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James Hardie IndustriesBUILDERS FIRSTSOURCE, INC. FORM 10-K (Annual Report) Filed 03/01/17 for the Period Ending 12/31/16 Address Telephone CIK Symbol SIC Code 2001 BRYAN STREET, SUITE 1600 DALLAS, TX 75201 (214) 880-3500 0001316835 BLDR 5211 - Lumber and Other Building Materials Dealers Industry Construction Supplies & Fixtures Sector Consumer Cyclicals Fiscal Year 12/31 http://www.edgar-online.com © Copyright 2017, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. UnitEd StAtESSECUritiES And ExCHAngE COmmiSSiOnWashington, d.C. 20549 Form 10-K ☑AnnUAl rEPOrt PUrSUAnt tO SECtiOn 13 Or 15(d) OF tHE SECUritiES ExCHAngE ACt OF 1934For the fiscal year ended December 31, 2016OR☐trAnSitiOn rEPOrt PUrSUAnt tO SECtiOn 13 Or 15(d) OF tHE SECUritiES ExCHAngE ACt OF 1934For the transition period from to Commission File Number: 0-51357 BUildErS FirStSOUrCE, inC.(Exact name of registrant as specified in its charter) delaware 52-2084569(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 2001 Bryan Street, Suite 1600dallas, texas 75201(Address of principal executive offices) (Zip Code)registrant’s telephone number, including area code:(214) 880-3500Securities registered pursuant to Section 12(b) of the Act: title of Each Class name of Exchange on Which registeredCommon stock, par value $0.01 per share nASdAQ Stock market llCSecurities registered pursuant to Section 12(g) of the Act:none Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and postedpursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles). Yes ☑ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge,in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☑Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act). Yes ☐ No ☑The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of June 30, 2016 was approximately $961.1 million based on the closing price pershare on that date of $11.25 as reported on the NASDAQ Stock Market LLC.The number of shares of the registrant’s common stock, par value $0.01, outstanding as of February 24, 2017 was 112,040,464.dOCUmEntS inCOrPOrAtEd By rEFErEnCEPortions of the registrant’s definitive proxy statement for its annual meeting of stockholders to be held on May 24, 2017 are incorporated by reference into Part II and Part III of thisForm 10-K. BUildErS FirStSOUrCE, inC.table of Contents to Form 10-K Page PArt i Item 1. Business 3Item 1A. Risk Factors 11Item 1B. Unresolved Staff Comments 21Item 2. Properties 21Item 3. Legal Proceedings 22Item 4. Mine Safety Disclosures 22 PArt ii Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 23Item 6. Selected Financial Data 25Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 26Item 7A. Quantitative and Qualitative Disclosures About Market Risk 39Item 8. Financial Statements and Supplementary Data 40Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 76Item 9A. Controls and Procedures 76Item 9B. Other Information 77 PArt iii Item 10. Directors, Executive Officers and Corporate Governance 78Item 11. Executive Compensation 78Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 78Item 13. Certain Relationships and Related Transactions, and Director Independence 79Item 14. Principal Accountant Fees and Services 79 PArt iv Item 15. Exhibits and Financial Statement Schedules 80Item 16 Form 10-K Summary 84 2 P Art i item 1. BusinessCAUtiOnAry StAtEmEntStatements in this report and the schedules hereto that are not purely historical facts or that necessarily depend upon future events, including statementsabout expected market share gains, forecasted financial performance or other statements about anticipations, beliefs, expectations, hopes, intentions or strategies forthe future, may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned notto place undue reliance on forward-looking statements. In addition, oral statements made by our directors, officers and employees to the investor and analystcommunities, media representatives and others, depending upon their nature, may also constitute forward-looking statements. As with the forward-lookingstatements included in this report, these forward-looking statements are by nature inherently uncertain, and actual results may differ materially as a result of manyfactors. All forward-looking statements are based upon information available to Builders FirstSource, Inc. on the date this report was submitted. BuildersFirstSource, Inc. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events orotherwise. Any forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from the events or resultsdescribed in the forward-looking statements, including risks or uncertainties related to the Company’s growth strategies, including gaining market share, or theCompany’s revenues and operating results being highly dependent on, among other things, the homebuilding industry, lumber prices and the economy. BuildersFirstSource, Inc. may not succeed in addressing these and other risks. Further information regarding the risk factors that could affect our financial and other resultsare included as Item 1A of this annual report on Form 10-K.OvErviEWIn this annual report, unless otherwise stated or the context otherwise requires, references to the “company,” “we,” “our,” “ours” or “us” refer to BuildersFirstSource, Inc. and its consolidated subsidiaries, including ProBuild Holdings LLC (“ProBuild”), as of July 31, 2015.We are a leading supplier and manufacturer of building materials, manufactured components and construction services to professional homebuilders, sub-contractors, remodelers and consumers. Following our acquisition of ProBuild in July 2015, the Company operates 400 locations in 40 states across the UnitedStates. We offer an integrated solution to our customers providing manufacturing, supply and installation of a full range of structural and related building products.Our manufactured products include our factory-built roof and floor trusses, wall panels and stairs, vinyl windows, custom millwork and trim, as well as engineeredwood that we design, cut, and assemble for each home. We also assemble interior and exterior doors into pre-hung units. Additionally, we supply our customerswith a broad offering of professional grade building products not manufactured by us, such as dimensional lumber and lumber sheet goods and various window,door and millwork lines. Our full range of construction-related services includes professional installation, turn-key framing and shell construction, and spans all ourproduct categories.Given the span and depth of our geographical reach, our locations are organized into nine geographical regions (Regions 1 through 9), which are also ouroperating segments, further aggregated into four reportable segments: Northeast, Southeast, South and West. All of our segments have similar customers, productsand services, and distribution methods as discussed below. Our financial statements contain additional information regarding segment performance which isdiscussed in Note 15 to the consolidated financial statements included in Item 8 of this annual report on Form 10-K.Builders FirstSource, Inc. is a Delaware corporation formed in 1998 as BSL Holdings, Inc. On October 13, 1999, our name changed to Builders FirstSource,Inc. Our common stock is listed on the NASDAQ Stock Market LLC under the ticker symbol “BLDR”.OUr indUStryWe compete in the professional segment (“Pro Segment”) of the U.S. residential building products supply market. Suppliers in the Pro Segment primarilyfocus on serving professional customers such as homebuilders and remodeling contractors. The Pro Segment consists predominantly of small, privately ownedsuppliers, including framing and shell construction contractors, local and regional materials distributors, single or multi-site lumberyards, and truss manufacturingand millwork operations. Because of the predominance of smaller privately owned companies and the overall size and diversity of the target customer market, thePro Segment remains fragmented. There were only five non-specialty building product suppliers in the Pro Segment that generated more than $500 million in sales,according to ProSales magazine’s 2015 ProSales 100 list. We were the largest non-specialty building product supplier on this list.3 The residential building products industry is driven by the level of activity in both the U.S. residential new construction market and the U.S. r esidentialrepair and remodeling market. Growth within these markets is linked to a number of key factors, including demographic trends, housing demand, interest rates,employment levels, availability of credit, foreclosure rates, consumer confidence, the availability of qualified tradesmen, and the state of the economy in general. The residential building products industry is characterized by several key trends, including greater utilization of manufactured components, an expandingrole of the distributor in providing turn-key services and a consolidation of suppliers by homebuilders. •Prefabricated components : Compared to conventional “stick-build” construction where builders cut and assemble lumber at the job site with theirown labor, prefabricated components are engineered in an offsite location using specialized equipment and labor. This outsourced task allows foroptimal material usage, lower overall labor costs and improved quality of structural elements. In addition, using prefabricated components typicallyresults in faster construction because fabrication can be automated and performed more systematically. As such, we believe there is a long term trendtowards increased use of prefabricated components by homebuilders. •Turn - key services : Many homebuilders have taken a more limited role in the homebuilding process and have outsourced certain key elements ofthe construction process, including process management, product selection, order input, scheduling, framing and installation. As such, we believethat many homebuilders are increasingly looking to suppliers in the Pro Segment to perform these critical functions, resulting in greater demand forintegrated project services; and •Consolidation of suppliers by homebuilders : We believe that homebuilders are increasingly looking to consolidate their supplier base. Manyhomebuilders are seeking a more strategic relationship with suppliers that are able to offer a broad range of products and services and, as a result, areallocating a greater share of wallet to a select number of larger, full service suppliers. We believe this trend accelerated during the recent downturnand continues in the current housing market recovery.The homebuilding industry experienced a significant downturn which began in 2006. During the downturn, many homebuilders significantly decreased theirhousing starts because of lower demand and a surplus of both existing and new home inventory. The weakness in the homebuilding industry resulted in asignificant reduction in demand for our products and services. Beginning in late 2011, the industry began to stabilize and housing and remodeling activity hassteadily strengthened since then. According to the U.S. Census Bureau, the single-family residential construction market was an estimated $243.4 billion in 2016,which was 4.8% higher than 2015, though still down significantly from the historical high of $413.2 billion in 2006. Further, according to the Home ImprovementResearch institute (“HIRI”), the professional repair and remodel end market was an estimated $98.1 billion in 2016, which was 6.1% higher than 2015.During the downturn mortgage financing and commercial credit for smaller homebuilders was severely constrained and continues to slow a recovery in ourindustry despite some recent improvement. However, we believe there are several meaningful trends that indicate U.S. housing demand will likely continue torecover to levels consistent with the historical average of the past fifty years. These trends include relatively low interest rates, the aging of housing stock, andpopulation growth due to immigration and birthrate exceeding death rate. According to the U.S Census Bureau, U.S. single-family housing starts increased 9.4% in2016 compared to 2015. A composite of third party sources, including the National Association of Homebuilders (“NAHB”), are predicting that U.S. single-familyhousing starts will increase to approximately 847,000 in 2017, which would represent an 8.4% increase from 2016 actual U.S. single-family housing starts of781,500. In addition, the HIRI is forecasting sales in the professional repair and remodel end market to increase approximately 4.2% in 2017 compared to 2016.OUr CUStOmErSWe serve a broad customer base in 40 states across the United States. We have a diverse geographic footprint as we have operations in 75 of the top 100U.S. Metropolitan Statistical Areas (“MSAs”), as ranked by single family housing permits based on 2016 U.S. Census data. In addition, approximately 83% ofU.S. housing permits in 2016 were issued in MSAs in which we operate. Given the local nature of our business, we have historically and will continue to locate ourfacilities in close proximity to our key customers and co-locate multiple operations in one facility to improve efficiency.We have a diversified customer base, ranging from large production builders to small custom homebuilders, as well as multi-family builders, repair andremodeling contractors and light commercial contractors. For the year ended December 31, 2016, our top 10 customers accounted for approximately 16.8% ofsales, and no single customer accounted for more than 5% of sales. Our top 10 customers are comprised primarily of the largest production homebuilders, includingpublicly traded companies such as D.R. Horton, Inc., Pulte Homes, Inc., Lennar Corporation, Hovnanian Enterprises and CalAtlantic Group.4 In addition to the largest production homebuilders, we also service and supply regional production and local custom homebuilders as well as repair andremodeling contractors. These customers require high levels of service and a broad product offering. Our sales team expects to work very closely with the designerson a day-to-d ay basis in order to ensure the appropriate products are identified, ordered or produced and delivered on time to the building site. To account for theseincreased service costs, pricing in the industry is tied to the level of service provided and the volu mes purchased.OUr PrOdUCtS And SErviCESWe group our building products and services into six product categories:Lumber & Lumber Sheet Goods. Lumber & lumber sheet goods include dimensional lumber, plywood and oriented strand board (“OSB”) products used inon-site house framing. Lumber & lumber sheet goods are our largest sales volume product category. The products in this category are highly sensitive tofluctuations in market prices for such commodities.Windows, Doors & Millwork. Windows & doors are comprised of the manufacturing, assembly and distribution of windows, and the assembly anddistribution of interior and exterior door units. We manufacture a portion of the vinyl windows that we distribute in our plant in Houston, Texas which allows us tosupply builders, primarily in the Texas market, with cost-competitive products. Our pre-hung interior and exterior doors consist of a door slab with hinges and doorjambs attached, reducing on-site installation time and providing higher quality finished door units than those constructed on site. These products typically require ahigh degree of product knowledge and training to sell. Millwork includes interior trim and custom features that we manufacture under the Synboard ® brand name.Synboard is produced from extruded PVC and offers several advantages over traditional wood features, such as greater durability and no ongoing maintenance suchas periodic caulking and painting.Manufactured Products. Manufactured products are factory-built substitutes for job-site framing and include wood floor and roof trusses, steel roof trusses,wall panels, stairs, and engineered wood that we design, cut, and assemble for each home. Our manufactured products allow builders to build higher quality homesmore efficiently. Roof trusses, floor trusses, wall panels and stair units are built in a factory controlled environment. Engineered floors and beams are cut to therequired size and packaged for the given application at many of our locations. Without manufactured products, builders construct these items on site, whereweather and variable labor quality can negatively impact construction cost, quality and installation time. In addition, engineered wood beams have greater structuralstrength than conventional framing materials, allowing builders to frame houses with more open space creating a wider variety of house designs. Engineered woodfloors are also stronger and straighter than conventionally framed floors.Gypsum, Roofing & Insulation. Gypsum, roofing, and insulation include wallboard, ceilings, joint treatment and finishes.Siding, Metal, and Concrete. Siding, metal, and concrete includes vinyl, composite, and wood siding, exterior trim, other exteriors, metal studs and cement.Other Building Products & Services. Other building products & services consist of various products, including cabinets and hardware. This category alsoincludes services such as turn-key framing, shell construction, design assistance and professional installation of products spanning all our product categories. Weprovide professional installation and turn-key services as a solution for our homebuilder customers. Through our installation services program, we helphomebuilders realize efficiencies through improved scheduling, resulting in reduced cycle time and better cost controls. By utilizing an energy efficiency softwareprogram, we also assist homebuilders in designing energy efficient homes in order to meet increasingly stringent energy rating requirements. Upgrading to ourpremium windows, doors, and insulating products reduces overall cost to the homebuilder by minimizing costs of the required heating/cooling system. We workclosely with the homebuilder to select the appropriate mix of our products in order to meet current and forthcoming energy codes. We believe these services requirescale, capital and sophistication that smaller competitors do not possess. We will continue to pursue profitable business in this category.We compete in a fragmented marketplace. We believe our integrated approach and scale allow us to compete effectively through our comprehensive productlines, prefabricated components, and value-added services combined with the knowledge of our integrated sales forces to enable our homebuilder customers tocomplete construction more quickly, with higher quality and at a lower cost. While we expect these benefits to be particularly valuable to our customers in marketenvironments characterized by labor shortages, sourcing challenges or sharply rising demand for new homes, we expect such benefits will also be increasinglyvalued and demanded by our customers operating under normal market conditions.5 mAnUFACtUringOur manufacturing facilities utilize the latest industry leading technology and the highest quality materials to improve product quality, increase efficiency,reduce lead times and minimize production errors. We manufacture products within two of our product categories: manufactured products, and windows, doors &millwork.Manufactured Products — Trusses and Wall Panels. Truss and wall panel production has two steps — design and fabrication. Each house requires its ownset of designed shop drawings, which vary by builder type: production versus custom builders. Production builders use prototype house plans as they replicatehouses. These house plans may be minimally modified to suit individual customer demand. The number of changes made to a given prototype house, and thenumber of prototype houses used, varies by builder and their construction and sales philosophy. We maintain an electronic master file of trusses and wall panels foreach builder’s prototype houses. There are three primary benefits to master filing. First, master filing is cost effective as the electronic master file is used rather thandesigning the components individually each time the prototype house is built. Second, it improves design quality as a house’s design is based on the provenprototype except for any minor builder modifications. Third, master filing allows us to change one file and update all related prototype house designs automaticallyas we improve the design over time or as the builder modifies the base prototype house. We do not maintain a master file for custom builders who do not replicatehouses, as it is not cost effective. For these builders, the components are designed individually for each house.After we design shop drawings for a given house, we download the shop drawings into a proprietary software system to review the design for potentialerrors and to schedule the job for production. The fabrication process begins by cutting individual pieces of lumber to required lengths in accordance with the shopdrawings. We download the shop drawings from our design department to computerized saws. We assemble the cut lumber to form roof trusses, floor trusses orwall panels, and store the finished components by house awaiting shipment to the job site.We generate fabrication time standards for each component during the design step. We use these standards to measure efficiency by comparing actualproduction time with the calculated standard. Each plant’s performance is benchmarked by comparing efficiency across plants.Manufactured Products — Engineered Wood. As with trusses and wall panels, engineered wood components have a design and fabrication step. We designengineered wood floors using a master filing system similar to the truss and wall panel system. Engineered wood beams are designed to ensure the beam will bestructurally sound in the given application. After the design phase, a printed layout is generated. We use this layout to cut the engineered wood to the requiredlength and assemble all of the components into a house package. We design and fabricate engineered wood at many of our distribution locations.Manufactured Products — Stairs. We manufacture box stairs at some of our locations. After a house is framed, our salesman takes measurements at the jobsite prior to manufacturing to account for any variation between the blueprints and the actual framed house. We fabricate box stairs based on these measurements.Custom Millwork. Our manufactured custom millwork consists primarily of synthetic exterior trim, custom windows, features and box columns that we sellunder our Synboard brand name and throughout our company.We sand, cut, and shape sheets of 4 foot by 18 or 20 foot Celuka-blown, extruded PVC, or Synboard, to produce the desired product. We produce exteriortrim boards by cutting the Synboard into the same industry-standard dimensions used for wood-based exterior trim boards. We form exterior features by assemblingpieces of Synboard and other PVC-based moldings that have been cut, heated and bent over forms to achieve the desired shape. For custom windows, we build theframe from Synboard and glaze the glass into place. We fabricate box columns from sections of PVC that are cut on a 45 degree angle and mitered together.Windows. We manufacture a full line of traditional vinyl windows at an approximately 200,000 square foot manufacturing facility located in Houston,Texas. The process begins by purchasing vinyl lineal extrusions. We cut these extrusions to size and join them together to form the window frame and sash. Wethen purchase sheet glass and cut it to size. We combine two pieces of identically shaped glass with a sealing compound to create a glass unit with improvedinsulating capability. We then insert the sealed glass unit and glaze it into the window frame and sash. The unit is completed when we install a balance to operatethe window and add a lock to secure the window in a closed position.Pre-hung Doors. We pre-hang interior and exterior doors at many of our locations. We insert door slabs and pre-cut door jambs into a door machine, whichbores holes into the doors for the door hardware and applies the jambs and hinges to the door slab. We then apply the casing that frames interior doors at a separatestation. Exterior doors do not have a casing, and instead may have sidelights applied to the sides of the door, a transom attached over the top of the door unit and adoor sill applied to the threshold.6 OUr StrAtEgyWe intend to build on our strong market positions and increase our sales and profits by pursuing the following strategies:Utilize our competitive strengths to capitalize on housing market recovery and growth As the U.S. housing market recovery continues, we intend to increase sales through our scale, product portfolio and structural efficiencies. Our Pro Segmenthomebuilding customers continue to emphasize the importance of competitive pricing, a broad product portfolio, sales force knowledge, on-site services andoverall “ease of use” of their building products suppliers. Our comprehensive product offering, experienced sales force and tenured senior management teamposition us well to capitalize on strong demand in the new home construction market as well as the repair and remodel segment. Our acquisition of ProBuild furtherdeveloped the suite of products and services we provide to our customers, in addition to substantially expanding our national footprint. This comprehensivenetwork of products, services and facilities provides a platform which we believe enhances our “one-stop-shop” strategy and more evenly distributes and promotesadditional “pull through” of our value added products. We believe that homebuilders will continue to place an increased value on these capabilities, which willfurther differentiate us from our competitors.Execute on identified cost saving strategies Our management has shown the capability to effectively and efficiently integrate newly acquired businesses, ramping up productivity and driving value.Prior to the ProBuild acquisition, we successfully integrated 33 acquisitions since 1998. These integration capabilities should enable us to achieve annual run ratecost savings of $100 to $120 million within two years of the close date of the ProBuild acquisition. We have realized approximately $74 million in 2016 and $10million in 2015 of the anticipated synergy cost savings. One-time costs to achieve these cost savings is estimated to be $90-$100 million, of which we incurredapproximately $28 million and $43 million in 2016 and 2015, respectively. The remainder of these costs are expected to be incurred in 2017.Maximize our share of wallet with individual customers across our service areasWe believe that Pro Segment customers will continue to consolidate the number of supplier relationships they utilize in the future. As a result, this willcreate the opportunity to win a greater share of wallet for remaining suppliers. By focusing on and developing our differentiated “one-stop-shop” strategy, whichincludes broadening our product mix, we will be able to offer a complete array of products and services that would otherwise need to be sourced from variousdistributors. Additionally, as the largest non-specialty distributor of building products, we will be capable of providing customers with a consistent partner onprojects regardless of where they are located. This operational platform often will make us a preferred distributor relationship for large scale national homebuilderswhile still providing value to local and custom homebuilders looking for assistance with product selection, on-site installation and project management.Continue to leverage strategic vendor relationshipsOur acquisition of ProBuild made us the largest non-specialty distributor in the Pro Segment. We believe we will be able to leverage this size and our stronghomebuilder relationships to provide our vendors access to a large customer base. We believe that our size, purchasing power, and strong financial position allowsus to negotiate favorable pricing (including back-end rebates), savings in procurement costs and to receive a higher priority with our vendors when product supplyis limited. We strive to continually enhance our role as a preferred partner for vendors and our size, strong liquidity position, and access to capital markets isexpected to mitigate natural credit concerns. Furthermore, our broad product portfolio includes a variety of higher-margin products, which we believe will enhanceour preferred partner status. This preferred status enables us to participate in mutually beneficial joint marketing programs with our vendors. These incrementalefficiencies in procurement provide an opportunity to pass on additional value to our customers. Optimize cash flow with highly scalable cost structureThrough the downturn we focused on standardizing processes and technology-based workflows to minimize costs, streamline our operations and enhanceworking capital efficiency. Significant investments in our technology infrastructure and reengineering of our business processes enabled us to centralize manycorporate and field tasks. This standardization helps us to optimize our cost structure, allows our centralized operating team to make better purchasing and pricingdecisions based on an accurate, up-to-the-minute understanding of costs and trends, and enables us to redeploy capital more strategically. We believe that theseefficiencies will drive enhanced profit margins and cash flow conversion across our entire platform as we continue to grow with improving market conditions.7 SAlES And mArKEtingWe seek to attract and retain customers through exceptional customer service, leading product quality, broad product and service offerings, and competitivepricing. This strategy is centered on building and maintaining strong customer relationships rather than traditional marketing and advertising. We strive to addvalue for the homebuilders through shorter lead times, lower material costs, faster project completion and higher quality. By executing this strategy, we believe wewill continue to generate new business.Our experienced, locally focused sales force is at the core of our sales effort. This sales effort involves deploying salespeople who are skilled in housingconstruction to meet with a homebuilder’s construction superintendent, local purchasing agent, or local executive with the goal of becoming their primary productsupplier. If selected by the homebuilder, the salesperson and his or her team review blueprints for the contracted homes and advise the homebuilder in areas such asopportunities for cost reduction, increased energy efficiencies, and regional aesthetic preferences. Next, the team determines the specific package of products thatare needed to complete the project and schedules a sequence of site deliveries. Our large delivery fleet and comprehensive inventory management systems enableus to provide “just-in-time” product delivery, ensuring a smoother and faster production cycle for the homebuilder. Throughout the construction process, thesalesperson makes frequent site visits to ensure timely delivery and proper installation and to make suggestions for efficiency improvements. We believe this levelof service is highly valued by our customers and generates significant customer loyalty. At December 31, 2016, we employed approximately 1,700 salesrepresentatives, who are typically paid a commission based on gross margin dollars collected and work with approximately 1,400 sales coordinators and productspecialists.BACKlOgDue to the nature of our business, backlog information is not meaningful. While our customers may provide an estimate of their future needs, in most caseswe do not receive a firm order from them until just prior to the anticipated delivery dates. Accordingly, in many cases the time frame from receipt of a firm order toshipment does not exceed a few days.mAtEriAlS And SUPPliEr rElAtiOnSHiPSWe purchase inventory primarily for distribution, some of which is also utilized in our manufacturing plants. The key materials we purchase includedimensional lumber, plywood, OSB, engineered wood, windows, doors, and millwork. Our largest suppliers are national companies such as WeyerhaeuserCompany, Boise Cascade Company, Canfor Corporation, Norbord, Inc., James Hardie Industries plc, National Gypsum Company, PlyGem Holdings, Inc., M IWindows and Doors, Inc., Andersen Corporation, Masonite International Corporation and JELD-WEN Inc. We believe there is sufficient supply in themarketplace to competitively source most of our requirements without reliance on any particular supplier and that our diversity of suppliers affords us purchasingflexibility. Due to our centralized procurement platform for commodity wood products and corporate oversight of purchasing programs we believe we are betterable to maximize the advantages of both our and our suppliers’ broad geographic footprints and negotiate purchases across multiple markets to achieve morefavorable contracts with respect to price, terms of sale, and supply than our regional competitors. Additionally, for certain customers, we institute purchasingprograms on commodity wood products such as OSB and lumber to align portions of our procurement costs with our customer pricing commitments. We balanceour OSB and lumber purchases with a mix of contract and spot market purchases to ensure consistent supply of product necessary to fulfill customer contracts, tosource products at the lowest possible cost, and to minimize our exposure to the volatility of commodity lumber prices.We currently source products from approximately 6,000 suppliers in order to reduce our dependence on any single company and to maximize purchasingleverage. Although no purchases from any single supplier represented more than 7% of our total materials purchases for the year ended December 31, 2016, webelieve we are one of the largest customers for many suppliers, and therefore have significant purchasing leverage. We have found that using multiple suppliersensures a stable source of products and the best purchasing terms as the suppliers compete to gain and maintain our business.We maintain strong relationships with our suppliers, and we believe opportunities exist to improve purchasing terms in the future, including inventorystorage or “just-in-time” delivery to reduce our inventory carrying costs. We will continue to pursue additional procurement cost savings and purchasing synergieswhich would further enhance our margins and cash flow.8 COmPEtitiOnWe compete in the Pro Segment of the U.S. residential building products supply market. We have and will continue to experience competition forhomebuilder business due to the highly fragmented nature of the Pro Segment. Most of our competitors in the Pro Segment are small, privately held localbusinesses. Most of these companies have limited access to capital and lack sophisticated information technology systems and large-scale procurement capabilities.We believe we have substantial competitive advantages over these smaller competitors due to our long-standing customer relationships, local market knowledgeand competitive pricing. Our largest competitors in our markets include 84 Lumber Co., which is privately held, as well as BMC Stock Holdings, Inc., which ispublicly held.Our customers primarily consist of professional homebuilders and those that provide construction services to them, with whom we focus on developingstrong relationships. The principal methods of competition in the Pro Segment are the development of long-term relationships with professional builders andretaining such customers by (i) delivering a full range of high-quality products on time, and (ii) offering trade credit, competitive pricing, flexibility in transactionprocessing, and integrated service and product packages, such as turn-key framing and shell construction, as well as manufactured components and installation. Ourleading market positions in the highly competitive Pro Segment create economies of scale that allow us to cost-effectively supply our customers, which bothenhances profitability and reduces the risk of losing customers to competitors.EmPlOyEESAt December 31, 2016, we had approximately 14,000 full-time equivalent employees. Approximately 2% of the workforce at our company are members often different unions. We believe that we have good relations with our employees.inFOrmAtiOn tECHnOlOgy SyStEmSOur operations are dependent upon our information technology systems, which encompass all of our major business functions. Our primary enterpriseresource planning (“ERP”) system, which we currently use for approximately half of our operations, is a proprietary system that has been highly customized by ourcomputer programmers. The materials required for thousands of standard builder plans are stored by the system for rapid quoting or order entry. Hundreds of pricelists are maintained on thousands of SKUs, facilitating rapid price changes in a changing product cost environment. A customer’s order can be tracked at each stageof the process and billing can be customized to reduce a customer’s administrative costs and speed payment.We have a customized financial reporting system which consolidates financial, sales and workforce data from our ERP systems and our human resourceinformation system (“HRIS”). This technology platform provides management with robust corporate and location level performance management by leveragingstandardized metrics and analytics allowing us to plan, track and report performance and compensation measures.We have developed a proprietary program for use in our component plants. This software reviews product designs for errors, schedules the plants andprovides the data used to measure plant efficiency. In addition, we have purchased several software products that have been integrated with our primary ERPsystem. These programs assist in analyzing blueprints to generate material lists and in purchasing lumber products at the lowest cost.ProBuild maintained multiple ERP systems to manage its operations. We are in the process of integrating the legacy ProBuild information technologysystems with ours, which we expect will be a multi-year process. Our initial area of focus has been where we have operations within the same geographic market.Once overlapping markets have been addressed, we will begin integration of the broader geographic footprint of our company.SEASOnAlity And OtHEr FACtOrSOur first and fourth quarters have historically been, and are generally expected to continue to be, adversely affected by weather causing reducedconstruction activity during these quarters. In addition, quarterly results historically have reflected, and are expected to continue to reflect, fluctuations from periodto period arising from the following: •The volatility of lumber prices; •The cyclical nature of the homebuilding industry; •General economic conditions in the markets in which we compete; •The pricing policies of our competitors;9 •The production schedules of our customers; and •The effects of weather.The composition and level of working capital typically change during periods of increasing sales as we carry more inventory and receivables. Workingcapital levels typically increase in the second and third quarters of the year due to higher sales during the peak residential construction season. These increases havein the past resulted in negative operating cash flows during this peak season, which historically have been financed through available cash and our borrowingavailability under credit facilities. Collection of receivables and reduction in inventory levels following the peak building and construction season have in the pastpositively impacted cash flow.AvAilABlE inFOrmAtiOnWe are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith, we file reports, proxyand information statements and other information with the Securities and Exchange Commission (“SEC”). Our annual reports on Form 10-K, quarterly reports onForm 10-Q, current reports on Form 8-K, proxy and information statements and other information and amendments to those reports filed or furnished pursuant toSection 13(a) or 15(d) of the Securities Exchange Act of 1934 are available through the investor relations section of our website under the links to “FinancialInformation.” Our Internet address is www.bldr.com. Reports are available on our website free of charge as soon as reasonably practicable after we electronicallyfile them with, or furnish them to, the SEC. In addition, our officers and directors file with the SEC initial statements of beneficial ownership and statements ofchange in beneficial ownership of our securities, which are also available on our website at the same location. We are not including this or any other information onour website as a part of, nor incorporating it by reference into, this Form 10-K or any of our other SEC filings.In addition to our website, you may read and copy public reports we file with or furnish to the SEC at the SEC’s Public Reference Room at 100 F Street,N.E., Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SECmaintains an Internet site that contains our reports, proxy and information statements, and other information that we electronically file with, or furnish to, the SECat www.sec.gov.ExECUtivE OFFiCErSFloyd F. Sherman, Chief Executive Officer and Director, age 77. Mr. Sherman has been our Chief Executive Officer and a director since 2001, when hejoined the Company. He served as President of the Company from 2001 until October 2006 and also served from February 2008 until November 2014. Prior tojoining the Company, he spent 28 years at Triangle Pacific/Armstrong Flooring, the last nine of which he served as Chairman and Chief Executive Officer.Mr. Sherman is currently a director of PGT, Inc. Mr. Sherman has over 40 years of experience in the building products industry. A native of Kerhonkson, NewYork and a veteran of the U.S. Army, Mr. Sherman is a graduate of the New York State College of Forestry at Syracuse University. He also holds an M.B.A.degree from Georgia State University.M. Chad Crow, President and Chief Operating Officer, age 48. Mr. Crow joined the Company in September 1999 as Assistant Controller. He served asVice President – Controller of the Company from May 2000 and was promoted to Senior Vice President and Chief Financial Officer in November 2009. InNovember 2014, he was appointed to the position of President, Chief Operating Officer and Chief Financial Officer. Mr. Crow continued in his position asPresident and Chief Operating Officer when Mr. Jackson joined the Company as Senior Vice President and Chief Financial Officer in November 2016. Prior tojoining the Company, Mr. Crow served in a variety of positions at Pier One Imports. Mr. Crow also has five years of public accounting experience with PriceWaterhouse LLP. Mr. Crow is a C.P.A. and received his B.B.A. degree from Texas Tech University.Donald F. McAleenan, Senior Vice President and General Counsel, age 62. Mr. McAleenan has served as Senior Vice President and General Counsel ofthe Company since 1998. Prior to joining the Company, Mr. McAleenan served as Vice President and Deputy General Counsel of Fibreboard Corporation from1992 to 1997. Mr. McAleenan was also Assistant General Counsel of AT&E Corporation and spent nine years as a securities lawyer at two New York City lawfirms. Mr. McAleenan has a B.S. from Georgetown University and a J.D. from New York University Law School.Morris E. Tolly, Senior Vice President — Operations, age 73. Mr. Tolly has served as Senior Vice President — Operations of the Company sinceJanuary 25, 2007. Mr. Tolly has been with Builders FirstSource since 1998 when the Company acquired Pelican Companies, Inc. (“Pelican”) and has over 40 yearsof experience in the building products industry. He served in a myriad of roles at Pelican, including sales, Sales Manager and General Manager. Mr. Tolly was anArea Vice President responsible for 12 locations at the time of Pelican’s acquisition. In 2000, he was promoted to President of the company’s Southeast Group,with responsibility for 48 locations.10 Peter M. Jackson, Senior Vice President and Chief Financial Officer, age 45. Mr. Jackson joined the Company on November 4, 2016 as Senior VicePresident and Chief Financial Officer. Prior to joining the Company, Mr. Jackson was employed by Lennox Interna tional, Inc. (“Lennox”), which manufacturesand markets a broad range of heating, ventilation, air conditioning, and refrigeration products. Since July 2014, Mr. Jackson had served as Vice President and CFOof Lennox’s Refrigeration Segment. From March 2 013 to June 2014, he was Vice President, Finance - Financial Planning and Analysis and Mergers andAcquisitions for Lennox. He also served as Vice President and Chief Financial Officer of Lennox’s Residential Heating and Cooling Segment from 2007 until 2013. Before joining Lennox, Mr. Jackson served in multiple financial leadership positions at SPX Corporation, General Electric, and Gerber Scientific. Mr. Jacksonis a certified public accountant and a graduate of General Electric’s Experienced Financial Leadership program. He holds an M.B.A. degree from RensselaerPolytechnic Institute and a B.S. from Bryant University.item 1A. Risk FactorsRisks associated with our business, an investment in our securities, and with achieving the forward-looking statements contained in this report or in ournews releases, websites, public filings, investor and analyst conferences or elsewhere, include, but are not limited to, the risk factors described below. Any of therisk factors described below could cause our actual results to differ materially from expectations and could have a material adverse effect on our business, financialcondition or operating results. We may not succeed in addressing these challenges and risks.the industry in which we operate is dependent upon the residential homebuilding industry, as well as the U.S. economy, the credit markets and otherimportant factors.The building products industry is highly dependent on new home and multifamily construction, which in turn are dependent upon a number of factors,including interest rates, consumer confidence, employment rates, foreclosure rates, housing inventory levels and occupancy, housing demand and the health of theU.S. economy and mortgage markets. Unfavorable changes in demographics, credit markets, consumer confidence, housing affordability, or housing inventorylevels and occupancy, or a weakening of the U.S. economy or of any regional or local economy in which we operate could adversely affect consumer spending,result in decreased demand for our products, and adversely affect our business. Production of new homes and multifamily buildings may also decline because ofshortages of qualified tradesmen, reliance on inadequately capitalized builders and sub-contractors, and shortages of suitable building lots and material. Thehomebuilding industry is currently experiencing a shortage of qualified, trained labor in many areas, including those served by us. In addition, the building industryis subject to various local, state, and federal statutes, ordinances, and regulations concerning zoning, building design and safety, construction, energy and waterconservation and similar matters, including regulations that impose restrictive zoning and density requirements in order to limit the number of homes that can bebuilt within the boundaries of a particular area or in order to maintain certain areas as primarily or exclusively residential. Regulatory restrictions may increase ouroperating expenses and limit the availability of suitable building lots for our customers, which could negatively affect our sales and earnings. Because we havesubstantial fixed costs, relatively modest declines in our customers’ production levels could have a significant adverse effect on our financial condition, operatingresults and cash flows.The homebuilding industry is still recovering from a significant downturn that began in mid-2006 and began to stabilize in late 2011. Housing andremodeling activity has steadily strengthened since then. In 2016, U.S. homebuilding activity increased to approximately 781,500 single-family starts although itremains well below the historical average (from 1959 through 2016) of approximately 1.0 million single-family starts per year. According to the U.S. CensusBureau, actual U.S. single family housing starts in the U.S. during 2016 were 46.7% lower than in 2006. We believe that the slow recovery of the housing market isdue to a variety of factors including: a severe economic recession, followed by a gradual economic recovery; limited credit availability; shortages of suitablebuilding lots in many regions; shortages of experienced labor; rising home prices in many markets resulting in affordability issues for potential buyers; and softhousing demand in certain markets. The downturn in the homebuilding industry resulted in a substantial reduction in demand for our products and services.During the downturn mortgage financing and commercial credit for smaller homebuilders was severely constrained and continues to slow a recovery in ourindustry despite some recent improvement. Since the housing industry is dependent upon the economy as well as potential homebuyers’ access to mortgagefinancing and homebuilders’ access to commercial credit, it is likely that the housing industry will not fully recover until conditions in the economy and the creditmarkets further improve.11 the building supply industry is cyclical and seasonal.The building products supply industry is subject to cyclical market pressures. Prices of building products are subject to fluctuations arising from changes insupply and demand, national and international economic conditions, labor costs, competition, market speculation, government regulation, and trade policies, as wellas from periodic delays in the delivery of lumber and other products. For example, prices of wood products, including lumber and panel products, are subject tosignificant volatility and directly affect our sales and earnings. In particular, low prices for wood products over a sustained period can adversely affect our financialcondition, operating results and cash flows, as can excessive spikes in prices. Our lumber and lumber sheet goods product category represented 33.5% of total salesfor the year ended December 31, 2016. We have limited ability to manage the timing and amount of pricing changes for building products. In addition, the supplyof building products fluctuates based on available manufacturing capacity. A shortage of capacity or excess capacity in the industry can result in significantincreases or declines in prices for those building products, often within a short period of time. Such price fluctuations can adversely affect our financial condition,operating results and cash flows.In addition, although weather patterns affect our operating results throughout the year, adverse weather historically has reduced construction activity in thefirst and fourth quarters in the regions where we operate. To the extent that hurricanes, severe storms, floods, other natural disasters or similar events occur in theregions in which we operate, our business may be adversely affected. We anticipate that fluctuations from period to period will continue in the future.Our industry is highly fragmented and competitive, and increased competitive pressure may adversely affect our results.The building products supply industry is highly fragmented and competitive. We face, and will continue to face, significant competition from local andregional building materials chains, as well as from privately-owned single site enterprises. Any of these competitors may (1) foresee the course of marketdevelopment more accurately than we do, (2) develop products that are superior to our products, (3) have the ability to produce or supply similar products at alower cost, (4) develop stronger relationships with local homebuilders or commercial builders, (5) adapt more quickly to new technologies or evolving customerrequirements than we do, or (6) have access to financing on more favorable terms than we can obtain in the market. As a result, we may not be able to competesuccessfully with them. In addition, home center retailers, which have historically concentrated their sales efforts on retail consumers and small contractors, haveintensified their marketing efforts to professional homebuilders in recent years and may continue to intensify these efforts in the future. Furthermore, certainproduct manufacturers sell and distribute their products directly to production homebuilders or commercial builders. The volume of such direct sales could increasein the future. Additionally, manufacturers of products distributed by us may elect to sell and distribute directly to homebuilders or commercial builders in the futureor enter into exclusive supplier arrangements with other distributors. Consolidation of production homebuilders or commercial builders may result in increasedcompetition for their business. Finally, we may not be able to maintain our operating costs or product prices at a level sufficiently low for us to compete effectively.If we are unable to compete effectively, our financial condition, operating results and cash flows may be adversely affected.We are subject to competitive pricing pressure from our customers.Production homebuilders and multi-family builders historically have exerted and will continue to exert significant pressure on their outside suppliers to keepprices low because of their market share and their ability to leverage such market share in the highly fragmented building products supply industry. The housingindustry downturn and its aftermath have resulted in significantly increased pricing pressures from production homebuilders and other customers. Over the past fewyears, these pricing pressures have adversely affected our operating results and cash flows. In addition, continued consolidation among production homebuilders orcommercial builders, and changes in production homebuilders’ or commercial builders’ purchasing policies or payment practices, could result in additional pricingpressure, and our financial condition, operating results and cash flows may be adversely affected.Our level of indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in theeconomy or our industry, and prevent us from meeting our obligations under our debt instruments .As of December 31, 2016, our debt totaled $1,831.2 million, including $246.0 million of lease finance obligations and capital lease obligations. We alsohave an $800 million senior secured revolving credit facility (“2015 facility”). As of December 31, 2016, we had $84.8 million of letters of credit outstanding underthe 2015 facility. There were no outstanding borrowings under the 2015 facility as of December 31, 2016. In addition, we have significant obligations underongoing operating leases that are not reflected on our balance sheet.12 Our substantial debt could have important consequences to us, including: •increasing our vulnerability to general economic and industry conditions; •requiring a substantial portion of our operating cash flow to be dedicated to the payment of principal and interest on our indebtedness, thereforereducing our liquidity and our ability to use our cash flow to fund our operations, capital expenditures, and future business opportunities; •exposing us to the risk of increased interest rates, and corresponding increased interest expense, because borrowings under the 2015 facility and the$600.0 million term loan credit agreement (“2015 term loan”) are at variable rates of interest; •limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions, and generalcorporate or other purposes; •limiting our ability to adjust to changing marketplace conditions and placing us at a competitive disadvantage compared to our competitors who mayhave less debt. •limiting our attractiveness as an investment opportunity for potential investors.In addition, some of our debt instruments, including those governing the 2015 facility, the 2015 term loan, the 10.75% senior unsecured notes due 2023(“2023 notes”) and the 5.625% senior secured notes due 2024 (“2024 notes”), contain cross-default provisions that could result in our debt being declaredimmediately due and payable under a number of debt instruments, even if we default on only one debt instrument. In such event, it is unlikely that we would beable to satisfy our obligations under all of such accelerated indebtedness simultaneously.Our financial condition and operating performance including that of our subsidiaries are also subject to prevailing economic and competitive conditions andto certain financial, business and other factors beyond our control. There are no assurances that we will maintain a level of liquidity sufficient to permit us to paythe principal, premium and interest on our 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, sellassets, seek additional capital, or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet ourscheduled debt service obligations. