without limitation current or former employees of Company or any affiliate, whom the respondent believes does or may have information relating to the dispute including a short description of the matter(s) about which each person is believed to have knowledge, and state with particularity the relief requested by the respondent, including a specific monetary amount, if the respondent seeks a monetary award of any kind. Both parties acknowledge that they have an ongoing duty to supplement the list of persons that either side believes does or may have information relating to the dispute.

 

i.              Promptly after service of the Response, the parties shall confer in good faith to attempt to agree upon a suitable arbitrator. if the parties are unable to agree upon an arbitrator, the claimant shall request from the American Arbitration Association (“AAA”) a list of 9 potential arbitrators randomly selected from the AAA’s employment arbitration panel for the area in which the hearing is required to take place or, if no employment arbitration panel exists for that area, then from the AAA’s commercial arbitration panel for that area (the “List”). The Company shall bear the cost of obtaining the List, which the AAA shall provide simultaneously to the claimant and the respondent by fax, email, hand delivery or any other expeditious mode of delivery, The AAA shall not administer the arbitration or have any role in the arbitration other than providing the List, unless the parties both agree otherwise in writing. No later than 5 business days after the List is received by the parties, or within such other time period as agreed by the parties in writing, they shall conduct a meeting or conference call during which they shall alternate in striking names from the List, beginning with the claimant. After each party has stricken 4 names from the List, the one remaining individual shall be appointed to serve as arbitrator and shall thereafter resolve the Arbitrable Dispute in accordance with this Addendum.

 

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j.              Notwithstanding the choice-of-law principles of any jurisdiction, the arbitrator shall be bound by and shall resolve all Arbitrable Disputes in accordance with the substantive law of the State of Colorado or federal law as enunciated by the federal courts situated in the Tenth Circuit, whichever apply to the claim and Federal rules of evidence, including, without limitation, all relevant privileges and the attorney work product doctrine.

 

k.             All facts relating to or concerning the Arbitrable Dispute and arbitration, including without limitation the existence of the arbitration, the nature of the claims and defenses asserted, and the outcome of the arbitration shall be confidential and shall not be disclosed by the claimant, the respondent or the arbitrator without the prior written consent of both the claimant and the respondent. Notwithstanding the foregoing confidentiality obligation, the claimant and respondent may divulge information rendered confidential pursuant to this Addendum to the extent necessary to prosecute or defend the arbitration or any related judicial proceeding, and the Company may disclose such information to its employees and agents in the ordinary course of their performance of their duties for the Company.

 

l. Before the arbitration hearing, each party shall be entitled to take discovery depositions of 3 fact witnesses and, in addition, the discovery deposition of every expert witness expected to testify for the opposing party at the arbitration hearing; provided that to the extent the arbitrator concludes that applicable law would render this subsection (I) unconscionable or otherwise unenforceable, the arbitrator shall have the authority to order additional depositions sufficient to protect the enforceability of this subsection (I). Upon the written request of either party, the other party shall promptly produce documents relevant to the Arbitrable Dispute or reasonably likely to lead to the discovery of admissible evidence. Each party acknowledges that each has an ongoing duty to supplement the production of documents in response to any request received from the party. The manner, timing and extent of any further discovery shall be committed to the arbitrator’s sound discretion, provided that the arbitrator shall upon a showing of reasonable cause permit any party to take a preservation deposition of any witness for use in at any hearing in lieu of live testimony, and provided further that under no circumstances shall the arbitrator allow more depositions or interrogatories than permitted by the presumptive limitations set forth in F.R.Civ.P. 30(a)(2)(A) and 33(a). The arbitrator shall levy appropriate sanctions, including an award of reasonable attorneys’ fees, against any party that fails to cooperate in good faith in discovery permitted by this Addendum or ordered by the arbitrator.

 

m, Either party shall have the right to subpoena witnesses and documents for the arbitration as well as documents relevant to the case from third parties. The arbitrator shall have the jurisdiction to hear and rule upon pre-hearing disputes and is authorized to hold pre-hearing conferences by telephone or in person, as the arbitrator deems advisable. The arbitrator shall have the authority to entertain a motion to dismiss, a motion for summary judgment and/or any other dispositive motion by any party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure. Either party, at its expense, may arrange and pay the cost of a court reporter to provide a stenographic record of the proceedings; provided, however, that if both parties desire a stenographic record or access to such record, the cost of the court reporter and such record shall be shared equally.

 

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Should any party refuse or neglect to appear for, or participate in the arbitration hearing, the arbitrator shall have the authority to decide the dispute based upon whatever evidence is presented. Either party, upon request at the close of the hearing, shall be given leave to file a post-hearing brief. The time for filing such brief shall be set by the arbitrator.

 

n. The arbitrator shall have no power to modify or deviate from the provisions of this Addendum unless both claimant and respondent consent to such modification or deviation. To the extent that any matter necessary to the efficient and timely completion of the arbitration is not governed by this Addendum, the arbitrator shall, after conferring with the parties, have the power to enter rulings and establish standards necessary, in his or her sound discretion, to resolve the matter.

 

o.             The Company shall bear the costs of the arbitrator only to the extent required by applicable law. Except as otherwise set forth in this Addendum, each party shall pay for its own costs and attorneys’ fees incurred by such party, if any. however, if’ any party prevails on a statutory claim which affords the prevailing party attorneys’ fees and costs, or if there is a written agreement providing for attorneys’ fees and costs, the arbitrator may award reasonable attorneys’ fees and costs to the prevailing party. Any dispute as to the reasonableness of any fee or cost shall be resolved by the arbitrator.

 

p.             Within 30 days after the arbitration hearing is closed or after any dispositive motion is fully briefed, the arbitrator shall issue a written award setting forth his or her decision and the reasons therefor. The arbitrator’s award shall be final, nonappealable and binding upon the parties, subject only to the provisions of 9 U.S.C. § 10, and may be entered as a judgment in any court of competent jurisdiction.

 

q.             The parties agree that reliance upon courts of law and equity can add significant costs and delays to the process of resolving disputes. Accordingly, they recognize that an essence of this Agreement is to provide for the submission of all Arbitrable Disputes to binding arbitration. Therefore, if any provision of this Addendum is found to be in conflict with a mandatory provision of applicable law or is otherwise void or voidable, the parties understand and agree that each such provision shall be reformed to render it enforceable, but only to the extent absolutely necessary to render the provision enforceable and only in view of the parties’ express desire that Arbitrable Disputes be resolved by arbitration and, to the greatest extent permitted by law, in accordance with the principles, limitations and procedures set forth in this Addendum.

 

r.              Either party may bring an action in court to compel arbitration under this Addendum and the Agreement, and to confirm, vacate or enforce an arbitration award, and each party shall bear its own attorney fees and costs and other expenses of such action.

 

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By:

/s/ André Durand

 

By:

/s/ Raj Dani

Name:

André Durand

 

Name:

Raj Dani

Title:

Chief Executive Officer

 

Date:

7-13-16

Date:

 

 

 

 

 

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EXHIBIT B

 

Certain Definitions

 

“Cause” means any of the following: (i) a material failure by you to perform your responsibilities or duties to the Company under this letter or those other lawful responsibilities or duties as requested from time to time by the Board, after demand for performance has been given by the Board that identifies how you have not performed your responsibilities or duties; (ii) your engagement in illegal or improper conduct or in gross misconduct in the fulfillment of your responsibilities or duties to the Company; (iii) your commission or conviction of, or plea of guilty or nolo contendere to, a felony, a crime involving moral turpitude or any other act or omission that the Company in good faith believes may harm the standing and reputation of the Company; (iv) a material breach of your duty of loyalty to the Company or your material breach of the Company’s written code of conduct and business ethics or Section 2 through 8 of the Confidentiality, Invention Assignment, Non-Solicit, Non-Compete and Arbitration Agreement, or any other agreement between you and the Company; (v) dishonesty, fraud, gross negligence or repetitive negligence committed without regard to corrective direction in the course of discharge of your duties as an employee; (vi) your personal bankruptcy or insolvency; or (vii) excessive and unreasonable absences from your duties for any reason (other than authorized vacation or sick leave) or as a result of your Disability (as defined below).

 

“Disability” means your inability to perform the essential functions of your job, with or without accommodation, for an extended period but not less than 60 business days in any consecutive 6-month period, as determined in the reasonable discretion of the Company.

 

“Good Reason” means that you voluntarily terminate your employment with the Company if there should occur, without your written consent:

 

(a)           a material, adverse change in your duties or responsibilities with the Company, provided that a change in title or a change in the person or office to which you report, shall not, by itself, constitute such a material, adverse change;

 

(b)           an aggregate reduction in your then current base salary by more than 10% or a reduction in your base salary by less than 10% which is not applied to similarly ranked employees;

 

(c)           the material breach by the Company of any offer letter or employment agreement between you and the Company; and/or

 

(d)           a relocation of your primary place of work to a location more than fifty (50) miles from Denver, Colorado.

 

provided, however, that in each case above, (i) you must first give the Company written notice of any of the foregoing within 30 business days following the first occurrence of such event in a written explanation specifying the basis for your belief that you are entitled to terminate your employment for Good Reason, (ii) the Company must have 30 days to cure such event and (iii)

 

B-1


 

provided that the Company does not reasonably cure such event, you must actually resign your employment within 30 days following the cure period described in (ii). Otherwise, any claim of such circumstances as “Good Reason” shall be deemed irrevocably waived by you.

 

All references to the Company in these definitions shall include parent, subsidiary, affiliate and successor entities of the Company.

 

B-2





Exhibit 10.21

 

ROARING FORK HOLDING, INC.

 

2016 STOCK OPTION PLAN, AMENDED AS OF [     ], 2019

 

1.                                      Purpose of Plan. This 2016 Stock Option Plan (the “Plan”) of Roaring Fork Holding, Inc., a Delaware corporation (the “Company”), is designed to provide incentives to such present and future employees, directors, officers, consultants or advisors of the Company or its subsidiaries (“Participants”), as may be selected in the sole discretion of the Committee, through the grant of Options by the Company to Participants. Only those Participants who are employees of the Company or its Subsidiaries shall be eligible to receive incentive stock options within the meaning of Section 422 of the Code. This Plan is a compensatory benefit plan within the meaning of Rule 701 of the Securities Act of 1933, as amended, and, unless and until the Company’s Common Stock is publicly traded, the issuance of options to purchase shares of the Company’s Common Stock pursuant to the Plan and the issuance of shares of Common Stock pursuant to such options are, to the extent permitted by applicable federal securities laws, intended to qualify for the exemption from registration under Rule 701 of the Securities Act.

 

2.                                      Definitions. Certain terms used in this Plan have the meanings set forth below:

 

Board” means the Company’s board of directors.

 

Cause” shall have the meaning ascribed to such term in any written offer letter or employment or severance agreement between the Company or any Subsidiary of the Company and such Participant, or in the absence of any such written agreement, shall mean (i) the commission of a felony or any other act or omission involving dishonesty, disloyalty or fraud with respect to the Company or any of its Subsidiaries or any of their customers or suppliers if the act or omission was wrongful or deliberate, or any other crime involving moral turpitude, (ii) conduct tending to bring the Company or any of its Subsidiaries into public disgrace or disrepute or economic harm, (iii) repeated material failure or inability to perform duties and/or obligations as reasonably directed by the Board or its designees, after demand for performance has been given by the Board or its designees that identifies how such Participant has not performed its duties and/or obligations, (iv) gross negligence or misconduct with respect to the Company or any of its Subsidiaries, (v) such Participant’s personal bankruptcy or insolvency, (vi) any other material breach of (A) any written agreement between the Company and such Participant evidencing the grant of any Option (B) the Company’s written code of conduct and business ethics or (C) any other written agreement between such Participant and the Company or any Subsidiary of the Company or (vii) excessive and unreasonable absences from such Participant’s duties for any reason (other than authorized vacation or sick leave) or as a result of such Participant’s inability to perform the essential duties, responsibilities and functions of its position with the Company as a result of any mental or physical disability or incapacity, which continues for 60 business days in any consecutive 6 month period.

 

Common Stock” means the Company’s Common Stock, par value $0.001 per share.

 

Company Stock” means, collectively, the Common Stock and any other class or series of shares of capital stock hereafter created by the Company.

 


 

Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, as the same may be amended from time to time.

 

Committee” shall mean the committee of the Board which may be designated by the Board to administer the Plan. The Committee shall be composed of two or more directors as appointed from time to time to serve by the Board. In the absence of the appointment of any such Committee, any action permitted or required to be taken hereunder shall be deemed to refer to the Board.

 

Company Group” means the Company and its Subsidiaries.

 

Competitive Activity” means, with respect to a Participant, during the term of such Participant’s employment with the Company or any of its Subsidiaries and during the two year period immediately following such Participant’s Termination Date, directly or indirectly, for himself or for any other Person, Participating in any Competitive Business or any business in which the Company is engaged or is planning to engage as of such Participant’s Termination Date; provided that the passive ownership by such Participant of not more than one percent (1%) of the outstanding shares of any class of capital stock of a corporation which is publicly traded on a national securities exchange will not be deemed to be a Competitive Activity, so long as such Participant has no active Participation in the business of such corporation.

 

Competitive Business” means any business in the geographic area set forth in the non-competition provision in any written employment or severance agreement between the Company or any Subsidiary of the Company and such Participant (or, in the absence of the designation of any such geographic area in any such written agreement, any geographic area or country where the Company or any Subsidiary of the Company generates revenues) engaged in the “Restricted Business” set forth in the non-competition provision in any written employment or severance agreement between the Company or any Subsidiary of the Company and such Participant (or, in the absence of the designation of any such “Restricted Business” in any such written agreement, in the provision of services within the identity and access management software and solutions industry related to any product, business, activity or service line of any person, entity or company that is in competition with any product, business, activity or service line of the Company).

 

Effective Date” means June 30, 2016.

 

Fair Market Value” of an Option Share means the fair market value thereof as determined in good faith by the Committee or, in the absence of the Committee, by the Board.

 

Good Reason” shall have the meaning ascribed to such term in any written offer letter or employment or severance agreement between the Company or any Subsidiary of the Company and such Participant, or in the absence of any such written agreement, shall mean Participant resigns from employment with the Company or any Subsidiary of the Company as a result of one or more of the following reasons:  (i) the Company reduces by more than 10% the amount of Participant’s base salary, or (ii) the Company makes a material adverse change in Participant’s duties or responsibilities with the Company or any Subsidiary of the Company,

 

2


 

provided that a change in title or a change in the person or office to which Participant reports, shall not, by itself, constitute such a material adverse change.