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required todispose of material assets or operations in an effort to meet our debt service and other obligations. The agreements governing the 2015 facility and the 2015 termloan and the indentures governing our 2023 notes and our 2024 notes restrict our ability to dispose of assets and to use the proceeds from such dispositions. Wemay not be able to consummate those dispositions or be able to obtain the proceeds that we could realize from them, and these proceeds may not be adequate tomeet any debt service obligations then due.We may have future capital needs and may not be able to obtain additional financing on acceptable terms.We are substantially reliant on cash on hand and borrowing availability under the 2015 facility, which totaled $681.6 million at December 31, 2016, toprovide working capital and fund our operations. Our working capital requirements are likely to grow assuming the housing industry improves. Our inability torenew, amend or replace the 2015 facility, the 2015 term loan, the 2023 notes or the 2024 notes when required or when business conditions warrant could have amaterial adverse effect on our business, financial condition and results of operations.Economic and credit market conditions, the performance of our industry, and our financial performance, as well as other factors, may constrain ourfinancing abilities. Our ability to secure additional financing, if available, and to satisfy our financial obligations under indebtedness outstanding from time to timewill depend upon our future operating performance, the availability of credit, economic conditions and financial, business and other factors, many of which arebeyond our control. Any worsening of current housing market conditions or the macroeconomic factors that affect our industry could require us to seek additionalcapital and have a material adverse effect on our ability to secure such capital on favorable terms, if at all.We may be unable to secure additional financing, financing on favorable terms or our operating cash flow may be insufficient to satisfy our financialobligations under indebtedness outstanding from time to time, including the 2015 facility, the 2015 term loan, the 2023 notes and the 2024 notes. The agreementsgoverning the 2015 facility and the 2015 term loan and the indentures governing the 2023 notes and the 2024 notes, moreover, restrict the amount of permittedindebtedness allowed. In addition, if financing is not available when needed, or is available on unfavorable terms, we may be unable to take advantage of businessopportunities, including potential acquisitions, or respond to competitive pressures, any of which could have a material adverse effect on our business, financialcondition, and results of operations. If additional funds are raised through the issuance of additional equity or convertible debt securities, our stockholders mayexperience significant dilution.13 We m ay incur additional indebtedness.We may incur additional indebtedness in the future, including collateralized debt, subject to the restrictions contained in the agreements governing the 2015facility and the 2015 term loan and the indentures governing the 2023 notes and the 2024 notes. If new debt is added to our current debt levels, the related risks thatwe now face could intensify.Our debt instruments contain various covenants that limit our ability to operate our business.Our financing arrangements, including the agreements governing the 2015 facility and the 2015 term loan and the indentures governing the 2023 notes andthe 2024 notes, contain various provisions that limit our ability to, among other things: •transfer or sell assets, including the equity interests of our restricted subsidiaries, or use asset sale proceeds; •incur additional debt; •pay dividends or distributions on our capital stock or repurchase our capital stock; •make certain restricted payments or investments; •create liens to secure debt; •enter into transactions with affiliates; •merge or consolidate with another company or continue to receive the benefits of these financing arrangements under a “change in control” scenario(as defined in those agreements); and •engage in unrelated business activities.The agreement governing the 2015 facility contains a financial covenant requiring the satisfaction of a minimum fixed charge coverage ratio of 1.00 to 1.00if our excess availability falls below the greater of $80.0 million or 10% of the maximum borrowing amount. As of December 31, 2016, our excess availability was$667.2 million. We do not anticipate excess availability falling below $80.0 million in 2017.These provisions may restrict our ability to expand or fully pursue our business strategies. Our ability to comply with the agreements governing the 2015facility and the 2015 term loan and the indentures governing the 2023 notes and the 2024 notes may be affected by changes in our operating and financialperformance, changes in general business and economic conditions, adverse regulatory developments, a change in control or other events beyond our control. Thebreach of any of these provisions, including those contained in the 2015 facility and the 2015 term loan and the indentures governing the 2023 notes and the 2024notes, could result in a default under our indebtedness, which could cause those and other obligations to become due and payable. If any of our indebtedness isaccelerated, we may not be able to repay it.in connection with the ProBuild acquisition, we incurred significant additional indebtedness which could adversely affect us, including by decreasing ourbusiness flexibility, and increased our interest expense.Our consolidated indebtedness as of December 31, 2016 was approximately $1,831.2 million. We substantially increased our indebtedness in connectionwith the ProBuild acquisition, which has increased our interest expense and could have the effect of, among other things, reducing our flexibility to respond tochanging business and economic conditions.The amount of cash required to pay interest on our increased indebtedness level puts greater demands on our cash resources. The increased levels ofindebtedness could also reduce funds available for working capital, capital expenditures, acquisitions and other general corporate purposes and may createcompetitive disadvantages for us relative to other companies with lower debt levels. If we do not achieve the expected benefits and cost savings from the ProBuildacquisition, or if the financial performance of the combined company does not meet current expectations, then our ability to service our indebtedness may beadversely impacted.Moreover, we may be required to raise substantial additional financing to fund working capital, capital expenditures, acquisitions or other general corporaterequirements. Our ability to arrange additional financing or refinancing will depend on, among other factors, our financial position and performance, as well asprevailing market conditions and other factors beyond our control. We cannot assure you that we will be able to obtain additional financing or refinancing on termsacceptable to us or at all.14 Our variable rate indebtedness subjects us to interest rate ri sk, which could cause our indebtedness service obligations to increase significantly.Interest rates may increase in the future. As a result, interest rates on our 2015 facility and our 2015 term loan could be higher or lower than currentlevels. As of December 31, 2016, we had approximately $467.7 million, or 25.5%, of our outstanding debt at variable interest rates. If interest rates increase, ourdebt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows,including cash available for servicing our indebtedness, would correspondingly decrease. At December 31, 2016, a 1.0% increase in interest rates on the 2015 termloan would, subject to the interest rate floor specified in the agreement, result in approximately $3.6 million in additional interest expense annually. At December31, 2016, a 1.0% increase in interest rates on the 2015 facility would result in no additional interest expense annually as we had no outstanding borrowings. The2015 facility also assesses variable commitment and outstanding letter of credit fees based on quarterly average loan utilization.the agreements that govern our indebtedness contain various covenants that impose restrictions on us and certain of our subsidiaries that may affect ourability to operate our businesses.The agreements that govern our indebtedness contain various affirmative and negative covenants that may, subject to certain significant exceptions, restrictthe ability of us and certain of our subsidiaries to, among other things, have liens on our property, and/or merge or consolidate with any other person or sell orconvey certain of our assets to any one person. The ability of us and our subsidiaries to comply with these provisions may be affected by events beyond our control.Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could accelerate our repayment obligations.Concluding the integration of Builders FirstSource and ProBuild may be more difficult, costly or time consuming than expected and the anticipatedadditional benefits and cost savings of the ProBuild acquisition may not be realized.We continue to assess additional synergies that we may realize as a consolidated company, the realization of which will depend on a number of factors. Thesuccess of the ProBuild acquisition, including expected additional benefits and cost savings, will depend, in part, on our ability to successfully conclude theintegration of the two businesses. It is possible that the integration process could result in the loss of key employees, higher than expected costs, diversion ofmanagement attention, the disruption of the combined company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies thatadversely affect the company’s ability to maintain relationships with customers, suppliers, vendors and employees or to achieve the expected additional benefitsand cost savings of the ProBuild acquisition. If we experience difficulties concluding the integration process, or if the operating or financial performance of thecombined company is less than we expect, we may forfeit some or all of the cost savings achieved to date, and the expected additional benefits and costs savings ofthe ProBuild acquisition may not be realized fully or at all, or may take longer to realize than expected. The integration planning and implementation process hasresulted and will continue to result in significant costs and diversion of management attention and resources. The integration process could have an adverse effecton the combined company for an undetermined period. Further, the actual additional cost savings of the ProBuild acquisition could be less than anticipated.We are continuing to incur significant costs in connection with the integration of ProBuild and we may not achieve all of the anticipated cost savings.We have incurred substantial fees and costs related to formulating and implementing integration plans, including facilities and systems consolidation costsand employment-related costs. At the time of the ProBuild acquisition in July 2015 we estimated these integration-related costs in the range of $90 to $100 millionover the two-year period following the closing. Through December 31, 2016, we had incurred approximately $71 million of integration-related costs. Theremainder of these costs are expected to be incurred in 2017. We continue to assess the magnitude of these costs, and additional unanticipated costs may beincurred in connection with the integration of the combined company’s businesses. Although we expect that the elimination of duplicative costs, as well as therealization of other efficiencies related to the integration of the businesses, should allow us to offset integration-related costs over time, this net benefit may not beachieved in the near term, or at all.the loss of any of our significant customers or a reduction in the quantity of products they purchase could affect our financial health.Our ten largest customers generated approximately 16.8% of our sales for the year ended December 31, 2016. We cannot guarantee that we will maintain orimprove our relationships with these customers or that we will supply these customers at historical levels. Due to the relatively weak housing market over the pastseveral years, many of our homebuilder customers substantially reduced their construction activity. Some homebuilder customers exited or severely curtailedbuilding activity in certain of our regions during the downturn and in subsequent years.15 In addition, production homebuilders, commercial builders and other customers may: (1) seek to purchase some of the products that we currently selldirectly from manufacturers, ( 2) elect to establish their own building products manufacturing and distribution facilities or (3) give advantages to manufacturing ordistribution intermediaries in which they have an economic stake. Continued consolidation among production homebuilders c ould also result in a loss of some ofour present customers to our competitors. The loss of one or more of our significant customers or deterioration in our relations with any of them could significantlyaffect our financial condition, operating results an d cash flows. Furthermore, our customers are not required to purchase any minimum amount of products fromus. The contracts into which we have entered with most of our professional customers typically provide that we supply particular products or services for a certainperiod of time when and if ordered by the customer. Should our customers purchase our products in significantly lower quantities than they have in the past, suchdecreased purchases could have a material adverse effect on our financial condit ion, operating results and cash flows.A range of factors may make our quarterly revenues and earnings variable.We have historically experienced, and in the future will continue to experience, variability in revenues and earnings on a quarterly basis. The factorsexpected to contribute to this variability include, among others: (1) the volatility of prices of lumber, wood products and other building products, (2) the cyclicalnature of the homebuilding industry, (3) general economic conditions in the various areas that we serve, (4) the intense competition in the industry, includingexpansion and growth strategies by competitors, (5) the production schedules of our customers, and (6) the effects of the weather. These factors, among others,make it difficult to project our operating results on a consistent basis, which may affect the price of our stock.Our continued success will depend on our ability to retain our key employees and to attract and retain new qualified employees.Our success depends in part on our ability to attract, hire, train and retain qualified managerial, operational, sales and other personnel. We face significantcompetition for these types of employees in our industry and from other industries. We may be unsuccessful in attracting and retaining the personnel we require toconduct and expand our operations successfully. In addition, key personnel may leave us and compete against us. Our success also depends to a significant extenton the continued service of our senior management team. We may be unsuccessful in replacing key managers who either resign or retire. The loss of any memberof our senior management team or other experienced senior employees could impair our ability to execute our business plan, cause us to lose customers and reduceour net sales, or lead to employee morale problems and/or the loss of other key employees. In any such event, our financial condition, operating results and cashflows could be adversely affected.Product shortages, loss of key suppliers, and our dependence on third-party suppliers and manufacturers could affect our financial health.Our ability to offer a wide variety of products to our customers is dependent upon our ability to obtain adequate product supply from manufacturers andother suppliers. Generally, our products are obtainable from various sources and in sufficient quantities. However, the loss of, or a substantial decrease in theavailability of, products from our suppliers or the loss of key supplier arrangements could adversely impact our financial condition, operating results, and cashflows.Although in many instances we have agreements with our suppliers, these agreements are generally terminable by either party on limited notice. Failure byour suppliers to continue to supply us with products on commercially reasonable terms, or at all, could put pressure on our operating margins or have a materialadverse effect on our financial condition, operating results and cash flows. Short-term changes in the cost of these materials, some of which are subject tosignificant fluctuations, are sometimes, but not always passed on to our customers. Our delayed ability to pass on material price increases to our customers couldadversely impact our financial condition, operating results and cash flows.if the housing market declines, we may be required to take impairment charges relating to our operations or temporarily idle or permanently close under-performing locations.If conditions in the housing industry deteriorate we may need to take goodwill and/or asset impairment charges relating to certain of our reporting units.Any such non-cash charges would have an adverse effect on our financial results. In addition, in response to industry conditions, we may have to temporarily idleor permanently close certain facilities in under-performing regions. Any such facility closures could have a significant adverse effect on our financial condition,operating results and cash flows.16 the nature of our business exposes us to product liability, product warr anty, casualty, construction defect, asbestos, vehicle and other claims and legalproceedings.We are involved in product liability, product warranty, casualty, construction defect, asbestos, vehicle and other claims relating to the products wemanufacture and distribute, and services we provide that, if adversely determined, could adversely affect our financial condition, operating results, and cash flows.We rely on manufacturers and other suppliers to provide us with many of the products we sell and distribute. Because we have no direct control over the quality ofsuch products manufactured or supplied by such third-party suppliers, we are exposed to risks relating to the quality of such products. In the fourth quarter of 2016,the Company has seen an increased occurrence of known and threatened legal claims, primarily related to construction defect type claims. We are also involved inseveral asbestos personal injury suits due to the alleged sale of asbestos-containing products by legacy businesses that we acquired. In addition, we are exposed topotential claims arising from the conduct of our respective employees and subcontractors, and builders and their subcontractors, for which we may be contractuallyliable. Although we currently maintain what we believe to be suitable and adequate insurance in excess of our self-insured amounts, there can be no assurance thatwe will be able to maintain such insurance on acceptable terms or that such insurance will provide adequate protection against potential liabilities. Product liability,product warranty, casualty, construction defect, asbestos, vehicle, and other claims can be expensive to defend and can divert the attention of management andother personnel for significant periods, regardless of the ultimate outcome. Claims of this nature could also have a negative impact on customer confidence in ourproducts and our company. In addition, we are involved on an ongoing basis in other types of legal proceedings. We cannot assure you that any current or futureclaims against us will not adversely affect our financial condition, operating results and cash flows.We occupy most of our facilities under long-term non-cancelable leases. We may be unable to renew leases at the end of their terms. if we close a facility,we are still obligated under the applicable lease.Most of our facilities are leased. Many of our leases are non-cancelable, typically have initial expiration terms ranging from five to 15 years and mostprovide options to renew for specified periods of time. We believe that leases we enter into in the future will likely be of the same terms (five to 15 years), will benon-cancelable and will feature similar renewal options. If we close or idle a facility we would remain committed to perform our obligations under the applicablelease, which would include, among other things, payment of the base rent, insurance, taxes and other expenses on the leased property for the balance of the leaseterm. Management may explore offsets to remaining obligations such as subleasing opportunities or negotiated lease terminations. During the period from 2007through 2016, we closed or idled a number of facilities for which we continue to remain liable. Our obligation to continue making rental payments with respect toleases for closed or idled facilities could have a material adverse effect on our business and results of operations. At the end of a lease term and any renewal periodfor a leased facility, for those locations where we have no renewal options remaining, we may be unable to renew the lease without additional cost, if at all. If weare unable to renew our facility leases, we may close or, if possible, relocate the facility, which could subject us to additional costs and risks which could have amaterial adverse effect on our business. Additionally, the revenue and profit generated at a relocated facility may not equal the revenue and profit generated at theformer operation.We are a holding company and conduct all of our operations through our subsidiaries.We are a holding company that derives all of our operating income from our subsidiaries. All of our assets are held by our direct and indirect subsidiaries.We rely on the earnings and cash flows of our subsidiaries, which are paid to us by our subsidiaries in the form of dividends and other payments or distributions, tomeet our debt service obligations. The ability of our subsidiaries to pay dividends or make other payments or distributions to us will depend on their respectiveoperating results and may be restricted by, among other things, the laws of their jurisdiction of organization (which may limit the amount of funds available for thepayment of dividends and other distributions to us), the terms of existing and future indebtedness and other agreements of our subsidiaries, the 2015 facility, the2015 term loan, the terms of the indentures governing the 2023 notes and the 2024 notes and the covenants of any future outstanding indebtedness we or oursubsidiaries incur.17 We may be adversely affected by any disruption in our respective information technology systems.Our operations are dependent upon our information technology systems, which encompass all of our major business functions. Our ProBuild subsidiarycurrently maintains multiple ERP systems to manage its operations. We plan to integrate ProBuild’s systems with ours over time and have commenced thatprocess. We may encounter significant operational disruptions and higher than expected costs in connection with such integration process, which could have amaterial adverse effect on our financial condition, operating results and cash flows. Our primary ERP system is a proprietary system that has been highlycustomized by our computer programmers. Our centralized financial reporting system currently draws data from our ERP systems. We rely upon our informationtechnology systems to manage and replenish inventory, to fill and ship customer orders on a timely basis, and to coordinate our sales activities across all of ourproducts and services. A substantial disruption in our information technology systems for any prolonged time period (arising from, for example, system capacitylimits from unexpected increases in our volume of business, outages, or delays in our service) could result in delays in receiving inventory and supplies or fillingcustomer orders and adversely affect our customer service and relationships. Our systems might be damaged or interrupted by natural or man-made events or bycomputer viruses, physical or electronic break-ins, or similar disruptions affecting the global Internet. There can be no assurance that such delays, problems, orassociated costs will not have a material adverse effect on our financial condition, operating results and cash flows.We are subject to cybersecurity risks and may incur increasing costs in an effort to minimize those risks.Our business employs systems that allow for the secure storage and transmission of customers’ proprietary information. Security breaches could expose usto a risk of loss or misuse of this information, litigation and potential liability. We may not have the resources or technical sophistication to anticipate or preventrapidly evolving types of cyber-attacks. Any compromise of our security could result in a violation of applicable privacy and other laws, significant legal andfinancial exposure, damage to our reputation and a loss of confidence in our security measures, which could harm our business. The regulatory environment relatedto information security and privacy is increasingly rigorous, with new and constantly changing requirements applicable to our business, and compliance with thoserequirements could result in additional costs. Our computer systems have been, and will likely continue to be, subjected to computer viruses or other maliciouscodes, unauthorized access attempts and cyber- or phishing-attacks. These events could compromise our confidential information, impede or interrupt our businessoperations, and may result in other negative consequences, including remediation costs, loss of revenue, litigation and reputational damage. To date, we have notexperienced a material breach of cybersecurity. As cyber-attacks become more sophisticated we may be required to incur significant costs to strengthen our systemsfrom outside intrusions and/or maintain insurance coverage related to the threat of such attacks. While we have implemented administrative and technical controlsand have taken other preventive actions to reduce the risk of cyber incidents and protect our information technology, they may be insufficient to prevent physicaland electronic break-ins, cyber-attacks or other security breaches to our computer systems.We are subject to payments-related risks that could increase our operating costs, expose us to fraud, subject us to potential liability and potentiallydisrupt our business.We accept payments using a variety of methods, including credit card, debit card, gift cards, direct debit from a customer’s bank account, consumerinvoicing, and physical bank checks, and we may offer different payment options over time. These payment options subject us to many compliance requirements,including, but not limited to, compliance with payment card association operating rules, including data security rules, certification requirements, rules governingelectronic funds transfers and Payment Card Industry Data Security Standards. They also subject us to potential fraud by criminal elements seeking to discover andtake advantage of security vulnerabilities that may exist in some of these payment systems. For certain payment methods, including credit and debit cards, we payinterchange and other fees, which may increase over time and raise our operating costs and lower profitability. We rely on third parties to provide paymentprocessing services, including the processing of credit and debit cards, and it could disrupt our business if these companies become unwilling or unable to providethese services to us. If we fail to comply with these rules or requirements, or if our data security systems are breached or compromised, we may be liable for cardissuing banks’ costs, subject to fines and higher transaction fees, and lose our ability to accept credit and debit card payments from our customers, processelectronic funds transfers, or facilitate other types of online payments, and our business and operating results could be adversely affected.We may be adversely affected by any natural or man-made disruptions to our distribution and manufacturing facilities.We currently maintain a broad network of distribution and manufacturing facilities throughout the U.S. Any widespread disruption to our facilities resultingfrom fire, earthquake, weather-related events, an act of terrorism or any other cause could damage a significant portion of our inventory and could materially impairour ability to distribute our products to customers. Moreover, we could incur significantly higher costs and longer lead times associated with distributing ourproducts to our customers during the time that it takes for us to reopen or replace a damaged facility. In addition, any shortages of fuel or significant fuel costincreases could disrupt our ability to distribute products to our customers. If any of these events were to occur, our financial condition, operating results and cashflows could be materially adversely affected.18 We may be unable to successfully implement our growth strategy, which includes increasing sales of our prefabricated components and other value-addedproducts, pursuing strategic acquisitions, opening new facilities and reducing our outstanding debt.Our long-term strategy depends in part on growing our sales of prefabricated components and other value-added products and increasing our market share.If any of these initiatives are not successful, or require extensive investment, our growth may be limited, and we may be unable to achieve or maintain expectedlevels of growth and profitability.Our long-term business plan also provides for continued growth through strategic acquisitions and organic growth through the construction of new facilitiesor the expansion of existing facilities. Failure to identify and acquire suitable acquisition candidates on appropriate terms could have a material adverse effect onour growth strategy. Moreover, reduced operating results during the historically slow economic recovery, our liquidity position, or the requirements of the 2015facility, the 2015 term loan or the indentures governing the 2023 notes and the 2024 notes, could prevent us from obtaining the capital required to effect newacquisitions or expansions of existing facilities. Our failure to make successful acquisitions or to build or expand needed facilities, including manufacturingfacilities, produce saleable product, or meet customer demand in a timely manner could adversely affect our financial condition, operating results, and cash flows Anegative impact on our financial condition, operating results and cash flows, or our decision to invest in strategic acquisitions or new facilities, could adverselyaffect our ability to reduce our substantial outstanding debt.In addition, although we have been successful in the past in integrating 33 acquisitions, we may not be able to fully integrate the operations of ProBuild orany future acquired businesses with our own in an efficient and cost-effective manner or without significant disruption to our or ProBuild’s existing operations.Moreover, acquisitions, including the ProBuild acquisition, involve significant risks and uncertainties, including uncertainties as to the future financial performanceof the acquired business, the achievement of expected synergies, difficulties integrating acquired personnel and corporate cultures into our business, the potentialloss of key employees, customers or suppliers, difficulties in integrating different computer and accounting systems, exposure to unforeseen liabilities of acquiredcompanies and the diversion of management attention and resources from existing operations. We may be unable to successfully complete potential acquisitionsdue to multiple factors, such as issues related to regulatory review of the proposed transactions. We may also be required to incur additional debt in order toconsummate acquisitions in the future. Potential new debt may be substantial and may limit our flexibility in using our cash flow from operations. Our failure tofully integrate ProBuild’s business or future acquired businesses effectively or to manage other consequences of our acquisitions, including increased indebtedness,could prevent us from remaining competitive and, ultimately, could adversely affect our financial condition, operating results and cash flows.Federal, state, local and other regulations could impose substantial costs and/or restrictions on our operations that would reduce our net income.We are subject to various federal, state, local and other regulations, including, among other things, regulations promulgated by the Department ofTransportation and applicable to our fleet of delivery trucks, work safety regulations promulgated by the Department of Labor’s Occupational Safety and HealthAdministration, employment regulations promulgated by the United States Equal Employment Opportunity Commission, accounting standards issued by theFinancial Accounting Standards Board (“FASB”) or similar entities, state and local regulations relating to our escrow business, and state and local zoningrestrictions and building codes. More burdensome regulatory requirements in these or other areas may increase our general and administrative costs and adverselyaffect our financial condition, operating results and cash flows. Moreover, failure to comply with the regulatory requirements applicable to our business couldexpose us to substantial penalties that could adversely affect our financial condition, operating results and cash flows.We are subject to potential exposure to environmental liabilities and are subject to environmental regulation.We are subject to various federal, state and local environmental laws, ordinances and regulations. Although we believe that our facilities are in materialcompliance with such laws, ordinances, and regulations, as owners and lessees of real property, we can be held liable for the investigation or remediation ofcontamination on such properties, in some circumstances, without regard to whether we knew of or were responsible for such contamination. No assurance can beprovided that remediation may not be required in the future as a result of spills or releases of petroleum products or hazardous substances, the discovery ofunknown environmental conditions, more stringent standards regarding existing residual contamination, or changes in legislation, laws, rules or regulations. Moreburdensome environmental regulatory requirements may increase our general and administrative costs and adversely affect our financial condition, operatingresults and cash flows.19 We may be adversely affected by uncertainty in the economy and financial markets, including as a result of terrorism or unrest in the middl e East,Europe or elsewhere.Instability in the economy and financial markets, including as a result of terrorism or unrest in the Middle East, Europe or elsewhere, may result in adecrease in housing starts, which would adversely affect our business. In addition, such unrest or related adverse developments, including a retaliatory militarystrike or terrorist attack, may cause unpredictable or unfavorable economic conditions and could have a material adverse effect on our financial condition, operatingresults, and cash flows. Any shortages of fuel or significant fuel cost increases related to geopolitical conditions could seriously disrupt our ability to distributeproducts to our customers. In addition, domestic terrorist attacks may affect our ability to keep our operations and services functioning properly and could have amaterial adverse effect on our financial condition, operating results and cash flows.Some Company Employees are Unionized.Approximately 2% of the workforce at our company are members of ten different unions. There can be no assurance that additional employees of ourcompany will not conduct union organization campaigns or become union members in the future. the ownership position of affiliates of Jll Partners, inc. limits other stockholders’ ability to influence corporate matters.Affiliates of JLL Partners, Inc. (“JLL”) owned approximately 21.8% of our outstanding common stock as of December 31, 2016. Two of our eight directorshold positions with affiliates of JLL. Accordingly, JLL has significant influence over our management and affairs and over all matters requiring stockholderapproval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets. This ownershipposition limits other stockholders’ ability to influence corporate matters and, as a result, we may take actions that some of our stockholders do not view asbeneficial. Additionally, JLL is in the business of making investments in companies and may, from time to time, acquire and hold interests in businesses thatcompete directly or indirectly with us. These entities may also pursue, for their own accounts, acquisition opportunities that may be complementary to our business,and, as a result, those acquisition opportunities may not be available to us. Further, certain provisions of our amended and restated certificate of incorporation andamended and restated bylaws may limit your ability to influence corporate matters, and, as a result, we may take actions that some of our stockholders do not viewas beneficial.If JLL were to sell a large portion of its ownership position the Company could experience a Section 382 Ownership Change, which is described more fullyin Note 12 to the consolidated financial statements included in Item 8 of this annual report on Form 10-K. If the Company were to experience a Section 382Ownership change annual limitations would be imposed on certain of the Company’s tax attributes, including net operating loss and capital loss carryforwards, andcertain other losses, credits, deductions or tax basis.the trading price of our common stock has been and may continue to be subject to wide fluctuations.Between January 1, 2016 and December 31, 2016, the price of our common stock on the NASDAQ ranged from $6.50 to $14.09 per share. Our stock pricemay fluctuate in response to a number of events and factors, including those described in this “Risk Factors” section. Additionally, our substantial indebtednessmay hinder the demand for our common stock, which could have a material adverse effect on the market price of our common stock.the price of our common stock is volatile and may decline.The market price of our common stock historically has experienced and may continue to experience significant price fluctuations similar to thoseexperienced by the broader stock market in recent years. In addition, the price of our common stock may fluctuate significantly in response to various factors,including: •actual or anticipated fluctuations in our results of operations; •announcements by us or our competitors of significant business developments, changes in customer relationships, acquisitions, or expansion plans; •changes in the prices of products we sell; •involvement in litigation; •our sale of common stock or other securities in the future; •market conditions in our industry; •changes in key personnel; •changes in market valuation or earnings of our competitors;20 •the trading volume of our common stock; •changes in the estimation of the future size and growth rate of our markets; and •general economic and market conditions; Broad market and industry factors may materially harm the market price of our common stock, regardless of our operating performance. In the past,following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against that company.If we were involved in any similar litigation we could incur substantial costs and our management’s attention and resources could be diverted, which couldadversely affect our financial condition, results of operations and cash flows. As a result, it may be difficult for you to resell your shares of common stock in thefuture.Significant sales of our common stock, or the perception that significant sales may occur in the future, could adversely affect the market price of ourcommon stock.The sale of substantial amounts of our common stock could adversely affect the price of our common stock. Sales of substantial amounts of our commonstock in the public market, and the availability of shares for future sale, including 3.5 million shares of our common stock issuable as of December 31, 2016, uponexercise of outstanding vested and unvested options to acquire shares of our common stock and through the conversion of 2.2 million restricted stock units underour stock incentive plans could adversely affect the prevailing market price of our common stock and could cause the market price of our common stock to remainlow for a substantial time. Additional stock grants may also be made under our incentive plans, including our 2014 Incentive Plan, as it may be amended. Further,affiliates of JLL own approximately 21.8% of our outstanding common stock as of December 31, 2016, and may sell shares of our common stock in the future. Wecannot foresee the effect of such potential sales on the market, but it is possible that if a significant percentage of such available shares were attempted to be soldwithin a short period of time, the market for our shares of common stock would be adversely affected. It is also unclear whether or not the market for our commonstock could absorb a large number of attempted sales in a short period of time, regardless of the price at which they might be offered. Even if a substantial numberof sales do not occur within a short period of time, the mere existence of this “market overhang” could have a negative effect on the market for our common stockand our ability to raise additional capital.We do not have any current plan to pay, and are restricted in our ability to pay, any dividends on our common stock, and as a result, your onlyopportunity to achieve a return on your investment in our common stock is if the price of our common stock increases.We anticipate that we will retain all future earnings and other cash resources for the future operation and development of our business. Accordingly, we donot intend to declare or pay regular cash dividends on our common stock in the near future. Payment of any future dividends will be at the discretion of our boardof directors after taking into account many factors, including our operating results, financial condition, current and anticipated cash needs and plans for expansion.The declaration and payment of any dividends on our common stock is also restricted by the terms of our outstanding indebtedness.item 1B. Unresolved Staff CommentsNone.item 2. PropertiesWe have a broad network of distribution and manufacturing facilities in 40 states throughout the U.S. Based on 2016 U.S. Census data, we have operationsin 75 of the top 100 U.S. Metropolitan Statistical Areas, as ranked by single family housing permits in 2016.Distribution centers typically include 10 to 15 acres of outside storage, a 45,000 square foot warehouse, 4,000 square feet of office space, and 15,000 squarefeet of covered storage. The outside area provides space for lumber storage and a staging area for delivery while the warehouse stores millwork, windows anddoors. The distribution centers are usually located in industrial areas with low cost real estate and easy access to freeways to maximize distribution efficiency andconvenience. Many of our distribution centers are situated on rail lines for efficient receipt of goods.Our manufacturing facilities produce trusses, wall panels, engineered wood, stairs, windows, pre-hung doors and custom millwork. In many cases, they arelocated on the same premises as our distribution facilities. Truss and panel manufacturing facilities21 vary in size from 30,000 square feet to 60,000 square feet with 8 to 10 acres of outside storage for lumber and for finished goods. Our window manufacturingfacility in Hous ton, Texas has approximately 200,000 square feet.We contractually lease 309 facilities and own 91 facilities. These leases typically have an initial operating lease term of 5 to 15 years and most provideoptions to renew for specified periods of time. A majority of our leases provide for fixed annual rentals. Certain of our leases include provisions for escalating rent,as an example, based on changes in the consumer price index. Most of the leases require us to pay taxes, insurance and common area maintenance expensesassociated with the properties. As described in Note 8 to the consolidated financial statements included in Item 8 of this annual report on Form 10-K, 150 of ourleased facilities are subject to a sales-lease back transaction that is accounted for in our financial statements as owned assets with offsetting lease financingobligations.We operate a fleet of approximately 10,700 rolling stock units, which primarily includes forklifts, trailers and approximately 4,600 trucks to deliverproducts from our distribution and manufacturing centers to our customer’s job sites. Through our emphasis on local market flexibility and strategically placedlocations, we minimize shipping and freight costs while maintaining a high degree of local market expertise. Through knowledge of local homebuilder needs,customer coordination and rapid restocking ability, we reduce working capital requirements and guard against out-of-stock products. We believe that this reliabilityis highly valued by our customers and reinforces customer relationships.item 3. Legal ProceedingsWe are involved in various claims and lawsuits incidental to the conduct of our business in the ordinary course. We carry insurance coverage in suchamounts in excess of our self-insured retention as we believe to be reasonable under the circumstances, but such insurance does not cover all of our liabilities inrespect of most claims and lawsuits. We do not believe that the ultimate resolution of these matters will have a material adverse effect on our consolidated financialposition, cash flows or operating results.Although our business and facilities are subject to federal, state and local environmental regulation, environmental regulation does not have a material effecton our operations. We believe that our facilities are in material compliance with such laws and regulations. As owners and lessees of real property, we can be heldliable for the investigation or remediation of contamination on such properties, in some circumstances without regard to whether we knew of or were responsiblefor such contamination. Our current expenditures with respect to environmental investigation and remediation at our facilities are minimal, although no assurancecan be provided that more significant remediation may not be required in the future as a result of spills or releases of petroleum products or hazardous substances orthe discovery of unknown environmental conditions, or changes in legislation, laws, rules or regulations.item 4. Mine Safety DisclosuresNot applicable.22 P Art iiitem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesOur common stock is traded on the NASDAQ Stock Market LLC under the symbol “BLDR”. On February 24, 2017, the closing price of our common stockas reported on the NASDAQ Stock Market LLC was $12.24. The approximate number of stockholders of record of our common stock on that date was 117,although we believe that the number of beneficial owners of our common stock is substantially greater.The table below sets forth the high and low sales prices of our common stock for the periods indicated: High low 2016 First quarter $11.34 $6.50 Second quarter $12.77 $10.15 Third quarter $14.09 $10.99 Fourth quarter $12.28 $9.04 2015 First quarter $7.06 $5.71 Second quarter $14.24 $6.54 Third quarter $16.69 $11.98 Fourth quarter $15.72 $10.02 We have not declared or paid cash dividends in the two most recent fiscal years. Any future determination relating to dividend policy will be made at thediscretion of our board of directors and will depend on a number of factors, including restrictions in our debt instruments, as well as our future earnings, capitalrequirements, financial condition, prospects and other factors that our board of directors may deem relevant. Our debt agreements currently restrict our ability topay dividends. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” contained inItem 7 of this annual report on Form 10-K.23 The graph below matches the cumulative 5-Year tot al return of holders of Builders FirstSource, Inc.'s common stock with the cumulative total returns of theRussell 2000 index and the S&P 600 Building Products index. The graph assumes that the value of the investment in our common stock and in each index(including reinvestment of dividends) was $100 on December 31, 2011 and tracks it through December 31, 2016. 12/11 12/12 12/13 12/14 12/15 12/16 Builders FirstSource, Inc. 100.00 273.53 349.51 336.76 543.14 537.75 Russell 2000 100.00 116.35 161.52 169.43 161.95 196.45 S&P 600 Building Products Index 100.00 130.78 189.80 197.06 231.02 317.98 The stock price performance included in this graph is not necessarily indicative of future stock price performance.The information regarding securities authorized for issuance under equity compensation plans appears in our definitive proxy statement for our annualmeeting of stockholders to be held on May 24, 2017 under the caption “Equity Compensation Plan Information,” which information is incorporated herein byreference.24 i tem 6. Selected Financial DataThe following selected consolidated financial data for the years ended December 31, 2016, 2015 and 2014 and as of December 31, 2016 and 2015 werederived from our consolidated financial statements that have been audited by PricewaterhouseCoopers LLP, independent registered public accounting firm, and areincluded as Item 8 of this annual report on Form 10-K. Selected consolidated financial data as of December 31, 2014 and as of and for the years endedDecember 31, 2013 and 2012 were derived from our consolidated financial statements that have been audited by PricewaterhouseCoopers LLP, but are not includedherein.The following data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations”contained in Item 7 of this annual report on Form 10-K and with our consolidated financial statements and related notes included as Item 8 of this annual report onForm 10-K. year Ended december 31, 2016 2015 2014 2013 2012 (in thousands, except per share amounts) Statement of operations data: Sales $6,367,284 $3,564,425 $1,604,096 $1,489,892 $1,070,676 Gross margin 1,596,748 901,458 356,997 319,920 214,566 Selling, general and administrative expenses 1,360,412 810,703 307,387 272,204 225,706 Net income (loss) (1)(2) 144,341 (22,831) 18,150 (42,691) (56,856) Net income (loss) per share — basic $1.30 $(0.22) $0.19 $(0.44) $(0.60) Net income (loss) per share — diluted $1.27 $(0.22) $0.18 $(0.44) $(0.60) Balance sheet data (end of period): Cash and cash equivalents $14,449 $65,063 $17,773 $54,696 $131,432 Total assets 2,909,887 2,882,038 574,065 505,436 548,369 Total debt (including current portion) 1,802,052 1,951,671 374,903 343,567 358,483 Stockholders’ equity 309,620 149,195 40,200 15,368 48,096 Other financial data: Depreciation and amortization $109,793 $58,280 $9,519 $9,305 $11,120 (1)As discussed in Note 12 to the consolidated financial statements included in Item 8 of this annual report on Form 10-K, net income included a reduction toour valuation allowance of $131.7 million as we released the valuation allowance against our net federal and certain state deferred tax assets for the yearended December 31, 2016. Net loss included a valuation allowance of $9.7 million against primarily all of our deferred tax assets for the year endedDecember 31, 2015. Net income included a reduction to our valuation allowance of $7.2 million due to the utilization of net operating loss carryforwards toreduce taxable income for the year ended December 31, 2014. Net loss included a valuation allowance of $15.3 million and $19.6 million against primarilyall of our deferred tax assets for the years ended December 31, 2013 and 2012, respectively.(2)Net income for the year ended December 31, 2016 includes a loss on debt extinguishment and other financing costs of $56.9 million resulting from multipledebt transactions executed in the current year. Our 2016 debt transactions are discussed in detail in Note 8 to the consolidated financial statements includedin Item 8 of this annual report on Form 10-K. Net loss for the year ended December 31, 2015 includes $38.6 million of acquisition and transaction relatedcosts associated with the ProBuild acquisition, including $13.2 million in commitment fees related to bridge and backstop financing facilities incurred inconnection with the financing of the ProBuild acquisition. In addition, net loss for the year ended December 31, 2015 also includes $10.3 million related tonon-cash interest expense from the amortization of debt discount and deferred loan costs, and fair value adjustments related to our warrants. Net loss for theyear ended December 31, 2013 included a $39.5 million prepayment penalty. 25 i tem 7. Management’s Discussion and Analysis of Financi al Condition and Results of OperationsThe following discussion of our financial condition and results of operations should be read in conjunction with the selected financial data and theconsolidated financial statements and related notes contained in Item 6. Selected Financial Data and Item 8. Financial Statements and Supplementary Data of thisannual report on Form 10-K, respectively. See “Risk Factors” contained in Item 1A. Risk Factors of this annual report on Form 10-K and “Cautionary Statement”contained in Item 1. Business of this annual report on Form 10-K for a discussion of the uncertainties, risks and assumptions associated with these statements.OvErviEWWe are a leading supplier of building materials, manufactured components and construction services to professional contractors, sub-contractors, andconsumers. Following our acquisition of ProBuild in July 2015, the Company operates 400 locations in 40 states across the United States. We offer an integratedsolution to our customers providing manufacturing, supply and installation of a full range of structural and related building products. Our manufactured productsinclude our factory-built roof and floor trusses, wall panels and stairs, vinyl windows, custom millwork and trim, as well as engineered wood that we design, cut,and assemble for each home. We also assemble interior and exterior doors into pre-hung units. Additionally, we supply our customers with a broad offering ofprofessional grade building products not manufactured by us, such as dimensional lumber and lumber sheet goods and various window, door and millwork lines.Our full range of construction-related services includes professional installation, turn-key framing and shell construction, and spans all our product categories.We group our building products into six product categories: •Lumber & Lumber Sheet Goods. Lumber & lumber sheet goods include dimensional lumber, plywood, and OSB products used in on-site houseframing. •Windows, Door & Millwork. Windows & doors are comprised of the manufacturing, assembly, and distribution of windows and the assembly anddistribution of interior and exterior door units. Millwork includes interior trim and custom features that we manufacture under the Synboard ® brandname. •Manufactured Products. Manufactured products consist of wood floor and roof trusses, steel roof trusses, wall panels, stairs, and engineered wood. •Gypsum, Roofing & Insulation. Gypsum, roofing, & insulation include wallboard, ceilings, joint treatment and finishes. •Siding, metal, and concrete. Siding, metal, and concrete includes vinyl, composite, and wood siding, exterior trim, other exteriors, metal studs andcement. •Other Building Products & Services. Other building products & services are comprised of products such as cabinets and hardware as well asservices such as turn-key framing, shell construction, design assistance, and professional installation spanning the majority of our product categories.Our operating results are dependent on the following trends, events and uncertainties, some of which are beyond our control: •Homebuilding Industry. Our business is driven primarily by the residential new construction market, which is in turn dependent upon a number offactors, including demographic trends, interest rates, consumer confidence, employment rates, foreclosure rates, the availability of skilledconstruction labor, and the health of the economy and mortgage markets. During the housing downturn, which began in 2006, many homebuilderssignificantly decreased their starts because of lower demand and an excess of home inventory. The housing market started to strengthen in 2011.According to the U.S. Census Bureau, annual U.S. single-family housing starts were 781,500 in 2016. However, single-family housing starts remainwell below the historical average (from 1959 through 2016) of 1.0 million per year. The housing industry is currently experiencing a shortage ofskilled construction labor, which we believe is constraining housing activity. Due to the lower levels in housing starts and increased competition forhomebuilder business, we have and will continue to experience pressure on our gross margins. In addition to these factors, there has been a trend ofconsolidation within the building products supply industry. However, our industry remains highly fragmented and competitive and we will continueto face significant competition from local and regional suppliers. We still believe there are several meaningful trends that indicate U.S. housingdemand will recover to the historical average in the long term and that the downturn in the housing industry was a trough in the cyclical nature of theresidential construction industry. These trends include relatively low interest rates, the aging of housing stock, and normal population growth due toimmigration and birthrate exceeding death rate. Industry forecasters, including the National Association of Homebuilders (“NAHB”), expect to seecontinued improvement in housing demand over the next few years.26 •Targeting Large Production Homebuilders. Over the past ten years, the homebuilding industry has undergone consol idation, and the largerhomebuilders have increased their market share. We expect that trend to continue as larger homebuilders have better liquidity and land positionsrelative to the smaller, less capitalized homebuilders. Our focus is on maintaining rel ationships and market share with these customers whilebalancing the competitive pressures we are facing in servicing large homebuilders with certain profitability expectations. We expect that our abilityto maintain strong relationships with the largest b uilders will be vital to our ability to expand into new markets as well as grow our market share.Additionally, we have been successful in expanding our custom homebuilder base while maintaining acceptable credit standards. •Repair and remodel end market . Following the acquisition of ProBuild, the repair and remodel end market now comprises a larger portion of ourbusiness. Although it is influenced by housing starts to a lesser degree than the homebuilding market, the repair and remodel end market is stilldependent upon some of the same factors as the homebuilding market, including demographic trends, interest rates, consumer confidence,employment rates, foreclosure rates, and the health of the economy and home financing markets. We expect that our ability to remain competitive inthis space as well as grow our market share will depend on our continued ability to provide a high level of customer service coupled with a broadproduct offering. •Use of Prefabricated Components. Homebuilders are increasingly using prefabricated components in order to realize increased efficiency andimproved quality. Shortening cycle time from start to completion is a key imperative of the homebuilders during periods of strong consumer demand.While the conversion of customers to this product offering slowed during the downturn we see the demand for prefabricated components increasingas the residential new construction market continues to strengthen and the availability of skilled construction labor remains limited. •Economic Conditions. Economic changes both nationally and locally in our markets impact our financial performance. The building products supplyindustry is highly dependent upon new home construction and subject to cyclical market changes. Our operations are subject to fluctuations arisingfrom changes in supply and demand, national and local economic conditions, labor costs and availability, competition, government regulation, tradepolicies and other factors that affect the homebuilding industry such as demographic trends, interest rates, single-family housing starts, employmentlevels, consumer confidence, and the availability of credit to homebuilders, contractors, and homeowners. During the downturn mortgage financingand commercial credit for smaller homebuilders was severely constrained and continues to slow a recovery in our industry despite some recentimprovement. As the housing industry is dependent upon the economy as well as potential homebuyers’ access to mortgage financing andhomebuilders’ access to commercial credit, it is likely that the housing industry will not fully recover to the historical average until conditions in theeconomy and the credit markets further improve. •Cost of Materials. Prices of wood products, which are subject to cyclical market fluctuations, may adversely impact operating income when pricesrapidly rise or fall within a relatively short period of time. We purchase certain materials, including lumber products, which are then sold tocustomers as well as used as direct production inputs for our manufactured and prefabricated products. Short-term changes in the cost of thesematerials, some of which are subject to significant fluctuations, are sometimes passed on to our customers, but our pricing quotation periods maylimit our ability to pass on such price changes. We may also be limited in our ability to pass on increases on in-bound freight costs on our products.Our inability to pass on material price increases to our customers could adversely impact our operating results. •Controlling Expenses. Another important aspect of our strategy is controlling costs and striving to be the low-cost building materials supplier in themarkets we serve. We pay close attention to managing our working capital and operating expenses. Further, we pay careful attention to our logisticsfunction and its effect on our shipping and handling costs. ▪Expand into Multi-Family and Light Commercial Business. Our primary focus has been, and continues to be, on single-family residential newconstruction and the repair and remodel end market. However, we will continue to identify opportunities for profitable growth in the multi-familyand light commercial markets. ▪Successful integration of the ProBuild business: The acquisition of ProBuild has substantially increased the scale of our company. Successfullyintegrating ProBuild will be critical to achieving our future objectives. Combining our two companies may be more difficult, costly, or timeconsuming than expected, which could result in the acquisition not achieving its intended results, including the expected operational synergies andcost savings. In addition, as a result of the ProBuild acquisition we have substantially increased indebtedness. Reduction of our outstanding debt willbe a key imperative as we work to achieve the intended results of the acquisition.27 rECEnt dEvElOPmEntSDuring the year ended December 31, 2016, the Company executed several debt transactions which are described in more detail below. These transactionsinclude two debt exchanges, complete extinguishment of our 7.625% senior secured notes due 2021 (“2021 notes”), as well as repricing and partially repaying our$600.0 million term loan facility due 2022 (“2015 term loan”) and the repurchase of $50.0 million in aggregate principal amount of our 2023 notes. Thesetransactions have extended our debt maturity profile and reduced our annual cash interest on a go forward basis.On February 12, 2016, we completed separate privately negotiated note exchange transactions in which $218.6 million in outstanding aggregate principalamount of our 10.75% senior unsecured notes due 2023 (“2023 notes”) was exchanged for $207.6 million in aggregate principal amount of our 2021 notes. OnFebruary 29, 2016, we completed additional separate privately negotiated note exchange transactions in which $63.8 million in outstanding aggregate principalamount of our 2023 notes was exchanged for $60.0 million in aggregate principal amount of our 2021 notes. The additional 2021 notes were issued under theexisting indenture dated as of May 29, 2013. These transactions resulted in a $7.8 million net gain on debt extinguishment, reducing interest expense in the firstquarter of 2016.In May 2016, the Company exercised its contractual right to redeem $35.0 million in aggregate principal amount of 2021 notes at a price of 103.0%. Thistransaction resulted in a $1.7 million loss on debt extinguishment, which increased interest expense in the second quarter of 2016.In August 2016, the Company issued $750.0 million in aggregate principal amount of 5.625% senior secured notes due 2024 (“2024 notes”) in a privateoffering. At the same time the Company also repriced its $600.0 million term loan facility (“2015 term loan”). This repricing lowered the margin to 3.75% in thecase of Eurodollar loans and 2.75% in the case of base rate loans. This reduction represents a 1.25% decrease in the applicable margin for both Eurodollar and baserate loans. The proceeds from the issuance of the 2024 notes were used, together with cash on hand and borrowings on our $800.0 million senior secured revolvingcredit facility (“2015 facility”), to fully redeem the $582.6 million in aggregate outstanding principal amount of 2021 notes, to pay down $125.9 million of the 2015term loan and to pay related transaction fees and expenses. We recognized a $43.9 million loss on extinguishment of the 2021 notes and $8.2 million in write off ofdebt discount and debt issuance costs related to the 2015 term loan repricing as components of interest expense in the third quarter of 2016.In October 2016, we repurchased $50.0 million in aggregate principal amount of our 2023 notes pursuant to the terms of a cash tender offer at a price of117.0% of par value plus accrued and unpaid interest. The purchase of the 2023 notes was funded with cash on hand and borrowings under our 2015 facility. Thistransaction resulted in a $9.7 million loss on debt extinguishment which was recognized in interest expense in the fourth quarter of 2016. Following thistransaction, we have $367.6 million in 2023 notes outstanding.On February 23, 2017, we repriced our existing 2015 term loan through an amendment and extension of the term loan credit agreement providing for a$467.7 million senior secured term loan facility due 2024 (“2024 term loan”). This repricing reduces the interest rate by 0.75% and extends the maturity by 19months to February 29, 2024.The transactions described above will allow the Company to reduce its annual cash interest expense by approximately $37 million going forward.CUrrEnt OPErAting COnditiOnS And OUtlOOKThough the level of housing starts remains below the historical average, the homebuilding industry has shown improvement since 2011. According to theU.S. Census Bureau, actual U.S. single-family housing starts for 2016 were 781,500, an increase of 9.4% compared to 2015. U.S single-family units underconstruction increased 12.4% during this same time period. While the housing industry has strengthened over the past few years, the limited availability of credit tosmaller homebuilders and potential homebuyers, as well as the high demand for a limited supply of skilled construction labor and the slow economic recovery,among other factors, have hampered a stronger recovery. A composite of third party sources, including the NAHB, are forecasting 847,000 U.S. single-familyhousing starts for 2017, which is an increase of 8.4% from 2016. In addition the Home Improvement Research Institute (“HIRI”) is forecasting sales in theprofessional repair and remodel end market to increase approximately 4.2% in 2017 compared to 2016.28 Our net sales for the year ended Dec ember 31, 2016 were up 78.6 % over the same period last year largely due to the acquisition of ProBuild. Our grossmargin percentage decreased by 0.2 % during the year ended December 31, 2016 compared to the year ended December 31, 2015. Our gross margin per centagedecreased primarily due to the impact of commodity price inflation relative to our short-term customer pricing commitments during the year ended December 31,2016. However, this decrease was mostly offset by an increase in our gross margin percentage largely attributable to the ProBuild acquisition , the result ofProBuild’s higher mix of higher margin repair & remodel and retail sales . We continue to invest in our business to improve our operating efficiency, which hasallowed us to better leverage our operating costs against changes in net sales. O ur selling, general and administrative expenses, as a pe rcentage of net sales, were21.4 % for the year e nded December 3 1, 2016 , a 1.3% de crease from 22.7 % in 2015 . The decrease in selling, general and administrative expenses, as apercentage of net sales, was largely due to the benefit of synergy cost savings. Synergy cost savings were primarily attributable to reduced pay roll and benefitsexpense, as well as decreased delivery costs and location consolidations. We still believe the long-term outlook for the housing industry is positive due to growth in the underlying demographics. We feel we are well-positioned totake advantage of the construction activity in our markets and to increase our market share, which may include strategic acquisitions. We will continue to focus onworking capital by closely monitoring the credit exposure of our customers and by working with our vendors to improve our payment terms and pricing on ourproducts. We will also continue to work diligently to achieve the appropriate balance of short-term expense control while maintaining the expertise and capacity togrow the business as market conditions improve. In addition, debt reduction will continue to be a key area of focus for the Company. We want to create long-termshareholder value and avoid taking steps that will limit our ability to compete.rESUltS OF OPErAtiOnSThe following table sets forth the percentage relationship to sales of certain costs, expenses and income items for the years ended December 31: 2016 2015 2014 Sales 100.0% 100.0% 100.0%Cost of sales 74.9% 74.7% 77.7%Gross margin 25.1% 25.3% 22.3%Selling, general and administrative expenses 21.4% 22.7% 19.2%Income from operations 3.7% 2.6% 3.1%Interest expense, net 3.3% 3.1% 1.9%Income tax expense (benefit) (1.9)% 0.1% 0.1% Net income (loss) 2.3% (0.6)% 1.1% 2016 Compared with 2015Sales. Sales for the year ended December 31, 2016 were $6,367.3 million, a 78.6% increase from sales of $3,564.4 million for 2015. Net sales increased$2,659.1 million, or approximately 75%, due to the ProBuild acquisition. Excluding the impact of the ProBuild acquisition, we estimate net sales increased $143.8million, or approximately 4% due to increased volume. According to the U.S. Census Bureau, actual U.S. single-family housing starts increased 9.4% and single-family units under construction increased 12.4% in 2016 compared to 2015.The following table shows sales classified by major product category (dollars in millions): 2016 2015 Sales % of Sales Sales % of Sales % Change Lumber & lumber sheet goods $2,131.4 33.5% $1,129.7 31.7% 88.7%Windows, doors & millwork 1,286.2 20.2% 818.1 23.0% 57.2%Manufactured products 1,097.7 17.2% 635.3 17.8% 72.8%Gypsum, roofing & insulation 520.0 8.2% 264.9 7.4% 96.3%Siding, metal & concrete products 622.3 9.8% 319.6 9.0% 94.7%Other building products & services 709.7 11.1% 396.8 11.1% 78.9%Total sales $6,367.3 100.0% $3,564.4 100.0% 78.6% Due to the ProBuild acquisition, we achieved increased net sales across all product categories. Our sales classification by product categories has shifted aswe diversified our product offerings to support a broader customer base across 40 states through the ProBuild acquisition.29 Gross Margin. Gross margin increased $695.3 million to $1,596.7 million . Of this increase, $656.8 million is due to the ProBuild acquisition. Our grossmargin percentage decreased to 25.1% in 2016 from 25.3% in 2015, a 0.2% decrease. Our gross marg in percentage decreased primarily due to the impact ofcommodity price inflation relative to our short-term customer pricing commitments during the year ended December 31, 2016. However, this decrease was mostlyoffset by an increase in our gross margin pe rcentage largely attributable to the ProBuild acquisition , the result of ProBuild’s higher mix of higher margin repair &remodel and retail sales . Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $549.7 million, or 67.8%, largely due to the ProBuildacquisition. Our salaries and benefits expense was $894.3 million, an increase of $383.7 million from 2015, largely due to increased full-time equivalent employeesfollowing the ProBuild acquisition. Delivery expense increased $65.9 million, office general and administrative expense increased $46.5 million, occupancyexpense increased $45.9 million and intangible asset amortization increased $10.7 million. These increases were primarily a result of the ProBuild acquisition, therelated integration activities and increased sales volume. These increases were partially offset by a $4.2 million decrease in facility closure costs.As a percentage of net sales, selling, general and administrative expenses decreased from 22.7% in 2015 to 21.4% in 2016 largely due to the benefit ofsynergy cost savings. Synergy cost savings were primarily attributable to reduced payroll and benefits expense, as well as decreased delivery costs and locationconsolidations. As a percentage of net sales, salaries and benefits expense decreased 0.3%, office general and administrative expense decreased 0.6% and deliveryexpense decreased 0.4%. These decreases were partially offset by occupancy expense, as a percentage of net sales, increasing 0.1%.Interest Expense, net. Interest expense was $214.7 million in 2016, an increase of $105.5 million from 2015. Of the $105.5 million increase, $49.6 millionwas attributable to increased interest expense associated with our increased debt balances following the ProBuild acquisition financing and subsequent refinancingtransactions, $28.1 million was attributable to losses on debt extinguishment largely due to the payment of redemption premiums on our 2021 and 2023 notes,$17.6 million was related to increased amortization and write-off of debt discount and debt issuance costs largely due to our debt transactions during the year endedDecember 31, 2016, and $14.2 million was due to interest expense primarily related to lease obligations assumed in the ProBuild acquisition. These increases werepartially offset by a $4.6 million decrease in interest expense due to non-cash fair value adjustments related to the exercise of all remaining stock warrants in 2015.Income Tax Expense. We recorded an income tax benefit of $122.7 million during the year ended December 31, 2016 compared to income tax expense of$4.4 million during the year ended December 31, 2015. In the third quarter of 2016, we released the valuation allowance against our net federal and some statedeferred tax assets. We recorded a reduction of the after-tax, non-cash valuation allowance on our net deferred tax assets of $131.7 million during the year endedDecember 31, 2016 compared to an increase of $9.7 million during the year ended December 31, 2015. Absent the valuation allowance our effective tax rate wouldhave been 41.8% and 28.5% for the years ended December 31, 2016 and 2015, respectively.2015 Compared with 2014Sales. Sales for the year ended December 31, 2015 were $3,564.4 million, a 122.2% increase from sales of $1,604.1 million for 2014. Net sales increased$1,910.9 million, or 119.1%, due to recent acquisitions, primarily ProBuild. Excluding the impact of acquisitions, net sales increased $49.4 million, or 8.5% due toincreased volume, which was partially offset by a 5.4% decrease due to the impact of commodity price deflation on net sales. According to the U.S. Census Bureau,actual U.S. single-family housing starts increased 10.3% and single-family units under construction increased 11.1% in 2015 compared to 2014.The following table shows sales classified by major product category (dollars in millions): 2015 2014 Sales % of Sales Sales % of Sales % Change Lumber & lumber sheet goods $1,129.7 31.7% $535.3 33.4% 111.0%Windows, doors & millwork 818.1 23.0% 446.4 27.8% 83.3%Manufactured products 635.3 17.8% 312.0 19.5% 103.6%Gypsum, roofing & insulation 264.9 7.4% 61.1 3.8% 333.4%Siding, metal & concrete products 319.6 9.0% 81.9 5.1% 290.3%Other building products & services 396.8 11.1% 167.4 10.4% 137.0%Total sales $3,564.4 100.0% $1,604.1 100.0% 122.2% 30 Due to the ProBuild acquisition, we achieved increased net sales across all product categories. Our sales classification by product categories has shifted aswe diversified our product offerings to support a broader customer base across 40 states through the ProBuild acquis ition. Excluding ProBuild, net sales increasedacross all product categories, except lumber & lumber sheet goods , which decreased $12.4 million . Th is decline in net sales of lumber and lumber sheet goods,excluding ProBuild, was largely due to an 11.1% dec rease in market prices for such commodities in 2015 compared to 2014, which was mostly offset by anincrease in sales volume.Gross Margin. Gross margin increased $544.5 million to $901.5 million. Of this increase, $493.3 million is due to the ProBuild acquisition. ExcludingProBuild, gross margin increased $51.2 million. Our gross margin percentage increased to 25.3% in 2015 from 22.3% in 2014, a 3.0% increase. ExcludingProBuild, our gross margin percentage increased 1.7%, primarily due to improved customer pricing relative to our costs and a higher mix of value-added sales fromour manufactured products categories in 2015 compared to 2014.Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $503.9 million, or 164.1%. Excluding ProBuild, ourselling, general, and administrative expense increased $68.0 million or 22.2%. Excluding ProBuild, our salaries and benefits expense was $218.4 million, anincrease of $27.3 million from 2014, largely due to a 6.2% increase in full-time equivalent employees related to increased sales volume and other recentacquisitions. Office general and administrative expense increased $31.2 million, primarily due to a $30.2 million increase in professional service fees largelyattributable to acquisition and integration costs related to the ProBuild acquisition. Facility closure costs increased $3.6 million primarily due to costs associatedwith location consolidations following the ProBuild acquisition. Intangible asset amortization increased $1.6 million due to other recent acquisitions. Deliveryexpense increased $1.7 million largely due to increased sales volume.As a percentage of net sales, selling, general and administrative expenses increased from 19.2% in 2014 to 22.7% in 2015. Excluding ProBuild, selling,general and administrative expenses were 22.0% of net sales. As a percentage of net sales, salaries and benefits expense increased 0.9%, office general andadministrative expense increased 1.7%, facility closure costs increased 0.2%, intangible asset amortization increased 0.1% and delivery expenses decreased 0.1%.The increase in selling, general and administrative expenses, as a percentage of net sales, was primarily due to the factors discussed above, and to a lesser degree,the negative impact of commodity price deflation on our net sales.Interest Expense, net. Interest expense was $109.2 million in 2015, an increase of $78.9 million from 2014. Excluding interest expense attributable toProBuild, which is primarily related to interest expense associated with lease finance obligations, our interest expense was $101.0 million, an increase of $70.7million. The increase was primarily related to the financing transactions associated with the acquisition of ProBuild. Of the $70.7 million increase, $49.5 millionwas attributable primarily to increased interest expense related to our 2023 notes, 2015 term loan and 2015 facility, $13.2 million was due to commitment feesrelated to unutilized bridge and backstop facilities, $8.3 million was related to non-cash interest expense from the amortization of debt discount and deferred loancosts, and fair value adjustments related to our previously outstanding stock warrants in 2014.Income Tax Expense. We recorded income tax expense of $4.4 million and $1.1 million during 2015 and 2014, respectively. We recorded an increase in theafter-tax, non-cash valuation allowance on our net deferred tax assets of $9.7 million in 2015 and a $7.2 million reduction in the after-tax, non-cash valuationallowance on our net deferred tax assets in 2014. Absent the valuation allowance, our effective tax rate would have been 28.5% and 42.1% for 2015 and 2014,respectively. Absent the valuation allowance the change in our effective rate is largely attributable to permanent differences related to fair value adjustments on ourpreviously outstanding stock warrants and 162(m) limitations.Results by Reportable SegmentThe following tables show net sales and income before income taxes by reportable segment (dollars in thousands): year ended december 31, net sales income before income taxes % of net % of net % of net % of net 2016 sales 2015 sales % change 2016 sales 2015 sales % change Northeast $1,204,099 19.4% $626,985 18.4% 92.0% $35,356 2.9% $28,862 4.6% 22.5%Southeast 1,367,933 22.0% 917,022 27.0% 49.2% 37,158 2.7% 14,607 1.6% 154.4%South 1,704,753 27.4% 1,073,240 31.5% 58.8% 69,846 4.1% 50,878 4.7% 37.3%West 1,939,206 31.2% 786,476 23.1% 146.6% 72,649 3.7% 35,170 4.5% 106.6% $6,215,991 100.0% $3,403,723 100.0% $215,009 3.5% $129,517 3.8% 31 year ended december 31, net sales income before income taxes % of net % of net % of net % of net 2015 sales 2014 sales % change 2015 sales 2014 sales % change Northeast $626,985 18.4% $229,998 15.8% 172.6% $28,862 4.6% $3,464 1.5% 733.2%Southeast 917,022 27.0% 672,059 46.0% 36.4% 14,607 1.6% 5,465 0.8% 167.3%South 1,073,240 31.5% 558,446 38.2% 92.2% 50,878 4.7% 17,804 3.2% 185.8%West 786,476 23.1% — — — 35,170 4.5% — — — $3,403,723 100.0% $1,460,503 100.0% $129,517 3.8% $26,733 1.8% As a result of our reorganization following the ProBuild acquisition, we have four reportable segments based on an aggregation of the geographic regions inwhich we operate. Our reportable segments do not necessarily align with any single region as defined by the U.S Census Bureau. According to the U.S. Census Bureau, actual single-family housing starts during the year ended December 31, 2016 increased 8.8%, 9.5%, 8.7% and 12.8%in the South region, Northeast region, West region and Midwest region, respectively. For the year ended December 31, 2016, we achieved increased net sales andprofitability across all our reportable segments, primarily due to the ProBuild acquisition and sales volume increases.Excluding the impact of recent acquisitions, net sales for the year ended December 31, 2015 compared to the year ended December 31, 2014 increased 4.5%and 5.9% in our legacy Southeast and South reportable segments, respectively, primarily due to volume increases, which were partially offset by commodity pricedeflation. According to the U.S Census Bureau, the actual U.S. single-family housing starts increased 10.3% in 2015 as compared to 2014, with single family startsin the South region increasing 12.0% compared to 2014. Excluding ProBuild, net sales for our Northeast reportable segment decreased 2.7% for the year endedDecember 31, 2015 compared to 2014 due to slower regional sales growth, which was not enough to overcome the impact of commodity price deflation.liQUidity And CAPitAl rESOUrCESOur primary capital requirements are to fund working capital needs and operating expenses, meet required interest and principal payments, and to fundcapital expenditures and potential future acquisitions. Our capital resources at December 31, 2016 consist of cash on hand and borrowing availability under our2015 facility.Our 2015 facility will be primarily used for working capital, general corporate purposes, and funding acquisitions. In addition, we may use the 2015 facilityto facilitate debt repayment and consolidation. Availability under the 2015 facility is determined by a borrowing base. Our borrowing base consists of tradeaccounts receivable, inventory, other receivables, including progress billings and credit card receivables, and qualified cash that all meet specific criteria containedwithin the credit agreement, minus agent specified reserves. Net excess borrowing availability is equal to the maximum borrowing amount minus outstandingborrowings and letters of credit.32 The following table shows our borrowing base and excess availability as of December 31, 2 016 and 2015 (in millions): As of december 31,2016 december 31,2015 Accounts Receivable Availability$403.5 $384.5 Inventory Availability 332.0 314.3 Other Receivables Availability 27.9 27.0 Gross Availability 763.4 725.8 Less: Agent Reserves (26.9) (23.5)Plus: Cash in Qualified Accounts 15.5 55.5 Borrowing Base 752.0 757.8 Aggregate Revolving Commitments 800.0 800.0 Maximum Borrowing Amount (lesser of Borrowing Base and Aggregate Revolving Commitments) 752.0 757.8 Less: Outstanding Borrowings — (60.0)Letters of Credit (84.8) (79.1)Net Excess Borrowing Availability on Revolving Facility$667.2 $618.7 As of December 31, 2016, we had no outstanding borrowings under our 2015 facility and our net excess borrowing availability was $667.2 million afterbeing reduced by outstanding letters of credit of approximately $84.8 million. Excess availability must equal or exceed a minimum specified amount, currently$80.0 million, or we are required to meet a fixed charge coverage ratio of 1:00 to 1:00. We were not in violation of any covenants or restrictions imposed by any ofour debt agreements at December 31, 2016.LiquidityOur liquidity at December 31, 2016 was $681.6 million, which consists of net borrowing availability under the 2015 facility and cash on hand. We areexpecting continued improvement in the housing industry in 2017. Beyond 2017, it is difficult for us to predict what will happen as our industry is dependent on anumber of factors, including national economic conditions, employment levels, the availability of credit for homebuilders and potential home buyers, the level offoreclosures, existing home inventory, and interest rates.We substantially increased our indebtedness following completion of the ProBuild acquisition in comparison to our indebtedness on a recent historical basis,which increased our interest expense and could have the effect of, among other things, reducing our flexibility to make acquisitions or to respond to changingbusiness and economic conditions. From time to time, based on market conditions and other factors and subject to compliance with applicable laws and regulations,the Company may repurchase or call the 2023 notes or 2024 notes, repay debt, or otherwise enter into transactions regarding its capital structure.Should the current industry conditions deteriorate or we pursue additional acquisitions, we may be required to raise additional funds through the sale ofcapital stock or debt in the public capital markets or in privately negotiated transactions. There can be no assurance that any of these financing options would beavailable on favorable terms, if at all. Alternatives to help supplement our liquidity position could include, but are not limited to, idling or permanently closingadditional facilities, adjusting our headcount in response to current business conditions, attempts to renegotiate leases, and divesting of non-core businesses. Thereare no assurances that these steps would prove successful or materially improve our liquidity position.33 Consolidated Cash FlowsCash provided by operating activities was $158.2 million and $177.0 million in 2016 and 2015, respectively. Our working capital increased $43.9 million in2016 compared to a decrease of $99.0 million in 2015. The change in working capital is largely due to the ProBuild acquisition, as well as increases in receivablesand inventory and increased customer demand. These increases were partially offset by increases in accounts payable and accrued liabilities largely due toincreased purchases and increased accounts payable days. Cash interest payments increased $99.5 million in 2016 compared to 2015. The remaining change is dueto an increase in cash provided by operations primarily related to increased sales and profitability during the year ended December 31, 2016 as a result of theProBuild acquisition and higher sales volume. In August 2016, the FASB issued an update to the existing guidance under the Statement of Cash Flows topic of theCodification. As a result of the Company’s election to early adopt this updated guidance in the fourth quarter of 2016, $42.9 million in payments of debtextinguishment costs made in 2016 which were previously reflected as operating cash outflows on our 2016 quarterly reports on Form 10-Q are now presented asfinancing cash outflows. Adoption of this guidance resulted in $1.1 million from the second quarter of 2016, $33.3 million from the third quarter of 2016 and $8.5million from the fourth quarter of 2016 in payments of debt extinguishment costs being presented as cash outflows from financing activities for the year endedDecember 31, 2016. The adoption of this guidance had no impact to our statement of cash flows for the years ended December 31, 2015 or 2014. This updatedguidance is described more fully in Note 2 to the consolidated financial statements included in Item 8 of this annual report on Form 10-K.Cash provided by operating activities was $177.0 million and $27.5 million in 2015 and 2014, respectively. Our working capital decreased $99.0 million in2015 compared to an increase of $7.8 million in 2014. The decrease in working capital is primarily due to a decrease in accounts receivable and an increase inaccrued liabilities. The decrease in accounts receivable is due to increased collections largely attributable to the ProBuild acquisition in the fourth quarter of 2015.The increase in accrued liabilities is largely due to increased interest payable following the ProBuild acquisition financing transactions. The decrease in workingcapital was partially offset by an increase in cash interest payments of $26.7 million in 2015 compared to 2014. In addition, during 2015 we had $13.2 million inone-time cash interest payments attributable to commitment fees related to unutilized bridge and backstop financing facilities. The remaining increase in cashprovided by operations is primarily related to increased sales and profitability during 2015 as a result of higher sales volume and the acquisition of ProBuild.Cash used in investing activities was $38.3 million and $1,508.0 million in 2016 and 2015, respectively. The change is primarily due to $1,462.7 million incash used for the ProBuild acquisition in 2015. The remaining change is largely due to an increase in proceeds from the sale of property, plant and equipment and adecrease in capital expenditures in 2016 compared to 2015.Cash used in investing activities increased $1,413.2 million in 2015 compared to 2014. The change is primarily due to the $1,462.7 million ProBuildacquisition. In addition, we acquired Timber Tech for $5.8 million during 2015. In 2014, $69.3 million of cash was used for acquisitions. Capital expenditures for2015 were $43.8 million compared to $25.7 million in 2014. The increase in capital expenditures primarily relates to purchasing machinery, equipment andvehicles to support sales growth and to increase capacity at existing locations.Cash used in financing activities was $170.5 million in 2016 compared to cash provided by financing activities of $1,378.3 million in 2015. Cash used infinancing activities in 2016 was primarily attributable to $807.5 million in payments of long-term debt, largely due to the extinguishment of our 2021 notes, thepartial pay down of the 2015 term loan and 2023 notes. In addition, we repaid $60.0 million, net, under the 2015 facility, paid $42.9 million of debt extinguishmentcosts and $15.7 million in debt issuance costs. These payments were partially offset by $750.0 million in proceeds from the 2024 notes issuance.Cash provided by financing activities was $1,378.3 million and $30.4 million for 2015 and 2014, respectively. During 2015 cash provided by financingactivities was primarily due to financing activities related to the ProBuild acquisition, including $700.0 million of proceeds from the issuance of notes, $594.0million of proceeds from a new term loan agreement, $320.0 million of borrowings under the revolving credit facilities, and $111.3 million of proceeds from thepublic offering of common stock, net of issuance costs. Slightly offsetting this, we repaid $290.0 million under the revolving credit facilities during 2015. Inaddition, we paid $58.5 million of deferred loan costs in 2015. Capital ExpendituresCapital expenditures vary depending on prevailing business factors, including current and anticipated market conditions. Historically, capital expenditureshave for the most part remained at relatively low levels in comparison to the operating cash flows generated during the corresponding periods. We expect our 2017capital expenditures to be approximately $80-$90 million primarily related to rolling stock, equipment and facility improvements to support our operations.34 diSClOSUrES OF COntrACtUAl OBligAtiOnS And COmmErCiAl COmmitmEntSThe following summarizes our contractual obligations as of December 31, 2016 (in thousands): Payments due by Period Contractual obligations total less than 1 year 1-3 years 3-5 years more than 5 years Long-term debt $1,585,258 $4,700 $9,400 $9,400 $1,561,758 Interest on long-term debt(1) 721,603 108,043 215,407 209,036 189,117 Lease finance obligations(2) 356,562 19,009 37,949 37,123 262,481 Capital lease obligations(2) 7,951 3,426 4,436 89 — Operating leases 283,531 67,213 104,155 55,971 56,192 Total contractual cash obligations $2,954,905 $202,391 $371,347 $311,619 $2,069,548 (1)We had no outstanding borrowings under the 2015 facility as of December 31, 2016. Borrowings under the 2015 facility bear interest at a variable rate.Therefore, actual interest may differ from the amounts presented above due to interest rate changes or any future borrowing activity under the 2015 facility.The 2015 term loan also bears interest at a variable rate, therefore actual interest may differ from the amounts presented above due to interest rate changes.(2)Future minimum commitments for lease finance obligations and capital lease obligations.The amounts reflected in the table above for operating leases represent future minimum lease payments under non-cancelable operating leases with an initialor remaining term in excess of one year at December 31, 2016. Purchase orders entered into in the ordinary course of business are excluded from the above tablebecause they are payable within one year. Amounts for which we are liable under purchase orders are reflected on our consolidated balance sheet as accountspayable and accrued liabilities. We plan to lease additional delivery equipment during 2017 to support anticipated sales growth. These operating leases are notincluded in the table above.OtHEr CASH OBligAtiOnS nOt rEFlECtEd in tHE BAlAnCE SHEEtIn accordance with accounting principles generally accepted in the United States, commonly referred to as GAAP, our operating leases are not recorded inour balance sheet. In addition to the lease obligations included in the above table, we have residual value guarantees on certain equipment leases. Under theseleases we have the option of (1) purchasing the equipment at the end of the lease term, (2) arranging for the sale of the equipment to a third party, or (3) returningthe equipment to the lessor to sell the equipment. If the sales proceeds in either case are less than the residual value, then we are required to reimburse the lessor forthe deficiency up to a specified level as stated in each lease agreement. The guarantees under these leases for the residual values of equipment at the end of therespective operating lease periods approximated $3.9 million as of December 31, 2016.Based upon the expectation that none of these leased assets will have a residual value at the end of the lease term that is materially less than the valuespecified in the related operating lease agreement or that we will purchase the equipment at the end of the lease term, we do not believe it is probable that we willbe required to fund any amounts under the terms of these guarantee arrangements. Accordingly, no accruals have been recognized for these guarantees.In addition, the Company is party to certain agreements related to its lease finance obligations which commit the Company to perform certain repairs andmaintenance obligations under the leases in a specified manner and timeframe that generally will occur throughout the next year.CritiCAl ACCOUnting POliCiES And EStimAtESCritical accounting policies are those that both are important to the accurate portrayal of a company’s financial condition and results, and require subjectiveor complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.In order to prepare financial statements that conform to GAAP, we make estimates and assumptions that affect the amounts reported in our financialstatements and accompanying notes. Certain estimates are particularly sensitive due to their significance to the financial statements and the possibility that futureevents may be significantly different from our expectations.We have identified the following accounting policies that require us to make the most subjective or complex judgments in order to fairly present ourconsolidated financial position and results of operations.35 Vendor Rebates. Many of our arrangements with o ur vendors provide for us to receive a rebate of a specified amount payable to us when we achieve any ofa number of measures, generally related to the volume of purchases from our vendors. We account for these rebates as a reduction of the prices of the v endor’sproducts, which reduces inventory until we sell the product, at which time these rebates reduce cost of sales. Throughout the year, we estimate the amount ofrebates based upon our historical level of purchases. We continually revise these estimate s to reflect actual purchase levels.If market conditions were to change, vendors may change the terms of some or all of these programs. Although these changes would not affect the amountswhich we have recorded related to product already purchased, it may impact our gross margins on products we sell or sales earned in future periods.Allowance for Doubtful Accounts and Related Reserves. We maintain an allowance for doubtful accounts for estimated losses due to the failure of ourcustomers to make required payments. We perform periodic credit evaluations of our customers and typically do not require collateral. However, we have, in somecases, required customers to collateralize their debt with us. Consistent with industry practices, we typically require payment from most customers within 30 days.As our business is seasonal in certain regions, our customers’ businesses are also seasonal. Sales are lowest in the winter months, and our past due accountsreceivable balance as a percentage of total receivables generally increases during this time. Throughout the year, we record estimated reserves based upon ourhistorical write-offs of uncollectible accounts, taking into consideration certain factors, such as aging statistics and trends, customer payment history, independentcredit reports, and discussions with customers. We regularly perform a specific analysis of all accounts past due and write off account balances when we haveexhausted reasonable collection efforts and determined that the likelihood of collection is remote. We charge these write-offs against our allowance for doubtfulaccounts. Any future decline in the macroeconomic factors that affect the overall housing industry or our specific customers’ business could cause us to revise ourestimate of expected losses and increase our allowance for doubtful accounts. In addition, we also establish reserves for credit memos and customer returns.Impairment of Long-Lived Assets. Long-lived assets, including property and equipment and intangible assets with finite lives, are reviewed for possibleimpairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived assetgroup is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset group. Our long-lived assets and liabilities are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets andliabilities. Our facility related long-lived assets are grouped at a geographical location level, which is at a level below our operating segments. All of our other long-lived assets are grouped at a geographical region level, which is the equivalent of our operating segments. Our judgment regarding the existence of impairmentindicators is based on market and operational performance. Determining whether impairment has occurred typically requires various estimates and assumptions,including determining which cash flows are directly related to the potentially impaired asset group, the useful life over which cash flows will occur, their amount,and the asset group’s residual value, if any. In turn, measurement of an impairment loss requires a determination of fair value, which is based on the bestinformation available.We use internal cash flow estimates, quoted market prices when available and independent appraisals, as appropriate, to determine fair value. We derive therequired cash flow estimates from our historical experience and our internal business plans and apply an appropriate discount rate. These cash flow estimates areover the remaining useful lives of the asset groups. Forecasted housing starts are used to help estimate future revenue. Historical trends are then used to projectgross margins and operating expenses based upon various revenue levels. If these projected cash flows are less than the carrying amount, an impairment loss isrecognized based on the fair value of the asset group. Due to the uncertainties associated with these projections, actual results could differ from projected results,and further impairment of long-lived assets could be recorded. Future non-cash impairment of long-lived assets would have the effect of decreasing our earnings orincreasing our losses in such period, but would not impact our current outstanding debt obligations or compliance with covenants contained in the related debtagreements.For the year ended December 31, 2016 we recorded asset impairment charges on held-for-use assets of $2.7 million primarily related to intangible assetsassociated with a location closure and recorded $1.9 million related to fair value adjustments on held-for-sale assets during 2016. For the year ended December 31,2015, we recorded asset impairment charges on held-for-use assets of $1.4 million related to customer relationship intangible assets associated with a locationclosure and recorded $0.7 million related to fair value adjustments on held-for-sale assets during 2015. We recorded no significant asset impairment charges in2014.Goodwill. Goodwill represents the excess of the amount we paid to acquire businesses over the estimated fair value of tangible assets and identifiableintangible assets acquired, less liabilities assumed. At December 31, 2016, our goodwill balance was $740.4 million, representing 25.4% of our total assets.36 We test goodwill for impairment in the fourth quarter of each year or at any other time when impairment indicators exist by comparing the estimatedimplied value of a reporting units’ goodwill to its book value. Examples of such indicators that could cause us to test goodwill for impairment between annual testsinclude a significant change in the business climate, unexpected co mpetition or a significant deterioration in market share. We may also consider marketcapitalization relative to our net assets. Housing starts are a significant sales driver for us. If there is a significant decline or an expected decline in housing start s,this could adversely affect our expectations for a reporting unit and the value of that reporting unit. We did not have any goodwill impairments in 201 6 , 201 5 or201 4 .The process of evaluating goodwill for impairment involves the determination of the fair value of our reporting units. As a result of the reorganizationfollowing the ProBuild acquisition, our reporting units are aligned with our nine geographic regions which are also determined to be our operating segments. Inevaluating goodwill for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the reportingunit is less than its carrying value. If it is concluded that it is not more likely than not that the fair value of the reporting unit is less than its carrying value, then nofurther testing of the goodwill is required.However, if we determine that it is more likely than not that the fair value of the reporting unit is less than its carrying value, then we evaluate goodwill forimpairment using a two-step process. The first step is to identify potential impairment by comparing the fair value of a reporting unit to the book value, includinggoodwill. If the fair value of a reporting unit exceeds the book value, goodwill is not impaired. If the book value exceeds the fair value, the second step of theprocess is performed to measure the amount of impairment. In step two, the estimated fair value of the reporting unit is allocated to all other assets and liabilities ofthat reporting unit based on their respective fair values. The excess of the fair value of the reporting unit over the amount allocated to its assets and liabilities is theimplied fair value of goodwill. Goodwill impairment is measured as the excess of the carrying value over its implied fair value. The fair value of a reporting unit isestimated based upon the projected discounted cash flow expected to be generated from the reporting unit using a discounted cash flow methodology. Whereavailable and appropriate, comparative market multiples are used to corroborate the results of the discounted cash flow.In performing our annual impairment tests at December 31, 2016, we developed a range of fair values for our reporting units using a five-year discountedcash flow methodology. Inherent in such fair value determinations are estimates relating to future cash flows, including revenue growth, gross margins, operatingexpenses and long-term growth rates, and our interpretation of current economic indicators and market conditions and their impact on our strategic plans andoperations. Due to the uncertainties associated with such estimates, interpretations and assumptions, actual results could differ from projected results, and furtherimpairment of goodwill could be recorded.Significant information and assumptions utilized in estimating future cash flows for our reporting units includes projections of market share gains as well aspublicly available industry information on projected single-family housing starts and lumber commodity prices which are used to project revenue. Projected grossmargins and operating expenses reflect current headcount levels and cost structure and are flexed in future years based upon historical trends at various revenuelevels. Long-term growth was based upon terminal value earnings before interest, taxes, depreciation and amortization (EBITDA) multiples of 4.5x for all reportingunits to reflect the relevant expected acquisition price. A discount rate of 12.5% was used for all reporting units and is intended to reflect the weighted average costof capital for a potential market participant and includes all risks of ownership and the associated risks of realizing the stream of projected future cash flows.Decreasing the long-term growth to an EBITDA multiple of 3.5x, or increasing the discount rate by 1.0% to 13.5%, would not have changed the results of ourimpairment testing.At December 31, 2016, the fair values of each of our reporting units were substantially in excess of their respective carrying values. The excess (or“cushion”) of the implied fair value of goodwill over the carrying value of goodwill for each of our nine reporting units ranged from $58.0 million to $238.0million. Factors that could negatively impact the estimated fair value of our reporting units and potentially trigger additional impairment include, but are not limitedto, unexpected competition, lower than expected housing starts, an increase in market participant weighted average cost of capital, increases in material or laborcost, and significant declines in our market capitalization. Future impairment of goodwill would have the effect of decreasing our earnings or increasing our lossesin such period, but would not impact our current outstanding debt obligations or compliance with covenants contained in the related debt agreements.Deferred Income Taxes. At December 31, 2016 and 2015, the Company had deferred tax assets, net of deferred tax liabilities, of $120.1 million and $127.1million, respectively, offset by valuation allowances of $4.8 million and $136.5 million, respectively. We have $411.4 million of state net operating loss carry-forwards, which includes $2.5 million of state tax credit carry-forwards expiring at various dates through 2036. We also have $226.5 million of federal netoperating loss carry-forwards that will expire at various dates through 2036. The federal and state net operating loss carry-forwards include approximately $23.3million of gross windfall tax benefits from stock option exercises that have not been recorded as of December 31, 2016. At December 31, 2016, the Companyneeded to generate approximately $287.6 million of pre-tax income in future periods to realize its federal deferred tax assets.37 We evaluate our deferred tax assets on a quarterly basis to determine whether a valuation allowance is required. In accordance with the Income Taxes topicof the Accounting Standards Codification (“Codification”) , we assess whether it is more likel y than not that some or all of our deferred tax assets will not berealized. Significant judgment is required in estimating valuation allowances for deferred tax assets and in making this determination, we consider all availablepositive and negative evide nce. In the Company’s evaluation of its ability to realize its deferred tax assets, we gave more significant weight to evidence that wasobjective in nature as compared to subjective evidence. Also, more significant weight was given to evidence that relate s to the Company’s current financialperformance. The realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income in the applicable carryback or carryforwardperiods. We consider the nature, frequency, and severity of current and cumulative losses, as well as historical and forecasted financial results, the overall businessenvironment, our industry's historic cyclicality, the reversal of existing deferred tax liabilities, and tax planning strategies in our assessmen t. Changes in ourestimates of future taxable income and tax planning strategies will affect our estimate of the realization of the tax benefits of these tax carryforwards.We recorded a full valuation allowance in 2008 due to our cumulative three-year loss position at that time, compounded by the negative industry-widebusiness trends and outlook. At December 31, 2015, the Company had given significant weight to the negative objective evidence of the historically weak housingmarket conditions during the housing downturn that contributed to our three-year cumulative pre-tax loss position when reporting a valuation allowance of $136.5million against our deferred income tax assets, representing a valuation allowance against substantially all of our net deferred income tax assets.In the second quarter of 2016, we moved from a cumulative loss position over the previous three years to a cumulative income position for the first timesince we established the full valuation allowance in 2008. We continued to maintain a cumulative income position over the previous three years into the thirdquarter of 2016. In the Company’s evaluation at September 30, 2016, we gave the most significant weight to this objective positive evidence related to its recentfinancial results. Additionally, even conservative projections of the Company’s estimated future annual pre-tax income would indicate realization of all of itsfederal net operating losses well in advance of the expiration of the Company’s NOL carryforwards and it would also absorb all federal deductible temporarydifferences as they reverse in future years. The Company considered, at a lower weighting, the subjective positive evidence that it expects to increase its pre-taxincome in future years as the homebuilding industry continues to recover and strengthen as currently projected by a composite of third-party sources, including theNAHB. Therefore, at September 30, 2016, with this positive historical evidence and the projection of future profitability, management determined that there wassufficient positive evidence to conclude that it is more likely than not that we would realize our net federal and certain state deferred tax assets, resulting in $117.6million and $3.2 million benefit being recognized in our provision for income taxes for the third and fourth quarter of 2016, respectively.Prior to the quarter ended June 30, 2016, the Company had given significant weight to the negative objective evidence of its three-year cumulative pre-taxloss position as a result of losses incurred in prior years during the housing downturn. As of June 30, 2016 and September 30, 2016, the Company had generatedpositive cumulative pre-tax income for the past three years and therefore, the prior year losses were weighted less than the recent positive financial results in theCompany’s evaluation at September 30, 2016. Other negative subjective evidence, such as the cyclical, slower-than-anticipated housing market recovery, wasconsidered at a lower weighting because the Company’s recent financial performance has been achieved in this environment.As of December 31, 2016, we have certain states where we are not currently projecting future taxable income levels that would be sufficient to utilize thecarryover net operating losses and as such continue to maintain a valuation allowance against certain of these state deferred tax assets. We will continue to assessquarterly whether it is more likely than not that some or all of these state deferred tax assets will be realizable in the future. Changes in the positive and negativeevidence, including differences in the Company’s future operating results as compared to the estimates utilized in the determination of the valuation allowance,could result in changes in the Company’s estimate of the valuation allowance related to its tax benefits for state net operating loss carryforwards.In 2016 we recorded a reduction to the valuation allowance of $131.7 million against our net deferred tax assets as we released valuation allowances on ournet deferred tax assets as noted above. In 2015, we recorded a valuation allowance of $9.7 million related to our continuing operations. In 2014, we reduced ourvaluation allowance by $7.2 million due to the utilization of net operating losses against federal and state taxable income.We base our estimate of deferred tax assets and liabilities on current tax laws and rates. In certain cases, we also base our estimate on business plan forecastsand other expectations about future outcomes. Changes in existing tax laws or rates could affect our actual tax results, and future business results may affect theamount of our deferred tax liabilities or the valuation of our deferred tax assets over time. Due to uncertainties in the estimation process, particularly with respect tochanges in facts and circumstances in future reporting periods, as well as the residential homebuilding industry’s cyclicality and sensitivity to changes in economicconditions, it is possible that actual results could differ from the estimates used in previous analyses. 38 Accounting for deferred taxes is based upon estimates of future results. Differences between the anticipated and actual outcomes of these future resultscould have a material impact on our consolidated results of operations or financial position. Insurance. We are insured for general liability, auto liability and workers’ compensation exposures, subject to deductible amounts. The expected liability forunpaid claims, including incurred but not reported losses, is determined using the assistance of a third-party actuary and is reflected on our balance sheet as anaccrued liability. The amount recoverable from our insurance provider is reflected as an other asset. Our accounting policy includes an internal evaluation andadjustment of our reserve for all insured losses on a quarterly basis. On a quarterly basis, we engage an external actuarial professional to independently assess andestimate the total liability outstanding, which is compared to the actual reserve balance at that time and adjusted accordingly.Stock-Based Compensation. Calculating stock-based compensation expense requires the input of subjective assumptions. We determine the fair value ofeach restricted stock unit grant subject to market conditions using the Monte Carlo simulation model. Specific inputs to the model include the expected volatilitiesof our common stock and the expected volatilities of the common stocks of the constituents of the Company’s peer group, dividend yield and risk-free rate.The expected volatilities are based on the historical volatilities of our common stock and the common stocks of the constituents of the Company’s peergroup over the most recent period equal to the measurement period. The expected dividend yield is based on our history of not paying regular dividends in the pastand our current intention to not pay regular dividends in the foreseeable future. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time ofgrant and has a term equal to the measurement period.rECEntly iSSUEd ACCOUnting StAndArdSInformation regarding recent accounting pronouncements is discussed in Note 2 to the consolidated financial statements included in Item 8 of this annualreport on Form 10-K.item 7A. Quantitative and Qualitative Disclosures about Market RiskWe may experience changes in interest expense if changes in our debt occur. Changes in market interest rates could also affect our interest expense. Our2023 notes and our 2024 notes bear interest at a fixed rate, therefore, our interest expense related to these notes would not be affected by an increase in marketinterest rates. Borrowings under the 2015 facility and the 2015 term loan bear interest at either a base rate or eurodollar rate, plus, in each case, an applicablemargin. At December 31, 2016, a 1.0% increase in interest rates on the 2015 term loan would, subject to the interest rate floor specified in the agreement, result inapproximately $3.6 million in additional interest expense annually. At December 31, 2016, a 1.0% increase in interest rates on the 2015 facility would result in noadditional interest expense annually as we had no outstanding borrowings. The 2015 facility also assesses variable commitment and outstanding letter of credit feesbased on quarterly average loan utilization.We purchase certain materials, including lumber products, which are then sold to customers as well as used as direct production inputs for our manufacturedproducts that we deliver. Short-term changes in the cost of these materials and the related in-bound freight costs, some of which are subject to significantfluctuations, are sometimes, but not always, passed on to our customers. Our delayed ability to pass on material price increases to our customers can adverselyimpact our operating results. 39 i tem 8. Financial Statements and Supplementary dataindEx tO COnSOlidAtEd FinAnCiAl StAtEmEntS Report of Independent Registered Public Accounting Firm 41Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2016, 2015 and 2014 42Consolidated Balance Sheets at December 31, 2016 and 2015 43Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014 44Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2016, 2015 and 2014 45Notes to Consolidated Financial Statements 46 40 report of independent regi stered Public Accounting FirmTo the Board of Directors and Stockholders of Builders FirstSource, Inc.In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations and comprehensive income (loss),stockholders’ equity and cash flows present fairly, in all material respects, the financial position of Builders FirstSource, Inc. and its subsidiaries at December 31,2016 and December 31, 2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2016 inconformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects,effective internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control - Integrated Framework (2013) issuedby the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements,for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included inManagement's Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company'sinternal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public CompanyAccounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether thefinancial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Ouraudits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing theaccounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal controlover financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, andtesting and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such otherprocedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control overfinancial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate./s/ PricewaterhouseCoopers LLPDallas, TexasMarch 1, 2017 41 BUildErS FirStSOUrCE, inC. And SUBSidiAriESCOnSOlidAtEd StAtEmEntS OF OPErAtiOnS And COmPrEHEnSivE inCOmE (lOSS) years Ended december 31, 2016 2015 2014 (in thousands, except per share amounts) Sales $6,367,284 $3,564,425 $1,604,096 Cost of sales 4,770,536 2,662,967 1,247,099 Gross margin 1,596,748 901,458 356,997 Selling, general and administrative expenses 1,360,412 810,703 307,387 Income from operations 236,336 90,755 49,610 Interest expense, net 214,667 109,199 30,349 Income (loss) before income taxes 21,669 (18,444) 19,261 Income tax expense (benefit) (122,672) 4,387 1,111 Net income (loss) $144,341 $(22,831) $18,150 Comprehensive income (loss) $144,341 $(22,831) $18,150 Net income (loss) per share: Basic $1.30 $(0.22) $0.19 Diluted $1.27 $(0.22) $0.18 Weighted average common shares outstanding: Basic 110,754 103,190 98,050 Diluted 113,585 103,190 100,522 The accompanying notes are an integral part of these consolidated financial statements. 