 

Independent Third Party” means any Person who, immediately prior to the contemplated transaction, does not own in excess of 10% of the Company’s Common Stock on a fully-diluted basis (a “10% Owner”), who is not controlling, controlled by or under common control with any such 10% Owner and who is not the spouse or descendant (by birth or adoption) of any such 10% Owner or a trust for the benefit of such 10% Owner and/or such other Persons.

 

Investors” means Vista Equity Partners Fund VI, L.P., Vista Equity Partners Fund VI-A, L.P., and VEPF VI FAF, L.P. and any affiliate of any of the foregoing Persons that holds Common Stock, and “Investor” means any of the Investors individually.

 

Investor Fund” means one or more equity buy-out investment funds (including Vista Equity Partners Fund VI, L.P.) managed or controlled by Vista Equity Partners III, LLC or any successor management company, and any of such fund’s respective portfolio companies, (excluding the Company and its Subsidiaries) and their respective partners, members, directors, employees, stockholders, agents, any successor by operation of law (including by merger) of any such Person, and any entity that acquires all or substantially all of the assets of any such Person in a single transaction or series of related transactions.

 

Investor Returns Target” means $1,491,000,000.

 

IPO” means an initial public offering and sale of the Company’s Common Stock pursuant to an effective registration statement under the Securities Act.

 

Option” means any option enabling the holder thereof to purchase any shares of the Company’s Common Stock granted by the Committee pursuant to the provisions of this Plan. Options to be granted under this Plan may be incentive stock options within the meaning of Section 422 of the Code (“Incentive Stock Options”) or in such other form, consistent with this Plan, as the Committee may determine.

 

Option Shares” means the shares of the Company’s Common Stock acquired (or to be acquired) pursuant to the exercise of any Option.

 

Original Cost” of each Option Share will be equal to the price paid therefor (in each case, as proportionally adjusted for all stock splits, stock dividends and other recapitalizations affecting such share of Common Stock subsequent to any such purchase).

 

Participate” (and the correlative terms “Participating” and “Participation”) includes any direct or indirect ownership interest in any enterprise or participation in the management of such enterprise, whether as an officer, director, employee, partner, sole proprietor, agent, representative, independent contractor, consultant, executive, franchisor, franchisee, creditor, owner or otherwise.

 

Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint share company, a trust, a joint venture, an unincorporated

 

3


 

organization and a governmental entity or any department, agency or political subdivision thereof.

 

Sale of the Company” means (i) any sale or transfer by the Company or its Subsidiaries of all or substantially all (as defined under Delaware law) of their assets on a consolidated basis, or (ii) any consolidation, merger or reorganization of the Company with or into any other entity or entities as a result of which any person or group other than the Investors obtains possession of voting power (under ordinary circumstances) to elect a majority of the surviving corporation’s board of directors.

 

Securities Act” means the Securities Act of 1933, as amended.

 

Solvent Reorganization” means any solvent reorganization of the Company or any Subsidiary of the Company, including by merger, consolidation, recapitalization, transfer or sale of shares or assets, or contribution of assets and/or liabilities, or any liquidation, exchange of securities, conversion of entity, migration of entity, formation of new entity, or any other transaction or group of related transactions (in each case other than to or with a third party that is not a member of the Company Group or its Affiliates (which Affiliates may include an entity formed for the purpose of such Solvent Reorganization)), in which:

 

(i)                                 all holders of Option Shares are offered the same consideration in respect of such Option Shares;

 

(ii)                              the pro rata indirect economic interests of the holders of Option Shares in the business of the Company, relative to each other and all other holders, directly or indirectly, of equity securities in the Company Group (other than those held by entities within the Company Group), are preserved; and

 

(iii)                           the rights of the holders of Option Shares are preserved in all material respects (it being understood by way of illustration and not limitation that the relocation of a covenant or restriction from one instrument to another shall be deemed a preservation if the relocation is necessitated, by virtue of any law or regulations applicable to the Company Group following such Solvent Reorganization, as a result of any change in jurisdiction or form of entity in connection with the Solvent Reorganization; provided that such covenants and restrictions are retained in instruments that are, as nearly as practicable and to the extent consistent with business and transactional objectives, equivalent to the instruments in which such restrictions or covenants were contained prior to the Solvent Reorganization).

 

Strategic Transaction” means a transaction with or involving a strategic partner, i.e., a Person who, as determined by the Board, will benefit the Company as a result of experience, expertise, knowledge or relationships.

 

Subsidiary” means any corporation or other entity of which the securities or other ownership interests having the voting power to elect a majority of the board of directors or other governing body are, at the time of determination, owned by the Company, directly or through one or more Subsidiaries.

 

4


 

Termination Date” means the first date on which a Participant is no longer employed (or in the case of a Participant who was not an employee, the first date on which such Participant is no longer acting as a director or officer of, or consultant or advisor to, the Company or its Subsidiaries) by the Company or its Subsidiaries for any reason.

 

Termination Event” means the first to occur of (i) the Sale of the Company, (ii) the sale or transfer to any third party of shares of the Company’s capital stock by the holders thereof as a result of which any person or group other than the Investors obtains possession of voting power (under ordinary circumstances) to elect a majority of the Company’s board of directors, or (iii) at any time following the IPO, a sale of shares of the Company by the Investor following which (x) the cumulative total of all cash distributions made to, or other cash proceeds received by, the Investor Fund (excluding management or transaction fees and expenses, any other advisory fees and expenses, any board fees and expenses or any other expenses) in respect of its ownership of equity or debt securities of the Company or any of its Subsidiaries or any loans provided by the Investor Fund during the life of the Investor Fund’s investment period, minus (y) the Investor Fund’s total investment in the Company and its Subsidiaries (whether in exchange for equity, indebtedness or otherwise), equals or exceeds the Investor Returns Target.

 

3.                                      Grant of Options. The Committee shall have the right and power to grant to any Participant such Options at any time prior to the termination of this Plan in such quantity, at such exercise price, which may be Fair Market Value or such other value as determined by the Committee and set forth in a written award agreement with respect to an Option, and on such other terms and subject to such conditions that are consistent with this Plan and established by the Committee. Options granted under this Plan shall be subject to such terms and conditions and evidenced by agreements as shall be determined from time to time by the Committee. Any Participant acquiring Common Stock pursuant to an Option shall be required to pay in full the exercise price related thereto, except as otherwise set forth in a written award agreement with respect to an Option.

 

4.                                      Administration of the Plan. The Committee shall have the power and authority to prescribe, amend and rescind rules and procedures governing the administration of this Plan, including, but not limited to the full power and authority (i) to interpret the terms of this Plan, the terms of any Options granted under this Plan and the rules and procedures established by the Committee governing any such Options, (ii) to determine the rights of any person under this Plan or the meaning of requirements imposed by the terms of this Plan or any rule or procedure established by the Committee, (iii) to correct any defect or omission or reconcile any inconsistency in the Plan or in any Option granted hereunder, (iv) to determine whether any Options are subject to and/or comply with the requirements of Code Section 409A or the regulations thereunder and (v) to make all other determinations and take all other actions necessary or advisable for the implementation and administration of the Plan. Each action of the Committee shall be binding on all persons. Notwithstanding any provision to the contrary contained in this Plan or any separate written agreement between the Company and any Participant with respect to any Option pursuant to this Plan, any unvested Options that do not become vested immediately prior to, or in connection with, any Sale of the Company shall be forfeited and cancelled with concurrent effect upon the consummation of any such transaction, and no Participant nor any other Person shall have any further rights or obligations with respect to such forfeited Options.

 

5


 

It is the Company’s intent that, except as otherwise specifically provided in a written award agreement with respect to an Option, the Options not be treated as a nonqualified deferred compensation plan that fails to meet the requirements of Section 409A(a)(2), (3) or (4) of the Code and that any ambiguities in construction be interpreted in order to effectuate such intent. Options under the Plan shall contain such terms as the Committee determines are appropriate to be exempt from, or comply with, the requirements of Section 409A of the Code. In the event that, after the issuance of an Option under the Plan, Section 409A of the Code or the regulations thereunder are amended, or the Internal Revenue Service or Treasury Department issues additional guidance interpreting Section 409A of the Code, the Committee may modify the terms of any such previously issued Option to the extent the Committee determines that such modification is necessary to comply with the requirements of Section 409A of the Code. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on any Participant by Code Section 409A or damages for failing to comply with Code Section 409A.

 

5.                                      Limitation on the Aggregate Number of Shares of Common Stock. The number of shares of Common Stock with respect to which Options may be granted under this Plan (and which may be issued upon the exercise or payment thereof) shall not exceed, in the aggregate, 40,000 shares of Common Stock (as such number is equitably adjusted pursuant to Section 8 hereof). If any Options expire unexercised or unpaid or are canceled, terminated or forfeited in any manner without the issuance of shares of Common Stock or payment thereunder, the shares with respect to which such Options were granted shall again be available under this Plan. Similarly, if any shares of Common Stock issued hereunder upon exercise of Options are repurchased hereunder, such shares shall again be available under this Plan for reissuance as Options.

 

6.                                      Incentive Stock Options. Any of the Options to be granted hereunder may constitute Incentive Stock Options to the extent expressly designated as such by the Committee or the Board. All Incentive Stock Options (i) shall have an exercise price per share of Common Stock of not less than 100% of the Fair Market Value of such share on the date of grant, (ii) shall not be exercisable more than ten years after the date of grant, (iii) shall not be transferable other than by will or under the laws of descent and distribution and, during the lifetime of the Participant to whom such Incentive Stock Options were granted, may be exercised only by such Participant (or his guardian or legal representative) and (iv) shall be exercisable only during the Participant’s employment by the Company or a Subsidiary, provided, however, that the Committee may, in its discretion, provide at the time that an Incentive Stock Option is granted that such Incentive Stock Option may be exercised for a period ending no later than either (x) the termination of this Plan in the event of the Participant’s death while an employee of the Company or a Subsidiary or (y) the date which is three months after the Termination Date for any other reason. The Committee’s discretion to extend the period during which an Incentive Stock Option is exercisable shall only apply if and to the extent that (i) the Participant was entitled to exercise such option on the date of termination and (ii) such option would not have expired had the Participant continued to be employed by the Company or a Subsidiary. To the extent that the aggregate Fair Market Value of shares with respect to which Incentive Stock Options are exercisable for the first time by any individual during any calendar year exceeds $100,000, such options shall be treated as options which are not Incentive Stock Options.

 

6


 

7.                                      Listing, Registration and Compliance with Laws and Regulations. Each Option shall be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the shares subject to the Option upon any securities exchange or under any federal, state or foreign securities or other law or regulation, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition to or in connection with the granting of such Option or the issue or purchase of shares thereunder, no such Option may be exercised or paid in shares of Common Stock in whole or in part unless such listing, registration, qualification, consent or approval (a “Required Listing”) shall have been effected or obtained, and the holder of each such Option will supply the Company with such certificates, representations and information as the Company shall request which are reasonably necessary or desirable in order for the Company to obtain such Required Listing, and shall otherwise cooperate with the Company in obtaining such Required Listing. In the case of officers and other persons subject to Section 16(b) of the Securities Exchange Act of 1934, as amended, the Committee may at any time impose any limitations upon the exercise of an Option which, in the Committee’s discretion, are necessary or desirable in order to comply with Section 16(b) and the rules and regulations thereunder. If the Company, as part of an offering of securities or otherwise, finds it desirable because of federal, state or foreign regulatory requirements to reduce the period during which any Option may be exercised, the Committee may, in its discretion and without the consent of the holders of any such Option, so reduce such period on not less than 15 days’ written notice to the holders thereof.

 

8.                                      Adjustment for Change in Common Stock. In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation or other change in Common Stock, the Committee shall make appropriate changes in the number and type of shares authorized by this Plan, the number and type of shares covered by outstanding Options and the prices specified therein.

 

9.                                      Taxes. The Company shall be entitled, if necessary or desirable, to withhold (or secure payment from the Participant in lieu of withholding) the amount of any withholding or other tax due with respect to any amount payable and/or shares issuable under this Plan, and the Company may defer any such payment or issuance unless and until indemnified to its satisfaction.

 

10.                               Termination and Amendment. The Committee at any time may suspend or terminate this Plan and make such additions or amendments as it deems advisable under this Plan, except that it may not, without further approval by the Company’s stockholders, (a) increase the maximum number of shares as to which Options may be granted under this Plan, except pursuant to Section 8 above or (b) extend the term of this Plan; provided that, subject to the other provisions hereof, the Committee may not change any of the terms of a written agreement with respect to an Option between the Company and the holder of such Option in a manner which would have a material adverse effect on the holder of such Option without the approval of the holder of such Option. No Options shall be granted or shares of Common Stock issued hereunder after the tenth anniversary of the Effective Date; provided that, if the term of this Plan is otherwise extended, no Incentive Stock Options shall be granted hereunder after the tenth anniversary of the original Effective Date.

 

7


 

11.                               Participant Acknowledgments. In connection with the grant of any Option and/or the issuance of any Common Stock pursuant to this Plan, each Participant acknowledges and agrees, that as a condition to any such grant or issuance:

 

(a)                                 The Company will have no duty or obligation to disclose to any Participant, and no Participant will have any right to be advised of, any material information regarding the Company or its Subsidiaries at any time prior to, upon or in connection with the repurchase of any Option Shares upon the termination of such Participant’s employment with the Company or its Subsidiaries or as otherwise provided under this Plan or any written agreement evidencing the grant of any Option or the issuance of any shares of Common Stock.

 

(b)                                 Neither the grant of any Option, the issuance of any Common Stock nor any provision contained in this Plan or in any written agreement evidencing the grant of any Option or the issuance of any Common Stock shall entitle such Participant to remain in the employment of the Company or its Subsidiaries or affect the right of the Company to terminate any Participant’s employment at any time for any reason.

 

(c)                                  Such Participant will have consulted, or will have had an opportunity to consult with, independent legal counsel regarding his or her rights and obligations under this Plan and any written agreement evidencing any grant of any Option and he or she fully understands the terms and conditions contained herein and therein.

 

(d)                                 Prior to the purchase of any shares of Common Stock pursuant to this Plan or any written agreement evidencing the purchase of any shares of Common Stock, such Participant will deliver to the Company an executed consent from such Participant’s spouse (if any) in the form of Exhibit A attached hereto. If, at any time subsequent to the date such Participant purchases any shares of Common Stock and prior to the occurrence of a Termination Event, such Participant becomes legally married (whether in the first instance or to a different spouse), such Participant shall cause his or her spouse to execute and deliver to the Company a consent in the form of Exhibit A attached hereto. Such Participant’s failure to deliver the Company an executed consent in the form of Exhibit A at any time when such Participant would otherwise be required to deliver such consent shall constitute such Participant’s continuing representation and warranty that such Participant is not legally married as of such date. At the request of the Company, all Participants shall execute a joinder to any stockholders agreement among the equityholders of the Company then in effect.

 

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12.                               Repurchase Option.

 

(a)                                 Repurchase Option. If a Participant is no longer employed (or in the case of a Participant who was not an employee, the date on which such Participant is no longer acting as a director or officer of, or consultant or advisor to, the Company or any of its Subsidiaries) by the Company or its Subsidiaries for any reason, the Option Shares (whether held by such Participant or one or more transferees of such Participant, other than the Company or any Investor) will be subject to repurchase by the Investors and the Company (each of the aforementioned solely at their option) pursuant to the terms and conditions set forth in this Section 12 (the “Repurchase Option”).

 

(b)                                 Repurchase Price. Following the Termination Date, the Investors and the Company may elect to repurchase all or any portion of the Option Shares at a price per share equal to (i) Original Cost, in the event of Participant’s termination for Cause, or in the event Participant resigns without Good Reason, or in the event Participant engages in a Competitive Activity prior to the repurchase date, or (ii) Fair Market Value (as of the date of repurchase), in the event of the Participant’s termination without Cause or in the event Participant resigns for Good Reason, provided that if Participant engages in a Competitive Activity following the Termination Date, Participant shall pay to the Company the difference between the Fair Market Value (as of the date of repurchase) and the Original Cost, if any. In the event any rights pursuant to the Repurchase Option may arise, the Company will promptly notify the Investors thereof.

 

(c)                                  Repurchase Procedures. Subject to Section 12(b), each Investor may elect to exercise the Repurchase Option to purchase up to its pro rata share (determined based upon the number of shares of Common Stock then held by each such Investor) by delivering written notice (the “Initial Repurchase Notice”) to the holder or holders of the Option Shares, the Company and the other Investors no later than 180 days after the later of (i) the Termination Date and (ii) the 181st day following the acquisition of the Option Shares subject to such repurchase. To the extent that any of the Investors do not elect to repurchase their full allotment of Option Shares no later than the fifth business day following delivery of the first Initial Repurchase Notice delivered by any Investor (and, immediately following the completion of such fifth business day, the Company will notify in writing each of the Investors if any of the Investors have not elected to purchase their full allotment of Option Shares), the other Investors shall be entitled to purchase all or any portion of the remaining Option Shares by providing notice (the “Supplemental Repurchase Notice”) to each of the parties receiving the Initial Repurchase Notice within 10 business days following the delivery of the first Initial Repurchase Notice delivered by any Investor; provided that if in the aggregate such Investors elect to purchase more than the remaining available Option Shares, such remaining available Option Shares purchased by each Investor will be reduced on a pro rata basis based upon the number of shares of Common Stock then held by each electing Investor. To the extent that, after giving effect to the reoffer pursuant to the immediately preceding sentence, any portion of the Option Shares are not being repurchased by the Investors, the Company may exercise the Repurchase Option for the remaining Option Shares by delivering written notice (a “Company Repurchase Notice” and together with the Initial Repurchase Notice and Supplemental Repurchase Notice, a “Repurchase Notice”) to the holder or holders of the applicable Option Shares within 10 business days of the expiration of the latest period during which the Investors were entitled to deliver

 

9


 

Repurchase Notices. Each Repurchase Notice will set forth the number of Option Shares to be acquired from such holder(s), the aggregate consideration to be paid for such Option Shares and the time and place for the closing of the transaction. If any Option Shares are held by any transferees of a Participant, the Investors and the Company, as the case may be, will purchase the shares elected to be purchased from all such holder(s) of Option Shares, pro rata according to the number of Option Shares held by each such holder(s) at the time of delivery of such Repurchase Notice (determined as nearly as practicable to the nearest share). If Option Shares of different classes are to be purchased pursuant to the Repurchase Option and such Option Shares are held by any transferees of a Participant, the number of shares of each class of Option Shares to be purchased will be allocated among all such holders, pro rata according to the total number of Option Shares to be purchased from such Persons.

 

(d)         Closing. The closing of the transactions contemplated by this Section 12 will take place on the date designated in the applicable Repurchase Notice, which date will not be more than 90 days after the delivery of such notice. Each Investor will pay for the Option Shares to be purchased by it by, at its option, wire transfer of immediately available funds or delivery of a check payable to the holder of such Option Shares. The Company will pay for the Option Shares to be purchased by it by first offsetting amounts outstanding under any bona fide debts owing by such Participant to the Company or any of its Subsidiaries, now existing or hereinafter arising (irrespective as to whether such amounts are owing by the holder of such Option Shares), and will pay the remainder of the purchase price by, at its option, (i) wire transfer of immediately available funds, (ii) delivery of a check payable to the holder of such Option Shares, (iii) a subordinated promissory note payable in three equal annual installments commencing on the first anniversary of the closing of such purchase and bearing interest at a rate per annum equal to 5% or (iv) a combination of (i), (ii) and (iii), in the aggregate amount of the purchase price for such shares. Notwithstanding anything to the contrary contained herein, all repurchases of Option Shares by the Company will be subject to applicable restrictions contained in the corporation law of the Company’s jurisdiction of incorporation and in the Company’s and its Subsidiaries’ debt and equity financing agreements. If any such restrictions prohibit the repurchase of Option Shares hereunder which the Company is otherwise entitled to make, the Company may make such repurchases as soon as it is permitted to do so under such restrictions. The Investors and/or the Company, as the case may be, will receive customary representations and warranties from each seller regarding the sale of the Option Shares, including, but not limited to, representations that such seller has good and marketable title to the Option Shares to be transferred free and clear of all liens, claims and other encumbrances.

 

13.                               Restrictions on Transfer.

 

(a)                                 Transfer of Option Shares. No Participant may sell, transfer, assign, pledge, encumber or otherwise dispose of (whether directly or indirectly, whether with or without consideration and whether voluntarily or involuntarily or by operation of law) any interest (legal or beneficial) in any Option Shares (a “Transfer”) except Transfers pursuant to Sections 12, 13(b), 16 or 17 hereof (or as otherwise set forth in any written agreement with respect to the issuance of Options between the Company and such Participant), in each case pursuant to the terms and limitations set forth therein.

 

10


 

(b)         Certain Permitted Transfers. The restrictions contained in Section 13(a) will not apply with respect to Transfers of Option Shares by a Participant (i) to its Affiliates, (ii) pursuant to Section 16, (iii) pursuant to Section 17, or (iv) pursuant to applicable laws of descent or distribution or among a Participant’s Family Group; provided that the restrictions contained in this Plan will continue to apply to the Option Shares after any Transfer pursuant to clause (i) or (iv) above and each transferee of such Option Shares shall agree in writing, prior to and as a condition precedent to the effectiveness of such Transfer, to be bound by the provisions of this Plan, without modification or condition, subject only to the consummation of the Transfer. Upon the Transfer of Option Shares pursuant to clause (i) or (iv) of this Section 13(b), the transferring Participant will deliver a written notice to the Company and the Investors, which notice will disclose in reasonable detail the identity of such transferee(s) and shall include an original counterpart of the agreement of such transferee(s) to be bound by this Plan. Notwithstanding the foregoing, no Participant shall avoid the provisions of this Plan by making one or more transfers to one or more transferees permitted under clause (i) above and then disposing of all or any portion of such Participant’s interest in such transferee. “Family Group” means a Participant’s spouse and descendants (whether by birth or adoption) and any trust solely for the benefit of such Participant and/or such Participant’s spouse and/or such Participant’s descendants (by birth or adoption), parents or dependents, or any charitable trust the grantor of which is such Participant and/or a member of the Participant’s Family Group. Any transferee of Option Shares pursuant to a transfer in accordance with the provisions of this Section 13(b) is herein referred to as a “Permitted Transferee.”

 

(c)                                  Termination of Restrictions. The rights and restrictions on the transfer of Option Shares set forth in this Section 13 will continue with respect to each Option Share until the earlier of (i) the consummation of an Approved Sale (as defined below) and (ii) the consummation of an IPO.

 

14.                               Additional Restrictions on Transfer.

 

(a)                                 The certificates representing the Option Shares will bear the following legend:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN THE ISSUER’S 2016 STOCK OPTION PLAN AND A WRITTEN AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF SUCH SECURITIES, COPIES OF WHICH MAY BE OBTAINED BY THE HOLDER HEREOF AT THE ISSUER’S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE.”

 

11


 

(b)                                 No holder of Option Shares may sell, transfer or dispose of any Option Shares (except pursuant to an effective registration statement under the Securities Act) without first, if requested by the Company, delivering to the Company an opinion of counsel reasonably acceptable in form and substance to the Company (which counsel shall be reasonably acceptable to the Company) that registration under the Securities Act is not required in connection with such transfer.

 

(c)                                  No holder of Option Shares will effect any public sale or distribution (including sales pursuant to Rule 144 of the Securities Act) of any Option Shares or of any other equity securities of the Company, or any securities, options or rights convertible into or exchangeable or exercisable for such securities, during the seven days prior to and the 180-day period beginning on the effective date of any underwritten public offering of the Company’s securities, except as part of such underwritten public offering. The restrictions on transfer set forth in this Section 14(c) shall continue with respect to each Option Share and each other security, option or right described in the preceding sentence until the date on which such security has been transferred pursuant to an offering registered under the Securities Act or to the public through a broker, dealer or market maker pursuant to the provisions of Rule 144 (other than Rule 144(k)) adopted under the Securities Act.

 

15.                               Definition of Option Shares. For all purposes of this Plan, Option Shares will continue to be Option Shares in the hands of any holder other than such Participant (except for the Company, the Investors or purchasers pursuant to an offering registered under the Securities Act or purchasers pursuant to a Rule 144 transaction (other than a Rule 144(k) transaction occurring prior to the time of a closing of an IPO)), and each such other holder of Option Shares will succeed to all rights and obligations attributable to such Participant as a holder of Option Shares hereunder and under any separate written agreement between the Company and such Participant. Option Shares will also include shares of the Company’s capital stock issued with respect to Option Shares by way of a share split, share dividend or other recapitalization.

 

16.                               Sale of the Company.

 

(a)                                 If the holders of a majority of the Company Stock held by the Investors (the “Requisite Holders”) approve (i) a sale of all or a majority of the Company’s assets determined on a consolidated basis or a sale of a majority of the Company’s outstanding capital stock (whether by merger, recapitalization, consolidation, reorganization, combination or otherwise) to any Independent Third Party or group of Independent Third Parties or (ii) a Transfer of any shares of Company Stock in connection with a Strategic Transaction (collectively an “Approved Sale”), each holder of Option Shares shall vote for (to the extent entitled to vote) at a shareholders meeting or by written consent, and shall consent to and raise no objections against, the Approved Sale and the process by which such Approved Sale is arranged. If the Approved Sale is structured as (x) a merger or consolidation, each holder of Option Shares shall waive all dissenters’ rights, appraisal rights and similar rights in connection with such merger or consolidation, (y) a sale of assets, each holder of Option Shares shall vote in favor of the dissolution and liquidation of the Company following consummation of the Approved Sale if requested by such Requisite Holders or (z) a sale of Company Stock, each holder of Option Shares shall agree to sell and surrender all of such holder’s Option Shares at the same price and on the same other terms and conditions, as applicable, as approved by such Requisite Holders.

 

12


 

The Company and holders of Option Shares shall take all necessary or desirable actions reasonably requested in good faith by such Requisite Holders in connection with the consummation of the Approved Sale, and execute all agreements, documents and instruments in connection therewith, as reasonably requested in good faith by such Requisite Holders (including, without limitation, (i) with respect to the Company, providing potential purchasers with reasonable due diligence access to the books and records, personnel and facilities of the Company and its Subsidiaries (subject to customary confidentiality provisions) in order to facilitate an Approved Sale, (ii) with respect to holders of Option Shares who are also employees of the Company or any Subsidiary, entering into confidentiality, non-competition, non-solicitation and non-hire agreements requested by the proposed purchaser and (iii) with respect to all holders of Option Shares, entering into a sale contract, letters of transmittal and similar agreements and instruments as reasonably required in good faith by such Requisite Holders pursuant to which each holder shall: (A) severally (but not jointly) make such indemnities regarding the Company and its Subsidiaries and their assets, liabilities and businesses (the “Company Reps”) as approved by such Requisite Holders and (B) solely on behalf of such holder, make such representations, warranties, covenants and indemnities concerning such holder and the Option Shares to be sold by such holder as may be set forth in any agreement approved by such Requisite Holders (the “Holder Reps”); provided that the allocable share of any holder of Option Shares for any amounts payable in connection with any claim by the purchaser for a breach of the Company Reps (any such amount payable, a “Company Loss”) shall be determined in accordance with Section 16(c), and if any holder of Option Shares pays for more than such holder’s allocable share of a Company Loss (such overpayment, the “Excess Amount”), then each other holder of Company Stock shall promptly contribute to such holder an amount equal to such other holder’s pro rata share of such Excess Amount as determined in accordance with Section 16(c)). Notwithstanding anything to the contrary contained herein, no holder of Option Shares shall be liable for Company Losses in the aggregate (taken together with aggregate indemnification losses with respect to the Holder Reps) in an amount greater than such holder’s pro rata share (based upon the total consideration received for the Company Stock in the Approved Sale) of the total consideration paid by the buyer in respect of the Approved Sale (including all amounts paid to repay indebtedness of the Company and its Subsidiaries in connection with such Approved Sale).

 

(b)                                 The obligation of each holder of Option Shares with respect to an Approved Sale shall be subject to the satisfaction of the following conditions: (i) upon the consummation of the Approved Sale, each holder of Option Shares (in its capacity as such) shall have the right to receive with respect to each applicable class thereof the same form and amount of consideration; (ii) if any holders of a class of Company Stock are given an option as to the form and amount of consideration to be received, each holder of such class of Option Shares shall be given the same option (other than, in the case of clause (i) or this clause (ii), any consideration, option, right or benefit to be received by a holder on account of such individual’s employment relationship with the Company and its Subsidiaries (e.g., a stay bonus, noncompetition agreement, right to reinvest or roll over equity, etc.)); and (iii) each holder of Options shall be given an opportunity to either (A) exercise such rights prior to the consummation of the Approved Sale and participate in such sale as a holder of such class of Company Stock or (B) upon the consummation of the Approved Sale, receive in exchange for such rights consideration equal to the amount determined by multiplying (1) the same amount of consideration per share of a class of Company Stock received by holders of such class of Company Stock in connection with the Approved Sale less

 

13


 

the exercise price per share of such class of Option Shares of such rights to acquire such class of Company Stock by (2) the number of shares of such class of Company Stock represented by such rights.