42 BUildErS FirStSOUrCE, inC. And SUBSidiAriESCOnSOlidAtEd BAlAnCE SHEEtS december 31, 2016 2015 (in thousands, except per share amounts) ASSEtS Current assets: Cash and cash equivalents $14,449 $65,063 Accounts receivable, less allowances of $11,571 and $8,049 at December 31, 2016 and 2015, respectively 569,208 528,544 Other receivables 55,781 57,778 Inventories, net 541,771 513,045 Other current assets 34,772 29,899 Total current assets 1,215,981 1,194,329 Property, plant and equipment, net 656,101 734,329 Assets held for sale 4,361 5,585 Goodwill 740,411 739,625 Intangible assets, net 159,373 189,604 Deferred income taxes 115,320 2,035 Other assets, net 18,340 16,531 Total assets $2,909,887 $2,882,038 liABilitiES And StOCKHOldErS’ EQUity Current liabilities: Checks outstanding $35,606 $46,833 Accounts payable 409,759 365,347 Accrued liabilities 293,115 293,905 Current maturities of long-term debt and lease obligations 16,217 29,153 Total current liabilities 754,697 735,238 Long-term debt and lease obligations, net of current maturities, debt discount, and debt issuance costs 1,785,835 1,922,518 Deferred income taxes — 11,502 Other long-term liabilities 59,735 63,585 Total liabilities 2,600,267 2,732,843 Commitments and contingencies (Note 14) Stockholders’ equity: Preferred stock, $0.01 par value, 10,000 shares authorized; zero shares issued and outstanding atDecember 31, 2016 and 2015 — — Common stock, $0.01 par value, 200,000 shares authorized; 111,564 and 109,726 shares issued andoutstanding at December 31, 2016 and 2015, respectively 1,115 1,097 Additional paid-in capital 527,868 511,802 Accumulated deficit (219,363) (363,704)Total stockholders’ equity 309,620 149,195 Total liabilities and stockholders’ equity $2,909,887 $2,882,038 The accompanying notes are an integral part of these consolidated financial statements. 43 BUildErS FirStSOUrCE, inC. And SUBSidiAriESCOnSOlidAtEd StAtEmEntS OF CASH FlOWS years Ended december 31, 2016 2015 2014 (in thousands) Cash flows from operating activities: Net income (loss) $144,341 $(22,831) $18,150 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 109,793 58,280 9,519 Asset impairments 4,616 2,114 — Amortization of deferred loan costs 6,863 18,630 2,432 Amortization of debt discount 639 299 — Loss on extinguishment of debt 55,776 — — Payment of original issue discount (1,259) — — Accretion of lease finance obligations 813 — — Fair value adjustment of stock warrants — 4,563 (456)Deferred income taxes (124,787) 3,287 524 Bad debt expense 1,390 2,285 (274)Stock compensation expense 10,549 6,848 6,157 Net gain on sales of assets (4,952) (801) (114)Changes in assets and liabilities, net of assets acquired and liabilities assumed: Receivables (45,942) 74,089 1,113 Inventories (33,965) 46,854 (9,103)Other current assets (4,873) (6,320) (4,791)Other assets and liabilities (1,641) 5,314 (660)Accounts payable and checks outstanding 36,585 (45,286) (5,410)Accrued liabilities 4,281 29,709 10,406 Net cash provided by operating activities 158,227 177,034 27,493 Cash flows from investing activities: Purchases of property, plant and equipment (42,662) (43,811) (25,716)Proceeds from sale of property, plant and equipment 8,305 4,275 213 Cash used for acquisitions, net (3,970) (1,468,511) (69,337)Net cash used in investing activities (38,327) (1,508,047) (94,840)Cash flows from financing activities: Borrowings under revolving credit facility 907,000 320,000 30,000 Payments under revolving credit facility (967,000) (290,000) — Proceeds from issuance of notes 750,000 700,000 — Proceeds from term loan — 594,000 — Repayments of long-term debt and other loans (807,517) (4,213) (67)Payments of debt extinguishment costs (42,869) — — Payments of loan costs (15,663) (58,525) (34)Proceeds from public offering of common stock, net of issuance costs — 111,309 — Exercise of stock options 6,627 6,718 1,831 Repurchase of common stock (1,092) (986) (1,306)Net cash provided by (used in) financing activities (170,514) 1,378,303 30,424 Net increase (decrease) in cash and cash equivalents (50,614) 47,290 (36,923)Cash and cash equivalents at beginning of period 65,063 17,773 54,696 Cash and cash equivalents at end of period $14,449 $65,063 $17,773 Supplemental disclosure of non-cash activitiesFor the years ended December 31, 2016 and 2015 the Company retired assets subject to lease finance obligations of $38.1 million and $1.4 million and extinguished therelated lease finance obligation of $41.2 million and $1.5 million, respectively. There were no retirements of assets subject to lease finance obligations or extinguishment oflease finance obligations for the year ended December 31, 2014.The Company purchased equipment which was financed through capital lease obligations of $8.1 million and $1.6 million in the years ended December 31, 2016 and 2015,respectively. There were no purchases of equipment financed through capital lease obligations for the year ended December 31, 2014. The accompanying notes are an integral part of these consolidated financial statements. 44 BUildErS FirStSOUrCE, inC. And SUBSidiAriESCOnSOlidAtEd StAtEmEnt OF CHAngES in StOCKHOldErS’ EQUity Additional Paid Common Stock in Accumulated Shares Amount Capital deficit total (in thousands) Balance at December 31, 2013 97,905 $973 $373,418 $(359,023) $15,368 Vesting of restricted stock — 6 (6) — — Stock compensation expense — — 6,157 — 6,157 Exercise of stock options 492 5 1,826 — 1,831 Repurchase of common stock (171) (2) (1,304) — (1,306)Net income — — — 18,150 18,150 Balance at December 31, 2014 98,226 982 380,091 (340,873) 40,200 Issuance of common stock from public offering, net ofissuance costs 9,200 92 111,217 — 111,309 Vesting of restricted stock units 495 5 (5) — — Stock compensation expense — — 6,848 — 6,848 Exercise of stock options 1,388 14 6,704 — 6,718 Exercise of stock warrants 569 6 7,931 — 7,937 Repurchase of common stock (152) (2) (984) — (986)Net loss — — — (22,831) (22,831)Balance at December 31, 2015 109,726 1,097 511,802 (363,704) 149,195 Vesting of restricted stock units 505 5 (5) — — Stock compensation expense — — 10,549 — 10,549 Exercise of stock options 1,496 15 6,612 — 6,627 Repurchase of common stock (163) (2) (1,090) — (1,092)Net income — — — 144,341 144,341 Balance at December 31, 2016 111,564 $1,115 $527,868 $(219,363) $309,620 The accompanying notes are an integral part of these consolidated financial statements. 45 BUildErS FirStSOUrCE, inC. And SUBSidiAriESnOtES tO COnSOlidAtEd FinAnCiAl StAtEmEntS 1. description of the BusinessBuilders FirstSource, Inc., a Delaware corporation formed in 1998, is a leading supplier of building materials, manufactured components and constructionservices to professional contractors, sub-contractors, and consumers. Following our acquisition of ProBuild Holdings LLC (“ProBuild”) in July 2015, the companyoperates locations in 40 states across the United States.In this annual report, references to the “Company,” “we,” “our,” “ours” or “us” refer to Builders FirstSource, Inc. and its consolidated subsidiaries(including ProBuild as of July 31, 2015), unless otherwise stated or the context otherwise requires. 2. Summary of Significant Accounting PoliciesPrinciples of ConsolidationThe consolidated financial statements present the results of operations, financial position, and cash flows of Builders FirstSource, Inc. and its wholly-ownedsubsidiaries. All intercompany transactions have been eliminated in consolidation.Accounting EstimatesThe preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States of America requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at thedate of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from thoseestimates.Estimates are used when accounting for items such as revenue, vendor rebates, allowance for returns, discounts and doubtful accounts, employeecompensation programs, depreciation and amortization periods, income taxes, inventory values, insurance programs, goodwill, other intangible assets and long-lived assets.Sales RecognitionWe recognize sales of building products upon delivery to the customer. For contracts with service elements, sales are generally recognized on the completedcontract method as these contracts are usually completed within 30 days with the percentage of completion method applied on a limited basis to certain contracts.Percentage of completion revenue represents less than 2% of our consolidated sales for each year presented. Contract costs include all direct material and labor,equipment costs and those indirect costs related to contract performance. Provisions for estimated losses on uncompleted contracts are recognized in the period inwhich such losses are determined. Prepayments for materials or services are deferred until such materials have been delivered or services have been provided. Allsales recognized are net of allowances for discounts and estimated returns, based on historical experience. We present all sales tax on a net basis in our consolidatedfinancial statements. The Company records sales incentives provided to customers as a reduction of revenue.Cash and Cash Equivalents & Checks OutstandingCash and cash equivalents consist of cash on hand and all highly liquid investments with an original maturity date of three months or less. Also included incash and cash equivalents are proceeds due from credit card transactions that generally settle within two business days. We maintain cash at financial institutions inexcess of federally insured limits. Further, we maintain various banking relationships with different financial institutions. Accordingly, when there is a negativebook cash balance resulting from outstanding checks that had not yet been paid by any single financial institution; they are reflected in checks outstanding on theaccompanying consolidated balance sheets.Financial InstrumentsWe use financial instruments in the normal course of business as a tool to manage our assets and liabilities. We do not hold or issue financial instruments fortrading purposes.We issued detachable warrants in 2011, which were measured at fair value on a recurring basis until exercised in 2015 as discussed in Note 8.46 Accounts ReceivableWe extend credit to qualified professional homebuilders and contractors, in many cases on a non-collateralized basis. Accounts receivable potentiallyexpose us to concentrations of credit risk. Because our customers are dispersed among our various markets, our credit risk to any one customer or state economy isnot significant.Our customer mix is a balance of large national homebuilders, regional homebuilders, local homebuilders and repair and remodeling contractors. For theyear ended December 31, 2016, our top 10 customers accounted for approximately 16.8% of our sales, and no single customer accounted for more than 5% of sales.The allowance for doubtful accounts is based on management’s assessment of the amount which may become uncollectible in the future and is estimatedusing specific review of problem accounts, overall portfolio quality, current economic conditions that may affect the borrower’s ability to pay, and historicalexperience. Accounts receivable are written off when deemed uncollectible. Other receivables consist primarily of vendor rebates receivable.We also establish reserves for credit memos and customer returns. The reserve balance was $5.6 million and $3.8 million at December 31, 2016 and 2015,respectively. The activity in this reserve was not significant for each year presented.Accounts receivable consisted of the following at December 31: 2016 2015 (in thousands) Accounts Receivable $580,779 $536,593 Less: allowances for returns and doubtful accounts 11,571 8,049 Accounts receivable, net $569,208 $528,544 The following table shows the changes in our allowance for doubtful accounts: 2016 2015 2014 (in thousands) Balance at January 1, $4,245 $1,734 $2,413 Additions 1,390 2,285 (274) Deductions (write-offs, net of recoveries) 287 226 (405) Balance at December 31, $5,922 $4,245 $1,734 InventoriesInventories consist principally of materials purchased for resale, including lumber, sheet goods, windows, doors and millwork, as well as certainmanufactured products and are stated at the lower of cost or market. Cost is determined using the weighted average method, the use of which approximates thefirst-in, first-out method. We accrue for shrink based on the actual historical shrink results of our most recent physical inventories adjusted, if necessary, for currenteconomic conditions. These estimates are compared with actual results as physical inventory counts are taken and reconciled to the general ledger.During the year, we monitor our inventory levels by market and record provisions for excess inventories based on slower moving inventory. We definepotential excess inventory as the amount of inventory on hand in excess of the historical usage, excluding special order items purchased in the last six months. Wethen apply our judgment as to forecasted demand and other factors, including liquidation value, to determine the required adjustments to net realizable value. Ourinventories are generally not susceptible to technological obsolescence.Our arrangements with vendors provide for rebates of a specified amount of consideration, payable when certain measures, generally related to a stipulatedlevel of purchases, have been achieved. We account for estimated rebates as a reduction of the prices of the vendor’s inventory until the product is sold, at whichtime such rebates reduce cost of sales in the accompanying consolidated statements of operations and comprehensive loss. Throughout the year we estimate theamount of the rebates based upon the expected level of purchases. We continually revise these estimates based on actual purchase levels.We source products from a large number of suppliers. No materials purchased from any single supplier represented more than 7% of our total materialspurchased in 2016.47 Shipping and Handling CostsHandling costs incurred in manufacturing activities are included in cost of sales. All other shipping and handling costs are included in selling, general andadministrative expenses in the accompanying consolidated statements of operations and comprehensive income (loss) and totaled $269.8 million, $171.9 millionand $79.7 million in 2016, 2015 and 2014, respectively.Income TaxesWe account for income taxes utilizing the liability method described in the Income Taxes topic of the FASB Accounting Standards Codification(“Codification”). Deferred income taxes are recorded to reflect consequences on future years of differences between the tax basis of assets and liabilities and theirfinancial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which differences are expected to affecttaxable earnings. We record a valuation allowance to reduce deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets willnot be realized.Warranty ExpenseWe have warranty obligations with respect to most manufactured products; however, the liability for the warranty obligations is not significant as a result ofthird-party inspection and acceptance processes.Debt Issuance Costs and Debt DiscountLoan costs are capitalized upon the issuance of long-term debt and amortized over the life of the related debt. Debt issuance costs associated with term debtare presented as a reduction to long-term debt. Debt issuance costs associated with revolving debt arrangements are presented as a component of other assets. Debtissuance costs incurred in connection with revolving debt arrangements are amortized using the straight-line method. Debt issuance costs incurred in connectionwith term debt are amortized using the effective interest method. Debt discount is amortized over the life of the related debt using the effective interest method.Amortization of debt issuance costs and the debt discount are included in interest expense. Upon changes to our debt structure, we evaluate debt issuance costs inaccordance with the Debt topic of the Codification. We adjust debt issuance costs as necessary based on the results of this evaluation, as discussed in Note 8.Property, Plant and EquipmentProperty, plant and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. The estimatedlives of the various classes of assets are as follows: Buildings and improvements 20 to 40 years Machinery and equipment 3 to 10 years Furniture and fixtures 3 to 5 years Leasehold improvements The shorter of the estimated useful life or the remaining lease term Major additions and improvements are capitalized, while maintenance and repairs that do not extend the useful life of the property are charged to expense asincurred. Gains or losses from dispositions of property, plant and equipment are recorded in the period incurred. We also capitalize certain costs of computersoftware developed or obtained for internal use, including interest, provided that those costs are not research and development, and certain other criteria are met.Internal use computer software costs are included in machinery and equipment and generally depreciated using the straight-line method over the estimated usefullives of the assets, generally three years.We periodically evaluate the commercial and strategic operation of the land, related buildings and improvements of our facilities. In connection with theseevaluations, some facilities may be consolidated, and others may be sold or leased. Nonoperating assets primarily related to land and building real estate assetsassociated with location closures that are actively being marketed for sale within a year are classified as assets held for sale and recorded at fair value, usually thequoted market price obtained from an independent third-party less the cost to sell. Until the assets are sold, an estimate of the fair value is reassessed at eachreporting period. Net gains or losses related to the sale of real estate and equipment or impairment adjustments related to assets held for sale are recorded as selling,general and administrative expenses.48 Long-Lived AssetsWe evaluate our long-lived assets, other than goodwill, for impairment when events or changes in circumstances indicate, in our judgment, that the carryingvalue of such assets may not be recoverable. The determination of whether or not impairment exists is based on our estimate of undiscounted future cash flowsbefore interest attributable to the assets as compared to the net carrying value of the assets. If impairment is indicated, the amount of the impairment recognized isdetermined by estimating the fair value of the assets based on estimated discounted future cash flows and recording a provision for loss if the carrying value isgreater than estimated fair value. The net carrying value of assets identified to be disposed of in the future is compared to their estimated fair value, usually thequoted market price obtained from an independent third-party less the cost to sell, to determine if impairment exists. Until the assets are disposed of, an estimate ofthe fair value is reassessed when related events or circumstances change. Asset impairment charges are presented in the consolidated statements of operations andcomprehensive income (loss) for the respective years.InsuranceWe have established insurance programs to cover certain insurable risks consisting primarily of physical loss to property, business interruptions resultingfrom such loss, workers’ compensation, employee healthcare, and comprehensive general and auto liability. Third party insurance coverage is obtained forexposures above predetermined deductibles as well as for those risks required to be insured by law or contract. Provisions for losses are developed from valuationsthat rely upon our past claims experience, which considers both the frequency and settlement of claims. We discount our workers’ compensation liability basedupon estimated future payment streams at our risk-free rate. Our total insurance reserve balances were $80.4 million and $84.3 million as of December 31, 2016and 2015, respectively. Of these balances $43.6 million and $40.3 million were recorded as other long-term liabilities as of December 31, 2016 and 2015,respectively. Included in these reserve balances as of December 31, 2016 and 2015, were approximately $9.4 million and $9.9 million, respectively, of claims thatexceeded stop-loss limits and are expected to be recovered under insurance policies which are also recorded as other receivables and other assets in theaccompanying consolidated balance sheets.Net Income (Loss) per Common ShareNet income (loss) per common share, or earnings per share (“EPS”), is calculated in accordance with the Earnings per Share topic of the Codification whichrequires the presentation of basic and diluted EPS. Basic EPS is computed using the weighted average number of common shares outstanding during the period.Diluted EPS is computed using the weighted average number of common shares outstanding during the period, plus the dilutive effect of potential common shares.The table below presents a reconciliation of weighted average common shares used in the calculation of basic and diluted EPS for the years endedDecember 31: 2016 2015 2014 (in thousands) Weighted average shares for basic EPS 110,754 103,190 98,050 Dilutive effect of options, warrants, and RSUs 2,831 — 2,472 Weighted average shares for diluted EPS 113,585 103,190 100,522 Our restricted stock shares include rights to receive dividends that are not subject to the risk of forfeiture even if the underlying restricted stock shares onwhich the dividends were paid do not vest. In accordance with the Earnings Per Share topic of the Codification, unvested share-based payment awards that containnon-forfeitable rights to dividends are deemed participating securities and should be considered in the calculation of basic EPS. Since the restricted stock shares donot include an obligation to share in losses, they will be included in our basic EPS calculation in periods of net income and excluded from our basic EPS calculationin periods of net loss. Accordingly, there were 13,000 restricted stock shares excluded from the computation of basic EPS in 2015 because we generated a net loss.There were 27,000 restricted stock shares included in our basic EPS calculation for 2014 as we generated net income. There were no outstanding restricted stockshares as of December 31, 2016.For the purpose of computing diluted EPS, weighted average shares outstanding have been adjusted for common shares underlying 3,515,000 options topurchase common stock and 2,177,000 restricted stock units (“RSUs”) for 2016. Options to purchase 4,998,000 shares of common stock and 1,516,000 RSUs werenot included in the computation of diluted EPS for 2015 because their effect was anti-dilutive. Incremental shares attributable to average warrants outstandingduring 2015 were not included in the computation of diluted EPS for 2015 as their effect was anti-dilutive. There were no warrants outstanding at December 31,2016 as all of the remaining warrants were exercised in April 2015. Weighted average shares outstanding have been adjusted for common shares underlying6,246,000 options, 700,000 warrants, and 1,855,000 RSUs for 2014. In addition, $0.5 million of income due to fair value adjustments related to the warrants wasexcluded from net income in the computation of diluted EPS for 2014.49 Goodwill and Other Intan gible AssetsIntangibles subject to amortizationWe recognize an acquired intangible asset apart from goodwill whenever the intangible asset arises from contractual or other legal rights, or whenever it canbe separated or divided from the acquired entity and sold, transferred, licensed, rented, or exchanged, either individually or in combination with a related contract,asset or liability. Impairment losses are recognized if the carrying value of an intangible asset subject to amortization is not recoverable from expected future cashflows and its carrying amount exceeds its estimated fair value.GoodwillWe recognize goodwill as the excess cost of an acquired entity over the net amount assigned to assets acquired and liabilities assumed. Goodwill is testedfor impairment on an annual basis and between annual tests whenever impairment is indicated. This annual test takes place as of December 31 each year.Impairment losses are recognized whenever the implied fair value of goodwill is less than its carrying value.Stock-based CompensationWe have four stock-based employee compensation plans, which are described more fully in Note 10. We issue new common stock shares upon exercises ofstock options, grants of restricted stock, and vesting of RSUs.The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted averageassumptions for the year ended December 31: 2016 2015 2014Expected life 6.0 years 6.0 years 5.8 yearsExpected volatility 60.88% 75.2% 92.1%Expected dividend yield 0.00% 0.00% 0.00%Risk-free rate 1.41% 1.75% 1.83% The expected life represents the period of time the options are expected to be outstanding. We used the simplified method for determining the expected lifeassumption due to limited historical exercise experience on our stock options. The expected volatility is based on the historical volatility of our common stock overthe most recent period equal to the expected life of the option. The expected dividend yield is based on our history of not paying regular dividends in the past andour current intention to not pay regular dividends in the foreseeable future. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grantand has a term equal to the expected life of the options.The fair value of RSU awards subject to market conditions is estimated on the date of grant using the Monte Carlo simulation model with the followingweighted average assumptions for the year ended December 31: 2016Expected volatility (company) 53.6%Expected volatility (peer group median) 17.3%Correlation between the company and peer group median 0.47Expected dividend yield 0.00%Risk-free rate 1.29% The expected volatilities are based on the historical volatilities of our common stock and the common stocks of the constituents of the Company’s peergroup over the most recent period equal to the measurement period. The expected dividend yield is based on our history of not paying regular dividends in the pastand our current intention to not pay regular dividends in the foreseeable future. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time ofgrant and has a term equal to the measurement period. We did not grant any RSUs subject to market conditions in 2015 or 2014.50 Fair ValueThe Fair Value Measurements and Disclosures topic of the Codification provides a framework for measuring the fair value of assets and liabilities andestablishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fairvalue. The fair value hierarchy can be summarized as follows:Level 1 — unadjusted quoted prices for identical assets or liabilities in active markets accessible by usLevel 2 — inputs that are observable in the marketplace other than those inputs classified as Level 1Level 3 — inputs that are unobservable in the marketplace and significant to the valuationIf a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input thatis significant to the fair value calculation. The only financial instruments measured at fair value on a recurring basis were our warrants as discussed in Note 8.As of December 31, 2016 and 2015 the Company does not have any financial instruments which are measured at fair value on a recurring basis. We haveelected to report the value of our 10.75% senior unsecured notes due 2023 (“2023 notes”), 5.625% senior secured notes due 2024 (“2024 notes”), and $600.0million term loan facility due 2022 (“2015 term loan”) at amortized cost. The fair values of the 2023 notes, the 2024 notes and the 2015 term loan at December 31,2016 were approximately $421.8 million, $758.0 million and $471.2 million, respectively, and were determined using Level 2 inputs based on market prices. Supplemental Cash Flow InformationSupplemental cash flow information was as follows for the years ended December 31: 2016 2015 2014 (in thousands) Cash payments for interest $197,384 $55,028 $28,338 Cash payments for income taxes 2,875 1,409 456 Comprehensive Income (Loss)Comprehensive income (loss) is defined as the change in equity (net assets) of a business enterprise during a period from transactions and other events andcircumstances from non-owner sources. It consists of net income (loss) and other gains and losses affecting stockholders’ equity that, under GAAP, are excludedfrom net income. We had no items of other comprehensive income (loss) for the years ended December 31, 2016, 2015, and 2014. Recently Issued Accounting PronouncementsIn January 2017, the Financial Accounting Standards Board (“FASB”) issued an update to the existing guidance under the Intangibles-Goodwill and Othertopic of the Accounting Standards Codification (“Codification”) to simplify the accounting for goodwill impairment. The guidance removes Step 2 of the goodwillimpairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying valueexceeds its fair value, not to exceed the carrying amount of goodwill. All of the other goodwill impairment guidance will remain largely unchanged, including theoption to perform a qualitative assessment to determine if a quantitative impairment test is necessary. This update is effective for annual and any interim goodwillimpairment tests in fiscal years beginning after December 15, 2019. Early adoption of this guidance is permitted for annual or interim goodwill tests performedafter January 1, 2017. This guidance will be applied on a prospective basis following adoption.In January 2017, the FASB issued an update to the existing guidance under the Business Combinations topic of the Codification. This update revises thedefinition of a business. Under this guidance when substantially all of the assets acquired is concentrated in a single asset (or group of similar assets) the assetsacquired would not be considered a business. If this initial screen is met the need for further assessment is eliminated. If this screen is not met in order to beconsidered a business an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to create outputs.This update is effective for public companies for annual and interim reporting periods beginning after December 15, 2017. Early adoption of this guidance ispermitted. This guidance requires prospective application following adoption.51 In August 2016, the FASB issued an update to the existing guidance under the Statement of Cash Flows topic of the Codification . This update clarifies theclassification of certain transactions in the statement of cash flows. This update requires application using a retrospective transition method. This update is effectivefor public companies for annual and interim reporting periods beginning after December 15, 2017. Early adoption is permitted, provided that al l of theamendments in this update are adopted in the same period. As a result of the Company’s election to early adopt this updated guidance in the fourth quarter of 2016,$42.9 million in payments of debt extinguishment costs made in 2016 which were prev iously reflected as operating cash outflows on our 2016 quarterly reports onForm 10-Q are now presented as financing cash outflows. Adoption of this guidance resulted in $1.1 million from the second quarter of 2016, $33.3 million fromthe third quarter of 2016 and $8.5 million from the fourth quarter of 2016 in payments of debt extinguishment costs being presented as cash outflows fromfinancing activities for the year ended December 31, 2016. The adoption of this guidance had no impact to our statement of cash flows for the years endedDecember 31, 2015 or 2014In March 2016, the FASB issued an update to the existing guidance under the Compensation-Stock Compensation topic of the Codification. This updatesimplifies several aspects of accounting for stock compensation including accounting for income taxes, classification of awards as liabilities or equity, forfeituresand classification on the statement of cash flows. This update is effective for public companies for annual and interim reporting periods beginning after December15, 2016. Early adoption is permitted with adjustments reflected as of the beginning of the fiscal year of adoption. The various aspects of this guidance requireprospective, retrospective, or modified retrospective application. This guidance will be effective for the Company in the first quarter of 2017. As of December 31,2016 the Company had approximately $23.3 million of unrecognized gross windfall benefits. Upon adoption the Company will recognize any previouslyunrecorded windfall benefits on a modified retrospective basis through a cumulative-effect adjustment to the beginning balance of our accumulated deficit.Following adoption any windfalls or shortfalls will be recognized as a component of income tax expense in the period they occur. Additionally, the Company willelect to recognize the effect of pre-vesting forfeitures as they actually occur rather than estimating forfeitures each period. Any differential between the amount ofcompensation cost previously recorded and the amount that would have been recorded without assuming forfeitures will be recognized on a modified retrospectivebasis through a cumulative-effect adjustment to the beginning balance of our accumulated deficit.In February 2016, the FASB issued an update to the existing guidance under Leases topic of the Codification. Under the new guidance, lessees will berequired to recognize the following for all leases, with the exception of short-term leases, at the commencement date: (1) a lease liability, which is a lessee‘sobligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’sright to use, or control the use of, a specified asset for the lease term. This update requires a modified retrospective transition as of the beginning of the earliestcomparative period presented in the financial statements. This update is effective for public companies for fiscal years beginning after December 15, 2018,including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact of this guidance on our financialstatements.In July 2015, the FASB issued an update to the existing guidance under the Inventory topic of the Codification. This update changes the subsequentmeasurement of inventory from lower of cost or market to lower of cost and net realizable value. This guidance is effective for interim and annual reporting periodsbeginning after December 15, 2016. Early adoption of this guidance is permitted as of the beginning of an interim or annual reporting period. This guidancerequires prospective application. We do not expect the adoption of this guidance to have an impact on our financial statements.In August 2014, the FASB issued an update to the existing guidance under the Presentation of Financial Statements topic of the Codification. This updaterequires management to perform interim and annual assessments on whether there are conditions or events that raise substantial doubt about the entity’s ability tocontinue as a going concern within one year of the date the financial statements are issued and to provide related disclosures, if required. This new guidance iseffective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. As such, the Company adopted this guidance for theannual reporting period ending December 31, 2016. The adoption of this guidance did not have an impact on our financial statements.In May 2014, the FASB issued an update to the existing guidance under the Revenue Recognition topic of the Codification which is a comprehensive newrevenue recognition model requiring a company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflectsthe consideration to which the entity expects to be entitled in exchange for those goods or services. This new guidance was originally effective for annual reportingperiods beginning after December 15, 2016. However, in July 2015 the FASB approved an optional one year deferral of the effective date to annual reportingperiods beginning after December 15, 2017. Early adoption is permitted; however, this guidance cannot be adopted earlier than the original effective date. TheCompany does not intend to adopt this guidance early, therefore it will be effective for us beginning on January 1, 2018. This guidance allows either fullretrospective or modified retrospective methods of adoption. Subsequent to issuance of the original update the FASB issued several updates amending this newguidance. In April 2016, the FASB issued an update clarifying issues related to identifying performance obligations and licensing. In May 2016, the FASB issuedan update regarding the assessment of collectability criteria, presentation of sales taxes, measurement of noncash consideration and transition guidance forcompleted contracts and contract modifications. While we are still evaluating the impact of these updates on our financial statements, we anticipate this guidancewill primarily impact our contracts with service elements and certain classifications within the statement of operations. 52 3. AcquisitionsOn June 30, 2014 the Company acquired certain assets and the operations of Slone Lumber Company, Inc. (“Slone”) for $8.7 million in cash (includingcertain adjustments). Based in Houston, Texas, Slone is a full-line building materials supplier. Slone’s product offerings include lumber, engineered beams, interiorand exterior door units, moulding, trim, and cabinets. Slone also offers installation services on exterior doors, shutters, and cabinets.On July 31, 2014 the Company acquired certain assets and the operations of West Orange Lumber Company, Inc. (“West Orange”) for $9.8 million in cash(including certain adjustments). Based in Groveland, Florida, West Orange supplies lumber, roof and floor trusses, custom windows and doors, as well asinstallation services, to both residential homebuilders and commercial contractors in central Florida. On August 6, 2014 the Company acquired certain assets and the operations of Truss Rite, LLC (“Truss Rite”) for $14.6 million in cash (including certainadjustments). Based in Sherman, Texas Truss Rite primarily manufactures wood roof and floor trusses for large multi-family and commercial projects throughoutTexas and parts of Oklahoma. Truss Rite predominately serves developers and general contractors in the multi-family residential housing sector.On October 1, 2014 the Company acquired certain assets and the operations of Trim Tech of Austin, Inc. (“Trim Tech”) for $19.4 million in cash (includingcertain adjustments). Trim Tech is based in Hutto, Texas, which is approximately 30 miles north of downtown Austin. Trim Tech is a turn-key supplier of customcabinets, interior and exterior doors, stair parts, and custom millwork and molding. On December 22, 2014 the Company acquired certain assets and the operations of Empire Truss, Ltd. (“Empire”) for $16.8 million in cash (includingcertain adjustments). Empire is a Texas-based manufacturer of custom designed roof trusses and floor trusses, and a distributor of engineered wood products withits primary operations located in Huntsville, Texas, approximately 65 miles north of downtown Houston. Empire’s primary focus is on multi-family and lightcommercial customers. On February 9, 2015, the Company acquired certain assets and the operations of Timber Tech Texas, Inc. and its affiliates (“Timber Tech”) for $5.8 millionin cash (including certain adjustments). Timber Tech is based in Cibolo, Texas, which is approximately 25 miles northeast of downtown San Antonio. Timber Techis a manufacturer of roof trusses, floor trusses, wall panels and sub-components, as well as a supplier of glue laminated timber and veneer lumber beams.On July 31, 2015, the Company acquired all of the operating affiliates of ProBuild through the purchase of all issued and outstanding equity interests inProBuild for $1.63 billion in cash, subject to certain adjustments. The purchase price was funded by the net proceeds received from the financing transactionsdescribed in Note 8. Previously headquartered in Denver, Colorado, ProBuild is one of the nation’s largest professional building materials suppliers. As a result ofthe ProBuild acquisition, the Company has a greater diversification of products and services and a significantly improved geographic footprint.These acquisitions were accounted for by the acquisition method, and accordingly the results of operations were included in the Company’s consolidatedfinancial statements from the acquisition date. The purchase price was allocated to the assets acquired based on estimated fair values at the acquisition date, withthe excess of purchase price over the estimated fair value of the net assets acquired recorded as goodwill. The fair value of acquired intangible assets of $184.5million, primarily related to tradenames, customer relationships and lease contract intangibles, was estimated by applying an income approach. That measure isbased on significant Level 3 inputs not observable in the market. Key assumptions developed based on the Company’s historical experience, future projections andcomparable market data include future cash flows, long-term growth rates, royalty rates, attrition rates and discount rates.We incurred acquisition related costs of $20.9 million and $0.6 million related to these acquisitions during the years ended December 31, 2015 and 2014,respectively. These costs include due diligence costs and transaction costs to complete the acquisitions, and have been recognized in selling, general andadministrative expense in the accompanying condensed consolidated statements of operations and comprehensive income (loss). We did not incur any acquisitioncosts related to these acquisitions during the year ended December 31, 2016.53 T he following table summarizes the aggregate fair values of the assets acquired and liabilities assumed for ProBuild and all other acquisitions, net of cash(in thousands) for the year ended: 2015 2014 ProBuild All Other All Other Accounts receivable$470,105 $306 $9,544 Other receivables 34,718 — — Inventory 411,160 1,095 5,417 Other current assets 12,101 — — Property, plant and equipment 658,540 3,961 8,580 Assets held for sale 10,911 — — Goodwill (Note 5) 602,690 (2,839) 28,581 Intangible assets (Note 6) 184,509 3,311 17,467 Other assets 2,016 — 34 Total assets acquired 2,386,750 5,834 69,623 Checks outstanding (32,378) — — Current maturities of long term debt and lease obligations (25,456) — — Accounts payable (339,673) — — Accrued liabilities (210,436) (37) (286)Other long-term liabilities (53,703) — — Long-term debt and lease obligations, net of current maturities (262,390) — — Total liabilities assumed (924,036) (37) (286)Total net assets acquired$1,462,714 $5,797 $69,337 All of the goodwill and intangible assets recognized from the ProBuild and all other acquisitions are expected to be deductible for tax purposes, with thegoodwill recognized from these acquisitions being amortized ratably over a 15 year period. The ProBuild acquisition was treated as an asset purchase for taxpurposes.The operating results of the acquisitions have been included in the consolidated statements of operations and comprehensive income (loss) from theiracquisition dates through December 31, 2016. Net sales and net income attributable to ProBuild were approximately $4,520 million and $190 million, respectivelyfor the year ended December 31, 2016. Net sales and net income attributable to ProBuild were approximately $1,860 million and $50 million, respectively, for theperiod of August 1, 2015 through December 31, 2015. Net income attributable to ProBuild does not include an allocation of the additional interest expense incurredby the Company as a result of the ProBuild acquisition financing transactions. Net sales and net income attributable to the other acquisitions are not material,individually or in the aggregate.The following table reflects the pro forma operating results for the Company which gives effect to the acquisition of ProBuild as if it had occurred onJanuary 1, 2014. The pro forma results are based on assumptions that the Company believes are reasonable under the circumstances. The pro forma results are notnecessarily indicative of future results. The pro forma financial information includes the historical results of the Company and ProBuild adjusted for certain items,which are described below, and does not include the effects of any synergies or cost reduction initiatives related to the acquisition of ProBuild. Pro formainformation for the other acquisitions is not presented as it is not material, individually or in the aggregate. year Endeddecember 31, 2015 2014 (pro forma)(in thousands, except per share amounts)Net sales$6,066,792 $6,082,819 Net loss$(10,433) $(127,880)Basic net loss per share$(0.10) $(1.19)Diluted net loss per share$(0.10) $(1.19) Pro forma net loss for the years ended December 31, 2015 and 2014 reflects adjustments primarily related to depreciation and amortization, the conversionfrom last-in, first-out to first-in, first out inventory valuation, and interest expense. Pro forma net loss for 2015 was adjusted to exclude transaction-related expensesof $46.9 million ($34.6 million incurred by the Company and $12.3 million incurred by ProBuild). Pro forma net loss for 2014 was adjusted to include thesetransaction-related expenses. 54 Alaska Truss AcquisitionOn May 13, 2016, the Company acquired certain assets and the operations of Alaska Truss Manufacturing, LLC and ATM, LLC (collectively “AlaskaTruss”) for cash of $4.0 million and $1.0 million of other consideration, subject to certain adjustments. Of the total consideration, $3.4 million was allocated totangible assets acquired, primarily property, plant and equipment, $0.8 million was allocated to intangible assets and $0.8 million was allocated to goodwill.Based in Chugiak, Alaska, Alaska Truss supplies roof trusses to both residential and commercial contractors throughout the greater Anchorage area.Acquisition costs related to Alaska Truss were not material in the year ended December 31, 2016. Pro forma results of operations are not presented as thisacquisition is not material. 4. Property, Plant and EquipmentProperty, plant and equipment consisted of the following at December 31: 2016 2015 (in thousands) Land $195,064 $214,302 Buildings and improvements 331,498 338,566 Machinery and equipment 329,529 314,446 Furniture and fixtures 56,571 47,456 Construction in progress 12,771 7,828 Property, plant and equipment 925,433 922,598 Less: accumulated depreciation 269,332 188,269 Property, plant and equipment, net $656,101 $734,329 Depreciation expense was $87.2 million, $46.3 million and $8.5 million, of which $9.5 million, $5.3 million and $2.5 million was included in cost of sales,in 2016, 2015, and 2014, respectively.Included in property, plant and equipment are certain assets held under capital leases and lease finance obligations. These assets are recorded at the presentvalue of minimum lease payments and include land, buildings and equipment. Amortization charges associated with assets held under capital leases and leasefinance obligations are included in depreciation expense. The following balances held under capital lease and lease finance obligations, net of accumulatedamortization of $9.2 million and $4.9 million at December 31, 2016 and 2015, respectively, are included on the accompanying combined balance sheet: 2016 2015 (in thousands) Land $119,287 $124,987 Buildings and improvements 151,862 183,390 Machinery and equipment 11,012 14,168 $282,161 $322,545 55 5. goodwillThe following table sets forth the changes in the carrying amount of goodwill by reportable segment for the years ended December 31, 2016 and 2015 (inthousands): northeast Southeast South West total Balance as of January 1, 2015 Goodwill $13,609 $49,591 $121,210 $— $184,410 Accumulated impairment losses (494) (615) (43,527) — (44,636) 13,115 48,976 77,683 — 139,774 Acquisitions and other purchase price adjustments 83,493 11,100 208,452 296,806 599,851 Balance as of December 31, 2015 Goodwill $97,102 $60,691 $329,662 $296,806 $784,261 Accumulated impairment losses (494) (615) (43,527) — (44,636) 96,608 60,076 286,135 296,806 739,625 Acquisitions and other purchase price adjustments — — — 786 786 Balance as of December 31, 2016 Goodwill $97,102 $60,691 $329,662 $297,592 $785,047 Accumulated impairment losses (494) (615) (43,527) — (44,636) $96,608 $60,076 $286,135 $297,592 $740,411 In 2016, the change in the carrying amount of goodwill is attributable to our acquisition of Alaska Truss. In 2015, the change in the carrying amount ofgoodwill is attributable to our acquisitions of ProBuild and Timber Tech. The amount allocated to goodwill is attributable to the assembled workforce of theacquired companies as well as the diversification of products and services, the significantly improved geographic footprint, and the synergies expected to arise as aresult of these acquisitions.We closely monitor trends in economic factors and their effects on operating results to determine if an impairment trigger was present that would warrant areassessment of the recoverability of the carrying amount of goodwill prior to the required annual impairment test in accordance with the Intangibles – Goodwilland Other topic of the Codification.The process of evaluating goodwill for impairment involves the determination of fair value of our reporting units. Inherent in such fair value determinationsare certain judgments and estimates relating to future cash flows, including our interpretation of current economic indicators and market valuations andassumptions about our strategic plans with regard to our operations. Due to the uncertainties associated with such estimates, actual results could differ from suchestimates resulting in further impairment of goodwill.In performing our impairment analysis, we developed a range of fair values for our reporting units using a discounted cash flow methodology. Thediscounted cash flow methodology establishes fair value by estimating the present value of the projected future cash flows to be generated from the reporting unit.The discount rate applied to the projected future cash flows to arrive at the present value is intended to reflect all risks of ownership and the associated risks ofrealizing the stream of projected future cash flows. The discounted cash flow methodology uses our projections of financial performance for a five-year period. Themost significant assumptions used in the discounted cash flow methodology are the discount rate, the terminal value and the expected future revenues, grossmargins and operating expenses, which vary among reporting units. Significant assumptions used in our financial projections include housing starts, lumbercommodity prices, and market share gains.We recorded no goodwill impairment charges in 2016, 2015, and 2014. 56 6 . intangible AssetsThe following table presents intangible assets as of December 31: 2016 2015 grossCarryingAmount AccumulatedAmortization grossCarryingAmount AccumulatedAmortization (in thousands) Customer relationships $149,046 $(33,023) $148,910 $(12,968) Non-compete agreements 1,379 (375) 766 (170)Trade names 51,361 (13,286) 51,361 (4,155)Favorable lease intangibles 6,408 (2,137) 6,408 (548)Total intangible assets $208,194 $(48,821) $207,445 $(17,841)Unfavorable lease obligations (included in Accrued liabilities andOther long-term liabilities) $(19,597) $8,746 $(19,547) $2,072 In connection with the acquisition of ProBuild, we recorded intangible assets of $184.5 million, which includes $50.1 million of trade names, $128.0 millionof customer relationships and $6.4 million of favorable lease intangibles. We also recorded $19.5 million of unfavorable lease obligations. The weighted averageuseful lives of the acquired assets are 9.7 years for trade names, 13.5 years for customer relationships, and 10.0 years for both the favorable and unfavorable leaseintangibles.During the years ended December 31, 2016, 2015, and 2014, we recorded amortization expense in relation to the above-listed intangible assets of $22.6million, $11.9 million, and $1.1 million, respectively. In addition, as a result of the facility closure activities following the ProBuild acquisition, we recordedimpairment charges of $1.7 million and $1.4 million against our intangible assets during the years ended December 31, 2016 and 2015, respectively. Werecognized these impairment charges in selling, general, and administrative expense in the accompanying consolidated statement of operations and comprehensiveincome (loss). The following table presents the estimated amortization expense for these intangible assets for the years ending December 31 (in thousands): 2017 $21,869 2018 18,651 2019 17,748 2020 14,817 2021 11,935 Thereafter 63,502 Total future net intangible amortization expense $148,522 7. Accrued liabilitiesAccrued liabilities consisted of the following at December 31: 2016 2015 (in thousands) Accrued payroll and other employee related expenses $127,485 $120,138 Accrued business taxes 30,177 29,054 Self-insurance reserves 36,817 44,085 Accrued interest 28,570 33,712 Facility closure reserves 3,910 5,228 Customer obligations 38,448 38,173 Unfavorable lease obligations (Note 6) 4,921 5,096 Other 22,787 18,419 Total accrued liabilities $293,115 $293,905 57 8 . long-term debtLong-term debt and lease obligations consisted of the following (in thousands): december 31,2016 december 31,2015 2021 notes$— $350,000 2023 notes 367,608 700,000 2024 notes 750,000 — 2015 facility — 60,000 2015 term loan 467,650 598,625 Lease finance obligations 238,539 280,909 Capital lease obligations (Note 9) 7,427 8,159 1,831,224 1,997,693 Unamortized debt discount and debt issuance costs (29,172) (46,022) 1,802,052 1,951,671 Less: current maturities of long-term debt and lease obligations 16,217 29,153 Long-term debt and lease obligations, net of current maturities$1,785,835 $1,922,518 ProBuild Acquisition FinancingAs described in Note 3, we acquired all of the operating affiliates of ProBuild on July 31, 2015 through the purchase of all issued and outstanding equityinterests of ProBuild for $1.63 billion in cash, subject to certain adjustments. The purchase price was funded with the net cash proceeds from (i) the sale of $700.0million in aggregate principal amount of 10.75% senior unsecured notes due 2023 (the “2023 notes”), (ii) entry into a $600.0 million term loan credit agreement(the “2015 term loan”) provided by a syndicate of financial institutions led by Deutsche Bank AG, New York Branch, as administrative and collateral agent, (iii) a$295.0 million draw on an amended and restated $800.0 million senior secured revolving credit facility (the “2015 facility”) provided by a syndicate of financialinstitutions led by SunTrust Bank as administrative and collateral agent, and (iv) a public offering of 9.2 million new shares of our common stock at anoffering price of $12.80 per share (the “equity offering”).In connection with the financing transactions described above, we incurred approximately $65.0 million of various third-party fees and expenses. Of thesecosts, $18.1 million were allocated to the 2023 notes, $16.0 million were allocated to the 2015 term loan, $11.2 million were allocated to the 2015 facility and $6.5million were allocated to the equity offering. The costs allocated to the 2023 notes and the 2015 term loan were recorded as reductions to long-term debt and arebeing amortized over their respective terms using the effective interest method. The costs allocated to the 2015 facility were recorded as other assets and are beingamortized over its term on a straight-line basis. The costs allocated to the equity offering were recorded as a reduction to additional paid-in capital. In addition,$13.2 million in costs relate to commitment fees paid for bridge and backstop financing facilities entered into in connection with these financing transactions,neither of which was utilized. As such, these fees were recorded as interest expense in the third quarter of 2015. At the closing of these transactions, there wereapproximately $3.0 million in unamortized debt issuance costs associated with our previous revolving credit facility, of which approximately $0.9 million wererecorded as interest expense in the third quarter of 2015. The remaining $2.1 million in unamortized costs associated with our previous revolving credit facility arebeing amortized over the term of the 2015 facility.2016 Debt TransactionsDuring the year ended December 31, 2016, the Company executed several debt transactions which are described in more detail below. These transactionsinclude two debt exchanges, complete extinguishment of our 7.625% senior secured notes due 2021 (the “2021 notes”), repricing and partially repaying our 2015term loan and a cash tender offer in which we further reduced the aggregate principal amount of outstanding 2023 notes. These transactions have extended our debtmaturity profile and reduced our annual cash interest on a go forward basis.Note Exchange TransactionsOn February 12, 2016, we completed separate privately negotiated note exchange transactions in which $218.6 million in aggregate principal amount of our2023 notes was exchanged for $207.6 million in aggregate principal amount of our previously outstanding 2021 notes. On February 29, 2016, we completedadditional separate privately negotiated note exchange transactions in which $63.8 million in aggregate principal amount of our 2023 notes was exchanged for$60.0 million in aggregate principal amount of our previously outstanding 2021 notes.58 The note exchange transactions were considered to be debt extinguishments. As such, we recognized a net gain of $7.8 million which was recorded as anoffset to interest expense in the accompanying consolidated statements of operations and compreh ensive income (loss) for the year ended December 31, 2016. Ofthis $7.8 million gain, $14.8 million was attributable to the reduction in outstanding principal which was partially offset by the write-off of $7.0 million ofunamortized debt issuance costs as sociated with the 2023 notes which were extinguished in the exchange transactions.In connection with issuance of the 2021 notes in the exchange transactions, we incurred $4.9 million of various third-party fees and expenses. These costswere previously recorded as a reduction to long-term debt and were subsequently written off to interest expense in the third quarter of 2016 in connection with theextinguishment of the 2021 notes as described in the “2016 Refinancing Transactions” section below.Note Redemption TransactionIn May 2016, the Company exercised its contractual right to redeem $35.0 million in aggregate principal amount of 2021 notes at a price of 103.0%, plusaccrued and unpaid interest. The redemption transaction was considered to be a debt extinguishment. As such, we recognized a loss of $1.7 million which wasrecorded as a component of interest expense in the accompanying consolidated statements of operations and comprehensive income (loss) for the year endedDecember 31, 2016. Of this $1.7 million loss, $1.1 million was attributable to the payment of the redemption premium and $0.6 million was attributable to thewrite-off of unamortized debt issuance costs associated with the redeemed notes.2016 Refinancing TransactionsIn August 2016, we completed a private offering of $750.0 million in aggregate principal amount of 5.625% senior secured notes due 2024 (“2024 notes”)at an issue price equal to 100% of their face value. At the same time the Company also repriced its 2015 term loan. This repricing lowered the applicable margin to3.75% in the case of Eurodollar loans and 2.75% in the case of base rate loans. This reduction represents a 1.25% decrease in the applicable margin for bothEurodollar and base rate loans. In connection with the repricing, the mandatory quarterly principal repayments were reduced from $1.375 million to $1.175 million.All other material terms of the 2015 term loan remain unchanged.The proceeds from the issuance of the 2024 notes were used, together with cash on hand and borrowings on the 2015 facility, to fully redeem the $582.6million in aggregate outstanding principal amount of 2021 notes, to pay down $125.9 million of the 2015 term loan and to pay related transaction fees andexpenses.The redemption of the 2021 notes was considered to be a debt extinguishment. As such, we recognized a loss of $43.9 million which was recorded as acomponent of interest expense in the accompanying consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2016.Of this $43.9 million loss, $33.3 million was attributable to the payment of the redemption premium and $10.6 million was attributable to the write-off ofunamortized debt issuance costs associated with the redeemed notes. In addition, in connection with the repricing and pay down of the 2015 term loan werecognized $8.2 million in interest expense in the third quarter of 2016 related to the write-off of unamortized debt discount and debt issuance costs.In connection with the issuance of the 2024 notes and the 2015 term loan repricing, we incurred approximately $12.0 million of various third-party fees andexpenses. Of these costs $10.5 million were allocated to the 2024 notes and have been recorded as a reduction to long-term debt. These costs are being amortizedover the contractual life of the 2024 notes using the effective interest method. The remaining $1.5 million in costs incurred were allocated to the 2015 term loan. Ofthis $1.5 million, $1.2 million was recorded to interest expense in the third quarter of 2016. The remaining $0.3 million of new third-party costs together with $10.9million in remaining unamortized debt discount and debt issuance costs have been recorded as a reduction of long-term debt and are being be amortized over theremaining contractual life of the 2015 term loan using the effective interest method.Tender OfferIn October 2016, we purchased $50.0 million in aggregate principal amount of our 2023 notes pursuant to the terms of a cash tender offer at a price of117.0% of par value plus accrued and unpaid interest. The purchase of the 2023 notes was funded with cash on hand and borrowings under our 2015 facility.59 The tender offer transaction was considered to be a debt extinguishment. As such, we rec ognized a loss on extinguishment of $9.7 million which wasrecorded as a component of interest expense in the accompanying consolidated statements of operations and comprehensive income (loss) for the year endedDecember 31, 2016. Of this loss, approximate ly $8.5 million was attributable to the purchase premium paid to the lenders and $1.2 million was attributable to thewrite-off of unamortized debt issuance costs associated with the redeemed notes. In addition to the loss described above, we incurred appr oximately $0.1 million inthird party costs which were recorded to selling, general, and administrative expense in the fourth quarter of 2016.Senior Unsecured Notes due 2023As of December 31, 2016, we have $367.6 million outstanding in aggregate principal amount of the 2023 notes that mature on August 15, 2023. The 2023notes were sold in a private offering at an issue price equal to 100% of their face value. Interest accrues on the 2023 notes at a rate of 10.75% per annum and ispayable semi-annually on March 1 and September 1 of each year, commencing on March 1, 2016.The terms of the notes are governed by an indenture and a supplemental indenture, each dated as of July 31, 2015, among the Company, the guarantorsnamed therein and Wilmington Trust, National Association, as trustee (the “trustee”). Pursuant to the indenture and supplemental indenture, the company’ssignificant operating subsidiaries serve as guarantors of the 2023 notes. The 2023 notes are the Company’s senior unsecured obligations and will rank equally withall of its existing and future senior unsecured debt and will be senior to all of its existing and future subordinated debt.The indenture contains certain restrictive covenants, which among other things, limit the ability of the Company to incur additional debt, issue preferredstock, create liens, pay dividends, make certain investments, sell certain assets, enter into certain types of transactions with affiliates, and effect mergers andconsolidations. At any time prior to August 15, 2018, the Company may redeem the 2023 notes in whole or in part at a redemption price equal to 100% of theprincipal amount of the 2023 notes plus a premium as specified in the indenture. At any time on or after August 15, 2018, the Company may redeem the 2023 notesat the redemption prices set forth in the indenture plus accrued and unpaid interest. In addition, the Company may redeem up to 40% of the aggregate principalamount of the 2023 notes with the net cash proceeds of one or more equity offerings, as described in the indenture, at a price equal to 110.75% of the principalamount thereof, plus accrued and unpaid interest. In the event of a change in control, we may be required to repurchase all or part of the 2023 notes at a price equalto 101% of the principal amount thereof, plus accrued and unpaid interest.2015 Term Loan Credit AgreementAs of December 31, 2016, we have $467.7 million outstanding under the 2015 term loan, which matures on July 31, 2022. The 2015 term loan, which wasissued at 99%, bears interest, at our option, at either a eurodollar rate or a base rate, plus, in each case an applicable margin. The margin will be 3.75% per annumin the case of eurodollar rate loans and 2.75% per annum in the case of base rate loans. The 2015 term loan has mandatory principal repayments of $1.175 millionwhich are payable in March, June, September, and December of each year provided that each such payment is subject to reduction as a result of certainprepayments of the loans in accordance with the loan documentation. The weighted average interest rate of the term loan was 5.6% during the year endedDecember 31, 2016.2015 Senior Secured Revolving Credit FacilityThe 2015 facility provides for an $800.0 million revolving credit line to be used for working capital and general corporate purposes. The availableborrowing capacity, or borrowing base, is derived from a percentage of the Company’s eligible receivables and inventory, as defined by the agreement, subject tocertain reserves. As of December 31, 2016, the net borrowing availability under the 2015 facility is $667.2 million after being reduced by outstanding letters ofcredit of $84.8 million. During the year ended December 31, 2016, we borrowed $907.0 million and repaid $967.0 million at a weighted average interest rate of2.5%. There were no outstanding borrowings under the 2015 facility as of December 31, 2016. The 2015 facility matures on July 31, 2020.Borrowings under the 2015 facility bear interest, at our option, at either a eurodollar rate or a base rate, plus, in each case an applicable margin. Theapplicable margin ranges from 1.25% to 1.75% per annum in the case of eurodollar rate loans and 0.25% to 0.75% per annum in the case of base rate loans. Themargin in either case is based on a measure of availability under the 2015 facility. A variable commitment fee, currently 0.375% per annum, is charged on theunused amount of the revolver based on quarterly average loan utilization. Letters of credit under the 2015 facility are assessed at a rate equal to the applicableeurodollar margin, currently 1.5%, as well as a fronting fee at a rate of 0.125% per annum. These fees are payable quarterly in arrears at the end of March, June,September, and December. 