 

(c)                                  In the event an Approved Sale occurs (whether pursuant to this Section 16 or otherwise), each holder of Option Shares shall receive in exchange for such Option Shares held by such holder an amount (the “Sale Proceeds Amount”) equal to the amount that such holder would have received in respect of such holder’s Option Shares if the aggregate consideration (after satisfaction or assumption of all debts and liabilities) from such Approved Sale had been distributed by the Company in accordance with the order of priority as set forth in the Company’s Certificate of Incorporation (and, if less than all of the Company Stock is included in such transaction, then the allocation of such aggregate net consideration shall be determined as if the stock included in such transaction was all of the Company Stock then outstanding, and for purposes of this Section 16(c), the terms of the Company’s Certificate of Incorporation shall be interpreted consistent with this assumption). The allocable share of each holder of Option Shares of any Company Loss shall be an amount equal to the amount by which such holder’s Sale Proceeds Amount would have been reduced had the aggregate consideration from such Approved Sale been distributed by the Company in accordance with the immediately foregoing sentence after deducting from such aggregate consideration the aggregate amount of such Company Loss. The Company shall pay all transaction costs associated with any Approved Sale to the extent such costs are incurred for the benefit of all holders of Company Stock (as determined by the Board). To the extent such costs are not incurred by the Company prior to the distribution to the holders of Option Shares of proceeds from any Approved Sale or by the acquiring company, such costs shall be borne by each holder of Option Shares according to such holder’s pro rata share (based upon the total consideration received for the Company Stock in the Approved Sale) of the costs of any Approved Sale. Expenses incurred by any holder of Option Shares on its own behalf (and not simultaneously for the benefit of all other holders of Company Stock as approved by the Board) shall not be considered expenses of the transaction and shall be the sole responsibility of such holder. Each holder of Option Shares shall take all necessary or desirable actions in connection with the distribution of the aggregate consideration from such Approved Sale, merger or Transfer as reasonably requested in good faith by the Requisite Holders.

 

(d)                                 If the Company or the holders of Option Shares enter into any negotiation or transaction for which Rule 506 (or any similar rule then in effect) promulgated by the Securities and Exchange Commission may be available with respect to such negotiation or transaction (including, without limitation, a merger, consolidation or other reorganization), the holders of Option Shares shall at the request of the Company, appoint a “purchaser representative” (as such term is defined in Rule 501 (or any similar rule then in effect) promulgated by the Securities and Exchange Commission) reasonably acceptable to the Company. If any holder of Option Shares appoints a purchaser representative designated by the Company, the Company shall pay the fees of such purchaser representative. However, if any holder of Option Shares declines to appoint the purchaser representative designated by the Company, such holder shall appoint another purchaser representative (reasonably acceptable to the Company), and such holder shall be responsible for the fees of the purchaser representative so appointed.

 

14


 

(e)                                  If any holder of Option Shares does not, in connection with an Approved Sale, execute and/or deliver all transfer and other documents required to be executed and/or delivered, and take all other actions required to be taken, by such holder pursuant to this Section 16 in respect of all of the Option Shares held by such holder, such defaulting holder shall be deemed to have irrevocably appointed each and any member of the Board (or any officer appointed by the Board), acting individually, to be such holder’s agent and attorney-in-fact to execute and/or deliver all necessary transfer and other documents, and take all other necessary actions, on such holder’s behalf in connection with such Approved Sale.

 

(f)                                   The provisions of Sections 16(b), (c) and (d) hereof will terminate on the first to occur of (i) the consummation of an IPO and (ii) the consummation of an Approved Sale (except as such provisions relate to any such Approved Sale).

 

17.                               Public Offering. If the Board and the Requisite Holders approve an IPO, the holders of Option Shares will take all reasonably necessary or desirable actions in connection with the consummation of the IPO. If the IPO is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the capital stock structure will adversely affect the marketability of the offering, each holder of Option Shares will consent to and vote for a recapitalization, reorganization and/or exchange of the shares of Company’s capital stock into securities that the managing underwriters, the Board and the holders of a majority of the Common Stock then held by the Investors find acceptable and will take all necessary or desirable actions in connection with the consummation of the recapitalization, reorganization and/or exchange; provided that the resulting securities reflect and are consistent with the rights and preferences set forth in the Company’s Certificate of Incorporation as in effect immediately prior to the IPO. The provisions of this Section 17 and all references to the defined term “IPO” in this Plan will apply, mutatis mutandis, to (i) any initial public offering and sale of any common stock of any Subsidiary of the Company and the liquidation of the Company into any such Subsidiary in connection therewith and (ii) any Solvent Reorganization approved by the Board. In connection with any such public offering and sale of any common stock of any Subsidiary of the Company, the Company shall liquidate into such Subsidiary or take other appropriate action to distribute the securities of such Subsidiary.

 

18.                               Transfers in Violation of Plan. Any transfer or attempted transfer of any Option Shares in violation of any provision of this Plan shall be void, and the Company shall not record such transfer on its books or treat any purported transferee of such Option Shares as the owner of such shares for any purpose.

 

19.                               Severability. Whenever possible, each provision of this Plan will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Plan is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Plan will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

20.                               Remedies. Each of the Company, any Participant and the Investors will be entitled to enforce its rights under this Plan specifically, to recover damages and costs (including reasonable attorneys’ fees) caused by any breach of any provision of this Plan and to exercise all other rights

 

15


 

existing in its favor. Each Participant and the Company acknowledges and agrees that money damages may not be an adequate remedy for any breach of the provisions of this Plan and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Plan.

 

21.                               Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or holiday in the state in which the Company’s chief executive office is located, the time period shall be automatically extended to the business day immediately following such Saturday, Sunday or holiday.

 

22.                               Governing Law. All issues concerning this Plan will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision of rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Delaware. Each of the Company and each Participant submits to the co-exclusive jurisdiction of the United States District Court and any Delaware state court sitting in Wilmington, Delaware over any lawsuit under this Plan and waives any objection based on venue or forum non conveniens with respect to any action instituted therein. Each of the Company and each Participant waives the necessity for personal service of any and all process upon it and consents that all such service of process may be made by registered or certified mail (return receipt requested), in each case directed to such party in accordance with the notice requirements set forth in this Plan, and service so made will be deemed to be completed on the date of actual receipt. Each of the Company and each Participant consents to service of process as aforesaid. Nothing in this Plan will prohibit personal service in lieu of the service by mail contemplated herein.

 

23.                               Notices. Any notice required or permitted under this Plan or any agreement executed and delivered in connection with this Plan shall be in writing and shall be either delivered by facsimile (which shall be effective upon receipt of confirmation of successful transmission), personally delivered, or mailed by first class mail, return receipt requested, to any Participant at the address indicated in the Company’s records for such Person, and to the Company at the facsimile number and address below indicated:

 

Notices to the Company:

 

Roaring Fork Holding, Inc.

c/o Vista Equity Partners Management, LLC

Four Embarcadero Center, 20th Floor

San Francisco, CA 94111

Fax:                                                                       (415) 765-6666

Attention:                                         David A. Breach (dbreach@vistaequitypartners.com)

Michael Fosnaugh (mfosnaugh@vistaequitypartners.com)

 

With a copy to:

 

Kirkland & Ellis LLP

555 California Street

 

16


 

San Francisco, CA 94104

Fax:                                                                       (415) 439-1500

Attention:                                         Stuart E. Casillas, P.C. (stuart.casillas@kirkland.com)

 

or such other facsimile number or address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Plan shall be deemed to have been given when so delivered or mailed.

 

*   *   *   *   *

 

17


EXHIBIT A

 

SPOUSAL CONSENT

 

The undersigned spouse hereby acknowledges that I have read the following agreements to which my spouse is a party:

 

Roaring Fork Holding, Inc. 2016 Stock Option Plan

Stock Option Agreement

 

and that I understand their contents. I am aware that such agreements provide for the repurchase of certain of my spouse’s capital stock of Roaring Fork Holding, Inc. (the “Company”) under certain circumstances and impose other restrictions on such capital stock. I agree that my spouse’s interest in such capital stock is subject to the agreements referred to above and the other agreements referred to therein and any interest I may have in such capital stock shall be irrevocably bound by these agreements and the other agreements referred to therein and further that my community property interest (if any) shall be similarly bound by these agreements.

 

The undersigned spouse irrevocably constitutes and appoints                  (the “Stockholder”) as the undersigned’s true and lawful attorney and proxy in the undersigned’s name, place and stead to sign, make, execute, acknowledge, deliver, file and record all documents which may be required, and to manage, vote, act and make all decisions with respect to (whether necessary, incidental, convenient or otherwise), any and all capital stock of the Company in which the undersigned now has or hereafter acquires any interest and in any and all capital stock of the Company now or hereafter held of record by the Stockholder (including but not limited to, the right, without further signature, consent or knowledge of the undersigned spouse, to exercise or not to exercise any and all options under any appropriate agreements and to exercise amendments and modifications of and to terminate the foregoing agreements and to dispose of any and all such capital stock and options), with all powers the undersigned spouse would possess if personally present, it being expressly understood and intended by the undersigned that the foregoing power of attorney and proxy is coupled with an interest; and this power of attorney is a durable power of attorney and will not be affected by disability, incapacity or death of the Stockholder, or dissolution of marriage and this proxy will not terminate without consent of the Stockholder and the Company.

 

Stockholder:

Spouse of Stockholder:

 

 

 

 

 

Signature

Signature

 

 

 

 

 

Printed Name

Printed Name

 

 

 

 

 

Date

Date

 

 

 

 

SUBSCRIBED AND SWORN to

 

before me this          day

 

of            , 20   

 

 

 

 

My Commission Expires

 

 

 

 

 

Notary Public

 

 


 




Exhibit 10.22

 

STOCK OPTION AGREEMENT

 

THIS STOCK OPTION AGREEMENT (this “Agreement”) is made and entered into as of [         ], 2016 (the “Grant Date”), between Roaring Fork Holding, Inc., a Delaware corporation (the “Company”), and [          ] (“Optionholder”).

 

The Company and Optionholder desire to enter into this Agreement whereby the Company will grant Optionholder the options specified herein to acquire certain shares of the Company’s Common Stock. Defined terms used in this Agreement without definition will have the meanings ascribed thereto in the Company’s 2016 Stock Option Plan (the “Plan”), a copy of which is attached hereto as Exhibit A. In the event a provision of this Agreement is inconsistent or conflicts with the provisions of the Plan, the provisions of this Agreement will govern and prevail.

 

The parties hereto agree as follows:

 

1.             Plan Acknowledgment.  Each of the undersigned agree that this Agreement has been executed and delivered, and the stock options have been granted hereunder, in connection with and as a part of the compensation and incentive arrangements between the Company and Optionholder and, except as otherwise specified herein, pursuant to each of the terms and conditions of the Plan.

 

2.             Options.

 

(a)           Service Option Grant.  The Company hereby grants to Optionholder, pursuant to the Plan, an option to purchase up to [     ] shares of Common Stock (the “Service Option,” and such shares, the “Service Option Shares”), at an exercise price per share of $[     ] (the “Option Price”). The Option Price and the number of Service Option Shares issuable upon exercise of any Service Option will be equitably adjusted for any share split, share dividend or reclassification of Common Stock which occurs subsequent to the date of this Agreement. The Service Option will expire as provided in Section 2(d) below. The Service Option is not intended to be an “incentive stock option” within the meaning of Section 422 of the Code.  The “Vesting Commencement Date” for purposes of this Agreement is [    ].

 

(b)           Return Target Option Grant.  The Company hereby grants to Optionholder, pursuant to the Plan, an option to purchase up to [     ] shares of Common Stock (the “Return Target Option,” and such shares, the “Return Target Option Shares”), at an exercise price per share equal to the Option Price. The Option Price and the number of Return Target Option Shares issuable upon exercise of any Return Target Option will be equitably adjusted for any share split, share dividend or reclassification of the Common Stock which occurs subsequent to the date of this Agreement. The Return Target Option will expire as provided in Section 2(d) below. The Return Target Options are not intended to be “incentive stock options” within the meaning of Section 422 of the Code.

 

(c)           Exercisability.  Options may be exercised only to the extent they have become vested and the vested portion of such Options shall be exercisable only upon the earliest of one or more of the following events: (i) Optionholder’s separation from service within the meaning of Section 409A(a)(2)(A)(i) of the Code (not including death or Disability (such term,

 


 

as used herein, having the definition set forth in Optionholder’s employment agreement, or, in the absence of such employment agreement, as defined in the long-term disability plan covering the Optionholder)), (ii) death, (iii) Disability (to the extent such Disability qualifies as a disability within the meaning of Section 409A(a)(2)(C) of the Code), (iv) the close of business on the tenth anniversary of the Grant Date, and (v) a Termination Event (provided, that for purposes of this Section 2(c), a transaction shall not constitute a Termination Event unless the transaction also constitutes a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the Company’s assets, within the meaning of Section 409A(a)(2)(A)(v) of the Code; provided that, with respect to Options that become exercisable pursuant to clause (i) of this Section 2(c), if Optionholder is a “specified employee” as defined in Section 409A(a)(2)(B)(i) of the Code, then the Options shall become exercisable six months after the separation from service. Each event specified in clauses (i) through (v) of this Section 2(c) is intended to constitute a “date specified under the plan” within the meaning of United States Treasury Regulation Section 1.409A-3(d). Options shall become vested and exercisable in accordance with the provisions of this Section 2(c) and Section 2(f) below. Options which have become vested as of the date of determination are referred to herein as “Vested Options,” and all other Options are referred to herein as “Unvested Options.”  Optionholder may only exercise Options that are Vested Options.

 

(i)            Service Options.  The Service Options described in Section 2(a) above will have vested and become exercisable with respect to [twenty-five] percent ([25]%) of the Service Option Shares underlying the Service Options on the twelve (12) month anniversary of the Vesting Commencement Date (the “First Vesting Date”) if the Optionholder remains in the continuous employ of or service with the Company or any of its Subsidiaries from and after the date hereof through and including such date, and with respect to an additional [6.25]% of the Service Option Shares at the end of each full three calendar month period after the First Vesting Date if, Optionholder is, and has been, continuously employed by the Company or its Subsidiaries from the date of this Agreement through such date.

 

(ii)           Return Target Options.  The Return Target Options will have vested and become exercisable if (A) Optionholder is, and has been, continuously employed by the Company or its Subsidiaries from the date of this Agreement through the date of a Termination Event and (B) if upon the consummation of such Termination Event, the Total Equity Return Multiple as of the date of such Termination Event is equal to or greater than three.  As used in this Agreement, the term “Total Equity Return Multiple,” which shall be determined by the Board acting in good faith, shall mean the quotient of: (i) the cumulative total of all cash distributions made to, or other cash proceeds received by, the Investor Fund (excluding management or transaction fees and expenses, any other advisory fees and expenses, any board fees and expenses or any other expenses) in respect of its ownership of equity or debt securities of the Company or any of its Subsidiaries or any loans provided by the Investor Fund during the life of the Investor Fund’s investment period, divided by (ii) the Investor Fund’s total investment in the Company and its Subsidiaries (whether in exchange for equity, indebtedness or otherwise). As used in this Agreement, the term “Investor Fund” shall mean one or more equity buy-out investment funds (including Vista Equity Partners Fund VI, L.P.) managed or controlled by Vista Equity Partners III, LLC or any successor management company, and any of such fund’s respective portfolio companies, (excluding the Company and its Subsidiaries) and their respective partners, members, directors, employees, stockholders, agents, any successor by

 

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operation of law (including by merger) of any such Person, and any entity that acquires all or substantially all of the assets of any such Person in a single transaction or series of related transactions. For purposes of calculating the Total Equity Return Multiple, all distributions made to the Investor Funds will be net of all accrued but unpaid management fees, all expenses associated with the ultimate sale of the Company business and assuming, for purposes of the calculation made pursuant to clause (i) above, the vesting (and exercise, if applicable) (prior to the calculation of the Total Equity Return Multiple) of all outstanding options, warrants and other outstanding rights to acquire capital stock of the Company. For the avoidance of doubt, the Return Target Options shall expire, and shall not vest or become exercisable, if the Total Equity Return Multiple as of the date of a Termination Event is not equal to or greater than [three].

 

(d)           Expiration of Options.  Notwithstanding any provision herein to the contrary, any portion of the Options granted hereunder that have not vested and become exercisable prior to the Termination Date will expire on the Termination Date and may not be exercised under any circumstance. Options shall be exercisable only upon one or more of the events described in Section 2(c) above and to the extent not exercised in accordance with Section 2(c) upon the occurrence of such event(s), the Options shall immediately terminate and cease to be exercisable. Any portion of the Options granted hereunder that have become exercisable due to death or Disability (to the extent such Disability also qualifies as a disability within the meaning of Section 409A(a)(2)(C) of the Code) will expire 180 days after the date of Optionholder’s death or Disability, but in no event after the earlier of (A) the close of business on the tenth anniversary of the Grant Date and (B) the later of the last day of the calendar year in which the event permitting exercise occurs and the 15th day of the third month following the date on which the event permitting exercise occurs. Any portion of the Options granted hereunder that have vested and become exercisable prior to the Termination Date will expire on the earlier of (i) 90 days after the Termination Date and (ii) the close of business on the tenth anniversary of the date of this Agreement. Notwithstanding any provision in this Agreement to the contrary, any portion of the Options granted hereunder which have not been exercised prior to or in connection with a Termination Event shall expire upon the consummation of any such transaction.

 

(e)           Procedure for Exercise.  At any time after all or any portion of the Options granted hereunder have become exercisable with respect to any Option Shares and prior to the close of business on the tenth anniversary of the date of this Agreement (except as provided in Section 2(d) above),Optionholder may exercise all or any portion of the Options granted hereunder with respect to Option Shares vested and exercisable pursuant to Section 2(c) above by delivering written notice of exercise to the Company, together with (i) a written acknowledgment that Optionholder has read and has been afforded an opportunity to ask questions of management of the Company regarding all financial and other information provided to Optionholder regarding the Company and its Subsidiaries, (ii) payment in full by delivery of a cashier’s, personal or certified check or wire transfer of immediately available funds to the Company in the amount equal to the number of Option Shares to be acquired multiplied by the applicable option exercise price (the “Aggregate Exercise Price”), provided that, Optionholder may, in lieu of paying the Aggregate Exercise Price in cash, indicate in Optionholder’s exercise notice that such Optionholder intends to effect a cashless exercise thereof and, in such case, the Company shall cancel such number of Option Shares otherwise issuable to the Optionholder having a Fair Market Value equal to the Aggregate Exercise Price of the Options being exercised, in which event the Company shall only issue Option Shares for the remainder of the

 

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Options being exercised after satisfying the Aggregate Exercise Price, (iii) an executed joinder agreement to that certain [Stockholders Agreement, dated as of [    ], by and among the Company and its stockholders signatory thereto (as amended from time to time, the “Stockholders Agreement”),] in form and substance reasonably satisfactory to the Company, pursuant to which such Optionholder shall become a party to the Stockholders Agreement and be entitled to the rights and benefits and subject to the duties and obligations of a “Management Stockholder” thereunder, and (iv) an executed consent from Optionholder’s spouse (if any) in the form of Exhibit 1 attached to the Plan. As a condition to any exercise of the Options, Optionholder will permit the Company to deliver to him or her all financial and other information regarding the Company and its Subsidiaries which it believes is necessary to enable Optionholder to make an informed investment decision. If, at any time subsequent to the date Optionholder exercises any portion of the Options granted hereunder and prior to the occurrence of a Termination Event, Optionholder becomes legally married (whether in the first instance or to a different spouse), Optionholder shall cause Optionholder’s spouse to execute and deliver to the Company a consent in the form of Exhibit 1 attached to the Plan. Optionholder’s failure to deliver to the Company an executed consent in the form of Exhibit 1 to the Plan at any time when Optionholder would otherwise be required to deliver such consent shall constitute Optionholder’s continuing representation and warranty that Optionholder is not legally married as of such date.

 

(f)            Termination Event.  Upon the consummation of a Termination Event, any Service Options which were Unvested Options immediately prior to such Termination Event shall be deemed Vested Options (such Options which are subject to accelerated vesting being referred to as the “Accelerated Options”). The Optionholder hereby agrees that upon a Termination Event, the Accelerated Options shall be deemed to be automatically exercised through a cashless exercise and Optionholder shall have no further rights under the Accelerated Options other than payment of the consideration, if any, (less any applicable taxes and withholdings) to be paid to the Optionholder (whether in the form of cash or stock) in respect of such deemed exercise of the Accelerated Options as of the Termination Event.

 

(g)           Securities Laws Restrictions.  Optionholder represents that when Optionholder exercises any portion of the Options he or she will be purchasing the Option Shares represented thereby for Optionholder’s own account and not on behalf of others. Optionholder understands and acknowledges that federal, state and foreign securities laws govern and restrict Optionholder’s right to offer, sell or otherwise dispose of any Option Shares unless Optionholder’s offer, sale or other disposition thereof is registered under the Securities Act and federal, state and foreign securities laws or, in the opinion of the Company’s counsel, such offer, sale or other disposition is exempt from registration thereunder. Optionholder agrees that he or she will not offer, sell or otherwise dispose of any Option Shares in any manner which would: (i) require the Company to file any registration statement (or similar filing under applicable securities law) with the Securities and Exchange Commission or to amend or supplement any such filing or (ii) violate or cause the Company to violate the Securities Act, the rules and regulations promulgated thereunder or any other applicable securities law. Optionholder further understands that the certificates for any Option Shares which Optionholder purchases will bear the legend set forth in the Plan or such other legends as the Company deems necessary or desirable in connection with the Securities Act or other rules, regulations or laws.

 

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(h)           Code Section 409A ComplianceThe permitted exercise of the Options specified in Section 2 is intended to comply with the provisions of Section 409A(a)(2) of the Code. The Company may reduce or expand the period of time following an event in which the vested portion of the Options may be exercised if Internal Revenue Service guidance specifies that such a reduction is required or that such an expansion is permitted under the provisions of Section 409A(a)(2) of the Code. In addition, the Company may (but shall be under no obligation to) make any other changes to this Agreement it determines are necessary to comply with the provisions of Section 409A(a)(2) of the Code. Optionholder hereby agrees and acknowledges, neither the Company nor any of its affiliates makes any representations with respect to the application of Section 409A of the Code to the Options and, by the acceptance of the Options, Optionholder agrees to accept the potential application of Section 409A of the Code to the Option and the other tax consequences of the issuance, vesting, ownership, modification, adjustment, exercise and disposition of the Option.

 

(i)            Withholding of Taxes.  The Company shall be entitled, if necessary or desirable, to withhold from Optionholder from any amounts due and payable by the Company to Optionholder (or secure payment from Optionholder in lieu of withholding) the amount of any withholding or other tax due from the Company with respect to any Options or Common Stock issuable under this Agreement.

 

(j)            Limited Transferability of the Options.  The Options granted hereunder are personal to Optionholder and are not transferable by Optionholder except pursuant to the laws of descent or distribution. Only Optionholder or his legal guardian or representative may exercise the Options granted hereunder.

 

3.             Optionholder’s Representations.  Optionholder hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by Optionholder does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Optionholder is a party or by which he or she is bound, (ii) Optionholder is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity (other than the Company or one of its Subsidiaries) and (iii) upon the execution and delivery of this Agreement by the Company and Optionholder, this Agreement shall be the valid and binding obligation of Optionholder, enforceable against Optionholder in accordance with its terms. Optionholder hereby acknowledges and represents that he or she has consulted with (or has had an opportunity to consult with) independent legal counsel regarding his or her rights and obligations under this Agreement (including, without limitation, the Plan) and that he or she fully understands the terms and conditions contained herein and therein.

 

4.             Notices.  Any notices required or permitted under this Agreement or the Plan will be delivered in accordance with the requirements of the Plan.

 

5.             Third Party Beneficiaries; Successors and Assigns.  The parties hereto acknowledge and agree that the Investor Funds are third party beneficiaries of this Agreement and the Plan. Except as otherwise provided herein, this Agreement and the Plan shall bind and inure to the benefit of and be enforceable by Optionholder, the Company and the Investor Funds and their respective heirs, successors and assigns (including subsequent holders of Option Shares); provided that the rights and obligations of Optionholder under this Agreement and the

 

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Plan shall not be assignable except in connection with a permitted transfer of Option Shares in accordance with the Plan.

 

6.             Section 83(b) Election.  Within 30 days after Optionholder has exercised any portion of the Option, in the event Optionholder is subject to United States federal income tax, Optionholder may, and is advised to, make an effective election with the Internal Revenue Service under Section 83(b) of the Code (an “83(b) Election”) relative to the Option Shares received by Optionholder pursuant to the exercise of such portion of the Option. Employee further acknowledges and understands that it is Employee’s sole obligation and responsibility to timely file such 83(b) Election, and neither the Company nor the Company’s legal or financial advisors shall have (i) any obligation or responsibility with respect to such filing or (ii) any liability resulting or arising from the failure to timely file such 83(b) Election.

 

7.             Complete Agreement.  This Agreement and the Plan and the other documents referred to herein and therein embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

 

8.             No Strict Construction.  The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

 

9.             Counterparts.  This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

 

10.          Governing Law. This Agreement will be subject to the Governing Law provisions of the Plan as if fully set forth in this Agreement.

 

11.          Remedies. Each of the parties to this Agreement will be entitled to any of the remedies specified in the Plan.

 

12.          Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Board and Optionholder, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

 

*   *   *   *   *

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

 

ROARING FORK HOLDING, INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

[                 ]

 


 

Exhibit A

 

2016 Stock Option Plan

 





Exhibit 10.23

 

STOCK OPTION AGREEMENT

 

THIS STOCK OPTION AGREEMENT (this “Agreement”) is made and entered into as of [         ], 2016 (the “Grant Date”), between Roaring Fork Holding, Inc., a Delaware corporation (the “Company”), and [                       ] (“Optionholder”).

 

The Company and Optionholder desire to enter into this Agreement whereby the Company will grant Optionholder the options specified herein to acquire certain shares of the Company’s Common Stock. Defined terms used in this Agreement without definition will have the meanings ascribed thereto in the Company’s 2016 Stock Option Plan (the “Plan”), a copy of which is attached hereto as Exhibit A. In the event a provision of this Agreement is inconsistent or conflicts with the provisions of the Plan, the provisions of this Agreement will govern and prevail.

 

The parties hereto agree as follows:

 

1.                                      Plan Acknowledgment. Each of the undersigned agree that this Agreement has been executed and delivered, and the stock options have been granted hereunder, in connection with and as a part of the compensation and incentive arrangements between the Company and Optionholder and, except as otherwise specified herein, pursuant to each of the terms and conditions of the Plan.

 

2.                                      Options.

 

(a)                                 Service Option Grant. The Company hereby grants to Optionholder, pursuant to the Plan, an option to purchase up to [                                                         ] shares of Common Stock (the “Service Option,” and such shares, the “Service Option Shares”), at an exercise price per share of $[                                       ] (the “Option Price”). The Option Price shall be at least equal to Fair Market Value. The Option Price and the number of Service Option Shares issuable upon exercise of any Service Option will be equitably adjusted for any share split, share dividend or reclassification of Common Stock which occurs subsequent to the date of this Agreement. The Service Option will expire as provided in Section 2(d) below. The Service Option is not intended to be an “incentive stock option” within the meaning of Section 422 of the Code. The “Vesting Commencement Date” for purposes of this Agreement is [                                    ].

 

(b)                                 Return Target Option Grant. The Company hereby grants to Optionholder, pursuant to the Plan, an option to purchase up to [     ] shares of Common Stock (the “Return Target Option,” and such shares, the “Return Target Option Shares”), at an exercise price per share equal to the Option Price. The Option Price and the number of Return Target Option Shares issuable upon exercise of any Return Target Option will be equitably adjusted for any share split, share dividend or reclassification of the Common Stock which occurs subsequent to the date of this Agreement. The Return Target Option will expire as provided in Section 2(d) below. The Return Target Options are not intended to be “incentive stock options” within the meaning of Section 422 of the Code.

 

(c)                                  Exercisability. Options shall become vested and exercisable in accordance with the provisions of this Section 2(c) and Section 2(f) below. Options which have become vested as of the date of determination are referred to herein as “Vested Options,” and all other Options

 


 

are referred to herein as “Unvested Options.” Optionholder may only exercise Options that are Vested Options.

 

(i)                                     Service Options. The Service Options described in Section 2(a) above will have vested and become exercisable with respect to [twenty-five] percent ([25]%) of the Service Option Shares underlying the Service Options on the twelve (12) month anniversary of the Vesting Commencement Date (the “First Vesting Date”) if the Optionholder remains in the continuous employ of or service with the Company or any of its Subsidiaries from and after the date hereof through and including such date, and with respect to an additional [6.25]% of the Service Option Shares at the end of each full three calendar month period after the First Vesting Date if, Optionholder is, and has been, continuously employed by the Company or its Subsidiaries from the date of this Agreement through such date.