60 All obligations under the 2015 term loan and 2015 facility will be guaranteed jointly and severally by the Company and all other subs idiaries that guaranteethe 2024 notes. All obligations and the guarantees of those obligations will be secured b y substantially all of the assets of the Company and the guarantors subjectto certain exceptions and permitted liens, including (i) with respect to the 2015 term loan, a first-priority security interest in such assets that constitute NotesCollateral (as defined below) and a second priority security interest in such assets that constitute ABL Collateral (as defined below), and (ii) with respect to the2015 facility, a first-priority security interest in such assets that constitute ABL Collateral and a seco nd-priority security interest in such assets that constitute NotesCollateral.“ABL Collateral” includes substantially all presently owned and after-acquired accounts receivable, inventory, rights of unpaid vendors with respect toinventory, deposit accounts, commodity accounts, securities accounts and lock boxes, investment property, cash and cash equivalents, and general intangibles,books and records, supporting obligations and documents and related letters of credit, commercial tort claims or other claims related to and proceeds of each of theforegoing. “Notes Collateral” includes all collateral which is not ABL collateral.The 2015 term loan and the 2015 facility contain restrictive covenants which, among other things, limit the Company’s ability to incur additionalindebtedness, incur liens, engage in mergers or other fundamental changes, sell certain assets, pay dividends, make acquisitions or investments, prepay certainindebtedness, change the nature of our business, and engage in certain transactions with affiliates. In addition, the 2015 facility also contains a financial covenantrequiring the satisfaction of a minimum fixed charge ratio of 1.00 to 1.00 in the event that the Company does not meet a minimum measure of availability,currently the larger of $80.0 million or 10% of the maximum borrowing amount under the 2015 facility.Senior Secured Notes due 2024As of December 31, 2016 we have $750.0 million outstanding in aggregate principal amount of the 2024 notes which mature on September 1, 2024. Interestaccrues on the 2024 notes at a rate of 5.625% per annum and is payable semi-annually on March 1 and September 1 of each year, commencing on March 1, 2017.The terms of the 2024 notes are governed by the indenture, dated as of August 22, 2016 (the “Indenture”), among the Company, the guarantors namedtherein (the “Guarantors”) and Wilmington Trust, National Association, as trustee (the “Trustee”) and notes collateral agent (the “Notes Collateral Agent”). The2024 notes, subject to certain exceptions, are guaranteed, jointly and severally, on a senior secured basis, by certain of our direct and indirect wholly ownedsubsidiaries. All obligations under the 2024 notes, and the guarantees of those obligations, are secured by substantially all of the assets of the Company and theGuarantors subject to certain exceptions and permitted liens, including a first-priority security interest in such assets that constitute Notes Collateral (as definedabove) and a second-priority security interest in such assets that constitute ABL Collateral (as defined above).The Notes Collateral Agent became a party to the ABL/Bond Intercreditor Agreement, dated as of May 29, 2013, among SunTrust Bank, as agent under theCompany’s 2015 facility, the Wilmington Trust, National Association, the Company and the Guarantors, and the Pari Passu Intercreditor Agreement, dated as ofJuly 31, 2015, among Deutsche Bank AG New York Branch, as term collateral agent under the Company’s 2015 term loan, Wilmington Trust, NationalAssociation, the Company and the Guarantors. These documents govern all arrangements in respect of the priority of the security interests in the ABL Collateraland the Notes Collateral among the parties to the Indenture, the 2015 facility and the 2015 term loan. The 2024 notes constitute senior secured obligations of theCompany and Guarantors, rank senior in right of payment to all future debt of the Company and Guarantors that is expressly subordinated in right of payment tothe 2024 notes, and rank equally in right of payment with all existing and future liabilities of the Company and Guarantors that are not so subordinated, includingthe 2015 facility.The Indenture contains restrictive covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, incur additional debtor issue preferred stock; create liens; create restrictions on the Company’s subsidiaries’ ability to make payments to the Company; pay dividends and make otherdistributions in respect of the Company’s and its subsidiaries’ capital stock; make certain investments or certain other restricted payments; guarantee indebtedness;designate unrestricted subsidiaries; sell certain kinds of assets; enter into certain types of transactions with affiliates; and effect mergers and consolidations.61 At any time prior to September 1, 2019, the Company may redeem the 2024 notes in whole or in part at a redemption price equal to 100% of the principalamount of the 2024 notes plus the “applicable premium” set forth in t he Indenture. At any time on or after September 1, 2019, the Company may redeem the 2024notes at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to the redemption date. At any time and from time to time during the 36-month period following August 22, 2016 (“the Closing Date”), the Company may redeem up to 10% of the aggregate principal amount of the 2024 notesduring each twelve-month period commencing on the Closing Date at a redemption price of 103% of the aggr egate principal amount thereof plus accrued andunpaid interest to the redemption date. In addition, at any time prior to September 1, 2019, the Company may redeem up to 40% of the aggregate principal amountof the 2024 notes with the net cash proceeds of one or more equity offerings, as described in the Indenture, at a price equal to 105.625% of the principal amountthereof, plus accrued and unpaid interest, if any, to the redemption date. If the Company experiences certain change of control events, holder s of the 2024 notesmay require it to repurchase all or part of their 2024 notes at 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the repurchase date.As of December 31, 2016 we were not in violation of any covenants or restrictions imposed by any of our debt agreements.Future maturities of long-term debt as of December 31, 2016 were as follows (in thousands): Year ending December 31, 2017 $4,700 2018 4,700 2019 4,700 2020 4,700 2021 4,700 Thereafter 1,561,758 Total long-term debt (including current maturities) $1,585,258 WarrantsOur previous term loan included detachable warrants that allowed for the purchase of up to 1.6 million shares of our common stock at a price of $2.50 pershare. In April 2015, the remaining 0.7 million of outstanding, detachable warrants were exercised. The warrants were considered to be derivative financialinstruments and were classified as liabilities. As such, they were measured at fair value on a recurring basis. Our share price and, to a lesser extent, the historicalvolatility of our common stock were the primary factors in the changes to our fair value measurements related to the warrants. All other inputs being equal, anincrease or decrease in our share price or volatility resulted in an increase or decrease in the fair value of our warrants and an increase or decrease in interestexpense.Non-cash fair value adjustments related to our derivative financial instrument recorded as interest expense in the consolidated statements of operations andcomprehensive income (loss) for the years ended December 31 (in thousands) were as follows: derivative not designatedas Hedging instruments location of gain (loss) recognized in income Amount of gain (loss) recognized in income 2016 2015 2014 Warrants Interest expense, net — (4,563) 456 We used the income approach to value our warrants by using the Black-Scholes option-pricing model. Using this model, the risk-free interest rate was basedon the U.S. Treasury yield curve in effect on the valuation date. The expected life was based on the period of time until the expiration of the warrants. Expectedvolatility was based on the historical volatility of our common stock over the most recent period equal to the expected life of the warrants. The expected dividendyield was based on our history of not paying regular dividends in the past.These techniques incorporated Level 1 and Level 2 inputs. Significant inputs to the derivative valuation for the warrants were observable in the activemarkets and are classified as Level 2 in the hierarchy.62 Lease Finance ObligationsAs a result of the ProBuild acquisition, the Company is party to 150 individual property lease agreements with a single lessor as of December 31, 2016.These lease agreements have initial terms ranging from nine to fifteen years (expiring from 2016 through 2021) and renewal options in five-year incrementsproviding for up to approximately 30-year remaining total lease terms. A related agreement between the lessor and the Company gives the Company the right toacquire a limited number of the leased facilities at fair market value. As a result of these purchase rights, the Company treats all of the properties that it leases fromthis lessor as a financing arrangement. The Company is also party to certain additional agreements with the same lessor which commit the Company to performcertain repair and maintenance obligations under the leases in a specified manner and timeframe.In 2006, we completed construction on a new multi-purpose facility. Based on the evaluation of the construction project in accordance with the Leases topicof the Codification, we were deemed the owner of the facility during the construction period. Effectively, a sale and leaseback of the facility occurred whenconstruction was completed and the lease term began. This transaction did not qualify for sale-leaseback accounting. As a result the Company treats the lease ofthis facility as a financing arrangement.As of December 31, 2016, lease finance obligations consist of $238.5 million, with cash payments of $23.8 million for the year ended December 31, 2016.These lease finance obligations are included on the consolidated balance sheet as a component of long-term debt and lease obligations. The related assets arerecorded as components of property, plant, and equipment on the consolidated balance sheet.Future minimum commitments for lease finance obligations as of December 31, 2016 were as follows (in thousands): Year ending December 31, 2017 $19,009 2018 18,974 2019 18,975 2020 18,893 2021 18,230 Thereafter 262,481 Total $356,562 9. Capital lease ObligationsThe Company leases certain property and equipment under capital leases expiring through 2020. These leases require monthly payments of principal andinterest, imputed at various interest rates. Future minimum lease payments as of December 31, 2016 are as follows (in thousands): Years ending December 31, 2017 $3,426 2018 2,045 2019 2,391 2020 89 Thereafter — Total minimum lease payments 7,951 Less: amount representing interest (524)Present value of net minimum payments 7,427 Less: current portion (3,130)Long-term capital lease obligations, net of current portion $4,297 63 10 . Employee Stock-Based Compensation2014 Incentive PlanUnder our 2014 Incentive Plan (“2014 Plan”), the Company is authorized to grant awards in the form of incentive stock options, non-qualified stock options,restricted stock shares, restricted stock units, other common stock-based awards and cash-based awards. In May 2016, our shareholders approved an amendment toour 2014 Plan that increased the number of shares of common stock reserved for the grant of awards under the 2014 Plan from 5.0 million shares to 8.5 millionshares, subject to adjustment as provided by the 2014 Plan. All 8.5 million shares under the Plan may be made subject to options, stock appreciation rights(“SARs”), or stock-based awards. Stock options and SARs granted under the 2014 Plan may not have a term exceeding 10 years from the date of grant. The 2014Plan also provides that all awards will become fully vested and/or exercisable upon a change in control (as defined in the 2014 Plan) if those awards (i) are notassumed or equitably substituted by the surviving entity or (ii) have been assumed or equitably substituted by the surviving entity, and the grantee’s employment isterminated under certain circumstances. Other specific terms for awards granted under the 2014 Plan shall be determined by our Compensation Committee (or theboard of directors if so determined by the board of directors). Awards granted under the 2014 Plan generally vest ratably over a three to four year period. As ofDecember 31, 2016, 6.0 million shares were available for issuance under the 2014 Plan.2007 Incentive PlanUnder our 2007 Incentive Plan (“2007 Plan”), the Company is authorized to grant awards in the form of incentive stock options, non-qualified stock options,restricted stock, other common stock-based awards and cash-based awards. In January 2010, our shareholders approved an amendment to our 2007 Plan whichincreased the number of shares of common stock that may be granted pursuant to awards under the 2007 Plan from 2.5 million shares to 7.0 million shares. Themaximum number of common shares reserved for the grant of awards under the 2007 Plan is 7.0 million, subject to adjustment as provided by the 2007 Plan. Nomore than 7.0 million shares may be made subject to options or SARs granted under the 2007 Plan, and no more than 3.5 million shares may be made subject tostock-based awards other than options or SARs. Stock options and SARs granted under the 2007 Plan may not have a term exceeding 10 years from the date ofgrant. The 2007 Plan also provides that all awards will become fully vested and/or exercisable upon a change in control (as defined in the 2007 Plan). Otherspecific terms for awards granted under the 2007 Plan shall be determined by our Compensation Committee (or the board of directors if so determined by the boardof directors). Historically, awards granted under the 2007 Plan generally vest ratably over a three to four-year period. As of December 31, 2016, 94,000 shares wereavailable for issuance under the 2007 Plan, 94,000 of which may be made subject to stock-based awards other than options or SARs.2005 Equity Incentive PlanUnder our 2005 Equity Incentive Plan (“2005 Plan”), we were authorized to grant stock-based awards in the form of incentive stock options, non-qualifiedstock options, restricted stock and other common stock-based awards. Stock options and SARs granted under the 2005 Plan could not have a term exceeding 10years from the date of grant. The 2005 Plan also provided that all awards become fully vested and/or exercisable upon a change in control (as defined in the 2005Plan). Historically, awards granted under the 2005 Plan generally vest ratably over a three-year period. As of June 27, 2015, no further grants will be made underthe 2005 Plan.1998 Stock Incentive PlanUnder the Builders FirstSource, Inc. 1998 Stock Incentive Plan (“1998 Plan”), we were authorized to issue shares of common stock pursuant to awardsgranted in various forms, including incentive stock options, non-qualified stock options and other stock-based awards. The 1998 Plan also authorized the sale ofcommon stock on terms determined by our board of directors. Stock options granted under the 1998 Plan generally cliff vest after a period of seven to nine yearswith certain option grants subject to acceleration if certain financial targets were met. The expiration date is generally 10 years subsequent to date of issuance. Asof January 1, 2005, no further grants will be made under the 1998 Plan.64 Stock OptionsThe following table summarizes our stock option activity: Options Weighted Average Exercise Price Weighted Average remaining years Aggregate intrinsic value (in thousands) (in thousands) Outstanding at December 31, 2015 4,998 $5.19 Granted 63 $6.59 Exercised (1,496) $4.43 Forfeited (50) $7.49 Outstanding at December 31, 2016 3,515 $5.51 5.4 $19,184 Exercisable at December 31, 2016 2,489 $4.71 4.6 $15,592 The outstanding options at December 31, 2016 include options to purchase 203,000 shares under the 2014 plan, 2,342,000 shares granted under the 2007Plan, 554,000 shares granted under the 2005 Plan and 416,000 shares granted under the 1998 Plan. As of December 31, 2016, options to purchase 35,000 sharesunder the 2014 Plan, 1,759,000 shares under the 2007 Plan, 279,000 shares under the 2005 Plan and 416,000 shares under the 1998 Plan were exercisable. Theweighted average grant date fair value of options granted during the years ended December 31, 2016, 2015 and 2014 were $3.71, $4.20 and $5.71, respectively.The total intrinsic value of options exercised during the years ended December 31, 2016, 2015, and 2014 were $11.6 million, $12.8 million and $2.0 million,respectively. We realized no excess tax benefits for stock options exercised during the years ended December 31, 2016, 2015 and 2014. Vesting of all of our stockoptions is contingent solely on continuous employment over the requisite service period.Outstanding and exercisable stock options at December 31, 2016 were as follows (shares in thousands): Outstanding Exercisable range of Exercise Prices Shares Weighted Average Exercise Price Weighted Average remaining years Shares Weighted Average Exercise Price $3.15 416 $3.15 6.1 416 $3.15 $3.19 - $3.72 1,189 $3.20 3.1 1,189 $3.20 $6.35 - $6.70 286 $6.50 6.3 117 $6.60 $7.15- $7.67 1,624 $7.63 6.7 767 $7.59 $3.15 - $7.67 3,515 $5.51 5.4 2,489 $4.71 Restricted Stock Shares The following table summarizes restricted stock activity for the year ended December 31, 2016 (shares in thousands): Shares Weighted Average grant date Fair value Nonvested at December 31, 2015 13 $3.72 Granted — $— Vested (13) $3.72 Forfeited — $— Nonvested at December 31, 2016 — $— Restricted Stock UnitsThe outstanding restricted stock units (“RSUs”) at December 31, 2016 include 1,864,000 units granted under the 2014 Plan and 313,000 units granted underthe 2007 Plan.65 The following table summarizes activity for RSUs subject solely to service conditions for the year ended December 31, 201 6 (shares in thousands): Shares Weighted Average grant date Fair value Nonvested at December 31, 2015 1,516 $7.49 Granted 705 $10.68 Vested (505) $7.69 Forfeited (59) $8.14 Nonvested at December 31, 2016 1,657 $8.77 The weighted average grant date fair value of RSUs for which vesting is subject solely to service conditions granted during the years ended December 31,2016, 2015 and 2014 were $10.68, $7.26, and $7.48, respectively.The following table summarizes activity for RSUs subject to both performance and service conditions for the year ended December 31, 2016 (shares inthousands): Shares Weighted Average grant date Fair value Nonvested at December 31, 2015 — $— Granted 265 $10.96 Vested — $— Forfeited (5) $11.09 Nonvested at December 31, 2016 260 $10.95 The weighted average grant date fair value of RSUs for which vesting is subject to both performance and service conditions granted during the year endedDecember 31, 2016 was $10.96. There were no RSUs granted in 2015 or 2014 which were subject to both performance and service conditions.The following table summarizes activity for RSUs subject to both market and service conditions for the year ended December 31, 2016 (shares inthousands): Shares Weighted Average grant date Fair value Nonvested at December 31, 2015 — $— Granted 265 $7.58 Vested — $— Forfeited (5) $7.72 Nonvested at December 31, 2016 260 $7.58 The weighted average grant date fair value of RSUs for which vesting is subject to both market and service conditions granted during the year endedDecember 31, 2016 was $7.58. There were no RSUs granted in 2015 or 2014 which were subject to both market and service conditions. Our results of operations include stock compensation expense of $10.5 million ($6.3 million net of taxes), $6.9 million ($6.9 million net of taxes) and $6.2million ($6.2 million net of taxes) for the years ended December 31, 2016, 2015 and 2014, respectively. The total fair value of options vested during the yearsended December 31, 2016, 2015, and 2014 were $2.8 million, $2.7 million and $3.0 million, respectively. The total fair value of restricted stock vested during theyears ended December 31, 2016, 2015 and 2014 were $49,600, $49,600 and $2.0 million, respectively. The total fair value of RSUs vested during the years endedDecember 31, 2016 and 2015 were $3.9 million and $3.7 million, respectively. There were no RSUs which vested in 2014.As of December 31, 2016, there was $14.1 million of total unrecognized compensation cost related to non-vested share-based compensation arrangementsgranted under the Plans. That cost is expected to be recognized over a weighted-average period of 1.6 years. 66 11. Facility Closure CostsWhen we close certain facilities, primarily related to location consolidation initiatives, we recognize expense related to the minimum future lease obligationsover the remaining lease terms on closed facilities, net of estimated sub-rental income as well as employee severance costs. These expenses are recorded in selling,general, and administrative expense in the accompanying consolidated statement of operations and comprehensive income (loss).An analysis of our facility closure reserves for the periods reflected is as follows: 2014 Additions Assumedin Acquisition Payments 2015 Additions Payments 2016 (in thousands) Facility and other exit costs, net ofestimated sub-lease rental income $1,147 $2,836 $12,494 $(3,942) $12,535 $464 $(4,776) $8,223 Employee severance and terminationbenefits — 1,434 — (1,181) 253 117 (358) 12 Total facility closure reserve $1,147 $4,270 $12,494 $(5,123) $12,788 $581 $(5,134 ) $8,235 The Company assumed $12.5 million of exit cost reserves as part of the ProBuild acquisition during 2015. The facility and other exit cost reserves of $8.2million at December 31, 2016, of which $4.3 million is recorded as other long-term liabilities, are primarily related to future minimum lease payments on vacatedfacilities.As plans to close facilities are developed and executed, assets that can be used at other facilities are transferred and assets to be abandoned or sold arewritten down to their net realizable value, including any long-lived assets. In situations where multiple facilities serve the same market we may temporarily close,or idle, facilities with plans to reopen these facilities once demand returns to the market. In these situations, finite lived assets continue to be depreciated andassessed for impairment. Should conditions in our markets worsen, or recovery take significantly longer than forecasted, we may temporarily idle or permanentlyclose additional facilities, at which time we may incur additional facility closure costs or asset impairment charges. Future non-cash impairment charges wouldhave the effect of decreasing our earnings or increasing our losses in such period, but would not impact our current outstanding debt obligations or compliance withcovenants contained in the related debt agreements. We continuously monitor economic conditions in all of our markets and changes in market conditions maywarrant future closings or idling of facilities. In addition, as we continue the integration of ProBuild we may close or idle other facilities. 12. income taxesThe components of income tax expense (benefit) included in continuing operations were as follows for the years ended December 31: 2016 2015 2014 (in thousands) Current: Federal $— $— $— State 2,115 1,100 587 2,115 1,100 587 Deferred: Federal (110,720) 2,530 457 State (14,067) 757 67 (124,787) 3,287 524 Income tax expense (benefit) $(122,672) $4,387 $1,111 67 Temporary differences, which give rise to deferred tax assets and liabilities, were as follows as of December 31: 2016 2015 (in thousands) Deferred tax assets related to: Accrued expenses $13,100 $6,786 Insurance reserves 15,128 7,156 Facility closure reserves 564 429 Stock-based compensation expense 7,429 7,284 Accounts receivable 5,023 1,358 Inventories 24,628 8,200 Operating loss and credit carryforwards 87,610 110,425 Goodwill and other intangible assets — 9,176 Other — 4,494 153,482 155,308 Valuation allowance (4,821) (136,548) Total deferred tax assets 148,661 18,760 Deferred tax liabilities related to: Prepaid expenses (3,799) (6,344) Goodwill and other intangible assets (15,956) (11,502) Property, plant and equipment (13,058) (10,381)Other (528) — Total deferred tax liabilities (33,341) (28,227) Net deferred tax asset (liability) $115,320 $(9,467) A reconciliation of the statutory federal income tax rate to our effective rate for continuing operations is provided below for the years ended December 31: 2016 2015 2014 Statutory federal income tax rate 35.0% 35.0% 35.0%State income taxes, net of federal income tax 6.1 8.3 5.2 Valuation allowance (607.9) (52.1) (36.5)Permanent difference – 162(m) limitation 0.6 (5.4) 0.7 Permanent difference – Warrant mark to market — (8.6) (0.8)Permanent difference – Other (0.8) (0.9) 2.0 Other 0.9 0.1 — (566.1)% (23.6)% 5.6%Section 382 of the Internal Revenue Code imposes annual limitations on the utilization of net operating loss (“NOL”) carryforwards, other taxcarryforwards, and certain built-in losses upon an ownership change as defined under that section. In general terms, an ownership change may result fromtransactions that increase the aggregate ownership of certain stockholders in the Company’s stock by more than 50 percentage points over a three year testingperiod (“Section 382 Ownership Change”). If the Company were to experience a Section 382 Ownership Change, an annual limitation would be imposed on certainof the Company’s tax attributes, including NOL and capital loss carryforwards, and certain other losses, credits, deductions or tax basis.At December 31, 2016 and 2015, the Company had deferred tax assets, net of deferred tax liabilities, of $120.1 million and $127.1 million, respectively,offset by valuation allowances of $4.8 million and $136.5 million, respectively. We have $411.4 million of state net operating loss carry-forwards, which includes$2.5 million of state tax credit carry-forwards expiring at various dates through 2036. We also have $226.5 million of federal net operating loss carry-forwards thatwill expire at various dates through 2036. The federal and state net operating loss carry-forwards include approximately $23.3 million of gross windfall tax benefitsfrom stock option exercises that have not been recorded as of December 31, 2016. At December 31, 2016, the Company needed to generate approximately$287.6 million of pre-tax income in future periods to realize its federal deferred tax assets.68 We evaluate our deferred tax assets on a quarterly basis to determine whether a valuation allowance is required. In accordance with the Income Taxes topicof the Codification , we assess whether it is more likely than not that some or all of our deferred tax assets will not be realized. Significant judgment is required inestimating valuation allowances for deferred tax assets and in making this determ ination, we consider all available positive and negative evidence. In theCompany’s evaluation of its ability to realize its deferred tax assets, we gave more significant weight to evidence that was objective in nature as compared tosubjective evidence. A lso, more significant weight was given to evidence that relates to the Company’s current financial performance. The realization of a deferredtax asset ultimately depends on the existence of sufficient taxable income in the applicable carryback or carryfor ward periods. We consider the nature, frequency,and severity of current and cumulative losses, as well as historical and forecasted financial results, the overall business environment, our industry's historiccyclicality, the reversal of existing deferred tax liabilities, and tax planning strategies in our assessment. Changes in our estimates of future taxable income and taxplanning strategies will affect our estimate of the realization of the tax benefits of these tax carryforwards.We recorded a full valuation allowance in 2008 due to our cumulative three-year loss position at that time, compounded by the negative industry-widebusiness trends and outlook. At December 31, 2015, the Company had given significant weight to the negative objective evidence of the historically weak housingmarket conditions during the housing downturn that contributed to our three-year cumulative pre-tax loss position when reporting a valuation allowance of $136.5million against our deferred income tax assets, representing a valuation allowance against substantially all of our net deferred income tax assets.In the second quarter of 2016, we moved from a cumulative loss position over the previous three years to a cumulative income position for the first timesince we established the full valuation allowance in 2008. We continued to maintain a cumulative income position over the previous three years into the thirdquarter of 2016. In the Company’s evaluation at September 30, 2016, we gave the most significant weight to this objective positive evidence related to its recentfinancial results. Additionally, even conservative projections of the Company’s estimated future annual pre-tax income would indicate realization of all of itsfederal net operating losses well in advance of the expiration of the Company’s NOL carryforwards and it would also absorb all federal deductible temporarydifferences as they reverse in future years. The Company considered, at a lower weighting, the subjective positive evidence that it expects to increase its pre-taxincome in future years as the homebuilding industry continues to recover and strengthen as currently projected by a composite of third-party sources, including theNAHB. Therefore, at September 30, 2016, with this positive historical evidence and the projection of future profitability, management determined that there wassufficient positive evidence to conclude that it is more likely than not that we would realize our net federal and certain state deferred tax assets, resulting in a$117.6 million and $3.2 million benefit being recognized in our provision for income taxes for the third and fourth quarter of 2016, respectively.Prior to the quarter ended June 30, 2016, the Company had given significant weight to the negative objective evidence of its three-year cumulative pre-taxloss position as a result of losses incurred in prior years during the housing downturn. As of June 30, 2016 and September 30, 2016, the Company had generatedpositive cumulative pre-tax income for the past three years and therefore, the prior year losses were weighted less than the recent positive financial results in theCompany’s evaluation at September 30, 2016. Other negative subjective evidence, such as the cyclical, slower-than-anticipated housing market recovery, wasconsidered at a lower weighting because the Company’s recent financial performance has been achieved in this environment.As of December 31, 2016, we have certain states where we are not currently projecting future taxable income levels that would be sufficient to utilize thecarryover net operating losses and as such continue to maintain a valuation allowance against certain of these state deferred tax assets. We will continue to assessquarterly whether it is more likely than not that some or all of these state deferred tax assets will be realizable in the future. Changes in the positive and negativeevidence, including differences in the Company’s future operating results as compared to the estimates utilized in the determination of the valuation allowance,could result in changes in the Company’s estimate of the valuation allowance related to its tax benefits for state net operating loss carryforwards.In 2016 we recorded a reduction to the valuation allowance of $131.7 million against our net deferred tax assets as we released valuation allowances on ournet deferred tax assets as noted above. In 2015, we recorded a valuation allowance of $9.7 million related to our continuing operations. In 2014, we reduced ourvaluation allowance by $7.2 million due to the utilization of net operating losses against federal and state taxable income.We base our estimate of deferred tax assets and liabilities on current tax laws and rates. In certain cases, we also base our estimate on business plan forecastsand other expectations about future outcomes. Changes in existing tax laws or rates could affect our actual tax results, and future business results may affect theamount of our deferred tax liabilities or the valuation of our deferred tax assets over time. Due to uncertainties in the estimation process, particularly with respect tochanges in facts and circumstances in future reporting periods, as well as the residential homebuilding industry’s cyclicality and sensitivity to changes in economicconditions, it is possible that actual results could differ from the estimates used in previous analyses. Accounting for deferred taxes is based upon estimates of future results. Differences between the anticipated and actual outcomes of these future resultscould have a material impact on our consolidated results of operations or financial position. 69 The following table shows the changes in our valuation allowance: 2016 2015 2014 (in thousands) Balance at January 1, $136,548 $133,183 $143,682 Additions charged to expense: Continuing operations — 9,679 — Discontinued operations — — 131 Reductions credited to expense: Continuing operations (131,727) — (7,178)Discontinued operations — (55) — Deductions — (6,259) (3,452)Balance at December 31, $4,821 $136,548 $133,183 We accrue interest and penalties on our uncertain tax positions as a component of our provision for income taxes. We accrued no significant interest andpenalties in 2016, 2015 or 2014. We had a total of $0.3 million and $0.3 million accrued for interest and penalties for our uncertain tax positions as ofDecember 31, 2016 and 2015, respectively.The following table shows the changes in the amount of our uncertain tax positions (exclusive of the effect of interest and penalties): 2016 2015 2014 (in thousands) Balance at January 1, $208 $378 $950 Tax positions taken in prior periods: Gross increases 18 — 2 Gross decreases — — — Tax positions taken in current period: Gross increases 23 12 13 Settlements with taxing authorities — — — Lapse of applicable statute of limitations (0) (182) (587)Balance at December 31, $249 $208 $378 The balance for uncertain tax positions was $0.2 million as of December 31, 2016 excluding penalties and interest.We are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. Based on completed examinations and the expiration ofstatutes of limitations, we have concluded all U.S. federal income tax matters for years through 2012. We report in 41 states with various years open toexamination. 13. Employee Benefit PlansAs a result of the ProBuild acquisition we maintain two active defined contribution 401(k) plans. Our employees are eligible to participate in the planssubject to certain employment eligibility provisions. Participants can contribute up to 15% of their annual compensation, subject to federally mandated maximums.Participants are immediately vested in their own contributions. We match a certain percentage of the contributions made by participating employees, subject to IRSlimitations. Our matching contributions are subject to a pro-rata five-year vesting schedule. We recognized expense of $4.6 million, $6.5 million and $0.4 millionin 2016, 2015 and 2014, respectively, for contributions to the plan.Through the ProBuild acquisition, the Company acquired a defined benefit plan, the ProBuild Retirement Plan, which was terminated as of January 30,2015. The Company has made all remaining plan benefit distributions and the plan was fully terminated and settled as of December 31, 2015. 70 The Company contributes to multiple collectively bargained union retirement plans including multiemployer plans. The Company does not administer themultiemployer plans, and contributions are determined in accordance wi th the provisions of negotiated labor contracts. The risks of participating in multiemployerplans are different from single-employer plans. Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees ofother participating employers. If a participating employer stops contributing to a multiemployer plan, the unfunded obligations of that multiemployer plan may beborne by the remaining participating employers. If the Company chooses to stop participating in a mu ltiemployer plan, the Company may be required to pay thatplan an amount (“withdrawal liability”) based on the plan’s formula and the underfunded status of the plan attributable to the Company . Contributions to the plansfor th e years ended December 31, 2016 and 2015 were not significant. 14. Commitments and ContingenciesWe lease certain land, buildings and equipment used in operations. These leases are generally accounted for as operating leases with initial terms rangingfrom one to 20 years and they generally contain renewal options. Certain operating leases are subject to contingent rentals based on various measures, primarilyconsumer price index increases. We also lease certain properties from related parties, including current employees and non-affiliate stockholders. Total rentexpense under operating leases was approximately $68.7 million, $43.6 million and $25.4 million for the years ended December 31, 2016, 2015, and 2014,respectively.In addition, we have residual value guarantees on certain equipment leases. Under these leases we have the option of (a) purchasing the equipment at theend of the lease term, (b) arranging for the sale of the equipment to a third party, or (c) returning the equipment to the lessor to sell the equipment. If the salesproceeds in any case are less than the residual value, we are required to reimburse the lessor for the deficiency up to a specified level as stated in each leaseagreement. If the sales proceeds exceed the residual value, we are entitled to all of such excess amounts. The guarantees under these leases for the residual valuesof equipment at the end of the respective operating lease periods approximated $3.9 million as of December 31, 2016. Based upon the expectation that none ofthese leased assets will have a residual value at the end of the lease term that is materially less than the value specified in the related operating lease agreement orthat we will purchase the equipment at the end of the lease term, we do not believe it is probable that we will be required to fund any amounts under the terms ofthese guarantee arrangements. Accordingly, no accruals have been recognized for these guarantees.Future minimum commitments for noncancelable operating leases with initial or remaining lease terms in excess of one year are as follows: related Party total* (in thousands) Year ending December 31, 2017 $1,010 $67,213 2018 336 57,619 2019 350 46,536 2020 360 33,056 2021 375 22,915 Thereafter 1,019 56,192 $3,450 $283,531 *Includes related party future minimum commitments for noncancelable operating leases.As of December 31, 2016, we had outstanding letters of credit totaling $84.8 million under our 2015 facility that principally support our self-insuranceprograms.Beginning in the fourth quarter, the Company has seen an increased occurrence of known and threatened construction defect legal claims primarily in twostates. While these claims are generally covered under the Company’s existing insurance programs to the extent any loss exceeds the deductible, there is areasonable possibility of loss that is not able to be estimated at this time because (i) many of the proceedings are in the discovery stage, (ii) the outcome of futurelitigation is uncertain, and/or (iii) the complex nature of the claims. Although the Company cannot estimate a reasonable range of loss based on currently availableinformation, the resolution of these matters could have an adverse effect on the Company's financial position, results of operations or cash flows.We are a party to various legal proceedings in the ordinary course of business. Although the ultimate disposition of these proceedings cannot be predictedwith certainty, management believes the outcome of any claim that is pending or threatened, either individually or on a combined basis, will not have a materialadverse effect on our consolidated financial position, cash flows or71 results of operations. However, there can be no assurances that future adverse judgments and costs would not b e material to our results of operations or liquidityfor a particular period. 15. Segment and Product informationWe offer an integrated solution to our customers providing manufacturing, supply, and installation of a full range of structural and related buildingproducts. We provide a wide variety of building products and services directly to homebuilder customers. We manufacture floor trusses, roof trusses, wall panels,stairs, millwork, windows, and doors. We also provide a full range of construction services. These product and service offerings are distributed across 400 locationsoperating in 40 states across the United States, which have been reorganized into nine geographical regions following the ProBuild acquisition. Centralizedfinancial and operational oversight, including resource allocation and assessment of performance on an income (loss) from continuing operations before incometaxes basis, is performed by our CEO, whom we have determined to be our chief operating decision maker (“CODM”). As a result of the reorganization following the ProBuild acquisition, the Company has nine operating segments aligned with its nine geographical regions(Regions 1 through 9). While all of our operating segments have similar nature of products, distribution methods and customers, certain of our operating segmentshave been aggregated due to also containing similar economic characteristics, resulting in the following composition of reportable segments: •Regions 1 and 2 have been aggregated to form the “Northeast” reportable segment •Regions 3 and 5 have been aggregated to form the “Southeast” reportable segment •Regions 4 and 6 have been aggregated to form the “South” reportable segment •Region 7, 8 and 9 have been aggregated to form the “West” reportable segmentIn addition to our reportable segments, our consolidated results include corporate overhead, other various operating activities that are not internally allocatedto a geographical region nor separately reported to the CODM, and certain reconciling items primarily related to allocations of corporate overhead and rentexpense, which have collectively been presented as “All Other”. The accounting policies of the segments are consistent with those described in Note 2, except fornoted reconciling items. The following tables present Net sales, Income (loss) before income taxes and certain other measures for the reportable segments, reconciled to consolidatedtotal operations, for the years ended December 31, (in thousands): 2016 reportable segments net Sales depreciation &Amortization interest income (loss)before incometaxes Northeast $1,204,099 $18,220 $18,660 $35,356 Southeast 1,367,933 11,384 19,956 37,158 South 1,704,753 22,139 22,331 69,846 West 1,939,206 33,775 27,143 72,649 total reportable segments 6,215,991 85,518 88,090 215,009 All other 151,293 24,275 126,577 (193,340)total consolidated $6,367,284 $109,793 $214,667 $21,669 2015 reportable segments net Sales depreciation &Amortization interest income (loss)before incometaxes Northeast $626,985 $4,201 $7,508 $28,862 Southeast 917,022 5,296 14,598 14,607 South 1,073,240 10,649 12,707 50,878 West 786,476 5,824 6,118 35,170 total reportable segments 3,403,723 25,970 40,931 129,517 All other 160,702 32,310 68,268 (147,961)total consolidated $3,564,425 $58,280 $109,199 $(18,444) 72 2014 reportable segments net Sales depreciation &Amortization interest income (loss)before incometaxes Northeast $229,998 $1,068 $3,634 $3,464 Southeast 672,059 2,743 11,925 5,465 South 558,446 2,621 7,666 17,804 West — — — — total reportable segments 1,460,503 6,432 23,225 26,733 All other 143,593 3,087 7,124 (7,472)total consolidated $1,604,096 $9,519 $30,349 $19,261 Asset information by segment is not reported internally or otherwise reviewed by the CODM nor does the company earn revenues or have long-lived assetslocated in foreign countries. The Company’s net sales by product category for the periods indicated were as follows (in thousands):Sales by product category were as follows for the years ended December 31: 2016 2015 2014 (in thousands) Lumber & lumber sheet goods $2,131,394 $1,129,684 $535,279 Windows, doors & millwork 1,286,151 818,131 446,433 Manufactured products 1,097,665 635,338 311,994 Gypsum, roofing & insulation 520,007 264,894 61,114 Siding, metal & concrete products 622,344 319,618 81,894 Other building & product services 709,723 396,760 167,382 Total sales $6,367,284 $3,564,425 $1,604,096 In the above presentation of the Company’s net sales by product category, prior periods have been revised to reflect a re-categorization of certain productsales within the respective product categories to be consistent with how management views the business after further refinement from the ongoing evaluationsfollowing the ProBuild acquisition. Install labor sales are reflected in the “Other building products & services” category. 16. related Party transactionsFloyd F. Sherman, our chief executive officer, and Brett Milgrim, a member of the Company’s board of directors, serve on the board of directors for PGT,Inc.. We purchased windows from PGT, Inc. totaling $11.4 million, $9.3 million and $6.3 million in 2016, 2015 and 2014, respectively. We had accounts payableto PGT, Inc. in the amounts of $1.4 million and $1.1 million as of December 31, 2016 and 2015, respectively.In 2016, 2015 and 2014, we paid approximately $0.7 million, $1.0 million and $0.9 million, respectively, in rental expense to employees or our non-affiliatestockholders for leases of land and buildings.Transactions between the Company and other related parties occur in the ordinary course of business. However, the Company carefully monitors andassesses related party relationships. Management does not believe that any of these transactions with related parties had a material impact on the Company’s resultsfor the years ended December 31, 2016, 2015 or 2014. 73 17. Unaudited Quarterly Financial dataThe following tables summarize the consolidated quarterly results of operations for 2016 and 2015 (in thousands, except per share amounts): 2016 First Quarter Second Quarter third Quarter Fourth Quarter Net sales $1,397,114 $1,677,300 $1,745,958 $1,546,912 Gross margin 349,748 418,331 437,094 391,575 Net income (loss) (16,980)(1) 29,441(2) 125,469(3) 6,411(4) Net income (loss) per share Basic $(0.15)(1) $0.27(2) $1.13(3) $0.06(4) Diluted $(0.15)(1) $0.26(2) $1.10(3) $0.06(4) 2015 First Quarter Second Quarter third Quarter Fourth Quarter Net sales $370,986 $461,521 $1,276,063 $1,455,855 Gross margin 83,733 110,614 324,774 382,337 Net income (loss) (7,070)(5) 3,576(6) (8,757)(7) (10,580)(8)Net income (loss) per share Basic $(0.07)(5) $0.04(6) $(0.08)(7)$(0.10)(8)Diluted $(0.07)(5) $0.03(6) $(0.08)(7)$(0.10)(8) (1)Includes a gain on debt extinguishment of $7.8 million as discussed in Note 8 and a valuation allowance of $5.1 million as discussed in Note 12.(2)Includes a loss on debt extinguishment of $1.7 million as discussed in Note 8 and a valuation allowance of $(16.0) million as discussed in Note 12.(3)Includes a loss on debt extinguishment and financing costs of $53.3 million as discussed in Note 8 and a valuation allowance of $(117.6) million asdiscussed in Note 12.(4)Includes a loss on debt extinguishment of $9.7 million as discussed in Note 8 and a valuation allowance of $(3.2) million as discussed in Note 12.(5)Includes acquisition costs of $5.5 million as discussed in Note 3, fair value adjustments for the warrants of $0.2 million as discussed in Note 8 and avaluation allowance of $3.1 million as discussed in Note 12.(6)Includes acquisition costs of $6.4 million as discussed in Note 3, fair value adjustments for the warrants of $4.7 million as discussed in Note 8 and avaluation allowance of $(1.3) million as discussed in Note 12.(7)Includes acquisition costs of $8.8 million as discussed in Note 3, financing costs of $13.2 million as discussed in Note 8 and a valuation allowance of $1.1million as discussed in Note 12.(8)Includes acquisition costs of $0.2 million as discussed in Note 3 and a valuation allowance of $6.8 million as discussed in Note 12. Earnings per share is computed independently for each of the quarters presented; therefore, the sum of the quarterly earnings per share may not equal theannual earnings per share. In the below presentation of the Company’s net sales by product category, prior quarterly periods for 2016 and 2015 have been revised to reflect a re-categorization of certain product sales within the respective product categories to be consistent with how management views the business after further refinementfrom the ongoing evaluations following the ProBuild acquisition. Install labor sales are reflected in the “Other building products & services” category. 