 

(ii)                                  Return Target Options. The Return Target Options will have vested and become exercisable if (A) Optionholder is, and has been, continuously employed by the Company or its Subsidiaries from the date of this Agreement through the date of a Termination Event and (B) if upon the consummation of such Termination Event, (i) the cumulative total of all cash distributions made to, or other cash proceeds received by, the Investor Fund (excluding management or transaction fees and expenses, any other advisory fees and expenses, any board fees and expenses or any other expenses) in respect of its ownership of equity or debt securities of the Company or any of its Subsidiaries or any loans provided by the Investor Fund during the life of the Investor Fund’s investment period, minus (ii) the Investor Fund’s total investment in the Company and its Subsidiaries (whether in exchange for equity, indebtedness or otherwise), equals or exceeds the Investor Returns Target (the “Vesting Condition”). As used in this Agreement, the term “Investor Fund” shall mean one or more equity buy-out investment funds (including Vista Equity Partners Fund VI, L.P.) managed or controlled by Vista Equity Partners III, LLC or any successor management company, and any of such fund’s respective portfolio companies, (excluding the Company and its Subsidiaries) and their respective partners, members, directors, employees, stockholders, agents, any successor by operation of law (including by merger) of any such Person, and any entity that acquires all or substantially all of the assets of any such Person in a single transaction or series of related transactions. For purposes of the calculation made pursuant to clause (i) above, all distributions made to the Investor Funds will be net of all accrued but unpaid management fees, all expenses associated with the ultimate sale of the Company business and the vesting (and exercise, if applicable) (prior to the calculation of the Vesting Condition) of all outstanding options, warrants and other outstanding rights to acquire capital stock of the Company will be assumed. For the avoidance of doubt, the Return Target Options shall expire, and shall not vest or become exercisable, if the Vesting Condition as of the date of a Termination Event has not been satisfied.

 

(d)                                 Expiration of Options. Notwithstanding any provision herein to the contrary, any portion of the Options granted hereunder that have not vested and become exercisable prior to the Termination Date will expire on the Termination Date and may not be exercised under any circumstance. Any portion of the Options granted hereunder that have vested and become exercisable prior to the Termination Date will expire on the earlier of (i) 90 days after the Termination Date and (ii) the close of business on the tenth anniversary of the date of this Agreement. Notwithstanding any provision in this Agreement to the contrary, any portion of the Options granted hereunder which have not been exercised prior to or in connection with a

 

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Termination Event, as described in clauses (i) or (ii) of such definition, shall expire upon the consummation of any such transaction.

 

(e)                                  Procedure for Exercise. Optionholder may exercise all or any portion of the Options granted hereunder with respect to Option Shares vested and exercisable pursuant to Section 2(c) above by delivering written notice of exercise to the Company, together with (i) a written acknowledgment that Optionholder has read and has been afforded an opportunity to ask questions of management of the Company regarding all financial and other information provided to Optionholder regarding the Company and its Subsidiaries, (ii) payment in full by delivery of a cashier’s, personal or certified check or wire transfer of immediately available funds to the Company in the amount equal to the number of Option Shares to be acquired multiplied by the applicable option exercise price (the “Aggregate Exercise Price”), provided that, Optionholder may, in lieu of paying the Aggregate Exercise Price in cash, indicate in Optionholder’s exercise notice that such Optionholder intends to effect a cashless exercise thereof and, in such case, the Company shall cancel such number of Option Shares otherwise issuable to the Optionholder having a Fair Market Value equal to the Aggregate Exercise Price of the Options being exercised, in which event the Company shall only issue Option Shares for the remainder of the Options being exercised after satisfying the Aggregate Exercise Price, (iii) an executed joinder agreement to that certain Stockholders Agreement, dated as of July 31, 2016, by and among the Company and its stockholders signatory thereto (as amended from time to time, the “Stockholders Agreement”), in form and substance reasonably satisfactory to the Company, pursuant to which such Optionholder shall become a party to the Stockholders Agreement and be entitled to the rights and benefits and subject to the duties and obligations of a “Management Stockholder” thereunder, and (iv) an executed consent from Optionholder’s spouse (if any) in the form of Exhibit 1 attached to the Plan. As a condition to any exercise of the Options, Optionholder will permit the Company to deliver to him or her all financial and other information regarding the Company and its Subsidiaries which it believes is necessary to enable Optionholder to make an informed investment decision. If, at any time subsequent to the date Optionholder exercises any portion of the Options granted hereunder and prior to the occurrence of a Termination Event, Optionholder becomes legally married (whether in the first instance or to a different spouse), Optionholder shall cause Optionholder’s spouse to execute and deliver to the Company a consent in the form of Exhibit 1 attached to the Plan. Optionholder’s failure to deliver to the Company an executed consent in the form of Exhibit 1 to the Plan at any time when Optionholder would otherwise be required to deliver such consent shall constitute Optionholder’s continuing representation and warranty that Optionholder is not legally married as of such date.

 

(f)                                   Termination Event. Upon the consummation of a Termination Event, any Service Options which were Unvested Options immediately prior to such Termination Event shall be deemed Vested Options (such Options which are subject to accelerated vesting being referred to as the “Accelerated Options”). The Optionholder hereby agrees that upon a Termination Event, the Accelerated Options shall be deemed to be automatically exercised through a cashless exercise and Optionholder shall have no further rights under the Accelerated Options other than payment of the consideration, if any, (less any applicable taxes and withholdings) to be paid to the Optionholder (whether in the form of cash or stock) in respect of such deemed exercise of the Accelerated Options as of the Termination Event.

 

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(g)                                  Securities Laws Restrictions. Optionholder represents that when Optionholder exercises any portion of the Options he or she will be purchasing the Option Shares represented thereby for Optionholder’s own account and not on behalf of others. Optionholder understands and acknowledges that federal, state and foreign securities laws govern and restrict Optionholder’s right to offer, sell or otherwise dispose of any Option Shares unless Optionholder’s offer, sale or other disposition thereof is registered under the Securities Act and federal, state and foreign securities laws or, in the opinion of the Company’s counsel, such offer, sale or other disposition is exempt from registration thereunder. Optionholder agrees that he or she will not offer, sell or otherwise dispose of any Option Shares in any manner which would: (i) require the Company to file any registration statement (or similar filing under applicable securities law) with the Securities and Exchange Commission or to amend or supplement any such filing or (ii) violate or cause the Company to violate the Securities Act, the rules and regulations promulgated thereunder or any other applicable securities law. Optionholder further understands that the certificates for any Option Shares which Optionholder purchases will bear the legend set forth in the Plan or such other legends as the Company deems necessary or desirable in connection with the Securities Act or other rules, regulations or laws.

 

(h)                                 Code Section 409A Compliance. The Company may (but shall be under no obligation to) make any other changes to this Agreement it determines are necessary to comply with the provisions of Section 409A(a)(2) of the Code. Optionholder hereby agrees and acknowledges, neither the Company nor any of its affiliates makes any representations with respect to the application of Section 409A of the Code to the Options and, by the acceptance of the Options, Optionholder agrees to accept the other tax consequences of the issuance, vesting, ownership, modification, adjustment, exercise and disposition of the Option.

 

(i)                                     Withholding of Taxes. The Company shall be entitled, if necessary or desirable, to withhold from Optionholder from any amounts due and payable by the Company to Optionholder (or secure payment from Optionholder in lieu of withholding) the amount of any withholding or other tax due from the Company with respect to any Options or Common Stock issuable under this Agreement.

 

(j)                                    Limited Transferability of the Options. The Options granted hereunder are personal to Optionholder and are not transferable by Optionholder except pursuant to the laws of descent or distribution. Only Optionholder or his legal guardian or representative may exercise the Options granted hereunder.

 

3.                                      Optionholder’s Representations. Optionholder hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by Optionholder does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Optionholder is a party or by which he or she is bound, (ii) Optionholder is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity (other than the Company or one of its Subsidiaries) and (iii) upon the execution and delivery of this Agreement by the Company and Optionholder, this Agreement shall be the valid and binding obligation of Optionholder, enforceable against Optionholder in accordance with its terms.

 

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Optionholder hereby acknowledges and represents that he or she has consulted with (or has had an opportunity to consult with) independent legal counsel regarding his or her rights and obligations under this Agreement (including, without limitation, the Plan) and that he or she fully understands the terms and conditions contained herein and therein.

 

4.                                      Notices. Any notices required or permitted under this Agreement or the Plan will be delivered in accordance with the requirements of the Plan.

 

5.                                      Third Party Beneficiaries; Successors and Assigns. The parties hereto acknowledge and agree that the Investor Funds are third party beneficiaries of this Agreement and the Plan. Except as otherwise provided herein, this Agreement and the Plan shall bind and inure to the benefit of and be enforceable by Optionholder, the Company and the Investor Funds and their respective heirs, successors and assigns (including subsequent holders of Option Shares); provided that the rights and obligations of Optionholder under this Agreement and the Plan shall not be assignable except in connection with a permitted transfer of Option Shares in accordance with the Plan.

 

6.                                      Section 83(b) Election. Within 30 days after Optionholder has exercised any portion of the Option, in the event Optionholder is subject to United States federal income tax, Optionholder may, and is advised to, make an effective election with the Internal Revenue Service under Section 83(b) of the Code (an “83(b) Election”) relative to the Option Shares received by Optionholder pursuant to the exercise of such portion of the Option. Employee further acknowledges and understands that it is Employee’s sole obligation and responsibility to timely file such 83(b) Election, and neither the Company nor the Company’s legal or financial advisors shall have (i) any obligation or responsibility with respect to such filing or (ii) any liability resulting or arising from the failure to timely file such 83(b) Election.

 

7.                                      Complete Agreement. This Agreement and the Plan and the other documents referred to herein and therein embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

 

8.                                      No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

 

9.                                      Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

 

10.                               Governing Law. This Agreement will be subject to the Governing Law provisions of the Plan as if fully set forth in this Agreement.

 

11.                               Remedies. Each of the parties to this Agreement will be entitled to any of the remedies specified in the Plan.

 

12.                               Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Board and Optionholder, and no course of

 

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conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

 

* * * * *

 

6


 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

 

ROARING FORK HOLDING, INC.

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

  [         ]

 


 

Exhibit A

 

2016 Stock Option Plan

 


 




Exhibit 10.24

 

NON-EMPLOYEE OUTSIDE DIRECTOR

RESTRICTED STOCK UNIT AGREEMENT

 

*  *  *  *  *

 

Participant:           [                   ]

 

Grant Date:           [                   ]

 

Number of Restricted Stock Units Granted:                   [           ]

 

*  *  *  *  *

 

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”), dated as of the Grant Date specified above, is entered into by and between Roaring Fork Holding, Inc., a corporation organized in the State of Delaware (the “Company”), and the Participant specified above; and

 

WHEREAS, it has been determined by the Committee (as defined in the Company’s 2016 Stock Option Plan (as amended, the “Plan”)) that it would be in the best interests of the Company to grant the Restricted Stock Units (“RSUs”) provided for herein to the Participant; and

 

WHEREAS, this Agreement and the RSUs granted hereunder shall be applied as if they were issued under the Plan and will be subject to the following terms and conditions of the Plan, which are incorporated herein and made a part hereof (with such changes as the Board determines appropriate or necessary to give effect to the intent of this provision): (i) capitalized terms in this Agreement that are not otherwise defined herein shall have the meaning set forth in the Plan, (ii) Sections 4 (Administration of the Plan), 7 (Listing, Registration and Compliance with Laws and Regulations), 8 (Adjustment for Change in Common Stock), 12 (Repurchase Option), 13 (Restrictions on Transfer), 14 (Additional Restrictions on Transfer), 16 (Sale of the Company), 17 (Public Offering), 18 (Transfers in Violation of Plan), and 21 (Business Days) are incorporated herein as appropriate. For the sake of clarity, the use of “award” under the Plan shall be deemed to include this Award and the term “Option Share” shall be interpreted to mean Shares subject to, or delivered pursuant to, this Award.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:

 

1.             Grant of RSUs. The Committee shall have the right and power to grant to any Participant such RSUs in such quantity as determined by the Committee and set forth in a written award agreement with respect to an RSU. RSUs granted under this Agreement shall be subject to such terms and conditions and evidenced by agreements as shall be determined from time to time by the Committee.

 


 

2.             Vesting and Settlement.

 

(a)   Vesting. Subject to the other provisions of this Section 2, one hundred percent (100%) of the RSUs shall vest on [the Grant Date/[      ](1)/the twelve (12)-month anniversary of the date hereof](2) (the “Vesting Date”); provided, that the Termination Date is not on or prior to such Vesting Date. There shall be no proportionate or partial vesting in the periods prior to each of the Vesting Date and all vesting shall occur only on the Vesting Dates, subject to the Participant’s continued service with the Company or any of its Subsidiaries on such Vesting Date.

 

(b)   Committee Discretion to Accelerate Vesting. Notwithstanding the foregoing, the Committee may, in its sole discretion, provide for accelerated vesting of the RSUs at any time and for any reason.

 

(c)   Termination Event. Upon the consummation of a Termination Event, any RSUs which were unvested immediately prior to such Termination Event shall be deemed vested RSUs (such RSUs which are subject to accelerated vesting being referred to as the “Accelerated RSUs”). The Participant hereby agrees that upon a Termination Event, the Accelerated RSUs shall be deemed to be automatically converted into a right solely to receive payment of the consideration (less any applicable taxes and withholdings), if any, otherwise payable (whether in the form of cash or stock) in respect of the shares of Common Stock underlying such Accelerated RSUs in connection with the Termination Event.

 

(d)   Termination due to Death or Disability. Subject to the Committee’s discretion to accelerate vesting hereunder, all unvested RSUs shall be immediately forfeited upon the Participant’s termination due to death or disability.

 

(e)   Forfeiture. Subject to the Committee’s discretion to accelerate vesting hereunder, all unvested RSUs shall be immediately forfeited upon the Participant’s termination by the Company, or due to the Participant’s voluntary resignation.

 

3.             Delivery of Shares.

 

(a)   General. Subject to the provisions of Sections 3(b) and 11(c) hereof, within thirty (30) days following the vesting of the RSUs, the Participant shall receive the number of shares of Common Stock that correspond to the number of RSUs that have become vested on the applicable vesting date.

 

(b)   Blackout Periods. If the Participant is subject to any Company “blackout” policy or other trading restriction imposed by the Company on the date such distribution would otherwise be made pursuant to Section 3(a) hereof, such distribution shall be instead made on the earlier of (i) the date that the Participant is not subject to any such policy or restriction and (ii) the later of (A) the end of the calendar year in which such distribution would otherwise have been made and (B) a date that is immediately prior to the expiration of two and one-half (2 1/2) months following the date such distribution would otherwise have been made hereunder.