74 Sales by product category were as follows (in thousands): three months Ended march 31,2016 June 30,2016 September 30,2016 december 31,2016 Lumber & lumber sheet goods $461,415 $560,877 $592,770 $516,332 Windows, doors & millwork 296,668 329,424 337,155 322,904 Manufactured products 236,233 286,446 301,563 273,423 Gypsum, roofing & insulation 112,302 138,662 145,618 123,425 Siding, metal & concrete products 131,966 168,070 176,557 145,751 Other building products & services 158,530 193,821 192,295 165,077 Net Sales $1,397,114 $1,677,300 $1,745,958 $1,546,912 three months Ended march 31,2015 June 30,2015 September 30,2015 december 31,2015 Lumber & lumber sheet goods $117,927 $144,974 $409,492 $457,291 Windows, doors & millwork 108,796 129,215 268,029 312,091 Manufactured products 74,307 98,634 223,258 239,139 Gypsum, roofing & insulation 13,690 17,394 108,045 125,765 Siding, metal & concrete products 18,595 25,152 127,930 147,941 Other building products & services 37,671 46,152 139,309 173,628 Net Sales $370,986 $461,521 $1,276,063 $1,455,855 18. Subsequent EventOn February 23, 2017, we repriced our existing 2015 term loan through an amendment and extension of the term loan credit agreement providing for a$467.7 million senior secured term loan facility due 2024 (“2024 term loan”). This repricing reduces the interest rate by 0.75% and extends the maturity by 19months to February 29, 2024. The 2024 term loan bears interest based on either a eurodollar or base rate (a rate equal to the highest of an agreed commercially available benchmark rate,the federal funds effective rate plus 0.50% or the eurodollar rate plus 1.0%, as selected by the Company) plus, in each case, an applicable margin. The applicablemargin in the 2024 term loan is (x) 3% in the case of Eurodollar rate loans and (y) 2% in the case of base rate loans. These rates represents a 0.75% reduction fromthe 2015 term loan. Deutsche Bank AG New York Branch continues to serve as administrative agent and collateral agent under the 2024 term loan. 75 i tem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone.item 9A. Controls and ProceduresDisclosure Controls Evaluation and Related CEO and CFO Certifications. Our management, with the participation of our principal executive officer(“CEO”) and principal financial officer (“CFO”) conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and proceduresas of the end of the period covered by this annual report.Certifications of our CEO and our CFO, which are required in accordance with Rule 13a-14 of the Securities Exchange Act of 1934, as amended(“Exchange Act”), are attached as exhibits to this annual report. This “Controls and Procedures” section includes the information concerning the controls evaluationreferred to in the certifications, and it should be read in conjunction with the certifications for a more complete understanding of the topics presented.Limitations on the Effectiveness of Controls. We do not expect that our disclosure controls and procedures will prevent all errors and all fraud. A system ofcontrols and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the system are met.Because of the limitations in all such systems, no evaluation can provide absolute assurance that all control issues and instances of fraud, if any, within theCompany have been detected. Furthermore, the design of any system of controls and procedures is based in part upon certain assumptions about the likelihood offuture events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of howunlikely. Because of these inherent limitations in a cost-effective system of controls and procedures, misstatements or omissions due to error or fraud may occurand not be detected.Scope of the Controls Evaluation. The evaluation of our disclosure controls and procedures included a review of their objectives and design, the Company’simplementation of the controls and procedures and the effect of the controls and procedures on the information generated for use in this annual report. In the courseof the evaluation, we sought to identify whether we had any data errors, control problems or acts of fraud and to confirm that appropriate corrective action,including process improvements, were being undertaken if needed. This type of evaluation is performed on a quarterly basis so that conclusions concerning theeffectiveness of our disclosure controls and procedures can be reported in our quarterly reports on Form 10-Q. Many of the components of our disclosure controlsand procedures are also evaluated by our internal audit department, our legal department and by personnel in our finance organization. The overall goals of thesevarious evaluation activities are to monitor our disclosure controls and procedures on an ongoing basis, and to maintain them as dynamic systems that change asconditions warrant.Conclusions regarding Disclosure Controls. Based on the required evaluation of our disclosure controls and procedures, our CEO and CFO have concludedthat, as of December 31, 2016, we maintained disclosure controls and procedures that were effective in providing reasonable assurance that information required tobe disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified inthe SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allowtimely decisions regarding required disclosure.Management’s Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internalcontrol over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Internal control over financial reporting is a process designed toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles ("GAAP"). Internal control over financial reporting includes policies and procedures that: (i) pertain to the maintenance ofrecords that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only inaccordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use or disposition of our assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withexisting policies or procedures may deteriorate.76 Under the supervision and with the participation of our ma nagement, including our CEO and CFO, we conducted an evaluation of the effectiveness of ourinternal control over financial reporting based on the framework set forth in Interna l Control — Integrated Framework ( 2013 ) issued by the Committee ofSponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework set forth in Internal Control — Integrated Framework(2013) , our management concluded that o ur internal control over financial reporting was effective as of December 31, 201 6 .The effectiveness of the Company’s internal control over financial reporting as of December 31, 2016, has been audited by PricewaterhouseCoopers LLP,an independent registered public accounting firm, as stated in their report which appears herein.Changes in Internal Control over Financial Reporting. During the quarter ended December 31, 2016, there were no changes in our internal control overfinancial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.item 9B. Other Information On February 23, 2017, we repriced our existing 2015 term loan with Deutsche Bank AG New York Branch, as administrative agent and collateral agent, andthe lenders and financial institutions party thereto, pursuant to an amendment and extension of the term loan credit agreement providing for a $467.7 million seniorsecured term loan facility due 2024 (“2024 term loan”). This repricing reduces the interest rate by 0.75% and extends the maturity by 19 months to February 29,2024. The 2024 term loan bears interest based on either a eurodollar or base rate (a rate equal to the highest of an agreed commercially available benchmark rate,the federal funds effective rate plus 0.50% or the eurodollar rate plus 1.0%, as selected by the Company) plus, in each case, an applicable margin. The applicablemargin in the 2024 term loan is (x) 3% in the case of Eurodollar rate loans and (y) 2% in the case of base rate loans. These rates represents a 0.75% reduction fromthe 2015 term loan. 77 P Art iiiitem 10. Directors, Executive Officers and Corporate GovernanceThe information required by this item appears in our definitive proxy statement for our annual meeting of stockholders to be held May 24, 2017 under thecaptions “Proposal 1 — Election of Directors,” “Continuing Directors,” “Information Regarding the Board and Its Committees,” “Corporate Governance,”“Section 16(a) Beneficial Ownership Reporting Compliance,” and “Executive Officers of the Registrant,” which information is incorporated herein by reference.Code of Business Conduct and EthicsBuilders FirstSource, Inc. and its subsidiaries endeavor to do business according to the highest ethical and legal standards, complying with both the letterand spirit of the law. Our board of directors approved a Code of Business Conduct and Ethics that applies to our directors, officers (including our principalexecutive officer, principal financial officer and controller) and employees. Our Code of Business Conduct and Ethics is administered by a compliance committeemade up of representatives from our legal, human resources, finance and internal audit departments.Our employees are encouraged to report any suspected violations of laws, regulations and the Code of Business Conduct and Ethics, and all unethicalbusiness practices. We provide continuously monitored hotlines for anonymous reporting by employees.Our board of directors has also approved a Supplemental Code of Ethics for the Chief Executive Officer, President, and Senior Financial Officers ofBuilders FirstSource, Inc., which is administered by our general counsel.Both of these policies are listed as exhibits to this annual report on Form 10-K and can be found in the “investors” section of our corporate Web site at:www.bldr.com.Stockholders may request a free copy of these policies by contacting the Corporate Secretary, Builders FirstSource, Inc., 2001 Bryan Street, Suite 1600,Dallas, Texas 75201, United States of America.In addition, within four business days of: •Any amendment to a provision of our Code of Business Conduct and Ethics or our Supplemental Code of Ethics for Chief Executive Officer,President and Senior Financial Officers of Builders FirstSource, Inc. that applies to our chief executive officer, our chief financial officer orcontroller; or •The grant of any waiver, including an implicit waiver, from a provision of one of these policies to one of these officers that relates to one or more ofthe items set forth in Item 406(b) of Regulation S-K.We will provide information regarding any such amendment or waiver (including the nature of any waiver, the name of the person to whom the waiver wasgranted and the date of the waiver) on our Web site at the Internet address above, and such information will be available on our Web site for at least a 12-monthperiod. In addition, we will disclose any amendments and waivers to our Code of Business Conduct and Ethics or our Supplemental Code of Ethics for ChiefExecutive Officer, President and Senior Financial Officers of Builders FirstSource, Inc. as required by the listing standards of the NASDAQ Stock Market LLC.item 11. Executive CompensationThe information required by this item appears in our definitive proxy statement for our annual meeting of stockholders to be held May 24, 2017 under thecaptions “Executive Compensation and Other Information,” “Information Regarding the Board and its Committees — Compensation of Directors,” and“Compensation Committee Interlocks and Insider Participation,” which information is incorporated herein by reference.item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this item appears in our definitive proxy statement for our annual meeting of stockholders to be held on May 24, 2017 underthe caption “Ownership of Securities” and “Equity Compensation Plan Information,” which information is incorporated herein by reference.78 i tem 13. Certain Relationships and Related Transactions, and Director IndependenceThe information required by this item appears in our definitive proxy statement for our annual meeting of stockholders to be held May 24, 2017 under thecaption “Election of Directors and Management Information,” “Information Regarding the Board and its Committees,” and “Certain Relationships and RelatedParty Transactions,” which information is incorporated herein by reference.item 14. Principal Accountant Fees and ServicesThe information required by this item appears in our definitive proxy statement for our annual meeting of stockholders to be held May 24, 2017 under thecaption “Proposal 4 — Ratification of Selection of Independent Registered Public Accounting Firm — Fees Paid to PricewaterhouseCoopers LLP,” whichinformation is incorporated herein by reference. 79 P Art iv item 15. Exhibits and Financial Statement Schedules(a) (1) See the index to consolidated financial statements provided in Item 8 for a list of the financial statements filed as part of this report.(2) Financial statement schedules are omitted because they are either not applicable or not material.(3) The following documents are filed, furnished or incorporated by reference as exhibits to this report as required by Item 601 of Regulation S-K. Exhibitnumber description 3.1 Amended and Restated Certificate of Incorporation of Builders FirstSource, Inc. (incorporated by reference to Exhibit 3.1 to Amendment No. 4 tothe Registration Statement of the Company on Form S-1, filed with the Securities and Exchange Commission on June 6, 2005, File Number 333-122788) 3.2 Amended and Restated By-Laws of Builders FirstSource, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report onForm 8-K, filed with the Securities and Exchange Commission on March 5, 2007, File Number 0-51357) 4.1 Registration Rights Agreement, dated as of January 21, 2010, among Builders FirstSource, Inc., JLL Partners Fund V, L.P., and Warburg PincusPrivate Equity IX, L.P. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Securities andExchange Commission on January 22, 2010, File Number 0-51357) 4.2 Indenture, dated as of July 31, 2015, among Builders FirstSource, Inc., the guarantors party thereto, and Wilmington Trust, National Association,as trustee (form of Note included therein) (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with theSecurities and Exchange Commission on August 6, 2015, File Number 0-51357) 4.3 Supplemental Indenture to the Indenture dated as of July 31, 2015, dated as of July 31, 2015, among Builders FirstSource, Inc., the guarantorsparty thereto, and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Company’s Current Reporton Form 8-K, filed with the Securities and Exchange Commission on August 6, 2015, File Number 0-51357) 4.4 Indenture, dated as of August 22, 2016, among Builders FirstSource, Inc., the guarantors party thereto, and Wilmington Trust, NationalAssociation, as trustee and notes collateral agent (form of Note included therein) (incorporated by reference to Exhibit 4.1 to the Company’sCurrent Report on Form 8-K, filed with the Securities and Exchange Commission on August 23, 2016, File Number 0-51357) 10.1 Term Loan Credit Agreement, dated as of July 31, 2015, among Builders FirstSource, Inc., Deutsche Bank AG, New York Branch, asadministrative agent and collateral agent, and the lenders and financial institutions party thereto (incorporated by reference to Exhibit 10.1 to theCompany’s Current Report on Form 8-K, filed with the Securities Exchange Commission on August 6, 2015, File Number 0-51357) 10.2 First Amendment to Credit Agreement, dated as of August 22, 2016, by and among Builders FirstSource, Inc., Deutsche Bank AG New YorkBranch, as administrative agent, and the lenders and financial institutions party thereto (incorporated by reference to Exhibit 10.2 to the Company’sCurrent Report on Form 8-K, filed with the Securities and Exchange Commission on August 23, 2016, File Number 0-51357) 10.3* Second Amendment to Credit Facility, dated as of February 23, 2017, by and among Builders FirstSource, Inc., Deutsche Bank AG New YorkBranch, as administrative agent, and the lenders and financial institutions party thereto 10.4 Amended and Restated Senior Secured Revolving Credit Facility, dated as of July 31, 2015, among Builders FirstSource, Inc., SunTrust Bank, asadministrative agent and collateral agent, and the lenders and financial institutions party thereto (incorporated by reference to Exhibit 10.2 to theCompany’s Current Report on Form 8-K, filed with the Securities Exchange Commission on August 6, 2015, File Number 0-51357)80 Exhibitnumber description 10.5 ABL/Bond Intercreditor Agreement, dated as of May 29, 2013, among Builders FirstSource, Inc. and certain of its subsidiaries, as grantors,SunTrust Bank, as ABL agent, and Wilmington Trust, National Association, as notes collateral agent (incorporated by reference to Exhibit 10.2 tothe Company’s Current Report on Form 8-K, filed with the Securities Exchange Commission on June 3, 2013, File Number 0-51357) 10.6 Collateral Agreement, dated as of July 31, 2015, among the Company, certain of its subsidiaries, and Deutsche Bank AG, New York Branch(incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed with the Securities Exchange Commission onAugust 6, 2015, File Number 0-51357) 10.7 Amended and Restated ABL Collateral Agreement, dated as of July 31, 2015, among the Company, certain of its subsidiaries, and SunTrust Bank(incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed with the Securities Exchange Commission onAugust 6, 2015, File Number 0-51357) 10.8 Notes Collateral Agreement, dated as of August 22, 2016, among Builders FirstSource, Inc., certain of its subsidiaries, and Wilmington Trust,National Association, as trustee (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securitiesand Exchange Commission on August 23, 2016, File Number 0-51357) 10.9 Guarantee Agreement, dated as of July 31, 2015, among the guarantors party thereto and Deutsche Bank AG, New York Branch (incorporated byreference to Exhibit 10.6 to the Company’s Current Report on Form 8-K, filed with the Securities Exchange Commission on August 6, 2015, FileNumber 0-51357) 10.10 Amended and Restated ABL Guarantee Agreement, dated as of July 31, 2015, among the Guarantors (as defined therein) and SunTrust Bank(incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K, filed with the Securities Exchange Commission onAugust 6, 2015, File Number 0-51357) 10.11 Lease and Master Agreement Guaranty, dated as of July 31, 2015, by the Company in favor of LN Real Estate LLC (incorporated by reference toExhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, filed with the Securities and ExchangeCommission on November 9, 2015, File Number 0-51357) 10.12+ Builders FirstSource, Inc. 1998 Stock Incentive Plan, as amended, effective March 1, 2004 (incorporated by reference to Exhibit 10.4 toAmendment No. 1 to the Registration Statement of the Company on Form S-1, filed with the Securities and Exchange Commission on April 27,2005, File Number 333-122788) 10.13+ Amendment No. 7 to the Builders FirstSource, Inc. 1998 Stock Incentive Plan (incorporated by reference to Exhibit 10.6 to the Company’s AnnualReport on Form 10-K for the year ended December 31, 2006, filed with the Securities and Exchange Commission on March 12, 2007, File Number0-51357) 10.14+ 2004 Form of Builders FirstSource, Inc. 1998 Stock Incentive Plan Nonqualified Stock Option Agreement (incorporated by reference toExhibit 10.5 to Amendment No. 1 to the Registration Statement of the Company on Form S-1, filed with the Securities and Exchange Commissionon April 27, 2005, File Number 333-122788) 10.15+ Builders FirstSource, Inc. 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.14 to Amendment No. 4 to the RegistrationStatement of the Company on Form S-1, filed with the Securities and Exchange Commission on June 6, 2005, File Number 333-122788) 10.16+ 2006 Form of Builders FirstSource, Inc. 2005 Equity Incentive Plan Nonqualified Stock Option Agreement (incorporated by reference toExhibit 99.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 17, 2006, FileNumber 0-51357) 10.17+ 2007 Form of Builders FirstSource, Inc. 2005 Equity Incentive Plan Nonqualified Stock Option Agreement for Employee Directors (incorporatedby reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 5,2007, File Number 0-51357) 10.18+ Builders FirstSource, Inc. 2007 Incentive Plan (incorporated by reference to Annex D of the Company’s Definitive Proxy Statement onSchedule 14A, filed with the Securities and Exchange Commission on December 15, 2009, File Number 0-51357) 10.19+ 2008 Form of Builders FirstSource, Inc. 2007 Incentive Plan Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 10.1 tothe Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, filed with the Securities and Exchange Commission on May1, 2008, File Number 0-51357)81 Exhibitnumber description 10.20+ 2008 Form of Builders FirstSource, Inc. 2007 Incentive Plan Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.2 to theCompany’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, filed with the Securities and Exchange Commission on May 1,2008, File Number 0-51357) 10.21+ 2010 Form of Builders FirstSource, Inc. 2007 Incentive Plan Nonqualified Stock Option Agreement for Employee Directors (incorporated byreference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, filed with the Securities andExchange Commission on March 4, 2010, File Number 0-51357) 10.22+ 2014 Form of Builders FirstSource, Inc. 2007 Incentive Plan Restricted Stock Unit Award Certificate (incorporated by reference to Exhibit 10.2 tothe Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, filed with the Securities and Exchange Commission onAugust 1, 2014, File Number 0-51357) 10.23+ 2014 Form of Builders FirstSource, Inc. 2007 Incentive Plan Director Restricted Stock Unit Award Certificate (incorporated by reference toExhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed with the Securities and ExchangeCommission on November 5, 2014, File Number 0-51357) 10.24+ Builders FirstSource, Inc. 2014 Incentive Plan (incorporated herein by reference to Appendix A of the Company’s Definitive Proxy Statement onSchedule 14A, filed with the Securities and Exchange Commission on April 11, 2014, File Number 0-51357) 10.25+ Amendment to the Builders FirstSource, Inc. 2014 Incentive Plan (incorporated by reference to Appendix A of the Company’s Definitive ProxyStatement on Schedule 14A, filed with the Securities and Exchange Commission on April 14, 2016, File Number 0-51357) 10.26+ 2014 Form of Builders FirstSource, Inc. 2014 Incentive Plan Restricted Stock Unit Award Certificate (incorporated by reference to Exhibit 10.3 tothe Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, filed with the Securities and Exchange Commission onAugust 1, 2014, File Number 0-51357) 10.27+ 2015 Form of Builders FirstSource, Inc. 2014 Incentive Plan Non-Statutory Stock Option Award Certificate (incorporated by reference to Exhibit10.22 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commissionon March 3, 2015, File Number 0-51357) 10.28+ 2016 Form of Builders FirstSource, Inc. 2014 Incentive Plan Restricted Stock Unit Award Certificate (incorporated by reference to Exhibit 10.2 tothe Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the Securities and Exchange Commission on May6, 2016, File Number 0-51357) 10.29*+ Builders FirstSource, Inc. Amended and Restated Director Compensation Policy 10.30+ Builders FirstSource, Inc. Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10.13 to Amendment No. 3 to theRegistration Statement of the Company on Form S-1, filed with the Securities and Exchange Commission on May 26, 2005, File Number 333-122788) 10.31+ Employment Agreement, dated September 1, 2001, between Builders FirstSource, Inc. and Floyd F. Sherman (incorporated by reference toExhibit 10.9 to Amendment No. 1 to the Registration Statement of the Company on Form S-1, filed with the Securities and Exchange Commissionon April 27, 2005, File Number 333-122788) 10.32+ Amendment to Employment Agreement, dated June 1, 2005, between Builders FirstSource, Inc. and Floyd F. Sherman (incorporated by referenceto Exhibit 10.15 to Amendment No. 4 to the Registration Statement of the Company on Form S-1, filed with the Securities and ExchangeCommission on June 6, 2005, File Number 333-122788) 10.33+ Second Amendment to Employment Agreement, dated October 29, 2008, between Builders FirstSource, Inc. and Floyd F. Sherman (incorporatedby reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Securities andExchange Commission on March 2, 2009, File Number 0-51357) 10.34+ Employment Agreement, dated February 23, 2010, between Builders FirstSource, Inc. and M. Chad Crow (incorporated by reference toExhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 26, 2010, FileNumber 0-51357) 10.35+ Employment Agreement, dated January 15, 2004, between Builders FirstSource, Inc. and Morris E. Tolly (incorporated by reference toExhibit 10.22 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, filed with the Securities and ExchangeCommission on March 5, 2008, File Number 0-51357)82 Exhibitnumber description 10.36+ Amendment to Employment Agreement, dated October 29, 2008, between Builders FirstSource, Inc. and Morris E. Tolly (incorporated byreference to Exhibit 10.31 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Securities andExchange Commission on March 2, 2009, File Number 0-51357) 10.37+ Employment Agreement, dated January 15, 2004, between Builders FirstSource, Inc. and Donald F. McAleenan (incorporated by reference toExhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, filed with the Securities ExchangeCommission on November 2, 2005, File Number 0-51357) 10.38+ Amendment to Employment Agreement, dated October 29, 2008, between Builders FirstSource, Inc. and Donald F. McAleenan (incorporated byreference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Securities andExchange Commission on March 2, 2009, File Number 0-51357) 10.39*+ Employment Agreement, dated November 14, 2014, between Builders FirstSource, Inc. and Peter M. Jackson 14.1 Builders FirstSource, Inc. Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to the Company’s Annual Report onForm 10-K for the year ended December 31, 2005, filed with the Securities and Exchange Commission on March 13, 2006, File Number 0-51357) 14.2 Builders FirstSource, Inc. Supplemental Code of Ethics (incorporated by reference to Exhibit 14.2 to the Company’s Annual Report on Form 10-Kfor the year ended December 31, 2005, filed with the Securities and Exchange Commission on March 13, 2006, File Number 0-51357) 21.1 Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the year endedDecember 31, 2015, filed with the Securities and Exchange Commission on March 11, 2016, File Number 0-51357) 23.1* Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm 24.1* Power of Attorney (included as part of signature page) 31.1* Certification of Chief Executive Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,signed by Floyd F. Sherman as Chief Executive Officer 31.2* Certification of Chief Financial Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,signed by Peter M. Jackson as Chief Financial Officer 32.1** Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002, signed by Floyd F. Sherman as Chief Executive Officer and Peter M. Jackson as Chief Financial Officer 101* The following financial information from Builders FirstSource, Inc.’s Form 10-K filed on March 1, 2017, formatted in eXtensible BusinessReporting Language (“XBRL”): (i) Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31,2016, 2015, and 2014, (ii) Consolidated Balance Sheets at December 31, 2016 and 2015, (iii) Consolidated Statements of Cash Flows for the yearsended December 31, 2016, 2015, and 2014, (iv) Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31,2016, 2015, and 2014, and (v) the Notes to Consolidated Financial Statements. *Filed herewith**Builders FirstSource, Inc. is furnishing, but not filing, the written statement pursuant to Title 18 United States Code 1350, as added by Section 906 of theSarbanes-Oxley Act of 2002, of Floyd F. Sherman, our Chief Executive Officer, and Peter M. Jackson, our Chief Financial Officer.+Indicates a management contract or compensatory plan or arrangement(b) A list of exhibits filed, furnished or incorporated by reference with this Form 10-K is provided above under Item 15(a)(3) of this report. BuildersFirstSource, inc. will furnish a copy of any exhibit listed above to any stockholder without charge upon written request to donald F. mcAleenan, Seniorvice President and general Counsel, 2001 Bryan Street, Suite 1600, dallas, texas 75201.(c) Not applicable83 item 16. Form 10-K Summary None. 84 SignAtUrESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized.March 1, 2017 BUildErS FirStSOUrCE, inC. /s/ FLOYD F. SHERMANFloyd F. ShermanChief Executive Officer(Principal Executive Officer) The undersigned hereby constitute and appoint Donald F. McAleenan and his substitutes our true and lawful attorneys-in-fact with full power to execute inour name and behalf in the capacities indicated below any and all amendments to this report and to file the same, with all exhibits thereto and other documents inconnection therewith, with the Securities and Exchange Commission, and hereby ratify and confirm all that such attorney-in-fact or his substitutes shall lawfully door cause to be done by virtue thereof.Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrantand in the capacities and on the dates indicated. Signature title date /s/ FLOYD F. SHERMAN Chief Executive Officer and Director March 1, 2017Floyd F. Sherman (Principal Executive Officer) /s/ PETER M. JACKSON Senior Vice President and Chief Financial Officer March 1, 2017Peter M. Jackson (Principal Financial Officer) /s/ JAMI COULTER Vice President and Chief Accounting Officer March 1, 2017Jami Coulter (Principal Accounting Officer) /s/ PAUL S. LEVY Chairman and Director March 1, 2017Paul S. Levy /s/ CLEVELAND A. CHRISTOPHE Director March 1, 2017Cleveland A. Christophe /s/ DANIEL AGROSKIN Director March 1, 2017Daniel Agroskin /s/ ROBERT C. GRIFFIN Director March 1, 2017Robert C. Griffin /s/ KEVIN J. KRUSE Director March 1, 2017Kevin J. Kruse /s/ BRETT N. MILGRIM Director March 1, 2017Brett N. Milgrim /s/ CRAIG A. STEINKE Director March 1, 2017Craig A. Steinke 85 Exhibit 10.3SECOnd AmEndmEnt tO CrEdit AgrEEmEntThis SECOND AMENDMENT dated as of February 23, 2017 (this “ Second Amendment ”) to the Credit Agreementreferred to below by and among Builders FirstSource, Inc., a Delaware corporation (the “ Borrower ”), the Lenders party hereto (asdefined below) and Deutsche Bank AG New York Branch, as administrative agent (in such capacity, the “ Administrative Agent ”). RECITALSWHEREAS, the Borrower, the several Lenders (as defined in the Credit Agreement) from time to time parties thereto andthe Administrative Agent, have entered into that certain Amended and Restated Term Loan Credit Agreement dated as of August 22,2016 (as amended, supplemented or otherwise modified from time to time prior to the date hereof, the “ Credit Agreement ”);WHEREAS, pursuant to and in accordance with Section 2.21 of the Credit Agreement, the Borrower has requested that theCredit Agreement be amended and restated into the form of the Second Amended and Restated Credit Agreement (as defined below)so as to, among other things, provide for a new tranche of term loans thereunder (the “ Refinancing Term Loans ”), which term loanswould refinance the Term Loans outstanding under the Credit Agreement immediately prior to the effectiveness of this SecondAmendment (the “ Existing Term Loans ”), in part through an exchange, and which, except as modified hereby, would have the sameterms as the Existing Term Loans under the Credit Agreement;WHEREAS, each Lender holding Existing Term Loans (collectively, the “ Existing Term Lenders ”) that executes anddelivers a consent to this Second Amendment in the form of the “Lender Consent” attached hereto as Annex I (a “ Lender Consent ”)(collectively, the “ Exchanging Term Lenders ”) will be deemed (i) to have agreed to the terms of this Second Amendment, (ii) tohave agreed to exchange (as further described in the Lender Consent) an aggregate principal amount of its Existing Term Loans withRefinancing Term Loans in a principal amount equal to the amount of such Exchanging Term Lenders or such lesser amount notifiedto such Exchanging Term Lender by the Administrative Agent and (iii) upon the Second Amendment Effective Date to haveexchanged (as further described in the Lender Consent) such amount of its Existing Term Loans with New Terms Loans in an equalprincipal amount;WHEREAS, each Existing Term Lender that makes the appropriate election in its Lender Consent (collectively, the “Increasing Term Lenders ”) will be also deemed to have agreed to make, on the Second Amendment Effective Date, RefinancingTerm Loans in addition to the Refinancing Term Loans that are exchanged for its Existing Term Loans (such additional RefinancingTerm Loans, collectively, the “ Increased Term Loans ”) in the amount notified to such Existing Term Lender by the AdministrativeAgent (but in no event greater than the amount such Person committed to make as Refinancing Term Loans);WHEREAS, each Person that executes and delivers a joinder to this Second Amendment in the form of the “Joinder”attached hereto as Annex II (a “ Joinder ”) (each, an “ Additional Term Lender ” and, together with the Increasing Term Lender andExchanging Term Lender, the “ New Term Lenders ”) will be deemed (i) to have agreed to the terms of this Second Amendment and (ii) to have committed to makeRefinancing Term Loans to the Borrower on the Second Amendment Effective Date (the “ Additional Term Loans ”), in the amountnotified to such Additional Term Lender by the Administrative Agent (but in no event greater than the amount such Personcommitted to make as Additional Term Loans);WHEREAS, the Net Proceeds of the Refinancing Term Loans will be used by the Borrower, together with cash on hand ofthe Borrower, to prepay in full the outstanding principal amount of the Existing Term Loans that are not exchanged for RefinancingTerm Loans by the Existing Term Lenders; andWHEREAS, the Lenders party hereto are willing, on the terms and subject to the conditions set forth below, to consent tothe amendment and restatement of the Credit Agreement into the Second Amended and Restated Credit Agreement.NOW, THEREFORE, in consideration of the covenants and agreements contained herein, as well as other good andvaluable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:ARTICLE IDEFINITIONSSECTION 1.1 Certain Definitions . Capitalized terms used (including in the preamble and recitals hereto) but not definedherein shall have the meanings assigned to such terms in the Credit Agreement. As used in this Second Amendment:“ Additional Term Lenders ” is defined in the fifth recital hereto.“ Additional Term Loans ” is defined in the fifth recital hereto.“ Credit Agreement ” is defined in the first recital hereto.“ Exchanged Term Loans ” is defined in Section 3.1 hereof.“ Exchanging Term Lenders ” is defined in the third recital hereto.“ Existing Term Lenders ” is defined in the third recital hereto.“ Existing Term Loans ” is defined in the second recital hereto.“ Second Amendment ” is defined in the preamble hereto.“ Second Amendment Effective Date ” shall mean the date on which the conditions set forth in Article IV of this SecondAmendment are satisfied or waived.“ Increased Term Loans ” is defined in the fourth recital hereto.“ Increasing Term Lenders ” is defined in the fourth recital hereto.2 “ Joinder ” is defined in the fifth recital hereto.“ Lender Consent ” is defined in the third recital hereto.“ New Term Lenders ” is defined in the fifth recital hereto.“ Non-Exchanging Term Lenders ” shall mean each Existing Term Lender that is not an Exchanging Term Lender.“ Refinancing Term Loans ” is defined in the second recital hereto.ARTICLE IIAMENDMENTS TO CREDIT AGREEMENTSECTION 2.1 Amendment and Restatement of Existing Credit Agreement . The Borrower, the Lenders party hereto, theAdministrative Agent and other parties party hereto agree that on the Second Amendment Effective Date, the Credit Agreement shallbe amended and restated in the form of the Second Amended and Restated Credit Agreement attached hereto as Exhibit A (the “Second Amended and Restated Credit Agreement ”) and any term or provision of the Credit Agreement which is different from thatset forth in the Second Amended and Restated Credit Agreement shall be replaced and superseded in all respects by the terms andprovisions of the Second Amended and Restated Credit Agreement.SECTION 2.2 Acknowledgement . On and after the Second Amendment Effective Date, unless the context shall otherwiserequire, each reference in the Second Amended and Restated Credit Agreement or any other Loan Document to (a) “Loans” shall bedeemed a reference to the Refinancing Term Loans contemplated hereby, and (b) “Lenders” shall be deemed a reference to the NewTerm Lenders. As of the Second Amendment Effective Date, after giving effect to the Second Amendment (after giving effect toany principal amortization payments made on or prior to the Second Amendment Effective Date), the aggregate outstanding principalof amount of “Loans” is $467,650,000.ARTICLE IIIEXCHANGE OF EXISTING TERM LOANSSECTION 3.1 Exchange of Existing Term Loans . On the terms and subject to the satisfaction (or waiver) of theconditions set forth in Article IV hereof, each Exchanging Term Lender agrees that an aggregate principal amount of its ExistingTerm Loans (the “ Exchanged Term Loans ”) equal to the amount of such Exchanging Term Lender’s Existing Term Loans (or suchlesser amount notified to such Exchanging Term Lender by the Administrative Agent) will be exchanged with Refinancing TermLoans, as further described in such Exchanging Term Lender’s Lender Consent, as of the Second Amendment Effective Date.SECTION 3.2 Agreement to Make Increased Term Loans and Additional Term Loans . On the terms and subject to thesatisfaction (or waiver) of the conditions set forth in Article IV hereof, each Increasing Term Lender and each Additional TermLender agrees to make Increased Term3 Loans or Additional Term Loans, as the case may be, equal to the amount notified to such Increasing Term Lender or AdditionalTerm Lender by the Administrative Agent (but in no event greater than the amount such Person committed to make as IncreasedTerm Loans or Additional Term Loans, as the case may be), in each case on the Second Amendment Effective Date, and eachAdditional Term Lender shall be a “Lender” under the Credit Agreement as of such date. Amounts paid or prepaid in respect ofIncreased Term Loans or Additional Term Loans may not be reborrowed.SECTION 3.3 Other Provisions Regarding Term Loans . On the Second Amendment Effective Date, the Borrower shallapply the Net Proceeds of the Refinancing Term Loans (if any), together with cash on hand, to prepay in full the principal amount ofall Existing Term Loans, other than Exchanged Term Loans. The exchange of Exchanged Term Loans with Refinancing TermLoans and the repayment of Existing Term Loans (other than the Exchanged Term Loans) with the proceeds of the Increased TermLoans and Additional Term Loans contemplated hereby collectively constitute a voluntary prepayment of the Existing Term Loansby the Borrower pursuant to Section 2.11 of the Credit Agreement and shall be subject to the provisions of Section 2.11 of the CreditAgreement. The commitments of the Increased Term Lenders and the Additional Term Lenders and the refinancing undertakings ofthe Exchanging Term Lenders are several and no such New Term Lender will be responsible for any other New Term Lender’sfailure to make or acquire by refinancing Refinancing Term Loans. Each of the parties hereto acknowledges and agrees that theterms of this Second Amendment do not constitute a novation but, rather, an amendment of the terms of a pre-existing Indebtednessand related agreement, as evidenced by the Second Amended and Restated Credit Agreement.ARTICLE IVCONDITIONS TO EFFECTIVENESSThe effectiveness of this Second Amendment (including the amendments contained in Article II , the acknowledgementcontained in Section 2.1 and agreements contained in Article III but excluding this Article IV , which is effective as of the datehereof) are subject to the satisfaction (or waiver) of the following conditions:SECTION 4.1 This Second Amendment shall have been duly executed by the Borrower, the Administrative Agent and theNew Term Lenders (whether pursuant to the execution and delivery of a Lender Consent, a Joinder or counterparts to this SecondAmendment, as applicable) and delivered to the Administrative Agent.SECTION 4.2 At the time of and immediately after the Second Amendment Effective Date and the making of RefinancingTerm Loans, no Default or Event of Default shall have occurred and be continuing.SECTION 4.3 The representations and warranties set forth in ARTICLE III of the Credit Agreement and those set forth inArticle V of this Second Amendment shall be true and correct in all material respects on and as of the date of the making ofRefinancing Term Loans and the Second Amendment Effective 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 which4 case such representations and warranties shall be true and correct in all material respects as of such earlier date; provided , however ,that any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in allrespects on such respective dates.SECTION 4.4 The Administrative Agent shall have received a notice of Borrowing from the Borrower pursuant to Section2.03 of the Second Amended and Restated Credit Agreement with respect to the Refinancing Term Loans.SECTION 4.5 The Administrative Agent shall have received, on behalf of itself and the New Term Lenders, a satisfactorywritten opinion of Kirkland & Ellis LLP, counsel for the Borrower (i) dated the Second Amendment Effective Date and (ii)addressed to the Administrative Agent and the New Term Lenders, and in each case, each of their permitted assigns. The Borrowerhereby requests such counsel to deliver such opinion.SECTION 4.6 All fees required to be paid on the Second Amendment Effective Date pursuant to that certain EngagementLetter dated as of January 20, 2017 by and between the Borrower and Deutsche Bank Securities, Inc. (the “ Engagement Letter ”)and reasonable and documented out-of-pocket expenses required to be paid on the Second Amendment Effective Date pursuant tothe Engagement Letter, to the extent invoiced at least three (3) Business Days prior to the Second Amendment Effective Date, shall,upon the Second Amendment Effective Date, have been paid.SECTION 4.7 The Borrower shall have applied, concurrently with the exchange of the Exchanged Term Loans withRefinancing Term Loans and the making of the Increased Term Loans and Additional Term Loans (if any), the Net Proceeds of theRefinancing Term Loans (if any), together with cash on hand, to prepay in full the principal amount of all Existing Term Loans otherthan Exchanged Term Loans.ARTICLE VREPRESENTATIONS AND WARRANTIESSECTION 5.1 Representations and Warranties . TO INDUCE THE OTHER PARTIES HERETO TO ENTER INTOTHIS AMENDMENT, THE BORROWER REPRESENTS AND WARRANTS TO EACH OF THE LENDERS AND THEADMINISTRATIVE AGENT THAT, AS OF THE SECOND AMENDMENT EFFECTIVE DATE THIS AMENDMENT HASBEEN DULY AUTHORIZED, EXECUTED AND DELIVERED BY THE BORROWER AND CONSTITUTES A LEGAL,VALID AND BINDING OBLIGATION OF THE BORROWER, ENFORCEABLE AGAINST IT IN ACCORDANCE WITH ITSTERMS, SUBJECT TO APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR OTHERLAWS AFFECTING CREDITORS’ RIGHTS GENERALLY AND SUBJECT TO GENERAL PRINCIPLES OF EQUITY,REGARDLESS OF WHETHER CONSIDERED IN A PROCEEDING IN EQUITY OR AT LAW.5 ARTICLE VIEFFECTS ON LOAN DOCUMENTSSECTION 6.1 Except as specifically amended herein, all Loan Documents shall continue to be in full force and effect andare hereby in all respects ratified and confirmed.(a) The execution, delivery and effectiveness of this Second Amendment shall not operate as a waiver of anyright, power or remedy of any Lender or the Administrative Agent under any of the Loan Documents, nor constitute awaiver of any provision of the Loan Documents or in any way limit, impair or otherwise affect the rights and remedies ofthe Lenders or the Administrative Agent under the Loan Documents.(b) The Borrower and the other parties hereto acknowledge and agree that, on and after the Second AmendmentEffective Date, this Second Amendment, the Joinders and each of the other Loan Documents to be executed and deliveredby a Loan Party shall constitute a Loan Document for all purposes of the Second Amended and Restated CreditAgreement.(c) On and after the Second Amendment Effective Date, each reference in the Second Amended and RestatedCredit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the CreditAgreement, and each reference in the other Loan Documents to “Credit Agreement”, “thereunder”, “thereof” or words oflike import referring to the Credit Agreement shall mean and be a reference to the Second Amended and Restated CreditAgreement, and this Second Amendment and the Second Amended and Restated Credit Agreement shall be read togetherand construed as a single instrument.(d) Nothing herein shall be deemed to entitle the Borrower to a further consent to, or a further waiver,amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements containedin the Second Amended and Restated Credit Agreement or any other Loan Document in similar or different circumstances.(e) Section headings used herein are for convenience of reference only, are not part of this Second Amendmentand are not to affect the construction of, or to be taken into consideration in interpreting, this Second Amendment.ARTICLE VIIMISCELLANEOUSSECTION 7.1 APPLICABLE LAW . THIS SECOND AMENDMENT SHALL BE GOVERNED BY, ANDCONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.SECTION 7.2 Execution in Counterparts; Severability . This Second Amendment may be executed in any number ofcounterparts, each of which shall be deemed an original and all of6 which, when taken together, shall constitute one agreement. Delivery of an executed counterpart of a signature page of this SecondAmendment by facsimile transmission or other electronic transmission (e.g., a “.pdf” or “.tif” file) shall be effective as delivery of amanually executed counterpart hereof.SECTION 7.3 Reaffirmation . The Borrower, on behalf of itself and each of the Loan Parties party to the GuaranteeAgreement, the Security Agreement and the other Collateral Documents, in each case as amended, supplemented or otherwisemodified from time to time, hereby (i) acknowledges and agrees that the Refinancing Term Loans are Loans and the New TermLenders are Lenders, and that all of its obligations under the Term Guarantee Agreement and the Term Security Documents to whichit is a party are reaffirmed and remain in full force and effect on a continuous basis, (ii) reaffirms each Lien granted by each LoanParty to the Term Collateral Agent for the benefit of the Administrative Agent and the Secured Parties (including the New TermLenders) and reaffirms the guaranties made pursuant to the Term Guarantee Agreement, (iii) acknowledges and agrees that the grantsof security interests by and the guaranties of the Loan Parties contained in the Term Guarantee Agreement and the Term SecurityDocuments are, and shall remain, in full force and effect after giving effect to the Second Amendment, and (iv) agrees that the LoanDocument Obligations include, among other things and without limitation, the prompt and complete payment and performance bythe Borrower when due and payable (whether at the stated maturity, by acceleration or otherwise) of principal and interest on, andpremium (if any) on, the Refinancing Term Loans under the Second Amended and Restated Credit Agreement.[Remainder of page intentionally left blank.] 7 IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed and delivered bytheir respective proper and duly authorized officers as of the day and year first above written. BUILDERS FIRSTSOURCE, INC., as Borrower By: /s/ Donald F. McAleenanName: Donald F. McAleenanTitle: Senior Vice President, General Counsel and Secretary DEUTSCHE BANK AG NEW YORK BRANCH,as Administrative Agent By: /s/ Marcus TarkingtonName: Marcus TarkingtonTitle: Director By /s/ Dusan LazarovName: Dusan LazarovTitle: Director [Signature Page to Second Amendment] AnnEx ilEndEr COnSEnt tO SECOnd AmEndmEntLENDER CONSENT (this “ Lender Consent ”) to the Second Amendment to Credit Agreement, among theBorrower (as defined below), the New Term Lenders referred to therein (whether pursuant to the execution and delivery of a LenderConsent, a Joinder or counterparts to the Second Amendment, as applicable) and the Administrative Agent (as defined below), to theAmended and Restated Term Loan Credit Agreement dated as of August 22, 2016 (as amended, supplemented or otherwise modifiedfrom time to time prior to the date hereof, the “ Credit Agreement ”) by and among Builders FirstSource, Inc., a Delawarecorporation (the “ Borrower ”), the lenders from time to time party thereto (the “ Lenders ”) and Deutsche Bank AG New YorkBranch, as administrative agent (in such capacity, the “ Administrative Agent ”). All capitalized terms used but not defined hereinshall have the meaning ascribed thereto in the Credit Agreement or the Second Amendment, as applicable.term lenders[Check one or more of the two boxes below] ☐The undersigned Lender hereby irrevocably and unconditionally approves of and consents to the SecondAmendment and consents to the exchange (on a cashless basis) of 100% of the outstanding principal amount ofthe Term Loans held by such Lender (or such lesser amount allocated to such Lender by the AdministrativeAgent) with a Refinancing Term Loan in a like principal amount. ☐The undersigned Lender hereby requests to purchase Increased Term Loans up to an aggregate principal amountno greater than $_______, or such lesser amount as notified to such Lender by the Administrative Agent. SuchLender agrees that its signature hereto shall constitute its signature as Assignee to the Assignment andAssumption Agreement attached to the Credit Agreement reflecting such purchase and that it shall be bound bysuch Assignment and Assumption in all respects. AnnEx iiJOindErJOINDER, dated as of February 23 2017 (this “ Joinder ”), by and among ______________________ (the “New Term Lender ”), Builders FirstSource, Inc., a Delaware corporation (the “ Borrower ”), and Deutsche Bank AG New YorkBranch (the “ Administrative Agent ”).rECitAlS:WHEREAS, reference is hereby made to the Second Amendment to Credit Agreement dated as of February 23,2017 (the “ Second Amendment ”) among the Borrower, the New Term Lenders referred to therein (whether pursuant to theexecution and delivery of a Lender Consent, a Joinder or counterparts to the Second Amendment, as applicable) and theAdministrative Agent, to the Amended and Restated Term Loan Credit Agreement dated as of August 22, 2016 (as amended,supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among the Borrower, the Lenders (as defined inthe Credit Agreement) and the Administrative Agent. All capitalized terms used but not defined herein shall have the meaningascribed thereto in the Credit Agreement or the Second Amendment, as applicable.WHEREAS, pursuant to the terms of the Second Amendment, the Borrower has established Refinancing TermLoans with Exchanging Term Lenders, Increasing Term Lenders and/or Additional Term Lenders; andWHEREAS, subject to the terms and conditions of the Credit Agreement and the Second Amendment,Additional Term Lenders may become Lenders pursuant to one or more Joinders.NOW, THEREFORE, in consideration of the premises and agreements, provisions and covenants hereincontained, the parties hereto agree as follows:The New Term Lender hereby agrees to make Refinancing Term Loans in the amount notified to suchAdditional Term Lender by the Administrative Agent, but not to exceed the amount set forth on its signature page hereto, pursuant toand in accordance with the Credit Agreement and the Second Amendment. The Refinancing Term Loans provided pursuant to thisJoinder shall be subject to all of the terms in the Credit Agreement and the Second Amendment and to the conditions set forth in theCredit Agreement and the Second Amendment, and shall be entitled to all the benefits afforded by the Credit Agreement and theother Loan Documents, and shall, without limiting the foregoing, benefit equally and ratably from the Guarantees and securityinterests created by the Term Security Documents. The New Term Lender, the Borrower and the Administrative Agent acknowledgeand agree that the Refinancing Term Loans provided pursuant to this Joinder shall constitute Term Loans for all purposes of theCredit Agreement and the other applicable Loan Documents.By executing and delivering this Joinder, the New Term Lender shall be deemed to confirm to and agree withthe other parties hereto as follows: (i) such New Term Lender is legally authorized to enter into this Joinder and the CreditAgreement; (ii) such New Term Lender confirms that it has received a copy of this Joinder, the Second Amendment and the Credit Agreement, together with copies of themost recent financial statements delivered pursuant to Section 5.01 of the Credit Agreement and such other documents andinformation as it has deemed appropriate to make its own credit analysis and decision to enter into this Joinder, the SecondAmendment and the Credit Agreement; (iii) such New Term Lender will independently and without reliance upon the AdministrativeAgent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to makeits own credit decisions in taking or not taking action under this Joinder, the Second Amendment and the Credit Agreement; (iv) suchNew Term Lender appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise suchpowers under this Joinder, the Second Amendment and the Credit Agreement and the other Loan Documents as are delegated to theAdministrative Agent, respectively, by the terms hereof and thereof, together with such powers as are reasonably incidental thereto;and (v) such New Term Lender agrees that it will perform in accordance with their terms all the obligations which by the terms ofthis Joinder, the Second Amendment and the Credit Agreement are required to be performed by it as an Additional Term Lender.Upon (i) the execution of a counterpart of this Joinder by the New Term Lender, the Administrative Agent andthe Borrower and (ii) the delivery to the Administrative Agent of a fully executed counterpart (including by way of telecopy or otherelectronic transmission) hereof, the New Term Lender shall become a Lender under the Credit Agreement, effective as of the SecondAmendment Effective Date.Delivered herewith by the New Term Lender to the Administrative Agent are such forms, certificates or otherevidence with respect to United States federal income tax withholding matters as the New Term Lender may be required to deliver tothe Administrative Agent pursuant to the Credit Agreement.This Joinder may not be amended, modified or waived except by an instrument or instruments in writing signedand delivered on behalf of each of the parties hereto.This Joinder is a “Loan Document.”This Joinder, the Credit Agreement and the other Loan Documents constitute the entire agreement among theparties with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, bothwritten and verbal, among the parties or any of them with respect to the subject matter hereof.tHiS JOindEr SHAll BE COnStrUEd in ACCOrdAnCE WitH And gOvErnEd By tHElAWS OF tHE StAtE OF nEW yOrK. In the event any one or more of the provisions contained in this Joinder should be held invalid, illegal orunenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shallnot in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particularjurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor ingood-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of whichcomes as close as possible to that of the invalid, illegal or unenforceable provisions.This Joinder may be executed in counterparts, each of which shall be deemed to be an original, but all of whichshall constitute one and the same agreement. Delivery of an executed signature page to this Joinder by facsimile or other electronictransmission shall be as effective as delivery of a manually signed counterpart of this Joinder.[Remainder of page intentionally left blank.] IN WITNESS WHEREOF, each of the undersigned has caused its duly authorized officer to execute and deliver thisJoinder as of the date first written above. [NAME OF NEW TERM LENDER] By: Name: Title: If a second signature is necessary: By: Name: Title: Maximum Amount of Additional Term Loans:$ BUILDERS FIRSTSOURCE, INC.,as Borrower By Name: Title: Accepted: DEUTSCHE BANK AG NEW YORK BRANCH,as Administrative Agent By: Name: Title: By: Name: Title: ExHiBit ASecond Amended and Restated Credit Agreement SECOND AMENDED AND RESTATED TERM LOANCREDIT AGREEMENTamended and restated as ofFebruary 23, 2017,amongBUILDERS FIRSTSOURCE, INC.,as Borrower,The Lenders Party HeretoandDEUTSCHE BANK AG NEW YORK BRANCH,as Term Administrative Agent___________________________DEUTSCHE BANK SECURITIES INC.,CITIGROUP GLOBAL MARKETS INC.,CREDIT SUISSE SECURITIES (USA) LLC,KEYBANK CAPITAL MARKETS INC.andSUNTRUST ROBINSON HUMPHREY, INC.,as Joint Lead Arrangers and Joint Bookrunners tABlE OF COntEntS Page ARTICLE I DEFINITIONS SECTION 1.01 Defined Terms 1SECTION 1.02 Classification of Loans and Borrowings 69SECTION 1.03 Terms Generally 69SECTION 1.04 Accounting Terms; GAAP 69SECTION 1.05 Effectuation of Transactions 70SECTION 1.06 Limited Condition Acquisitions 70SECTION 1.07 Certain Determinations 71 ARTICLE II THE CREDITSSECTION 2.01 Commitments 72SECTION 2.02 Loans and Borrowings 72SECTION 2.03 Requests for Borrowings 73SECTION 2.04 [Reserved] 73SECTION 2.05 [Reserved] 73SECTION 2.06 Funding of Borrowings 73SECTION 2.07 Interest Elections 74SECTION 2.08 Termination of Commitments 75SECTION 2.09 Repayment of Loans; Evidence of Debt 76SECTION 2.10 Amortization of Term Loans 76SECTION 2.11 Prepayment of Loans 77SECTION 2.12 Fees 88SECTION 2.13 Interest 88SECTION 2.14 Alternate Rate of Interest 89SECTION 2.15 Increased Costs 90SECTION 2.16 Break Funding Payments 91SECTION 2.17 Taxes 91SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of Setoffs 95SECTION 2.19 Mitigation Obligations; Replacement of Lenders 96SECTION 2.20 Incremental Credit Extensions 97SECTION 2.21 Refinancing Amendments 100SECTION 2.22 Defaulting Lenders 101SECTION 2.23 Illegality 102SECTION 2.24 Loan Modification Offers 102-i- tABlE OF COntEntS(continued) Page ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.01 Organization; Powers 104SECTION 3.02 Authorization; Enforceability 104SECTION 3.03 Governmental Approvals; No Conflicts 104SECTION 3.04 Financial Condition; No Material Adverse Effect 105SECTION 3.05 Properties 105SECTION 3.06 Litigation and Environmental Matters 106SECTION 3.07 Compliance with Laws 106SECTION 3.08 Investment Company Status 106SECTION 3.09 Taxes 106SECTION 3.10 ERISA 106SECTION 3.11 Disclosure 107SECTION 3.12 Subsidiaries 107SECTION 3.13 Intellectual Property; Licenses, Etc 107SECTION 3.14 Solvency 108SECTION 3.15 Senior Indebtedness 108SECTION 3.16 Federal Reserve Regulations 108SECTION 3.17 Use of Proceeds 108 ARTICLE IV CONDITIONS SECTION 4.01 Effective Date 109 ARTICLE V AFFIRMATIVE COVENANTS SECTION 5.01 Financial Statements and Other Information 112SECTION 5.02 Notices of Material Events 115SECTION 5.03 Information Regarding Collateral 115SECTION 5.04 Existence; Conduct of Business 116SECTION 5.05 Payment of Taxes, etc. 116SECTION 5.06 Maintenance of Properties 116SECTION 5.07 Insurance 116SECTION 5.08 Books and Records; Inspection and Audit Rights 117SECTION 5.09 Compliance with Laws 118SECTION 5.10 Use of Proceeds 118SECTION 5.11 Additional Subsidiaries 118-ii- tABlE OF COntEntS(continued) PageSECTION 5.12 Further Assurances 119SECTION 5.13 Designation of Subsidiaries 119SECTION 5.14 Certain Post-Closing Obligations 120SECTION 5.15 Maintenance of Rating of the Borrower and the Facilities 120SECTION 5.16 Lines of Business 120SECTION 5.17 Transactions with Affiliates 120 ARTICLE VI NEGATIVE COVENANTS SECTION 6.01 Indebtedness; Certain Equity Securities 122SECTION 6.02 Liens 128SECTION 6.03 Fundamental Changes 132SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions 133SECTION 6.05 Asset Sales 136SECTION 6.06 [Reserved] 139SECTION 6.07 Restricted Payments; Certain Payments of Indebtedness 139SECTION 6.08 [Reserved] 144SECTION 6.09 Restrictive Agreements 144SECTION 6.10 Amendment of Junior Financing 145SECTION 6.11 [Reserved] 146SECTION 6.12 Changes in Fiscal Periods 146 ARTICLE VII EVENTS OF DEFAULT SECTION 7.01 Events of Default 146SECTION 7.02 Application of Proceeds 149 ARTICLE VIII ADMINISTRATIVE AGENT SECTION 8.01 Appointment and Authority 149SECTION 8.02 Rights as a Lender 150SECTION 8.03 Exculpatory Provisions 150SECTION 8.04 Reliance by Administrative Agent 151SECTION 8.05 Delegation of Duties 152SECTION 8.06 Resignation of Administrative Agent 152SECTION 8.07 Non-Reliance on Term Administrative Agent and Other Lenders 153SECTION 8.08 No Other Duties, Etc. 154SECTION 8.09 Term Administrative Agent May File Proofs of Claim 154-iii- tABlE OF COntEntS(continued) PageSECTION 8.10 No Waiver; Cumulative Remedies; Enforcement 155SECTION 8.11 Withholding Taxes 155 ARTICLE IX MISCELLANEOUS SECTION 9.01 Notices 156SECTION 9.02 Waivers; Amendments 158SECTION 9.03 Expenses; Indemnity; Damage Waiver 161SECTION 9.04 Successors and Assigns 164SECTION 9.05 Survival 171SECTION 9.06 Counterparts; Integration; Effectiveness 171SECTION 9.07 Severability 172SECTION 9.08 Right of Setoff 172SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process 172SECTION 9.10 WAIVER OF JURY TRIAL 173SECTION 9.11 Headings 174SECTION 9.12 Confidentiality 174SECTION 9.13 USA PATRIOT Act 175SECTION 9.14 Release of Liens and Guarantees 175SECTION 9.15 No Advisory or Fiduciary Responsibility 177SECTION 9.16 Interest Rate Limitation 177SECTION 9.17 Intercreditor Agreements 177 -iv- SCHEDULES : Schedule 2.01—Commitments and LoansSchedule 3.03—Government Approvals; No ConflictsSchedule 3.06—Litigation and Environmental MattersSchedule 3.12—SubsidiariesSchedule 5.14—Certain Post-Closing ObligationsSchedule 5.17—Existing Affiliate TransactionsSchedule 6.01—Existing IndebtednessSchedule 6.02—Existing LiensSchedule 6.04(e)—Existing InvestmentsSchedule 6.09—Existing RestrictionsSchedule 9.01—Notices EXHIBITS : Exhibit A—Form of Assignment and AssumptionExhibit B—Form of Term Guarantee AgreementExhibit C—Form of Perfection CertificateExhibit D—Form of Term Collateral AgreementExhibit E—[Reserved]Exhibit F—Form of Pari Passu Intercreditor AgreementExhibit G—Form of Second Lien Intercreditor AgreementExhibit H—Form of Closing CertificateExhibit I—Form of Intercompany NoteExhibit J—Form of Specified Discount Prepayment NoticeExhibit K—Form of Specified Discount Prepayment ResponseExhibit L—Form of Discount Range Prepayment NoticeExhibit M—Form of Discount Range Prepayment OfferExhibit N—Form of Solicited Discounted Prepayment NoticeExhibit O—Form of Solicited Discounted Prepayment OfferExhibit P—Form of Acceptance and Prepayment NoticeExhibit Q-1—Form of United States Tax Compliance Certificate 1Exhibit Q-2—Form of United States Tax Compliance Certificate 2Exhibit Q-3—Form of United States Tax Compliance Certificate 3Exhibit Q-4—Form of United States Tax Compliance Certificate 4Exhibit R—Form of Term NoteExhibit S—Form of Solvency CertificateExhibit T—Form of Notice of Borrowing -xxii- SECOND AMENDED AND RESTATED TERM LOAN CREDIT AGREEMENT dated as of February 23,2017 (this “ Agreement ”), among BUILDERS FIRSTSOURCE, INC., a Delaware corporation (the “ Borrower ”), the LENDERSparty hereto and DEUTSCHE BANK AG NEW YORK BRANCH (“ DBNY ”), as Term Administrative Agent.WHEREAS, the Borrower is party to that certain Amended and Restated Credit Agreement dated as of August22, 2016, by and among the Borrower, each lender from time to time party thereto and the Administrative Agent (as amended,restated, supplemented or otherwise modified prior to the Second Amendment Effective Date, the “ Existing Credit Agreement ”);WHEREAS, the requisite parties to the Existing Credit Agreement have agreed to amend and restate theExisting Credit Agreement as provided in this Agreement, effective upon the satisfaction of the conditions precedent set forth in theSecond Amendment.NOW, THEREFORE, the parties hereto hereby agree to amend and restate the Existing Credit Agreement, andthe Existing Credit Agreement is hereby amended and restated in its entirety as follows:ARTICLE IDEFINITIONSSECTION 1.01 Defined Terms.As used in this Agreement, the following terms have the meanings specified below:“ ABL/Bond Intercreditor Agreement ” means the ABL/Bond Intercreditor Agreement, dated as of May 29,2013, by and among, inter alios , SunTrust Bank, Wilmington Trust, National Association and each additional representative partythereto from time to time, as amended, modified, supplemented, substituted, replaced or restated, in whole or in part, from time totime.“ ABL Credit Agreement ” means the Credit Agreement dated as of the Effective Date among the Borrower, theSubsidiaries of the Borrower party thereto, SunTrust Bank, as administrative and collateral agent and the lenders party thereto fromtime to time, as amended, modified, supplemented, substituted, replaced, restated or refinanced, in whole or in part, from time totime (whether with the original administrative agent and lenders or other agents and lenders or otherwise and whether provided underthe original ABL Credit Agreement or another credit agreement, indenture, instrument, other document or otherwise, unless suchcredit agreement, indenture, instrument or document expressly provides that it is not an ABL Credit Agreement).“ ABL Facility ” means the senior secured revolving loan facility under the ABL Credit Agreement or anyamendment, supplement, modification, substitution, replacement, restatement or refinancing thereof, in whole or in part, from time totime, including in connection with a Permitted Refinancing of the ABL Credit Agreement.-1- “ ABL Financing Transactions ” means the ABL Financing Transactions as such term is defined in the ABLCredit Agreement.“ ABL Loan Documents ” means, collectively, (i) the ABL Credit Agreement and (ii) the security documents,intercreditor agreements (including the ABL/Bond Intercreditor Agreement), guarantees, joinders and other agreements orinstruments executed in connection with the ABL Credit Agreement or such other agreements, in each case, as amended, modified,supplemented, substituted, replaced, restated or refinanced, in whole or in part, from time to time including in connection with aPermitted Refinancing of the ABL Credit Agreement.“ ABL Obligations ” means all Indebtedness and other obligations of the Borrower and any other Loan Partiesoutstanding under or pursuant to the ABL Loan Documents, together with guarantees thereof that are secured, or intended to besecured, under the ABL Loan Documents, including any direct or indirect, absolute or contingent, interest and fees that accrue afterthe commencement by or against the Borrower, any other Loan Party or any guarantor of ABL Obligations of any proceeding underany Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees areallowed claims in such proceeding, and any obligations under a Designated Hedge Agreement or a Cash Management Agreement (orequivalent terms) that are secured pursuant to the ABL Loan Documents.“ ABR ” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loanscomprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.“ Acceptable Discount ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(2).“ Acceptable Prepayment Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).“ Acceptance and Prepayment Notice ” means an irrevocable written notice from a Term Lender accepting aSolicited Discounted Prepayment Offer to make a Discounted Term Loan Prepayment at the Acceptable Discount specified thereinpursuant to Section 2.11(a)(ii)(D) substantially in the form of Exhibit P.“ Acceptance Date ” has the meaning specified in Section 2.11(a)(ii)(D)(2).“ Accepting Lenders ” has the meaning specified in Section 2.24(a).“ Acquired Company ” means ProBuild Holdings LLC, a Delaware limited liability company.“ Acquired EBITDA ” means, with respect to any Acquired Entity or Business or any Converted RestrictedSubsidiary (any of the foregoing, a “ Pro Forma Entity ”) for any period as the amount for such period of Consolidated EBITDA ofsuch Pro Forma Entity (determined as if references to the Borrower and its Restricted Subsidiaries in the definition of “ConsolidatedEBITDA” were references to such Pro Forma Entity and its subsidiaries that will become Restricted Subsidiaries), all as determinedon a consolidated basis for such Pro Forma Entity.-2- “ Acquired Entity or Business ” has the meaning given such term in the definition of “Consolidated EBITDA.”“ Acquisition ” means the acquisition of the Acquired Companies (as defined in the Acquisition Agreement)pursuant to the terms of the Acquisition Agreement.“ Acquisition Agreement ” means that securities purchase agreement (together with all exhibits, schedules,annexes and disclosure schedules thereto) dated as of April 13, 2015 among the Borrower, as purchaser, the sellers identified thereinand the Acquired Company.“ Acquisition Documents ” means the Acquisition Agreement, all other agreements to be entered into between oramong the Acquired Company or its Affiliates and the Borrower or its Affiliates in connection with the Acquisition and allschedules, exhibits and annexes to each of the foregoing and all side letters, instruments and agreements affecting the terms of theforegoing or entered into in connection therewith.“ Acquisition Transaction ” means any acquisition by the Borrower or any Restricted Subsidiary that either (a) isnot permitted by the terms of this Agreement immediately prior to the consummation of such acquisition or (b) if permitted by theterms of this Agreement immediately prior to the consummation of such acquisition, would not provide the Borrower and itsRestricted Subsidiaries with adequate flexibility under the Loan Documents for the continuation and/or expansion of their combinedoperations following such consummation, as determined by the Borrower acting in good faith.“ Additional Revolving Lender ” means, at any time, any bank, financial institution or other institutional lenderor investor that agrees to provide any portion of any Incremental Revolving Loans pursuant to an Incremental Facility Amendment inaccordance with Section 2.20; provided that each Additional Revolving Lender shall be subject to the approval of the TermAdministrative Agent if such consent would be required under Section 9.04(b) for an assignment of Revolving Loans, as applicable,to such bank, financial institution or other institutional lender or investor (such approval not to be unreasonably withheld,conditioned or delayed) and the Borrower.“ Additional Term Lender ” means, at any time, any bank, financial institution or other institutional lender orinvestor that agrees to provide any portion of any (a) Incremental Term Loans pursuant to an Incremental Facility Amendment inaccordance with Section 2.20 or (b) Credit Agreement Refinancing Indebtedness pursuant to a Refinancing Amendment inaccordance with Section 2.21; provided that each Additional Term Lender shall be subject to the approval of the TermAdministrative Agent if such consent would be required under Section 9.04(b) for an assignment of Term Loans or TermCommitments, as applicable, to such bank, financial institution or other institutional lender or investor (such approval not to beunreasonably withheld, conditioned or delayed) and the Borrower.“ Adjusted LIBO Rate ” means, with respect to any Eurodollar Borrowing for any Interest Period, a rate perannum equal to the product of (i) the LIBO Rate as in effect at such time for such Interest Period and (ii) the Statutory Reserve Rate;provided that the Adjusted LIBO Rate for any Interest Period shall not be less than 1.00% per annum.-3- “ Administrative Questionnaire ” means an administrative questionnaire in a form supplied by the TermAdministrative Agent.“ Affected Class ” has the meaning specified in Section 2.24(a).“ Affiliate ” means, with respect to a specified Person, another Person that directly or indirectly Controls or isControlled by or is under common Control with the Person specified.“ Affiliated Debt Fund ” means any Affiliated Lender that is a bona fide diversified debt fund primarily engagedin, or that advises funds or other investment vehicles that are engaged in, making, purchasing, holding or otherwise investing incommercial loans, bonds and similar extensions of credit or securities in the ordinary course.“ Affiliated Lender ” means, at any time, any Lender that is an Investor or an Affiliate of an Investor (other thanthe Borrower or any of its Subsidiaries) at such time, to the extent that such Investor or its Affiliates constitute an Affiliate of theBorrower or its Subsidiaries.“ Agent ” means the Term Administrative Agent, the Term Collateral Agent, each Joint Lead Arranger and anysuccessors and assigns in such capacity, and “ Agents ” means two or more of them.“ Agent Parties ” has the meaning given to such term in Section 9.01(c).“ Agreement ” has the meaning given to such term in the preliminary statements hereto.“ Alternate Base Rate ” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effecton such day, (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1.00% and (c) the Adjusted LIBO Rate for theapplicable Loan on such day (or if such day is not a Business Day, the immediately preceding Business Day) for a deposit in dollarswith a maturity of one month plus 1.00%; provided that, solely for purposes of the foregoing, the Adjusted LIBO Rate for any dayshall be calculated using the LIBO Rate based on the rate per annum determined by the Term Administrative Agent by reference tothe ICE Benchmark Administration Interest Settlement Rates (as set forth by any service selected by the Term Administrative Agentthat has been nominated by the ICE Benchmark Administration Limited (or any Person which takes over the administration of thatrate) as an authorized information vendor for the purpose of displaying such rates) (the “ ICE LIBOR ”) as published by Reuters (orsuch other commercially available source providing quotations of ICE LIBOR as may be designated by the Term AdministrativeAgent from time to time) on such day at approximately 11:00 a.m. (London time) for deposits in dollars for a period equal to onemonth. If the Term Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) thatit is unable to ascertain the Federal Funds Effective Rate or the Adjusted LIBO Rate for any reason, including the inability or failureof the Term Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition of Federal FundsEffective Rate, the Alternate Base Rate shall be determined without regard to clause (b) or (c), as applicable, of the precedingsentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a changein the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from and including the effectivedate of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.-4- “ Applicable Account ” means, with respect to any payment to be made to the Term Administrative Agenthereunder, the account specified by the Term Administrative Agent from time to time for the purpose of receiving payments of suchtype.“ Applicable Discount ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(2).“ Applicable Rate ” means, for any day, (a) 2.00% per annum, in the case of an ABR Loan, or (ii) 3.00% perannum, in the case of a Eurodollar Loan.“ Approved Bank ” has the meaning assigned to such term in the definition of the term “Permitted Investments.”“ Approved Foreign Bank ” has the meaning assigned to such term in the definition of “Permitted Investments.”“ Approved Fund ” means any Person (other than a natural person) that is (or will be) engaged in making,purchasing, holding or investing in commercial loans and similar extensions of credit in the ordinary course of its activities and thatis administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity thatadministers, advises or manages a Lender.“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an EligibleAssignee (with the consent of any Person whose consent is required by Section 9.04(b)), substantially in the form of Exhibit A or anyother form reasonably approved by the Term Administrative Agent.“ Auction Agent ” means (a) the Term Administrative Agent or (b) any other financial institution or advisoremployed by the Borrower (whether or not an Affiliate of the Term Administrative Agent) to act as an arranger in connection withany Discounted Term Loan Prepayment pursuant to Section 2.11(a)(ii)(A); provided that the Borrower shall not designate the TermAdministrative Agent as the Auction Agent without the written consent of the Term Administrative Agent (it being understood thatthe Term Administrative Agent shall be under no obligation to agree to act as the Auction Agent).“ Audited Financial Statements ” means (a) the audited combined balance sheets of the Acquired Company forthe fiscal years ended December 31, 2013 and December 31, 2014, and the related consolidated statements of income and cash flowsof the Acquired Company for the fiscal years ended December 31, 2012, December 31, 2013 and December 31, 2014 and (b) theaudited consolidated balance sheets of the Borrower for the fiscal years ended December 31, 2013 and December 31, 2014, and therelated consolidated statements of income and cash flows of the Borrower for the fiscal years ended December 31, 2012, December31, 2013 and December 31, 2014.-5- “ Available Amount ” means, as of any date of determination, a cumulative amount equal to (withoutduplication):(a) $75,000,000 (the “ Starter Basket ”), plus(b) the sum of an amount (which amount shall not be less than zero) equal to the greater of (A) 50% ofConsolidated Net Income of the Borrower and its Restricted Subsidiaries for the period (treated as one accounting period)from the first day of the first full fiscal quarter of the Borrower commencing after the Effective Date to the end of the mostrecently ended Test Period as of such date and (B) the sum of Excess Cash Flow (but not less than zero in any period) forthe fiscal year ending December 31, 2016 and Excess Cash Flow for each succeeding completed fiscal year as of such date,in each case, that was not required to prepay Term Borrowings pursuant to Section 2.11(d), plus(c) returns, profits, distributions and similar amounts received in cash or Permitted Investments by the Borrowerand its Restricted Subsidiaries on Investments made using the Available Amount (not to exceed the amount of suchInvestments), plus(d) Investments of the Borrower or any of its Restricted Subsidiaries in any Unrestricted Subsidiary made usingthe Available Amount that has been re-designated as a Restricted Subsidiary or that has been merged or consolidated withor into the Borrower or any of its Restricted Subsidiaries (up to the lesser of (i) the fair market value determined in goodfaith by the Borrower of the Investments of the Borrower and its Restricted Subsidiaries in such Unrestricted Subsidiary atthe time of such re-designation or merger or consolidation and (ii) the fair market value determined in good faith by theBorrower of the original Investment by the Borrower and its Restricted Subsidiaries in such Unrestricted Subsidiary), plus(e) the Net Proceeds of a sale or other Disposition of any Unrestricted Subsidiary (including the issuance ofstock of an Unrestricted Subsidiary) received by the Borrower or any Restricted Subsidiary, plus(f) to the extent not included in Consolidated Net Income, dividends or other distributions or returns on capitalreceived by the Borrower or any Restricted Subsidiary from an Unrestricted Subsidiary, plus(g) the aggregate amount of any Retained Declined Proceeds since the Effective Date.“ Available Equity Amount ” means a cumulative amount equal to (without duplication):(a) the Net Proceeds of new public or private issuances of Qualified Equity Interests of any parent of theBorrower which are contributed to the Borrower, plus-6- (b) capital contributions received by the Borrower after the Effective Date in cash or Permitted Investments(other than (i) in respect of any Disqualified Equity Interest, (ii) to the extent constituting a Specified Equity Contribution(as defined in the ABL Credit Agreement) or (iii) amounts applied pursuant to Section 6.01(a)(xiv)), plus(c) the net cash proceeds received by the Borrower or any Restricted Subsidiary from Indebtedness andDisqualified Equity Interest issuances issued after the Effective Date and which have been exchanged or converted intoQualified Equity Interests, plus(d) returns, profits, distributions and similar amounts received in cash or Permitted Investments by the Borroweror any Restricted Subsidiary on Investments made using the Available Equity Amount (not to exceed the amount of suchInvestments).“ Bankruptcy Code ” means Title 11 of the United States Code, as amended, or any similar federal or state lawfor the relief of debtors.“ Board of Directors ” means, with respect to any Person, (a) in the case of any corporation, the board ofdirectors of such Person or any committee thereof duly authorized to act on behalf of such board, (b) in the case of any limitedliability company, the board of managers, board of directors, manager or managing member of such Person or the functionalequivalent of the foregoing or any committee thereof duly authorized to act on behalf of such board, manager or managing member,(c) in the case of any partnership, the board of directors or board of managers of the general partner of such Person and (d) in anyother case, the functional equivalent of the foregoing.“ Board of Governors ” means the Board of Governors of the Federal Reserve System of the United States ofAmerica.“ Borrower ” has the meaning assigned to such term in the preliminary statements hereto.“ Borrower Materials ” has the meaning assigned to such term in the last paragraph of Section 5.01.“ Borrower Offer of Specified Discount Prepayment ” means the offer by the Borrower to make a voluntaryprepayment of Term Loans at a Specified Discount to par pursuant to Section 2.11(a)(ii)(B).“ Borrower Solicitation of Discount Range Prepayment Offers ” means the solicitation by the Borrower of offersfor, and the corresponding acceptance by a Term Lender of, a voluntary prepayment of Term Loans at a specified range at a discountto par pursuant to Section 2.11(a)(ii)(C).“ Borrower Solicitation of Discounted Prepayment Offers ” means the solicitation by the Borrower of offers for,and the subsequent acceptance, if any, by a Term Lender of, a voluntary prepayment of Term Loans at a discount to par pursuant toSection 2.11(a)(ii)(D).-7- “ Borrowing ” means Loans of the same Class and Type, made, converted or continued on the same date and, inthe case of Eurodollar Loans, as to which a single Interest Period is in effect.“ Borrowing Minimum ” means (a) in the case of a Eurodollar Borrowing, $1,000,000 and (b) in the case of anABR Borrowing, $500,000.“ Borrowing Multiple ” means (a) in the case of a Eurodollar Borrowing, $1,000,000 and (b) in the case of anABR Borrowing, $500,000.“ Borrowing Request ” means a request by the Borrower for a Borrowing in accordance with Section 2.03.“ Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in NewYork City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, theterm “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbankmarket.“ Capital Lease Obligations ” of any Person means the obligations of such Person to pay rent or other amountsunder any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, whichobligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and theamount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP; provided , that allobligations of any Person that are or would be characterized as an operating lease as determined in accordance with GAAP as ineffect on the Effective Date (whether or not such operating lease was in effect on such date) shall continue to be accounted for as anoperating lease (and not as a Capitalized Lease or Capital Lease Obligation) for purposes of this Agreement regardless of any changein GAAP following the Effective Date that would otherwise require such obligation to be recharacterized as a Capital LeaseObligation, to the extent that financial reporting shall not be affected hereby. For purposes of Section 6.02, a Capital LeaseObligation shall be deemed to be secured by a Lien on the property being leased and such property shall be deemed to be owned bythe lessee.“ Capitalized Leases ” means all leases that have been or should be, in accordance with GAAP as in effect on theEffective Date, recorded as capitalized leases; provided that for all purposes hereunder the amount of obligations under anyCapitalized Lease shall be the amount thereof accounted for as a liability in accordance with GAAP.“ Capitalized Software Expenditures ” means, for any period, the aggregate of all expenditures (whether paid incash or accrued as liabilities) by the Borrower and its Restricted Subsidiaries during such period in respect of purchased software orinternally developed software and software enhancements that, in conformity with GAAP, are or are required to be reflected ascapitalized costs on the consolidated balance sheet of the Borrower and its Restricted Subsidiaries.-8- “ Cash Management Obligations ” means (a) obligations of the Borrower or any Subsidiary in respect of anyoverdraft and related liabilities arising from treasury, depository, cash pooling arrangements and cash management services or anyautomated clearing house transfers of funds and (b) other obligations in respect of netting services, employee credit or purchase cardprograms and similar arrangements.“ Cash Management Services ” has the meaning assigned to such term in the definition of “Secured CashManagement Obligations.”“ Casualty Event ” means any event that gives rise to the receipt by the Borrower or any Subsidiary of anyinsurance proceeds or condemnation awards in respect of any equipment, fixed assets or real property (including any improvementsthereon) to replace or repair such equipment, fixed assets or real property.“ CFC ” means a “controlled foreign corporation” within the meaning of Section 957 of the Code.“ CFC Holdco ” means a Domestic Subsidiary that is a disregarded entity for U.S. federal income tax purposeswith no material assets other than capital stock (and debt securities, if any) of one or more Foreign Subsidiaries that are CFCs, or ofother CFC Holdcos.“ Change of Control ” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, byany Person or group, other than the Permitted Holders (directly or indirectly, including through one or more holding companies), ofEquity Interests representing 50% or more of the aggregate ordinary voting power represented by the issued and outstanding EquityInterests in the Borrower and the percentage of the aggregate ordinary voting power so held is greater than the percentage of theaggregate ordinary voting power represented by the Equity Interests in the Borrower held by the Permitted Holders, unless thePermitted Holders (directly or indirectly, including through one of more holding companies) otherwise have the right (pursuant tocontract, proxy or otherwise), directly or indirectly, to designate, nominate or appoint (and do so designate, nominate or appoint) amajority of the Board of Directors of the Borrower or (b) the occurrence of a “Change of Control” (or similar event, howeverdenominated), as defined in the Secured Notes Indenture or the Unsecured Notes Indenture.For purposes of this definition, (i) “beneficial ownership” shall be as defined in Rules 13(d)-3 and 13(d)-5 underthe Exchange Act, (ii) the phrase Person or “group” is within the meaning of Section 13(d) or 14(d) of the Exchange Act, butexcluding any employee benefit plan of such Person or “group” and its subsidiaries and any Person acting in its capacity as trustee,agent or other fiduciary or administrator of any such plan, and (iii) if any Person or “group” includes one or more Permitted Holders,the issued and outstanding Equity Interests of the Borrower directly or indirectly owned by the Permitted Holders that are part ofsuch Person or “group” shall not be treated as being owned by such Person or “group” for purposes of determining whether clause(a) of this definition is triggered).“ Change in Law ” means: (a) the adoption of any rule, regulation, treaty or other law after the date of thisAgreement, (b) any change in any rule, regulation, treaty or other law or in the administration, interpretation or application thereof byany Governmental Authority after the-9- date of this Agreement or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law)of any Governmental Authority made or issued after the date of this Agreement, including, for the avoidance of doubt, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all rules, regulations, guidelines or directives thereunder or issued inconnection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank of International Settlements, theBasel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatoryauthorities, in each case pursuant to Basel III, shall, in each case, be deemed to be a “Change in Law,” to the extent enacted, adopted,promulgated or issued after the date of this Agreement, but only to the extent such rules, regulations, or published interpretations ordirectives are applied to the Borrower and its Subsidiaries by the Term Administrative Agent or any Lender in substantially the samemanner as applied to other similarly situated borrowers under comparable syndicated credit facilities, including, without limitation,for purposes of Section 2.15.“ Class ” when used in reference to (a) any Loan or Borrowing, refers to whether such Loan, or the Loanscomprising such Borrowing, are Incremental Revolving Loans, Term Loans, Incremental Term Loans or Other Term Loans, (b) anyCommitment, refers to whether such Commitment is a Term Commitment or Other Term Commitment and (c) any Lender, refers towhether such Lender has a Loan or Commitment with respect to a particular Class of Loans or Commitments. Other TermCommitments, Other Term Loans and Incremental Term Loans that have different terms and conditions shall be construed to be indifferent Classes.“ Code ” means the Internal Revenue Code of 1986, as amended from time to time.“ Collateral ” means any and all assets, whether real or personal, tangible or intangible, on which Liens arepurported to be granted pursuant to the Term Security Documents as security for the Secured Obligations.“ Collateral and Guarantee Requirement ” means, at any time, the requirement that:(a) the Term Administrative Agent shall have received from (i) the Borrower and each of the RestrictedSubsidiaries (other than any Excluded Subsidiary) either (x) a counterpart of the Term Guarantee Agreement duly executedand delivered on behalf of such Person or (y) in the case of any Person that becomes a Loan Party after the Effective Date(including by ceasing to be an Excluded Subsidiary), a supplement to the Term Guarantee Agreement, in substantially theform specified therein, duly executed and delivered on behalf of such Person and (ii) the Borrower and each SubsidiaryLoan Party either (x) a counterpart of the Term Collateral Agreement duly executed and delivered on behalf of such Personor (y) in the case of any Person that becomes a Subsidiary Loan Party after the Effective Date (including by ceasing to bean Excluded Subsidiary), a supplement to the Term Collateral Agreement, in substantially the form specified therein, dulyexecuted and delivered on behalf of such Person, in each case under this clause (a) together with, in the case of any suchLoan Documents executed and delivered after the Effective Date, to the extent reasonably requested by the TermAdministrative Agent, opinions and documents of the type referred to in Sections 4.01(b) and 4.01(d);-10- (b) all outstanding Equity Interests of each Restricted Subsidiary that is a Material Subsidiary (other than anyEquity Interests constituting Excluded Assets) owned by or on behalf of any Loan Party, shall have been pledged pursuantto the Term Collateral Agreement, and, subject to the ABL/Bond Intercreditor Agreement and the Pari Passu IntercreditorAgreement, the Term Administrative Agent shall have received certificates, if any, or other instruments, if any,representing all such Equity Interests to the extent constituting “certificated securities” (other than such Equity Interestsconstituting Excluded Assets), together with undated stock powers or other instruments of transfer with respect theretoendorsed in blank;(c) if any Indebtedness for borrowed money of the Borrower or any Subsidiary in a principal amount of$1,000,000 or more is owing by such obligor to any Loan Party and such Indebtedness is evidenced by a promissory note,such promissory note shall be pledged pursuant to the Term Collateral Agreement, and, subject to the ABL/BondIntercreditor Agreement and the Pari Passu Intercreditor Agreement, the Term Administrative Agent shall have receivedall such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank; provided ,however, the foregoing delivery requirement with respect to any intercompany indebtedness may be satisfied by deliveryof an omnibus or global intercompany note executed by all Loan Parties as payees and all such obligors as payors;(d) all certificates, agreements, documents and instruments, including Uniform Commercial Code financingstatements and Intellectual Property security agreements required by this Agreement, the Term Security Documents,Requirements of Law and reasonably requested by the Term Administrative Agent to be filed, delivered, registered orrecorded to create the Liens intended to be created by the Term Security Documents and perfect such Liens to the extentrequired by, and with the priority required by, this Agreement, the Term Security Documents and the other provisions ofthe term “Collateral and Guarantee Requirement,” shall have been filed, registered or recorded or delivered to the TermAdministrative Agent for filing, registration or recording; and(e) the Term Administrative Agent shall have received (i) counterparts of a Mortgage with respect to eachMaterial Real Property duly executed and delivered by the record owner of such Mortgaged Property (if the MortgagedProperty is in a jurisdiction that imposes a mortgage recording or similar tax is imposed on the amount secured by suchMortgage, then the amount secured by such Mortgage shall be limited to the book value of such Mortgaged Property, asreasonably determined by the Borrower), (ii) a policy or policies of title insurance (or marked unconditional commitmentto issue such policy or policies) issued by a nationally recognized title insurance company insuring the Lien of each suchMortgage as a first priority Lien on the Mortgaged Property described therein, free of any other Liens except as expresslypermitted by Section 6.02, together with such customary lender’s endorsements (other than a creditor’s rightsendorsement) as the Term Administrative Agent may reasonably request to the extent available in the applicablejurisdiction at commercially reasonable rates (it being agreed that the Term Administrative Agent shall accept zoningreports from a nationally recognized zoning company in lieu of zoning endorsements to such title insurance policies), in anamount equal to the fair market value of such Mortgaged Property or as otherwise reasonably agreed by the parties;-11- provided that in no event will the Borrower be required to obtain independent appraisals of such Mortgaged Properties,unless required by FIRREA, (iii) a completed “Life-of-Loan” Federal Emergency Management Agency standard floodhazard determination with respect to each Mortgaged Property, and if any Mortgaged Property is located in an areadetermined by the Federal Emergency Management Agency (or any successor agency) to be located in special floodhazard area, a duly executed notice about special flood hazard area status and flood disaster assistance and evidence ofsuch flood insurance as provided in Section 5.07(b), (iv) opinions, addressed to the Term Administrative Agent and theSecured Parties, from counsel qualified to opine in each jurisdiction where a Mortgaged Property is located regarding theenforceability of the Mortgage and such other matters as may be in form and substance reasonably satisfactory to the TermAdministrative Agent, (v) a survey or existing survey together with a no change affidavit of such Mortgaged Property, incompliance with the 2011 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys and otherwisereasonably satisfactory to the Term Administrative Agent, and (vi) evidence of payment of title insurance premiums andexpenses and all recording, mortgage, transfer and stamp taxes and fees payable in connection with recording theMortgage, any amendments thereto and any fixture filings in appropriate county land office(s).Notwithstanding the foregoing provisions of this definition or anything in this Agreement or any other Loan Document tothe contrary, (a) the foregoing provisions of this definition shall not require the creation or perfection of pledges of or securityinterests in, or the obtaining of title insurance, legal opinions or other deliverables with respect to, particular assets of the LoanParties, or the provision of Guarantees by any Subsidiary, if the Term Administrative Agent and the Borrower reasonably agree inwriting that the cost, burden, difficulty or consequence of creating or perfecting such pledges or security interests in such assets, orobtaining such title insurance, legal opinions or other deliverables in respect of such assets, or providing such Guarantees (taking intoaccount any adverse tax consequences to the Borrower and its Affiliates (including the imposition of withholding or other materialtaxes)), outweighs the benefits to be obtained by the Lenders therefrom; (b) Liens required to be granted from time to time pursuantto the term “Collateral and Guarantee Requirement” shall be subject to exceptions and limitations set forth in the Term SecurityDocuments; (c) in no event shall control agreements or other control or similar arrangements be required with respect to cash,Permitted Investments, other deposit accounts, securities and commodities accounts (including securities entitlements and relatedassets) (other than any such control agreements or other control or similar agreements as required by an ABL Facility and only for solong as such ABL Facility is in effect), letter of credit rights or other assets requiring perfection by control (but not, for avoidance ofdoubt, possession); (d) in no event shall any Loan Party be required to complete any filings or other action with respect to theperfection of security interests in any jurisdiction outside of the United States, and no actions in any non-U.S. jurisdiction or requiredby the laws of any non-U.S. jurisdiction shall be required to be taken to create any security interests in assets located or titled outsideof the United States (including any Equity Interests of Foreign Subsidiaries and any Intellectual Property governed by or arising orexisting under the laws of any jurisdiction other than the United States of America, any State thereof or the District of Columbia) orto perfect or make enforceable any security interests in any such assets (it being understood that there shall be no security agreementsor pledge agreements governed under the laws of any non-U.S. jurisdiction); (e) in no event shall any Loan Party be required tocomplete any filings or other action with respect to perfection of security interests in-12- assets subject to certificates of title beyond the filing of UCC financing statements; (f) other than the filing of UCC financingstatements, no perfection shall be required with respect to promissory notes evidencing debt for borrowed money in a principalamount of less than $1,000,000; (g) in no event shall any Loan Party be required to complete any filings or other action with respectto security interests in Intellectual Property beyond the filing of Intellectual Property security agreements with the United StatesPatent and Trademark Office or the United States Copyright Office; (h) no actions shall be required to perfect a security interest inletter of credit rights (other than the filing of UCC financing statements); and (i) in no event shall the Collateral include anyExcluded Assets. The Term Administrative Agent may grant extensions of time for the creation and perfection of security interestsin or the obtaining of title insurance, legal opinions or other deliverables with respect to particular assets or the provision of anyGuarantee by any Subsidiary (including extensions beyond the Effective Date or in connection with assets acquired, or Subsidiariesformed or acquired, after the Effective Date) and any other obligations under this definition where it determines that such actioncannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to beaccomplished by this Agreement or the Term Security Documents.“ Commitment ” means with respect to any Lender, its Term Commitment, Incremental Revolving Commitment,Other Term Commitment of any Class or any combination thereof (as the context requires).“ Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq .), as amended fromtime to time, and any successor statute.“ Compliance Certificate ” means the certificate required to be delivered pursuant to Section 5.01(d).“ Consolidated Cash Interest Expense ” means, as of any date for the applicable period ending on such date withrespect to the Borrower and its Restricted Subsidiaries on a consolidated basis, the amount payable with respect to such period inrespect of (a) total interest expense payable in cash with respect to all outstanding Indebtedness of the Borrower and its RestrictedSubsidiaries (including the interest component under Capitalized Leases, but excluding, to the extent included in interest expense,(i) fees and expenses (including any penalties and interest relating to Taxes) associated with the consummation of the Transactions,(ii) annual agency fees paid to the administrative agents and collateral agents under any credit facilities or other debt instruments ordocuments, (iii) costs associated with obtaining Swap Agreements and any interest expense attributable to the movement of themark-to-market valuation of obligations under Swap Agreements or other derivative instruments, and any one-time cash costsassociated with breakage in respect of Swap Agreements for interest rates, (iv) fees and expenses (including any penalties andinterest relating to Taxes) associated with any Investment not prohibited by Section 6.04, the issuance of Equity Interests orIndebtedness, (v) any interest component relating to accretion or accrual of discounted liabilities, (vi) all non-recurring cash interestexpense consisting of liquidated damages for failure to timely comply with registration rights obligations, (vii) amortization ofdeferred financing fees, debt issuance costs, commissions, fees and expenses or expensing of any financing fees or prepayment orredemption premiums or penalty and any other amounts of non-cash interest (including as a result of the effects of acquisitionmethod accounting or pushdown accounting), and (viii) any interest expense attributable to the exercise of-13- appraisal rights and the settlement of any claims or actions (whether actual, contingent or potential) with respect thereto and withrespect to any Permitted Acquisition or other Investment, all as calculated on a consolidated basis in accordance with GAAP minus(b) cash interest income of the Borrower and its Restricted Subsidiaries earned during such period, in each case as determined inaccordance with GAAP.“ Consolidated EBITDA ” means, for any period, Consolidated Net Income for such period, plus :(a) without duplication and to the extent already deducted (and not added back) in arriving at such ConsolidatedNet Income, the sum of the following amounts for such period:(i) total interest expense and, to the extent not reflected in such total interest expense, the sum of (A)premium payments, debt discount, fees, charges and related expenses incurred in connection with borrowedmoney (including capitalized interest) or in connection with the deferred purchase price of assets plus (B) theportion of rent expense with respect to such period under Capitalized Leases that is treated as interest expense inaccordance with GAAP plus (C) the implied interest component of synthetic leases with respect to such periodplus (D) any losses on hedging obligations or other derivative instruments entered into for the purpose ofhedging interest rate risk, net of interest income and gains on such hedging obligations or such derivativeinstruments plus (E) bank and letter of credit fees and costs of surety bonds in connection with financingactivities, plus (F) any commissions, discounts, yield and other fees and charges (including any interest expense)related to any Qualified Securitization Facility plus (G) amortization or write-off of deferred financing fees, debtissuance costs, debt discount or premium, terminated hedging obligations and other commissions, financing feesand expenses and, adjusted, to the extent included, to exclude any refunds or similar credits received inconnection with the purchasing or procurement of goods or services under any purchasing card or similarprogram;(ii) provision for taxes based on income, profits or capital and sales taxes, including federal,provincial, territorial, foreign, state, local, franchise, excise, and similar taxes and foreign withholding taxes paidor accrued during such period (including in respect of repatriated funds) including penalties and interest relatedto such taxes or arising from any tax examinations (including, without limitation, any additions to such taxes,and any penalties and interest with respect thereto);(iii) Non-Cash Charges;(iv) operating expenses incurred on or prior to the Effective Date attributable to (A) salary obligationspaid to employees terminated prior to the Effective Date and (B) wages paid to executives in excess of theamounts the Borrower and/or any of its Restricted Subsidiaries are required to pay pursuant to their respectiveemployment agreements;-14- (v) extraordinary losses or charges in accordance with GAAP;(vi) unusual, non-recurring or exceptional expenses, losses or charges (including any unusual, non-recurring or exceptional operating expenses, losses or charges directly attributable to the implementation of costsavings initiatives), severance, relocation costs, integration and facilities’ opening costs and other businessoptimization expenses and operating improvements (including related to new product introductions), systemsdevelopment and establishment costs, recruiting fees, signing costs, retention or completion bonuses, transitioncosts, costs related to closure/consolidation of facilities, internal costs in respect of strategic initiatives andcurtailments or modifications to pension and post-retirement employee benefit plans (including any settlement ofpension liabilities), contract terminations and professional and consulting fees incurred in connection with any ofthe foregoing;(vii) restructuring charges, accruals or reserves (including restructuring and integration costs related toacquisitions and adjustments to existing reserves), whether or not classified as restructuring expense on theconsolidated financial statements;(viii) the amount of any non-controlling interest consisting of income attributable to non-controllinginterests of third parties in any Non-Wholly Owned Subsidiary deducted (and not added back in such period) incalculating Consolidated Net Income;(ix) (A) the amount of board of directors, management, monitoring, consulting and advisory fees,indemnities and related expenses paid or accrued in such period (including any termination fees payable inconnection with the early termination of management and monitoring agreements) and (B) the amount ofexpenses relating to payments made to option holders of the Borrower or any of its direct or indirect parentcompanies in connection with, or as a result of, any distribution being made to shareholders of such Person or itsdirect or indirect parent companies, which payments are being made to compensate such option holders asthough they were shareholders at the time of, and entitled to share in, such distribution, in each case to the extentpermitted in the Loan Documents;(x) losses, expenses or charges (including all fees and expenses or charges relating thereto) (A) fromabandoned, closed, disposed or discontinued operations and any losses on disposal of abandoned, closed ordiscontinued operations and (B) attributable to business dispositions or asset dispositions (other than in theordinary course of business) as determined in good faith by a Financial Officer;(xi) any non-cash loss attributable to the mark to market movement in the valuation of any EquityInterests, and hedging obligations or other derivative instruments (in each case, including pursuant to FinancialAccounting Standards Codification No. 815—Derivatives and Hedging but only to the extent the cash impactresulting from such loss has not been realized);-15- (xii) any loss relating to amounts paid in cash prior to the stated settlement date of any hedgingobligation that has been reflected in Consolidated Net Income for such period;(xiii) any gain relating to hedging obligations associated with transactions realized in the currentperiod that has been reflected in Consolidated Net Income in prior periods and excluded from ConsolidatedEBITDA pursuant to clauses (c)(vi) and (c)(vii) below;(xiv) any costs or expenses incurred by the Borrower or any Restricted Subsidiary pursuant to anymanagement equity plan or stock option plan or any other management or employee benefit plan or agreement,any severance agreement or any stock subscription or shareholder agreement, to the extent that such costs orexpenses are non-cash or otherwise funded with cash proceeds contributed to the capital of the Borrower or NetProceeds of an issuance of Equity Interests of the Borrower (other than Disqualified Equity Interests);(xv) any net pension or other post-employment benefit costs representing amortization ofunrecognized prior service costs, actuarial losses, including amortization of such amounts arising in priorperiods, amortization of the unrecognized net obligation (and loss or cost) existing at the date of initialapplication of FASB Accounting Standards Codification 715, and any other items of a similar nature;(xvi) the amount of losses on Dispositions of accounts receivable, Securitization Assets and relatedassets incurred in connection with a Qualified Securitization Facility;(xvii) other add-backs and adjustments reflected in the Information Memorandum and the Model;(xviii) earn-out and contingent consideration obligations (including to the extent accounted for asbonuses or otherwise) and adjustments thereof and purchase price adjustments, in each case in connection withacquisitions or Investments;(xix) charges, losses, lost profits, expenses (including litigation expenses, fee and charges) or write-offs to the extent indemnified or insured by a third party, including expenses or losses covered byindemnification provisions or by any insurance provider in connection with the Transactions, a PermittedAcquisition or any other acquisition or Investment, disposition or any Casualty Event, in each case, to the extentthat coverage has not been denied and so long as such amounts are actually reimbursed in cash within one yearafter the related amount is first added to Consolidated EBITDA pursuant to this clause (xix) (and if not soreimbursed within one year, such amount shall be deducted from Consolidated EBITDA during the nextmeasurement period);-16- (xx) cash receipts (or any netting arrangements resulting in reduced cash expenses) not included inConsolidated EBITDA in any period to the extent non-cash gains relating to such receipts were deducted in thecalculation of Consolidated EBITDA pursuant to clause (c) below for any previous period and not added back;and(xxi) Public Company Costs; plus(b) without duplication, the amount of “run rate” cost savings, operating expense reductions, other operatingimprovements, and synergies related to any Specified Transaction, the Transactions, any restructuring, cost savinginitiative or other initiative projected by the Borrower in good faith to be realized as a result of actions taken, committed tobe taken or planned to be taken, in each case on or prior to the date that is 24 months after the end of the relevant TestPeriod (including actions initiated prior to the Effective Date) (which cost savings, operating expense reductions, otheroperating improvements and synergies shall be added to Consolidated EBITDA until fully realized and calculated on a proforma basis as though such cost savings, operating expense reductions, other operating improvements and synergies hadbeen realized on the first day of the relevant period), net of the amount of actual benefits realized from such actions; provided that (A) such cost savings, operating expense reductions, other operating improvements and synergies arereasonably identifiable and quantifiable and (B) no cost savings, operating expense reductions, other operatingimprovements or synergies shall be added pursuant to this clause (b) to the extent duplicative of any expenses or chargesrelating to such cost savings, operating expense reductions, other operating improvements or synergies that are included inclauses (a)(vi) and (a)(vii) above or in the definition of “Pro Forma Adjustment” (it being understood and agreed that “runrate” shall mean the full recurring benefit that is associated with any action taken); less(c) without duplication and to the extent included in arriving at such Consolidated Net Income, the sum of thefollowing amounts for such period:(i) extraordinary or non-recurring gains;(ii) non-cash gains (excluding any non-cash gain to the extent it represents the reversal of an accrual orreserve for a potential cash item that reduced Consolidated Net Income or Consolidated EBITDA in any priorperiod); and(iii) (A) gains (including all fees and expenses or income relating thereto) attributable to businessdispositions or asset dispositions, other than in the ordinary course of business, as determined in good faith by aFinancial Officer and (B) gains or income (including all reasonable fees and expenses or charges relatingthereto) from abandoned, closed, disposed or discontinued operations and any gains on disposal of abandoned,closed or discontinued operations;-17- (iv) any non-cash gain attributable to the mark to market movement in the valuation of any EquityInterests, and hedging obligations or other derivative instruments (in each case, including pursuant to FinancialAccounting Standards Codification No. 815—Derivatives and Hedging but only to the extent the cash impactresulting from such gain has not been realized);(v) any gain relating to amounts received in cash prior to the stated settlement date of any hedgingobligation that has been reflected in Consolidated Net Income in such period;(vi) any loss relating to hedging obligations associated with transactions realized in the current periodthat has been reflected in Consolidated Net Income in prior periods and excluded from Consolidated EBITDApursuant to clauses (a)(xii) and (a)(xiii) above; and(vii) the amount of any non-controlling interest consisting of loss attributable to non-controllinginterests of third parties in any Non Wholly Owned Subsidiary added (and not deducted in such period) toConsolidated Net Income; plus(d) any income from investments recorded using the equity method of accounting or the cost method ofaccounting, without duplication and to the extent not included in arriving at Consolidated Net Income, except to the extentsuch income was attributable to income that would be deducted pursuant to clause (c) if it were income of the Borrower orits Restricted Subsidiaries; minus(e) any losses from investments recorded using the equity method of accounting or the cost method ofaccounting, without duplication and to the extent not deducted in arriving at Consolidated Net Income, except to the extentsuch loss was attributable to losses that would be added back pursuant to clause (a) and (b) above if it were a loss of theBorrower or a Restricted Subsidiary; plus(f) an amount, with respect to investments recorded using the equity method of accounting or the cost method ofaccounting and without duplication of any amounts added pursuant to clause (d) above, equal to the amount attributable toeach such investment that would be added to Consolidated EBITDA pursuant to clauses (a) and (b) above if insteadattributable to the Borrower or a Restricted Subsidiary, pro-rated according to the Borrower’s or the applicableSubsidiary’s percentage ownership in such investment; minus(g) an amount, with respect to investments recorded using the equity method of accounting or the cost method ofaccounting and without duplication of any amounts deducted pursuant to clause (e) above, equal to the amount attributableto each such investment that would be deducted from Consolidated EBITDA pursuant to clause (c) above if insteadattributable to the Borrower or a Restricted Subsidiary, pro-rated according to the Borrower’s or the applicableSubsidiary’s percentage ownership in such investment;-18- in each case, as determined on a consolidated basis for the Borrower and its Restricted Subsidiaries in accordance with GAAP; provided that:(I) to the extent included in Consolidated Net Income, there shall be excluded in determining ConsolidatedEBITDA currency translation gains and losses related to currency remeasurements of assets or liabilities (including the netloss or gain resulting from hedging agreements for currency exchange risk and revaluations of intercompany balances);(II) there shall be included in determining Consolidated EBITDA for any period, without duplication, (A) to theextent not included in Consolidated Net Income, the Acquired EBITDA of any Person, property, business or asset orattributable to any Person, property, business or asset acquired by the Borrower or any Restricted Subsidiary during suchperiod (other than any Unrestricted Subsidiary) to the extent not subsequently sold, transferred or otherwise disposed of(but not including the Acquired EBITDA of any related Person, property, business or assets to the extent not so acquired)(each such Person, property, business or asset acquired, including pursuant to the Transactions or pursuant to a transactionconsummated prior to the Effective Date, and not subsequently so disposed of, an “ Acquired Entity or Business ”), and theAcquired EBITDA of any Unrestricted Subsidiary that is converted into a Restricted Subsidiary during such period (each,a “ Converted Restricted Subsidiary ”), in each case based on the Acquired EBITDA of such Pro Forma Entity for suchperiod (including the portion thereof occurring prior to such acquisition or conversion) determined on a historical ProForma Basis and (B) an adjustment in respect of each Pro Forma Entity equal to the amount of the Pro Forma Adjustmentwith respect to such Pro Forma Entity for such period (including the portion thereof occurring prior to such acquisition orconversion) as specified in the Pro Forma Adjustment certificate delivered to the Term Administrative Agent (for furtherdelivery to the Lenders); provided that, with respect to any determination to be made on a Pro Forma Basis, at the electionof the Borrower, such Acquired EBITDA or such adjustment shall not be required to be included for any Pro Forma Entityto the extent the aggregate consideration paid in connection with the acquisition of such Acquired Entity or Business or thefair market value of such Converted Restricted Subsidiary, in the aggregate, is less than $50,000,000;(III) there shall be (A) to the extent included in Consolidated Net Income, excluded in determining ConsolidatedEBITDA for any period the Disposed EBITDA of any Person, property, business or asset (other than any UnrestrictedSubsidiary) sold, transferred or otherwise disposed of, closed or classified as discontinued operations in accordance withGAAP (other than (x) if so classified on the basis that it is being held for sale unless such sale has actually occurred duringsuch period and (y) for periods prior to the applicable sale, transfer or other disposition, if the Disposed EBITDA of suchPerson, property, business or asset is positive (i.e., if such Disposed EBITDA is negative, it shall be added back indetermining Consolidated EBITDA for any period)) by the Borrower or any Restricted Subsidiary during such period(each such Person, property, business or asset so sold, transferred or otherwise disposed of, closed or classified, a “ SoldEntity or Business ”), and the Disposed EBITDA of any Restricted Subsidiary that is converted into an UnrestrictedSubsidiary during such period (each, a “ Converted Unrestricted Subsidiary ”), in each case-19- based on the Disposed EBITDA of such Sold Entity or Business or Converted Unrestricted Subsidiary for such period(including the portion thereof occurring prior to such sale, transfer, disposition, closure, classification or conversion)determined on a historical Pro Forma Basis and (B) to the extent not included in Consolidated Net Income, included indetermining Consolidated EBITDA for any period in which a Sold Entity or Business is disposed, an adjustment equal tothe Pro Forma Disposal Adjustment with respect to such Sold Entity or Business (including the portion thereof occurringprior to such disposal) as specified in the Pro Forma Disposal Adjustment certificate delivered to the Term AdministrativeAgent (for further delivery to the Lenders); and(IV) to the extent included in Consolidated Net Income, there shall be excluded in determining ConsolidatedEBITDA any expense (or income) as a result of adjustments recorded to contingent consideration liabilities relating to theTransaction or any Permitted Acquisition (or other Investment permitted hereunder).Notwithstanding the foregoing, Consolidated EBITDA shall be deemed to equal (a) $49,709,000 for the fiscal quarter ended March31, 2015, (b) $96,173,000 for the fiscal quarter ended December 31, 2014, (c) $125,683,000 for the fiscal quarter ended September30, 2014 and (d) $120,146,000 for the fiscal quarter ended June 30, 2014 (it being understood that such amounts are subject toadjustments, as and to the extent otherwise contemplated in this Agreement, in connection with any Pro Forma Adjustment or anycalculation on a Pro Forma Basis); provided that such amounts of Consolidated EBITDA for any such fiscal quarter shall be adjustedto include, without duplication, any cost savings that would otherwise be included pursuant to clause (b) of this definition.