 


(1)   Note to Draft: to be used for a fixed vesting date.

(2)   Note to Draft: to be edited based on specific vesting schedules.

 

2


 

4.             Dividends; Rights as Stockholder. Cash dividends on shares of Common Stock issuable hereunder shall be credited to a dividend book entry account on behalf of the Participant with respect to each RSU granted to the Participant, provided, that such cash dividends shall not be deemed to be reinvested in shares of Common Stock and shall be held uninvested and without interest and paid in cash at the same time that the shares of Common Stock underlying the RSUs are delivered to the Participant in accordance with the provisions hereof. Stock dividends on shares of Common Stock shall be credited to a dividend book entry account on behalf of the Participant with respect to each RSU granted to the Participant, provided, that such stock dividends shall be paid in shares of Common Stock at the same time that the shares of Common Stock underlying the RSUs are delivered to the Participant in accordance with the provisions hereof. Except as otherwise provided herein, the Participant shall have no rights as a stockholder with respect to any shares of Common Stock covered by any RSU unless and until the Participant has become the holder of record of such shares.

 

5.             Non-Transferability. No portion of the RSUs may be sold, assigned, transferred, encumbered, hypothecated or pledged by the Participant, other than to the Company as a result of forfeiture of the RSUs as provided herein, unless and until payment is made in respect of vested RSUs in accordance with the provisions hereof and the Participant has become the holder of record of the vested shares of Common Stock issuable hereunder (which vested shares of Common Stock shall be subject to the limitations, including limitations on transferability, set forth in, inter alia, the organizational documents of the Company, the Amended and Restated Stockholders Agreement, dated as of July 23, 2016, by and among the Company and each of the persons listed on the schedules thereto (as amended, restated and amended and restated from time to time, the “Stockholders Agreement”), and applicable securities laws).

 

6.             Governing Law. All issues concerning this Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision of rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Delaware. Each of the Company and the Participant submits to the co-exclusive jurisdiction of the United States District Court and any Delaware state court sitting in Wilmington, Delaware over any lawsuit under this Agreement and waives any objection based on venue or forum non conveniens with respect to any action instituted therein. Each of the Company and the Participant waives the necessity for personal service of any and all process upon it and consents that all such service of process may be made by registered or certified mail (return receipt requested), in each case directed to such party in accordance with the notice requirements set forth in this Agreement, and service so made will be deemed to be completed on the date of actual receipt. Each of the Company and the Participant consents to service of process as aforesaid. Nothing in this Agreement will prohibit personal service in lieu of the service by mail contemplated herein.

 

7.             Section 83(b) Election. Within thirty (30) days after the Participant has received any shares of Common Stock pursuant to Section 3, in the event the Participant is subject to United States federal income tax, Participant may make an effective election with the Internal Revenue Service under Section 83(b) of the Code (an “83(b) Election”) relative to the shares of Common Stock received pursuant to Section 3. Participant further acknowledges and

 

3


 

understands that it is Participant’s sole obligation and responsibility to timely file such 83(b) Election, and neither the Company nor the Company’s legal or financial advisors shall have (i) any obligation or responsibility with respect to such filing or (ii) any liability resulting or arising from the failure to timely file such 83(b) Election.

 

8.             Taxes. The Company shall be entitled, if necessary or desirable, to withhold (or secure payment from the Participant in lieu of withholding) the amount of any withholding or other tax due with respect to any amount payable and/or shares issuable under the Plan, and the Company may defer any such payment or issuance unless and until indemnified to its satisfaction.

 

9.             Legend. The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing shares of Common Stock issued pursuant to this Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares of Common Stock acquired pursuant to this Agreement in the possession of the Participant in order to carry out the provisions of this Section 9.

 

10.          Securities Representations. This Agreement is being entered into by the Company in reliance upon the following express representations and warranties of the Participant. The Participant hereby acknowledges, represents and warrants that:

 

(a)   The Participant has been advised that the Participant may be an “affiliate” within the meaning of Rule 144 under the Securities Act and in this connection the Company is relying in part on the Participant’s representations set forth in this Section 10.

 

(b)   If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, the shares of Common Stock issuable hereunder must be held indefinitely unless an exemption from any applicable resale restrictions is available or the Company files an additional registration statement (or a “re-offer prospectus”) with regard to such shares of Common Stock and the Company is under no obligation to register such shares of Common Stock (or to file a “re-offer prospectus”).

 

(c)   If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, the Participant understands that (i) the exemption from registration under Rule 144 will not be available unless (A) a public trading market then exists for the Common Stock of the Company, (B) adequate information concerning the Company is then available to the public, and (C) other terms and conditions of Rule 144 or any exemption therefrom are complied with, and (ii) any sale of the shares of Common Stock issuable hereunder may be made only in limited amounts in accordance with the terms and conditions of Rule 144 or any exemption therefrom.

 

11.          Participant Acknowledgments. In connection with the grant of any RSU and/or the issuance of any Common Stock pursuant to this Agreement, the Participant acknowledges and agrees, that as a condition to any such grant or issuance:

 

(a)   Neither the grant of any RSU, the issuance of any Common Stock nor any provision contained in this Agreement shall entitle the Participant to remain in the service of the

 

4


 

Company or its Subsidiaries or affect the right of the Company to terminate any Participant’s service at any time for any reason.

 

(b)   The Participant will have consulted, or will have had an opportunity to consult with, independent legal counsel regarding his or her rights and obligations under this Agreement evidencing any grant of RSUs and he or she fully understands the terms and conditions contained herein and therein.

 

(c)           Prior to the issuance of any shares of Common Stock hereunder, the Participant will deliver to the Company an executed consent from the Participant’s spouse (if any) in the form of Exhibit A attached hereto. If, at any time subsequent to the date the Participant is issued any shares of Common Stock and prior to the occurrence of a Termination Event, the Participant becomes legally married (whether in the first instance or to a different spouse), the Participant shall cause his or her spouse to execute and deliver to the Company a consent in the form of Exhibit A attached hereto. The Participant’s failure to deliver the Company an executed consent in the form of Exhibit A at any time when the Participant would otherwise be required to deliver such consent shall constitute the Participant’s continuing representation and warranty that the Participant is not legally married as of such date. Prior to the issuance of any shares of Common Stock hereunder, Participant will deliver to the Company an executed joinder to the Stockholders Agreement.

 

12.          Entire Agreement; Termination and Amendment. This Agreement contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter.

 

13.          Rights of Participant. Any questions as to whether and when there has been a Termination and the cause of such Termination shall be determined in the sole discretion of the Committee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries or its Affiliates to terminate the Participant’s provision of services at any time (for any reason and with or without Cause), nor confer upon the Participant any right to continue to provide services to the Company or any of its Subsidiaries for any period of time or to continue to receive the Participant’s present (or any other) compensation.

 

14.          Transfer of Personal Data. The Participant authorizes, agrees and unambiguously consents to the transmission by the Company (or any Subsidiary) of any personal data information related to the RSUs awarded under this Agreement for legitimate business purposes. This authorization and consent is freely given by the Participant.

 

15.          Compliance with Laws. The grant of RSUs and the issuance of shares of Common Stock hereunder shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law, rule regulation or exchange requirement applicable thereto. The Company shall not be obligated to issue the RSUs or any shares of Common Stock pursuant to this Agreement if any such issuance would violate any such requirements. As a condition to the settlement of the RSUs, the Company

 

5


 

may require the Participant to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation.

 

16.          Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Participant shall not assign (except in accordance with Section 5 hereof) any part of this Agreement without the prior express written consent of the Company.

 

17.          Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.

 

18.          Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.

 

19.          Further Assurances. Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated thereunder.

 

20.          Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

21.          Remedies. Each of the Company, the Participant and the Investors will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including reasonable attorneys’ fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The Participant and the Company acknowledge and agree that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement.

 

22.          Acquired Rights. The Participant acknowledges and agrees that: (a) the Company may terminate or amend the Agreement at any time; (b) the award of RSUs made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the RSUs awarded hereunder) give the Participant any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Participant’s

 

6


 

ordinary compensation (if any), and shall not be considered as part of such compensation in the event of termination or resignation.

 

23.          Notices. Any notice required or permitted under this Agreement shall be in writing and shall be either delivered by electronic transmission (i.e., electronic mail or facsimile) (which shall be effective upon receipt of confirmation of successful transmission), personally delivered, or mailed by first class mail, return receipt requested, to the Participant at the address indicated in the Company’s records for such Person, and to the Company at the facsimile number and address below indicated:

 

Notices to the Company:

 

Roaring Fork Holdings, Inc.

c/o Vista Equity Partners Management, LLC

Four Embarcadero Center, 20th Floor

San Francisco, CA 94111

Fax:

(415) 765-6666

Attention:

David A. Breach (dbreach@vistaequitypartners.com)

 

Michael Fosnaugh (mfosnaugh@vistaequitypartners.com)

 

 

With a copy to:

 

Kirkland & Ellis LLP

555 California Street

San Francisco, CA 94104

Fax:

(415) 439-1500

Attention:

Stuart E. Casillas, P.C. (stuart.casillas@kirkland.com)

 

or such other facsimile number or address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under the Plan shall be deemed to have been given when so delivered or mailed.

 

Remainder of Page Intentionally Left Blank

 

7


 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

 

ROARING FORK HOLDING, INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

PARTICIPANT

 

 

 

 

 

 

 

Name: [              ]

 


 

EXHIBIT A

 

Form of Spousal Consent

 


 

SPOUSAL CONSENT

 

The undersigned spouse hereby acknowledges that I have read the following agreements to which my spouse is a party:

 

Roaring Fork Holding, Inc. 2016 Stock Option Plan,

 

Stockholders Agreement

 

Non-Employee Outside Director Restricted Stock Unit Agreement

 

and that I understand their contents. I am aware that such agreements provide for the repurchase of certain of my spouse’s capital stock of Roaring Fork Holdings, Inc. (the “Company”), under certain circumstances and impose other restrictions on such capital stock. I agree that my spouse’s interest in such capital stock is subject to the agreements referred to above and the other agreements referred to therein and any interest I may have in such capital stock shall be irrevocably bound by these agreements and the other agreements referred to therein and further that my community property interest (if any) shall be similarly bound by these agreements.

 

The undersigned spouse irrevocably constitutes and appoints [        ] (the “Stockholder”) as the undersigned’s true and lawful attorney and proxy in the undersigned’s name, place and stead to sign, make, execute, acknowledge, deliver, file and record all documents which may be required, and to manage, vote, act and make all decisions with respect to (whether necessary, incidental, convenient or otherwise), any and all capital stock of the Company in which the undersigned now has or hereafter acquires any interest and in any and all capital stock of the Company now or hereafter held of record by the Stockholder (including but not limited to, the right, without further signature, consent or knowledge of the undersigned spouse, to exercise or not to exercise any and all options under any appropriate agreements and to exercise amendments and modifications of and to terminate the foregoing agreements and to dispose of any and all such capital stock and options), with all powers the undersigned spouse would possess if personally present, it being expressly understood and intended by the undersigned that the foregoing power of attorney and proxy is coupled with an interest; and this power of attorney is a durable power of attorney and will not be affected by disability, incapacity or death of the Stockholder, or dissolution of marriage and this proxy will not terminate without consent of the Stockholder and the Company.

 

 

Stockholder:

 

Spouse of Stockholder (if applicable):

 

 

 

 

 

 

Signature

 

Signature

 

 

 

 

 

 

Printed Name

 

Printed Name

 

 

 

 

 

 

Dated

 

Dated

 


 

SUBSCRIBED AND SWORN to

 

before me this                 day

of                  , 20      

 

 

 

My Commission Expires

 

 

 

Notary Public

 

 

 





EXHIBIT 10.25

 

NON-EMPLOYEE OUTSIDE DIRECTOR

RESTRICTED STOCK UNIT AGREEMENT

 

*  *  *  *  *

 

Participant:                                 [                ]

 

Grant Date:                                [                ]

 

Number of Restricted Stock Units Granted:                                                        [    ]

 

*  *  *  *  *

 

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”), dated as of the Grant Date specified above, is entered into by and between Roaring Fork Holding, Inc., a corporation organized in the State of Delaware (the “Company”), and the Participant specified above; and

 

WHEREAS, it has been determined by the Committee (as defined in the Company’s 2016 Stock Option Plan (as amended, the “Plan”)) that it would be in the best interests of the Company to grant the Restricted Stock Units (“RSUs”) provided for herein to the Participant; and

 

WHEREAS, this Agreement and the RSUs granted hereunder shall be applied as if they were issued under the Plan and will be subject to the following terms and conditions of the Plan, which are incorporated herein and made a part hereof (with such changes as the Board determines appropriate or necessary to give effect to the intent of this provision): (i) capitalized terms in this Agreement that are not otherwise defined herein shall have the meaning set forth in the Plan, (ii) Sections 4 (Administration of the Plan), 7 (Listing, Registration and Compliance with Laws and Regulations), 8 (Adjustment for Change in Common Stock), 12 (Repurchase Option), 13 (Restrictions on Transfer), 14 (Additional Restrictions on Transfer), 16 (Sale of the Company), 17 (Public Offering), 18 (Transfers in Violation of Plan), and 21 (Business Days) are incorporated herein as appropriate. For the sake of clarity, the use of “award” under the Plan shall be deemed to include this Award and the term “Option Share” shall be interpreted to mean Shares subject to, or delivered pursuant to, this Award.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:

 

1.                                      Grant of RSUs. The Committee shall have the right and power to grant to any Participant such RSUs in such quantity as determined by the Committee and set forth in a written award agreement with respect to an RSU. RSUs granted under this Agreement shall be subject to such terms and conditions and evidenced by agreements as shall be determined from time to time by the Committee.

 


 

2.                                      Vesting and Settlement.

 

(a)         Vesting. Subject to the other provisions of this Section 2, one hundred percent (100%) of the RSUs shall vest on [the Grant Date/[            ](1)/the twelve (12)-month anniversary of the date hereof](2) (the “Vesting Date”); provided, that the Termination Date is not on or prior to such Vesting Date. There shall be no proportionate or partial vesting in the periods prior to each of the Vesting Date and all vesting shall occur only on the Vesting Dates, subject to the Participant’s continued service with the Company or any of its Subsidiaries on such Vesting Date.

 

(b)         Committee Discretion to Accelerate Vesting. Notwithstanding the foregoing, the Committee may, in its sole discretion, provide for accelerated vesting of the RSUs at any time and for any reason.

 

(c)          Termination Event. Upon the consummation of a Termination Event, any RSUs which were unvested immediately prior to such Termination Event shall be deemed vested RSUs (such RSUs which are subject to accelerated vesting being referred to as the “Accelerated RSUs”). The Participant hereby agrees that upon a Termination Event, the Accelerated RSUs shall be deemed to be automatically converted into a right solely to receive payment of the consideration (less any applicable taxes and withholdings), if any, otherwise payable (whether in the form of cash or stock) in respect of the shares of Common Stock underlying such Accelerated RSUs in connection with the Termination Event.

 

(d)         Termination due to Death or Disability. Subject to the Committee’s discretion to accelerate vesting hereunder, all unvested RSUs shall be immediately forfeited upon the Participant’s termination due to death or disability.

 

(e)          Forfeiture. Subject to the Committee’s discretion to accelerate vesting hereunder, all unvested RSUs shall be immediately forfeited upon the Participant’s termination by the Company, or due to the Participant’s voluntary resignation.

 

3.                                      Delivery of Shares.

 

(a)         General. Subject to the provisions of Sections 3(b) and 11(c) hereof, within thirty (30) days following the vesting of the RSUs, the Participant shall receive the number of shares of Common Stock that correspond to the number of RSUs that have become vested on the applicable vesting date.

 

(b)         Blackout Periods. If the Participant is subject to any Company “blackout” policy or other trading restriction imposed by the Company on the date such distribution would otherwise be made pursuant to Section 3(a) hereof, such distribution shall be instead made on the earlier of (i) the date that the Participant is not subject to any such policy or restriction and (ii) the later of (A) the end of the calendar year in which such distribution would otherwise have been made and (B) a date that is immediately prior to the expiration of two and one-half (2 1/2) months following the date such distribution would otherwise have been made hereunder.

 


(1)   Note to Draft: to be used for a fixed vesting date.

(2)   Note to Draft: to be edited based on specific vesting schedules.

 

2


 

4.                                      Dividends; Rights as Stockholder. Cash dividends on shares of Common Stock issuable hereunder shall be credited to a dividend book entry account on behalf of the Participant with respect to each RSU granted to the Participant, provided, that such cash dividends shall not be deemed to be reinvested in shares of Common Stock and shall be held uninvested and without interest and paid in cash at the same time that the shares of Common Stock underlying the RSUs are delivered to the Participant in accordance with the provisions hereof. Stock dividends on shares of Common Stock shall be credited to a dividend book entry account on behalf of the Participant with respect to each RSU granted to the Participant, provided, that such stock dividends shall be paid in shares of Common Stock at the same time that the shares of Common Stock underlying the RSUs are delivered to the Participant in accordance with the provisions hereof. Except as otherwise provided herein, the Participant shall have no rights as a stockholder with respect to any shares of Common Stock covered by any RSU unless and until the Participant has become the holder of record of such shares.

 

5.                                      Non-Transferability. No portion of the RSUs may be sold, assigned, transferred, encumbered, hypothecated or pledged by the Participant, other than to the Company as a result of forfeiture of the RSUs as provided herein, unless and until payment is made in respect of vested RSUs in accordance with the provisions hereof and the Participant has become the holder of record of the vested shares of Common Stock issuable hereunder (which vested shares of Common Stock shall be subject to the limitations, including limitations on transferability, set forth in, inter alia, the organizational documents of the Company, the Amended and Restated Stockholders Agreement, dated as of July 23, 2016, by and among the Company and each of the persons listed on the schedules thereto (as amended, restated and amended and restated from time to time, the “Stockholders Agreement”), and applicable securities laws).

 

6.                                      Governing Law. All issues concerning this Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision of rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Delaware. Each of the Company and the Participant submits to the co-exclusive jurisdiction of the United States District Court and any Delaware state court sitting in Wilmington, Delaware over any lawsuit under this Agreement and waives any objection based on venue or forum non conveniens with respect to any action instituted therein. Each of the Company and the Participant waives the necessity for personal service of any and all process upon it and consents that all such service of process may be made by registered or certified mail (return receipt requested), in each case directed to such party in accordance with the notice requirements set forth in this Agreement, and service so made will be deemed to be completed on the date of actual receipt. Each of the Company and the Participant consents to service of process as aforesaid. Nothing in this Agreement will prohibit personal service in lieu of the service by mail contemplated herein.

 

7.                                      Section 83(b) Election. Within thirty (30) days after the Participant has received any shares of Common Stock pursuant to Section 3, in the event the Participant is subject to United States federal income tax, Participant may make an effective election with the Internal Revenue Service under Section 83(b) of the Code (an “83(b) Election”) relative to the shares of Common Stock received pursuant to Section 3. Participant further acknowledges and

 

3


 

understands that it is Participant’s sole obligation and responsibility to timely file such 83(b) Election, and neither the Company nor the Company’s legal or financial advisors shall have (i) any obligation or responsibility with respect to such filing or (ii) any liability resulting or arising from the failure to timely file such 83(b) Election.

 

8.                                      Taxes. The Company shall be entitled, if necessary or desirable, to withhold (or secure payment from the Participant in lieu of withholding) the amount of any withholding or other tax due with respect to any amount payable and/or shares issuable under the Plan, and the Company may defer any such payment or issuance unless and until indemnified to its satisfaction.

 

9.                                      Legend. The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing shares of Common Stock issued pursuant to this Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares of Common Stock acquired pursuant to this Agreement in the possession of the Participant in order to carry out the provisions of this Section 9.

 

10.                               Securities Representations. This Agreement is being entered into by the Company in reliance upon the following express representations and warranties of the Participant. The Participant hereby acknowledges, represents and warrants that:

 

(a)         The Participant has been advised that the Participant may be an “affiliate” within the meaning of Rule 144 under the Securities Act and in this connection the Company is relying in part on the Participant’s representations set forth in this Section 10.

 

(b)         If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, the shares of Common Stock issuable hereunder must be held indefinitely unless an exemption from any applicable resale restrictions is available or the Company files an additional registration statement (or a “re-offer prospectus”) with regard to such shares of Common Stock and the Company is under no obligation to register such shares of Common Stock (or to file a “re-offer prospectus”).

 

(c)          If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, the Participant understands that (i) the exemption from registration under Rule 144 will not be available unless (A) a public trading market then exists for the Common Stock of the Company, (B) adequate information concerning the Company is then available to the public, and (C) other terms and conditions of Rule 144 or any exemption therefrom are complied with, and (ii) any sale of the shares of Common Stock issuable hereunder may be made only in limited amounts in accordance with the terms and conditions of Rule 144 or any exemption therefrom.

 

11.                               Participant Acknowledgments. In connection with the grant of any RSU and/or the issuance of any Common Stock pursuant to this Agreement, the Participant acknowledges and agrees, that as a condition to any such grant or issuance:

 

(a)         Neither the grant of any RSU, the issuance of any Common Stock nor any provision contained in this Agreement shall entitle the Participant to remain in the service of the

 

4


 

Company or its Subsidiaries or affect the right of the Company to terminate any Participant’s service at any time for any reason.

 

(b)         The Participant will have consulted, or will have had an opportunity to consult with, independent legal counsel regarding his or her rights and obligations under this Agreement evidencing any grant of RSUs and he or she fully understands the terms and conditions contained herein and therein.

 

(c)                                  Prior to the issuance of any shares of Common Stock hereunder, the Participant will deliver to the Company an executed consent from the Participant’s spouse (if any) in the form of Exhibit A attached hereto. If, at any time subsequent to the date the Participant is issued any shares of Common Stock and prior to the occurrence of a Termination Event, the Participant becomes legally married (whether in the first instance or to a different spouse), the Participant shall cause his or her spouse to execute and deliver to the Company a consent in the form of Exhibit A attached hereto. The Participant’s failure to deliver the Company an executed consent in the form of Exhibit A at any time when the Participant would otherwise be required to deliver such consent shall constitute the Participant’s continuing representation and warranty that the Participant is not legally married as of such date. Prior to the issuance of any shares of Common Stock hereunder, Participant will deliver to the Company an executed joinder to the Stockholders Agreement.

 

12.                               Entire Agreement; Termination and Amendment. This Agreement contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter.

 

13.                               Rights of Participant. Any questions as to whether and when there has been a Termination and the cause of such Termination shall be determined in the sole discretion of the Committee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries or its Affiliates to terminate the Participant’s provision of services at any time (for any reason and with or without Cause), nor confer upon the Participant any right to continue to provide services to the Company or any of its Subsidiaries for any period of time or to continue to receive the Participant’s present (or any other) compensation.

 

14.                               Transfer of Personal Data. The Participant authorizes, agrees and unambiguously consents to the transmission by the Company (or any Subsidiary) of any personal data information related to the RSUs awarded under this Agreement for legitimate business purposes. This authorization and consent is freely given by the Participant.

 

15.                               Compliance with Laws. The grant of RSUs and the issuance of shares of Common Stock hereunder shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law, rule regulation or exchange requirement applicable thereto. The Company shall not be obligated to issue the RSUs or any shares of Common Stock pursuant to this Agreement if any such issuance would violate any such requirements. As a condition to the settlement of the RSUs, the Company

 

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may require the Participant to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation.

 

16.                               Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Participant shall not assign (except in accordance with Section 5 hereof) any part of this Agreement without the prior express written consent of the Company.

 

17.                               Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.

 

18.                               Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.

 

19.                               Further Assurances. Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated thereunder.

 

20.                               Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

21.                               Remedies. Each of the Company, the Participant and the Investors will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including reasonable attorneys’ fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The Participant and the Company acknowledge and agree that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement.

 

22.                               Acquired Rights. The Participant acknowledges and agrees that: (a) the Company may terminate or amend the Agreement at any time; (b) the award of RSUs made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the RSUs awarded hereunder) give the Participant any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Participant’s

 

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ordinary compensation (if any), and shall not be considered as part of such compensation in the event of termination or resignation.

 

23.                               Notices. Any notice required or permitted under this Agreement shall be in writing and shall be either delivered by electronic transmission (i.e., electronic mail or facsimile) (which shall be effective upon receipt of confirmation of successful transmission), personally delivered, or mailed by first class mail, return receipt requested, to the Participant at the address indicated in the Company’s records for such Person, and to the Company at the facsimile number and address below indicated:

 

Notices to the Company:

 

Roaring Fork Holdings, Inc.

c/o Vista Equity Partners Management, LLC

Four Embarcadero Center, 20th Floor

San Francisco, CA 94111

Fax:                                                                       (415) 765-6666

Attention:                                         David A. Breach (dbreach@vistaequitypartners.com)

Michael Fosnaugh (mfosnaugh@vistaequitypartners.com)

 

With a copy to:

 

Kirkland & Ellis LLP

555 California Street

San Francisco, CA 94104

Fax:                                                                       (415) 439-1500

Attention:                                         Stuart E. Casillas, P.C. (stuart.casillas@kirkland.com)

 

or such other facsimile number or address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under the Plan shall be deemed to have been given when so delivered or mailed.

 

Remainder of Page Intentionally Left Blank

 

7


 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

 

 

ROARING FORK HOLDING, INC.

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

PARTICIPANT

 

 

 

 

 

 

 

 

 

Name:

[                ]

 


 

EXHIBIT A

 

Form of Spousal Consent

 


 

SPOUSAL CONSENT

 

The undersigned spouse hereby acknowledges that I have read the following agreements to which my spouse is a party:

 

Roaring Fork Holding, Inc. 2016 Stock Option Plan,

 

Stockholders Agreement

 

Non-Employee Outside Director Restricted Stock Unit Agreement

 

and that I understand their contents. I am aware that such agreements provide for the repurchase of certain of my spouse’s capital stock of Roaring Fork Holdings, Inc. (the “Company”), under certain circumstances and impose other restrictions on such capital stock. I agree that my spouse’s interest in such capital stock is subject to the agreements referred to above and the other agreements referred to therein and any interest I may have in such capital stock shall be irrevocably bound by these agreements and the other agreements referred to therein and further that my community property interest (if any) shall be similarly bound by these agreements.

 

The undersigned spouse irrevocably constitutes and appoints [        ] (the “Stockholder”) as the undersigned’s true and lawful attorney and proxy in the undersigned’s name, place and stead to sign, make, execute, acknowledge, deliver, file and record all documents which may be required, and to manage, vote, act and make all decisions with respect to (whether necessary, incidental, convenient or otherwise), any and all capital stock of the Company in which the undersigned now has or hereafter acquires any interest and in any and all capital stock of the Company now or hereafter held of record by the Stockholder (including but not limited to, the right, without further signature, consent or knowledge of the undersigned spouse, to exercise or not to exercise any and all options under any appropriate agreements and to exercise amendments and modifications of and to terminate the foregoing agreements and to dispose of any and all such capital stock and options), with all powers the undersigned spouse would possess if personally present, it being expressly understood and intended by the undersigned that the foregoing power of attorney and proxy is coupled with an interest; and this power of attorney is a durable power of attorney and will not be affected by disability, incapacity or death of the Stockholder, or dissolution of marriage and this proxy will not terminate without consent of the Stockholder and the Company.

 

Stockholder:

Spouse of Stockholder (if applicable):

 

 

 

 

 

Signature

Signature

 

 

 

 

 

Printed Name

Printed Name

 

 

 

 

 

Dated

Dated

 


 

SUBSCRIBED AND SWORN to

before me this                 day

of                      , 20  

 

 

My Commission Expires

 

 

 

Notary Public

 

 





Exhibit 21.1

 

Subsidiaries of the Registrant

 

Subsidiaries of Ping Identity Holding Corp.

Roaring Fork Intermediate Holding, Inc. (Delaware)

 

Subsidiaries of Roaring Fork Intermediate Holding, Inc.

Roaring Fork Intermediate, LLC (Delaware)

 

Subsidiaries of Roaring Fork Intermediate, LLC

Ping Identity Corporation (Delaware)

 

Subsidiaries of Ping Identity Corporation

UnboundID LLC (Delaware)

Ping Identity International, Inc. (Delaware)

Elastic Beam LLC (Delaware)

 

Subsidiaries of Ping Identity International, Inc.

Ping Identity UK Limited (United Kingdom)

Ping Identity Canada Inc. (Canada)

Ping Identity France, SAS (France)

Ping Identity Australia Pty Limited (Australia)

Ping Identity Israel Ltd. (Israel)

 

Subsidiaries of Elastic Beam LLC

Elastic Beam (India) Private Limited (India)

 





Exhibit 23.1

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We hereby consent to the use in this Registration Statement on Form S-1 of Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.), of our report dated April 1, 2019 relating to the financial statements of Ping Identity Holding Corp. (formerly known as Roaring Fork Holding, Inc.), which appears in this Registration Statement.  We also consent to the reference to us under the heading “Experts” in such Registration Statement.

 

/s/ PricewaterhouseCoopers LLP
Denver, Colorado
August 23, 2019