“ Consolidated Net Income ” means, for any period, the net income (loss) of the Borrower and its RestrictedSubsidiaries for such period determined on a consolidated basis in accordance with GAAP, excluding, without duplication,(a) extraordinary items for such period,(b) the cumulative effect of a change in accounting principles during such period,(c) any Transaction Costs incurred during such period ,(d) any fees and expenses (including any transaction or retention bonus or similar payment) incurred during suchperiod, or any amortization thereof for such period, in connection with any acquisition, non-recurring costs to acquireequipment to the extent not capitalized in accordance with GAAP, Investment, recapitalization, asset disposition, non-competition agreement, issuance or repayment of debt, issuance of equity securities, refinancing transaction or amendmentor other modification of or waiver or consent relating to any debt instrument (in each case, including the Transaction Costsand any such transaction consummated prior to the Effective Date and any such transaction undertaken but not completed)and any charges or non-recurring merger costs incurred during such period as a result of any such transaction, in each casewhether or not successful (including, for the avoidance of doubt, the effects of expensing all transaction-related expensesin-20- accordance with FASB Accounting Standards Codification 805 and gains or losses associated with FASB AccountingStandards Codification 460),(e) any income (loss) (and all fees and expenses or charges relating thereto) for such period attributable to theearly extinguishment of Indebtedness, hedging agreements or other derivative instruments,(f) accruals and reserves that are established or adjusted as a result of the Transactions or any PermittedAcquisition or other Investment not prohibited under this Agreement in accordance with GAAP (including any adjustmentof estimated payouts on earn-outs) or changes as a result of the adoption or modification of accounting policies duringsuch period,(g) stock-based award compensation expenses,(h) any income (loss) attributable to deferred compensation plans or trusts,(i) any income (loss) from Investments recorded using the equity method,(j) the amount of any expense required to be recorded as compensation expense related to contingent transactionconsideration,(k) any unrealized or realized gain or loss due solely to fluctuations in currency values and the related tax effects,determined in accordance with GAAP, and(l) (i) the net income of any Person that is not a Subsidiary of such Person or is an Unrestricted Subsidiary orthat is accounted for by the equity method of accounting, shall be included only to the extent of the amount of dividends ordistributions or other payments paid in cash (or to the extent converted into cash) to the referent person or a subsidiarythereof in respect of such period and (ii) the net income shall include any ordinary course dividend distribution or otherpayment in cash received from any Person in excess of the amounts included in clause (i) above.There shall be included in Consolidated Net Income, without duplication, the amount of any cash tax benefitsrelated to the tax amortization of intangible assets in such period. There shall be excluded from Consolidated Net Income for anyperiod the effects from applying acquisition method accounting, including applying acquisition method accounting to inventory,property and equipment, loans and leases, software and other intangible assets and deferred revenue (including deferred costs relatedthereto and deferred rent) required or permitted by GAAP and related authoritative pronouncements (including the effects of suchadjustments pushed down to the Borrower and its Restricted Subsidiaries), as a result of the Transactions, any acquisition orInvestment consummated prior to the Effective Date and any Permitted Acquisitions (or other Investment not prohibited hereunder)or the amortization or write-off of any amounts thereof.In addition, to the extent not already included in Consolidated Net Income, Consolidated Net Income shallinclude the amount of proceeds received or due from business interruption insurance or reimbursement of expenses and charges thatare covered by-21- indemnification and other reimbursement provisions in connection with any acquisition or other Investment or any disposition of anyasset permitted hereunder.“ Consolidated Senior Secured First Lien Indebtedness ” means, as of any date of determination, ConsolidatedTotal Indebtedness as of such date that is not subordinated in right of payment to the Loan Document Obligations and that is securedby a Lien on the Collateral on an equal priority basis with Liens on the Collateral securing the Loan Document Obligations(including, for the avoidance of doubt, the Loan Document Obligations).“ Consolidated Senior Secured Indebtedness ” means, as of any date of determination, Consolidated TotalIndebtedness as of such date that is not subordinated in right of payment to the Secured Obligations and is secured by a Lien on theCollateral securing the Loan Document Obligations.“ Consolidated Senior Secured First Lien Net Leverage Ratio ” means, as of any date of determination, the ratio,on a Pro Forma Basis, of (a) Consolidated Senior Secured First Lien Indebtedness as of such date to (b) Consolidated EBITDA forthe most recently completed Test Period.“ Consolidated Senior Secured Net Leverage Ratio ” means, as of any date of determination, the ratio, on a ProForma Basis, of (a) Consolidated Senior Secured Indebtedness as of such date to (b) Consolidated EBITDA for the most recentlycompleted Test Period.“ Consolidated Total Indebtedness ” means, as of any date of determination, the aggregate amount ofIndebtedness of the Borrower and its Restricted Subsidiaries outstanding on such date, determined on a consolidated basis inaccordance with GAAP (but excluding the effects of any discounting of Indebtedness resulting from the application of theacquisition method accounting in connection with the Transactions or any Permitted Acquisition (or other Investment not prohibitedhereunder)) consisting only of Indebtedness for borrowed money, drawn but unreimbursed obligations under letters of credit,obligations in respect of Capitalized Leases and debt obligations evidenced by promissory notes or similar instruments, but excludingany obligations under or in respect of Qualified Securitization Facilities and excluding Indebtedness outstanding under the ABLFacility that was used to finance seasonal working capital needs of the Borrower and its Subsidiaries (as reasonably determined bythe Borrower in its reasonable discretion), minus the aggregate amount of cash and Permitted Investments (in each case, free andclear of all liens, other than Liens permitted pursuant to Section 6.02), excluding cash and Permitted Investments that are listed as“restricted” on the consolidated balance sheet of the Borrower and its Restricted Subsidiaries as of such date.“ Consolidated Working Capital ” means, at any date, the excess of (a) the sum of all amounts (other than cashand Permitted Investments) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any likecaption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries at such date, excluding the current portion ofdeferred income taxes and deferred rent balances over (b) the sum of all amounts that would, in conformity with GAAP, be set forthopposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Borrower and its RestrictedSubsidiaries on such date, including deferred revenue but excluding, without duplication, (i) the current portion of any-22- Funded Debt, (ii) all Indebtedness consisting of Loans and obligations under letters of credit to the extent otherwise included therein,(iii) the current portion of interest and (iv) the current portion of current and deferred income taxes; provided that, for purposes ofcalculating Excess Cash Flow, increases or decreases in working capital (A) arising from acquisitions or dispositions by theBorrower and its Restricted Subsidiaries shall be measured from the date on which such acquisition or disposition occurred until thefirst anniversary of such acquisition or disposition with respect to the Person subject to such acquisition or disposition and (B) shallexclude (I) the impact of non-cash adjustments contemplated in the Excess Cash Flow calculation, (II) the impact of adjusting itemsin the definition of Consolidated Net Income and (III) any changes in current assets or current liabilities as a result of (x) the effect offluctuations in the amount of accrued or contingent obligations, assets or liabilities under hedging agreements or other derivativeobligations, (y) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and noncurrentor (z) the effects of acquisition method accounting.“ Contract Consideration ” has the meaning assigned to such term in the definition of “Excess Cash Flow.”“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of themanagement or policies, or the dismissal or appointment of the management, of a Person, whether through the ability to exercisevoting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.“ Converted Restricted Subsidiary ” has the meaning given such term in the definition of “ConsolidatedEBITDA.”“ Converted Unrestricted Subsidiary ” has the meaning given such term in the definition of “ConsolidatedEBITDA.”“ Covered Jurisdiction ” means the United States (or any state or commonwealth thereof or the District ofColumbia).“ Credit Agreement Refinancing Indebtedness ” means Indebtedness 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 (“ Refinanced Debt ”); provided that such exchanging, extending, renewing, replacing orrefinancing Indebtedness (a) is in an original aggregate principal amount not greater than the aggregate principal amount of theRefinanced Debt (plus any premium, accrued interest and fees and expenses incurred in connection with such exchange, extension,renewal, replacement or refinancing ), (b) does not mature earlier than or have a Weighted Average Life to Maturity shorter than theRefinanced Debt, (c) shall not be guaranteed by any entity that is not a Loan Party, (d) in the case of any secured Indebtedness (i) isnot secured by any assets not securing the Secured Obligations and (ii) if not comprising Other Term Loans hereunder, is subject to aCustomary Intercreditor Agreement(s) and (e) otherwise has terms and conditions that shall be reasonably satisfactory to theBorrower and the lenders providing such Credit Agreement Refinancing Indebtedness. For the avoidance of doubt, such CreditAgreement Refinancing Indebtedness shall not be subject to any “most favored nation” pricing provisions.-23- “ Customary Intercreditor Agreement ” means (a) to the extent executed in connection with the incurrence ofIndebtedness secured by Liens on the Collateral which are intended to rank equal in priority to the Liens on the Collateral securingthe Secured Obligations (but without regard to the control of remedies) at the option of the Borrower, either (i) an intercreditoragreement substantially in the form of the Pari Passu Intercreditor Agreement (with such modifications as may be necessary orappropriate in light of prevailing market conditions and reasonably acceptable to the Term Administrative Agent) or (ii) a customaryintercreditor agreement in form and substance reasonably acceptable to the Term Administrative Agent and the Borrower, whichagreement shall provide that the Liens on the Collateral securing such Indebtedness shall rank equal in priority to the Liens on theCollateral securing the Secured Obligations (but without regard to the control of remedies) and (b) to the extent executed inconnection with the incurrence of Indebtedness secured by Liens on the Collateral which are intended to rank junior to the Liens onthe Collateral securing the Secured Obligations, at the option of the Borrower, either (i) an intercreditor agreement substantially inthe form of the Second Lien Intercreditor Agreement (with such modifications as may be necessary or appropriate in light ofprevailing market conditions and reasonably acceptable to the Term Administrative Agent) or (ii) a customary intercreditoragreement in form and substance reasonably acceptable to the Term Administrative Agent and the Borrower, which agreement shallprovide that the Liens on the Collateral securing such Indebtedness shall rank junior to the Liens on the Collateral securing theSecured Obligations. With regard to any changes in light of prevailing market conditions as set forth above in clauses (a)(i) or (b)(i)or with regard to clauses (a)(ii) or (b)(ii) , such changes or agreement, as applicable, shall be posted to the Lenders not less than five(5) Business Days before execution thereof and, if the Required Lenders shall not have objected to such changes within three (3)Business Days after posting, then the Required Lenders shall be deemed to have agreed that the Term Administrative Agent’s entryinto such intercreditor agreement (including with such changes) is reasonable and to have consented to such intercreditor agreement(including with such changes) and to the Term Administrative Agent’s execution thereof.“ DBNY ” has the meaning given to such term in the preliminary statements hereto.“ Debtor Relief Laws ” means the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy,assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relieflaws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.“ Default ” means any event or condition that constitutes an Event of Default or that upon notice, lapse of timeor both would, unless cured or waived, become an Event of Default.“ Defaulting Lender ” means, subject to Section 2.22(b), any Lender that (a) has failed to perform any of itsfunding obligations hereunder, including in respect of its Loans, within two (2) Business Days of the date required to be funded by ithereunder, (b) has notified the Borrower, the Term Administrative Agent or any Lender that it does not intend to comply with itsfunding obligations or has made a public statement or provided any written notification to any Person to that effect with respect to itsfunding obligations hereunder or under other agreements in which it commits to extend credit, (c) has failed, within three (3)Business Days after request by the Term Administrative Agent (whether acting on its own behalf or at the reasonable request of theBorrower (it being understood that the Term Administrative Agent shall comply with any such-24- reasonable request)) to confirm in a manner satisfactory to the Term Administrative Agent and the Borrower that it will comply withits funding obligations (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt ofsuch written confirmation by the Term Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parentcompany that has (i) become or is insolvent, (ii) become the subject of a proceeding under any Debtor Relief Law, (iii) had areceiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization orliquidation of its business or a custodian appointed for it, or (iv) taken any action in furtherance of, or indicated its consent to,approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solelyby virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by aGovernmental Authority where such ownership interest or proceeding does not result in or provide such Lender or Person withimmunity from the jurisdiction of courts within the United States of America or from the enforcement of judgments or writs ofattachment on its assets or permit such Lender or Person (or such Governmental Authority) to reject, repudiate, disavow or disaffirmany contracts or agreements made by such Lender or Person.“ Designated Non-Cash Consideration ” means the fair market value of non-cash consideration received by theBorrower or a Subsidiary in connection with a Disposition pursuant to Section 6.05(k) that is designated as Designated Non-CashConsideration pursuant to a certificate of a Responsible Officer of the Borrower, setting forth the basis of such valuation (whichamount will be reduced by the fair market value of the portion of the non-cash consideration converted to cash within 180 daysfollowing the consummation of the applicable Disposition).“ Discount Prepayment Accepting Lender ” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(2).“ Discount Range ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).“ Discount Range Prepayment Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).“ Discount Range Prepayment Notice ” means a written notice of a Borrower Solicitation of Discount RangePrepayment Offers made pursuant to Section 2.11(a)(ii)(C) substantially in the form of Exhibit L.“ Discount Range Prepayment Offer ” means the irrevocable written offer by a Term Lender, substantially in theform of Exhibit M, submitted in response to an invitation to submit offers following the Auction Agent’s receipt of a Discount RangePrepayment Notice.“ Discount Range Prepayment Response Date ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).“ Discount Range Proration ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(3).-25- “ Discounted Prepayment Determination Date ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).“ Discounted Prepayment Effective Date ” means in the case of a Borrower Offer of Specified DiscountPrepayment or Borrower Solicitation of Discount Range Prepayment Offer, five (5) Business Days following the receipt by eachrelevant Term Lender of notice from the Auction Agent in accordance with Section 2.11(a)(ii)(B), Section 2.11(a)(ii)(C) or Section2.11(a)(ii)(D), as applicable unless a shorter period is agreed to between the Borrower and the Auction Agent.“ Discounted Term Loan Prepayment ” has the meaning assigned to such term in Section 2.11(a)(ii)(A).“ Dispose ” and “ Disposition ” each has the meaning assigned to such term in Section 6.05.“ Disposed EBITDA ” means, with respect to any Sold Entity or Business or Converted Unrestricted Subsidiaryfor any period through (but not after) the date of such disposition, the amount for such period of Consolidated EBITDA of such SoldEntity or Business or Converted Unrestricted Subsidiary (determined as if references to the Borrower and its Restricted Subsidiariesin the definition of the term “Consolidated EBITDA” (and in the component financial definitions used therein) were references tosuch Sold Entity or Business and its subsidiaries or to such Converted Unrestricted Subsidiary and its subsidiaries), all as determinedon a consolidated basis for such Sold Entity or Business or Converted Unrestricted Subsidiary.“ Disqualified Equity Interest ” means, with respect to any Person, any Equity Interest in such Person that by itsterms (or by the terms of any security into which it is convertible or for which it is exchangeable, either mandatorily or at the optionof the holder thereof), or upon the happening of any event or condition:(a) matures or is mandatorily redeemable (other than solely for Equity Interests in such Person that do notconstitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests), whether pursuant to asinking fund obligation or otherwise;(b) is convertible or exchangeable, either mandatorily or at the option of the holder thereof, for Indebtedness orEquity Interests (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interestsand cash in lieu of fractional shares of such Equity Interests); or(c) is redeemable (other than solely for Equity Interests in such Person that do not constitute Disqualified EquityInterests and cash in lieu of fractional shares of such Equity Interests) or is required to be repurchased by such Person orany of its Affiliates, in whole or in part, at the option of the holder thereof;in each case, on or prior to the date ninety-one (91) days after the Latest Maturity Date; provided , however , that (i) an EquityInterest in any Person that would not constitute a Disqualified Equity-26- Interest but for terms thereof giving holders thereof the right to require such Person to redeem or purchase such Equity Interest uponthe occurrence of an “asset sale” or a “change of control” or similar event shall not constitute a Disqualified Equity Interest if anysuch requirement becomes operative only after the Termination Date and (ii) if an Equity Interest in any Person is issued pursuant toany plan for the benefit of employees of the Borrower (or any direct or indirect parent thereof) or any of its subsidiaries or by anysuch plan to such employees, such Equity Interest shall not constitute a Disqualified Equity Interest solely because it may be requiredto be repurchased by the Borrower (or any direct or indirect parent company thereof) or any of its subsidiaries in order to satisfyapplicable statutory or regulatory obligations of such Person.“ Disqualified Lenders ” means (i) those Persons identified by the Borrower to the Term Administrative Agentin writing prior to April 13, 2015 as being “Disqualified Lenders,” (ii) those Persons who are competitors of the Borrower and itsSubsidiaries (other than any bona fide diversified debt investment fund) identified by the Borrower to the Term AdministrativeAgent from time to time in writing (including by email) which designation shall become effective two (2) days after delivery of eachsuch written supplement to the Term Administrative Agent, but which shall not apply retroactively to disqualify any persons thathave previously acquired an assignment or participation interest in any Loan, (iii) in the case of each Person identified pursuant toclauses (i) and (ii) above, any of their Affiliates that are either (x) identified in writing by the Borrower from time to time or (y)known or reasonably identifiable as Affiliates and (iv) any Affiliate of a Lead Arranger that is engaged as a principal primarily inprivate equity, mezzanine financing or venture capital (other than such Affiliate engaged by the Borrower or its Affiliate as part ofthe Acquisition). Upon inquiry by any Term Lender to the Term Administrative Agent as to whether a specified potential assigneeor prospective participant is on the list of Disqualified Lenders, the Term Administrative Agent shall be permitted to disclose to suchTerm Lender whether such specific potential assignee or prospective participant is on the list of Disqualified Lenders.“ dollars ” or “ $ ” refers to lawful money of the United States of America.“ Domestic Subsidiary ” means any Subsidiary that is organized under the law of the United States, any statethereof or the District of Columbia.“ ECF Percentage ” means, with respect to the prepayment required by Section 2.11(d) with respect to any fiscalyear of the Borrower, if the Consolidated Senior Secured First Lien Net Leverage Ratio (prior to giving effect to the applicableprepayment pursuant to Section 2.11(d), but after giving effect to any voluntary prepayments made pursuant to Section 2.11(a) priorto the date of such prepayment) as of the end of such fiscal year is (a) greater than 3.50 to 1.00, 50% of Excess Cash Flow for suchfiscal year, (b) greater than 3.00 to 1.00 but less than or equal to 3.50 to 1.00, 25% of Excess Cash Flow for such fiscal year and(c) less than or equal to 3.00 to 1.00, 0% of Excess Cash Flow for such fiscal year.“ Effective Date ” means July 31, 2015.“ Effective Yield ” means, as to any Indebtedness, the effective yield on such Indebtedness in the reasonabledetermination of the Term Administrative Agent and the Borrower and consistent with generally accepted financial practices, takinginto account the applicable interest rate margins, any interest rate floors (the effect of which floors shall be determined in a-27- manner set forth in the proviso below) or similar devices and all fees, including upfront or similar fees or original issue discount(amortized over the shorter of (a) the remaining Weighted Average Life to Maturity of such Indebtedness and (b) the four yearsfollowing the date of incurrence thereof) payable generally to lenders or other institutions providing such Indebtedness, butexcluding any arrangement, syndication, commitment, prepayment, structuring, ticking or other similar fees payable in connectiontherewith that are not generally shared with the relevant Lenders (and, if applicable, consent fees for an amendment paid generally toconsenting Lenders and, solely for purposes of determining the effective yield for purposes of Section 2.11(a)(i) any original issuediscount or upfront fees payable in connection with the Loans issued on the Closing Date; provided that with respect to anyIndebtedness that includes a “LIBOR floor” or “Base Rate floor,” (i) to the extent that the LIBO Rate or Alternate Base Rate(without giving effect to any floors in such definitions), as applicable, on the date that the Effective Yield is being calculated is lessthan such floor, the amount of such difference shall be deemed added to the interest rate margin for such Indebtedness for thepurpose of calculating the Effective Yield and (ii) to the extent that the LIBO Rate or Alternate Base Rate (without giving effect toany floors in such definitions), as applicable, on the date that the Effective Yield is being calculated is greater than such floor, thenthe floor shall be disregarded in calculating the Effective Yield.“ Eligible Assignee ” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund and (d) any otherPerson (other than the Borrower or any of its Affiliates), other than, in each case, (i) a natural person, (ii) a Defaulting Lender or (iii)a Disqualified Lender. Notwithstanding the foregoing, each Loan Party and the Lenders acknowledge and agree that the TermAdministrative Agent shall have no liability with respect to any assignment made to a Disqualified Lender unless (i) (A) the TermAdministrative Agent has acted with gross negligence, bad faith or willful misconduct (in each case as determined by a court ofcompetent jurisdiction in a final and non-appealable judgment) or (B) such assignment resulted from a material breach of the LoanDocuments by the Term Administrative Agent (as determined by a court of competent jurisdiction in a final and non-appealablejudgment) and (ii) the Borrower has not consented to such assignment or is not deemed to have consented to such assignment to theextent required by Section 9.04(b).“ Environmental Laws ” means all applicable Requirements of Law relating to the protection of theenvironment, to preservation or reclamation of natural resources, to Release or threatened Release of any Hazardous Material or, tothe extent relating to exposure to Hazardous Materials, to health or safety matters.“ Environmental Liability ” means any liability, obligation, loss, claim, action, order or cost, contingent orotherwise (including any liability for damages, costs of medical monitoring, costs of environmental remediation or restoration,administrative oversight costs, consultants’ fees, fines, penalties and indemnities) resulting from or based upon (a) any actual oralleged violation of any Environmental Law or permit, license or approval issued thereunder, (b) the generation, use, handling,transportation, storage, or treatment of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release orthreatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement to the extent liabilityis assumed or imposed with respect to any of the foregoing.-28- “ Equity Interests ” means shares of capital stock, partnership interests, membership interests in a limitedliability company, beneficial interests in a trust or other equity ownership interests in a Person.“ Equity Issuance ” means the issuance of equity by the Borrower in the form of common equity or “qualifiedpreferred” equity reasonably acceptable to the Joint Lead Arrangers having a gross aggregate amount not less than $100,000,000.“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time.“ ERISA Affiliate ” means any trade or business (whether or not incorporated) that, together with any LoanParty, is treated as a single employer under Section 414(b) or 414(c) of the Code or, solely for purposes of Section 302 of ERISA andSection 412 of the Code, is treated as a single employer under Section 414 of the Code.“ ERISA Event ” means (a) any “reportable event,” as defined in Section 4043(c) of ERISA or the regulationsissued thereunder with respect to a Plan (other than an event for which the 30‑day notice period is waived); (b) any failure by anyPlan to satisfy the minimum funding standard (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicableto such Plan, in each case whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA,of an application for a waiver of the minimum funding standard with respect to any Plan; (d) a determination that any Plan is, or isexpected to be, in “at-risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code); (e) the incurrence by aLoan Party or any ERISA Affiliate of any liability under Title IV of ERISA (other than premiums due and not delinquent underSection 4007 of ERISA) with respect to the termination of any Plan or by application of Section 4069 of ERISA with respect to anyterminated plan; (f) the receipt by a Loan Party or any ERISA Affiliate from the PBGC or a plan administrator of any notice relatingto an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, or to an intention to terminate or toappoint a trustee to administer any plan or plans in respect of which such Loan Party or ERISA Affiliate would be deemed to be anemployer under Section 4069 of ERISA; (g) the incurrence by a Loan Party or any ERISA Affiliate of any liability with respect tothe withdrawal or partial withdrawal from any Multiemployer Plan; (h) the receipt by a Loan Party or any ERISA Affiliate of anynotice, or the receipt by any Multiemployer Plan from a Loan Party or any ERISA Affiliate of any notice, concerning the impositionof Withdrawal Liability, or the failure of a Loan Party or any ERISA Affiliate to pay when due, after the expiration of any applicablegrace period, any installment payment with respect to any Withdrawal Liability; or (i) the withdrawal of a Loan Party or any ERISAAffiliate from a Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” asdefined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) ofERISA.“ Eurodollar ” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loanscomprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.“ Event of Default ” has the meaning assigned to such term in Section 7.01.-29- “ Excess Cash Flow ” means, for any period, an amount equal to the excess of:(a) the sum, without duplication, of:(i) Consolidated Net Income for such period,(ii) an amount equal to the amount of all Non-Cash Charges to the extent deducted in arriving at suchConsolidated Net Income,(iii) decreases in Consolidated Working Capital and long-term accounts receivable for such period ,and(iv) an amount equal to the aggregate net non-cash loss on dispositions by the Borrower and itsRestricted Subsidiaries during such period (other than dispositions in the ordinary course of business) to theextent deducted in arriving at such Consolidated Net Income, less :(b) the sum, without duplication, of:(i) an amount equal to the amount of all non-cash credits included in arriving at such Consolidated NetIncome (including any amounts included in Consolidated Net Income of proceeds received or due from businessinterruption insurance or reimbursement of expenses and charges that are covered by indemnification and otherreimbursement provisions in connection with any acquisition or other Investment or any disposition of any assetpermitted under this Agreement to the extent such amounts are due but not received during such period) andcash charges included in clauses (a) through (j) of the definition of “Consolidated Net Income” (other than cashcharges in respect of Transaction Costs paid on or about the Effective Date to the extent financed with theproceeds of Indebtedness incurred on the Effective Date or an equity investment on the Effective Date),(ii) without duplication of amounts deducted pursuant to clause (xii) below in prior fiscal years, theamount of capital expenditures made in cash or accrued during such period, except to the extent that such capitalexpenditures were financed with the proceeds of Indebtedness of the Borrower or its Restricted Subsidiaries,(iii) the aggregate amount of all principal payments of Indebtedness (including (1) the principalcomponent of payments in respect of Capitalized Leases and (2) the amount of any mandatory prepayment ofLoans to the extent required due to a Disposition that resulted in an increase to Consolidated Net Income and notin excess of the amount of such increase, but excluding all other prepayments of Term Loans and allprepayments of revolving loans and swingline loans) made during such period, other than (A) in respect of anyrevolving credit facility except to the extent there is an equivalent permanent reduction in commitmentsthereunder and (B) to the extent financed with the proceeds of other Indebtedness of the Borrower or itsRestricted Subsidiaries,-30- (iv) an amount equal to the aggregate net non-cash gain on dispositions by the Borrower and itsRestricted Subsidiaries during such period (other than dispositions in the ordinary course of business) to theextent included in arriving at such Consolidated Net Income,(v) increases in Consolidated Working Capital and long-term accounts receivable for such period,(vi) cash payments by the Borrower and its Restricted Subsidiaries during such period in respect oflong-term liabilities of the Borrower and its Restricted Subsidiaries other than Indebtedness,(vii) without duplication of amounts deducted pursuant to clause (xii) below in prior fiscal years, theamount of Investments (other than Investments in Permitted Investments) and acquisitions not prohibited by thisAgreement to the extent that such Investments and acquisitions were financed with internally generated cashflow of the Borrower and its Restricted Subsidiaries,(viii) the amount of dividends and other Restricted Payments (including the amount of TaxDistributions made by the Borrower during such period, to the extent not deducted in arriving at ConsolidatedNet Income) paid in cash during such period, to the extent such dividends and Restricted Payments werefinanced with internally generated cash flow of the Borrower and its Restricted Subsidiaries,(ix) the aggregate amount of payments and expenditures actually made by the Borrower and itsRestricted Subsidiaries in cash during such period (including expenditures for the payment of financing fees) tothe extent that such payments and expenditures are not expensed during such period,(x) cash payments by the Borrower and its Restricted Subsidiaries during such period in respect ofNon-Cash Charges included in the calculation of Consolidated Net Income in any prior period,(xi) the aggregate amount of any premium, make-whole or penalty payments actually paid in cash bythe Borrower and its Restricted Subsidiaries during such period that are required to be made in connection withany prepayment of Indebtedness,(xii) at the option of the Borrower, and without duplication of amounts deducted from Excess CashFlow in prior periods, (1) the aggregate consideration required to be paid in cash by the Borrower or any of theRestricted Subsidiaries pursuant to binding contracts, commitments, letters of intent or purchase orders (the “Contract Consideration ”), in each case, entered into prior to or during such period and (2) to the extent set forthin a certificate of a Financial Officer delivered to the Term Administrative Agent at or before the time theCompliance Certificate for the period ending simultaneously with such Test Period is required to be deliveredpursuant to Section 5.01(d), the aggregate amount of cash that is reasonably expected to be paid in respect ofplanned cash expenditures by the-31- Borrower or any of the Restricted Subsidiaries (the “ Planned Expenditures ”), in the case of each of clauses (1)and (2), relating to Permitted Acquisitions, other Investments (other than Investments in Permitted Investments)or capital expenditures (including Capitalized Software Expenditures or other purchases of Intellectual Property)to be consummated or made during a subsequent Test Period (and in the case of Planned Expenditures, thesubsequent Test Period); provided , that to the extent the aggregate amount of internally generated cash actuallyutilized to finance such Permitted Acquisitions, Investments or capital expenditures during such Test Period isless than the Contract Consideration and Planned Expenditures, the amount of such shortfall shall be added tothe calculation of Excess Cash Flow at the end of such Test Period, and(xiii) the amount of taxes (including penalties and interest) paid in cash and/or tax reserves set aside orpayable (without duplication) in such period to the extent they exceed the amount of tax expense deducted indetermining Consolidated Net Income for such period.“ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended from time to time.“ Excluded Affiliates ” means (a) Affiliates of the Joint Lead Arrangers that are engaged as principals primarilyin private equity, mezzanine financing or venture capital and (b) employees of the Joint Lead Arrangers engaged directly orindirectly in the sale of the Acquired Company as representatives of the Acquired Company (other than, in each case, such Personsengaged by the Borrower or its Affiliates as part of the Transactions and such senior employees who are required, in accordance withindustry regulations or such Joint Lead Arranger’s (or its Affiliate’s) internal policies and procedures, to act in a supervisory capacityand such Joint Lead Arranger’s internal legal, compliance, risk management, credit or investment committee members).“ Excluded Assets ” has the meaning assigned to such term in the Term Collateral Agreement.“ Excluded Information ” has the meaning assigned to such term in Section 2.11(a)(ii)(A).“ Excluded Real Property ” means (a) any feeowned real property with a purchase price (in the case of realproperty acquired after the Effective Date) or Fair Market Value (in the case of real property owned as of the Effective Date, withFair Market Value determined as of the Effective Date) of less than $3,500,000 individually, (b) any real property that is subject to aLien permitted by Sections 6.02(iv) , (xix) , (xxii) , (xxiii) , (xxviii) or (xxxi) , (c) any real property with respect to which, in thereasonable judgment of the Term Administrative Agent (confirmed by notice to the Borrower) the cost (including as a result ofadverse tax consequences) of providing a Mortgage shall be excessive in view of the benefits to be obtained by the Lenders, (d) anyreal property to the extent providing a mortgage on such real property would (i) be prohibited or limited by any applicable law, ruleor regulation (but only so long as such prohibition or limitation is in effect), (ii) violate a contractual obligation to the owners of suchreal property (other than any-32- such owners that are the Borrower or Affiliates of the Borrower) that is binding on or relating to such real property (other thancustomary non-assignment provisions which are ineffective under the Uniform Commercial Code) but only to the extent suchcontractual obligation was not incurred in anticipation of this provision or (iii) give any other party (other than the Borrower or awholly-owned Restricted Subsidiary of the Borrower) to any contract, agreement, instrument or indenture governing such realproperty the right to terminate its obligations thereunder (other than customary non-assignment provisions which are ineffectiveunder the Uniform Commercial Code or other applicable law) and (e) any Leasehold.“ Excluded Subsidiary ” has the meaning assigned to such term in the Term Guarantee Agreement.“ Excluded Swap Obligation ” means, with respect to any Loan Guarantor at any time, any Secured SwapObligation under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of theCommodity Exchange Act, if, and to the extent that, all or a portion of the guarantee of such Loan Guarantor of, or the grant by suchLoan Guarantor of a security interest to secure, such Secured Swap Obligation (or any guarantee thereof) is or becomes illegal underthe Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application orofficial interpretation of any thereof) by virtue of such Loan Guarantor’s failure for any reason to constitute an “eligible contractparticipant,” as defined in the Commodity Exchange Act (determined after giving effect to any “Keepwell”, support or otheragreement for the benefit of such Loan Guarantor, at the time such guarantee or grant of a security interest becomes effective withrespect to such related Secured Swap Obligation). If a Secured Swap Obligation arises under a master agreement governing morethan one swap, such exclusion shall apply only to the portion of such Secured Swap Obligation that is attributable to swaps that areor would be rendered illegal due to such guarantee or security interest.“ Excluded Taxes ” means, with respect to the Term Administrative Agent, any Lender or any other recipient ofany payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document,(a) Taxes imposed on (or measured by) such recipient’s net income (however denominated) and franchise Taxes imposed on it (inlieu of net income Taxes) by a jurisdiction (i) as a result of such recipient being organized or having its principal office or, in the caseof any Lender, its applicable lending office in such jurisdiction, or (ii) as a result of any other present or former connection betweensuch recipient and the jurisdiction imposing such Tax (other than a connection arising solely from such recipient (x) having executed,delivered, become a party to, performed its obligations or received payments under, received or perfected a security interest under orenforced any Loan Documents or engaged in any other transaction pursuant to this Agreement or (y) with respect to any Taxesimposed as a result of any Loan Party’s connection with the taxing jurisdiction, having sold or assigned an interest in any LoanDocuments), (b) any branch profits tax imposed under Section 884(a) of the Code, or any similar Tax, imposed by any jurisdictiondescribed in clause (a) above, (c) any U.S. federal withholding Tax imposed pursuant to FATCA, (d) any withholding Tax that isattributable to a Lender’s failure to comply with Section 2.17(e) and (e) except in the case of an assignee pursuant to a request by theBorrower under Section 2.19 hereto, any U.S. federal withholding Taxes imposed on amounts payable to a Lender pursuant to aRequirement of Law in effect at the time such Lender becomes a party hereto (or designates a new lending office), except to theextent that-33- such Lender (or its assignor, if any) was entitled, immediately prior to the time of designation of a new lending office (orassignment), to receive additional amounts with respect to such withholding Tax under Section 2.17(a).“ Fair Market Value ” or “ fair market value ” means, with respect to any asset or group of assets on any date ofdetermination, the value of the consideration obtainable in a sale of such asset at such date of determination assuming a sale by awilling seller to a willing purchaser dealing at arm’s length and arranged in an orderly manner over a reasonable period of timetaking into account the nature and characteristics of such asset, as reasonably determined by the Borrower in good faith (whichdetermination shall be conclusive).“ FATCA ” means Sections 1471 through 1474 of the Code as of the date of this Agreement (or any amended orsuccessor version that is substantively comparable thereto), any current or future Treasury regulations thereunder or other officialadministrative interpretations thereof, any agreements entered into pursuant to current Section 1471(b)(1) of the Code as of the dateof this Agreement (or any amended or successor version described above) and any intergovernmental agreements implementing theforegoing.“ Federal Funds Effective Rate ” means, for any day, the weighted average of the rates on overnight Federalfunds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the nextsucceeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is aBusiness Day, the average of the quotations for such day for such transactions received by the Term Administrative Agent from threeFederal funds brokers of recognized standing selected by it.“ Fee Letter ” means the fee letter among the Borrower, the Joint Lead Arrangers and the Lenders party thereto,dated as of April 13, 2015.“ Financial Officer ” means the chief financial officer, principal accounting officer, treasurer or corporatecontroller of the Borrower.“ Financing Transactions ” means (a) the execution, delivery and performance by each Loan Party of the LoanDocuments to which it is to be a party and (b) the borrowing of Initial Loans hereunder and the use of the proceeds thereof.“ FIRREA ” means the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.“ First Amendment ” shall mean that certain First Amendment to Credit Agreement dated as of August 22, 2016by and among the Borrower, the lenders party thereto and the Administrative Agent.“ First Amendment Effective Date ” shall mean the date on which the conditions set forth in Article IV of theFirst Amendment have been satisfied or waived.“ Flood Insurance Laws ” means, collectively, (i) the National Flood Insurance Act of 1968 as now or hereafterin effect or any successor statute thereto, (ii) the Flood Disaster-34- Protection Act of 1973 as now or hereafter in effect or any successor statute thereto, (iii) the National Flood Insurance Reform Act of1994 as now or hereafter in effect or any successor statute thereto, (iv) the Flood Insurance Reform Act of 2004 as now or hereafterin effect or any successor statute thereto and (v) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter ineffect or any successor statute thereto.“ Foreign Prepayment Event ” has the meaning assigned to such term in Section 2.11(g).“ Foreign Subsidiary ” means any Subsidiary that is organized under the laws of a jurisdiction other than theUnited States, any state thereof or the District of Columbia.“ Form Intercreditor Agreements ” means (a) an intercreditor agreement substantially in the form of the PariPassu Intercreditor Agreement and/or (b) an intercreditor agreement substantially in the form of the Second Lien IntercreditorAgreement, as applicable.“ Funded Debt ” means all Indebtedness of the Borrower and its Restricted Subsidiaries for borrowed moneythat matures more than one year from the date of its creation or matures within one year from such date that is renewable orextendable, at the option of such Person, to a date more than one year from such date or arises under a revolving credit or similaragreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, includingIndebtedness in respect of the Loans.“ GAAP ” means generally accepted accounting principles in the United States of America, as in effect fromtime to time; provided , however , that if the Borrower notifies the Term Administrative Agent that the Borrower requests anamendment to any provision hereof to eliminate the effect of any change occurring after the Effective Date in GAAP or in theapplication thereof on the operation of such provision (or if the Term Administrative Agent notifies the Borrower that the RequiredLenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before orafter such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effectand applied immediately before such change shall have become effective until such notice shall have been withdrawn or suchprovision amended in accordance herewith. Notwithstanding any other provision contained herein, (a) all terms of an accounting orfinancial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, withoutgiving effect to any election under FASB Accounting Standards Codification 825-Financial Instruments, or any successor thereto(including pursuant to the FASB Accounting Standards Codification), to value any Indebtedness of any subsidiary at “fair value,” asdefined therein and (b) the amount of any Indebtedness under GAAP with respect to Capital Lease Obligations shall be determinedin accordance with the definition of Capital Lease Obligations.“ Governmental Approvals ” means all authorizations, consents, approvals, permits, licenses and exemptions of,registrations and filings with, and reports to, Governmental Authorities.“ Governmental Authority ” means the government of the United States of America, any other nation or anypolitical subdivision thereof, whether federal, state, provincial, territorial,-35- local or otherwise, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercisingexecutive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including anysupra national bodies such as the European Union or the European Central Bank).“ Guarantee ” of or by any Person (the “ guarantor ”) means any obligation, contingent or otherwise, of theguarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the “ primary obligor ”)in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay(or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for thepurchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuringthe owner of such Indebtedness of the payment thereof, (c) to maintain working capital, equity capital or any other financialstatement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or (d) as anaccount party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness; provided that the termGuarantee shall not include endorsements for collection or deposit in the ordinary course of business or customary and reasonableindemnity obligations in effect on the Effective Date or entered into in connection with any acquisition or disposition of assetspermitted under this Agreement (other than such obligations with respect to Indebtedness). The amount of any Guarantee shall bedeemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect ofwhich such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof asdetermined in good faith by a Financial Officer. The term “Guarantee” as a verb has a corresponding meaning.“ Hazardous Materials ” means all explosive, radioactive, hazardous or toxic substances, wastes or otherpollutants, including petroleum or petroleum by-products or distillates, asbestos or asbestos-containing materials, polychlorinatedbiphenyls, radon gas, infectious or medical wastes and all other dangerous or deleterious substances, wastes, chemicals, pollutants orcontaminants of any nature and in any form regulated pursuant to any Environmental Law.“ ICE LIBOR ” has the meaning assigned to such term in the definition of “Alternate Base Rate.”“ Identified Participating Lenders ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(3).“ Identified Qualifying Lenders ” has the meaning specified in Section 2.11(a)(ii)(D)(3).“ Immaterial Subsidiary ” means any Subsidiary other than a Material Subsidiary.“ Impacted Loans ” has the meaning assigned to such term in Section 2.14(b).“ Incremental Cap ” means, as of any date of determination, (I)(a) $300,000,000 plus (b) (i) the aggregateprincipal amount of all Term Loans voluntarily prepaid pursuant to Section 2.11(a)(i) and (ii) the aggregate amount of all TermLoans repurchased and prepaid-36- pursuant to Section 2.11(a)(ii) or otherwise in a manner not prohibited by Section 9.04(g), in each case prior to such date (other than,in each case, prepayments, repurchases and commitment reductions with the proceeds of the incurrence of long-term Indebtedness),minus (c) the amount of all Incremental Facilities and all Incremental Equivalent Debt outstanding at such time that was incurred inreliance on the foregoing clauses (a) and/or (b) plus (II) the maximum aggregate principal amount that can be incurred withoutcausing (a) in the case of any Incremental Facilities secured by the Collateral on a pari passu basis with the Secured Obligations,after giving effect to such incurrence of any such Incremental Facility or Incremental Equivalent Debt (deducting in calculating thenumerator of such Consolidated Senior Secured First Lien Net Leverage Ratio any cash proceeds thereof to the extent such proceedsare not promptly applied to the transaction financed in connection therewith) and the use of proceeds thereof, on a Pro Forma Basisand, in the case of an Incremental Revolving Facility, assuming a full draw on such Incremental Revolving Facility (but withoutgiving effect to any simultaneous incurrence of any Incremental Facility or Incremental Equivalent Debt made pursuant to theforegoing clause (I)), the Consolidated Senior Secured First Lien Net Leverage Ratio to exceed either (x) 3.75 to 1.00 for the mostrecently ended four fiscal quarter period for which financial statements are available or (y) in the case of any Incremental Facilityincurred to consummate a Permitted Acquisition or other Investment not prohibited by the Loan Documents, either (i) 3.75 to 1.00on a Pro Forma Basis for the most recently ended four fiscal quarter period for which financial statements are available or (ii) theConsolidated Senior Secured First Lien Net Leverage Ratio immediately prior to the incurrence of such Incremental Facility, (b) inthe case of any Incremental Facilities secured by the Collateral on a junior basis with the Secured Obligations, after giving effect tosuch incurrence of any such Incremental Facility (deducting in calculating the numerator of such Consolidated Senior Secured NetLeverage Ratio any cash proceeds thereof to the extent such proceeds are not promptly applied to the transaction financed inconnection therewith) and the use of proceeds thereof, on a Pro Forma Basis (but without giving effect to any simultaneousincurrence of any Incremental Facility made pursuant to the foregoing clause (I)), the Consolidated Senior Secured Net LeverageRatio to exceed either (x) 4.50 to 1.00 for the most recently ended four fiscal quarter period for which financial statements areavailable or (y) in the case of any Incremental Facility incurred to consummate a Permitted Acquisition or other Investment notprohibited by the Loan Documents, either (i) 4.50 to 1.00 on a Pro Forma Basis for the most recently ended four fiscal quarter periodfor which financial statements are available or (ii) the Consolidated Senior Secured Net Leverage Ratio immediately prior to theincurrence of such Incremental Facility and (c) in the case of any unsecured Incremental Facilities or Incremental Equivalent Debt,after giving effect to such incurrence of any such Incremental Facility (deducting in calculating the numerator of such Total NetLeverage Ratio any cash proceeds thereof to the extent such proceeds are not promptly applied to the transaction financed inconnection therewith) and the use of proceeds thereof, on a Pro Forma Basis (but without giving effect to any simultaneousincurrence of any Incremental Facility made pursuant to the foregoing clause (I)), either (x) the Total Net Leverage Ratio to exceedeither (i) 6.00 to 1.00 for the most recently ended four fiscal quarter period for which financial statements are available or (ii) in thecase of any Incremental Facility incurred to consummate a Permitted Acquisition or other Investment not prohibited by the LoanDocuments, either (A) 6.00 to 1.00 on a Pro Forma Basis for the most recently ended four fiscal quarter period for which financialstatements are available or (B) the Total Net Leverage Ratio immediately prior to the incurrence of such Incremental Facility or (y)the Interest Coverage Ratio to be less than either (i) 2.00:1.00 for the most recently ended four fiscal quarter period for whichfinancial statements are available or-37- (ii) in the case of any Incremental Facility incurred to consummate a Permitted Acquisition or other Investment not prohibited by theLoan Documents, either (A) 2.00 to 1.00 on a Pro Forma Basis for the most recently ended four fiscal quarter period for whichfinancial statements are available or (B) the Interest Coverage Ratio immediately prior to the incurrence of such IncrementalFacility. Any ratio calculated for purposes of determining the “Incremental Cap” shall be calculated on a Pro Forma Basis for themost recent for the most recently ended four fiscal quarter period for which financial statements are available, at the Borrower’soption, either at the time (A) of the effectiveness of such Incremental Facility or Incremental Equivalent Debt or (B) a definitiveagreement is entered into with respect to the transaction to be financed by such Incremental Facility or Incremental Equivalent Debt;provided that in connection with any subsequent calculation of the Incremental Cap prior to the earlier of the date on which suchtransaction to be financed by such Incremental Facility or Incremental Equivalent Debt is consummated or the date that the definitiveagreement for such transaction to be financed by such Incremental Facility or Incremental Equivalent Debt is terminated or expireswithout consummation of such transaction, the Incremental Cap shall be calculated on a Pro Forma Basis assuming such transactionand the other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) havebeen consummated . Loans may be incurred under both clauses (I) and (II), and proceeds from any such incurrence may be utilizedin a single transaction by first calculating the incurrence under clause (II) above and then calculating the incurrence under clause (I)above); provided that the Borrower may redesignate any such Indebtedness originally designated as incurred pursuant to clause (I)above if, at the time of such redesignation, the Borrower would be permitted to incur under clause (II) of the Incremental Cap theaggregate principal amount of Indebtedness being so redesignated (for purposes of clarity, with any such redesignation having theeffect of increasing the Borrower’s ability to incur indebtedness under clause (I) above as of the date of such redesignation by theamount of such Indebtedness so redesignated).“ Incremental Equivalent Debt ” has the meaning assigned to such term in Section 6.01(a)(xx).“ Incremental Facilities ” has the meaning assigned to such term in Section 2.20(a).“ Incremental Facility Amendment ” has the meaning assigned to such term in Section 2.20(e).“ Incremental Revolving Facilities ” has the meaning assigned to such term in Section 2.20(a).“ Incremental Revolving Increase ” has the meaning assigned to such term is Section 2.20(a).“ Incremental Revolving Lender ” has the meaning assigned to such term is Section 2.20(a).“ Incremental Revolving Loan ” means a Loan provided under any Incremental Revolving Facility.-38- “ Incremental Term Facility ” has the meaning assigned to such term in Section 2.20(a).“ Incremental Term Increase ” has the meaning assigned to such term in Section 2.20(a).“ Incremental Term Loan ” means a Loan provided under any Incremental Term Facility.“ Indebtedness ” of any Person means, without duplication, (a) all obligations of such Person for borrowedmoney, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of suchPerson under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations ofsuch Person in respect of the deferred purchase price of property or services (excluding (x) trade accounts payable in the ordinarycourse of business, (y) any earn-out obligation until after 30 days of becoming due and payable, has not been paid and suchobligation becomes a liability on the balance sheet of such Person in accordance with GAAP and (z) taxes and other accruedexpenses), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent orotherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness securedthereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of suchPerson, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters ofguaranty and (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances; provided that the term“Indebtedness” shall not include (i) deferred or prepaid revenue, (ii) purchase price holdbacks in respect of a portion of the purchaseprice of an asset to satisfy warranty, indemnity or other unperformed obligations of the seller, (iii) any obligations attributable to theexercise of appraisal rights and the settlement of any claims or actions (whether actual, contingent or potential) with respect thereto,(iv) Indebtedness of any Person that is a direct or indirect parent of the Borrower appearing on the balance sheet of the Borrower, orsolely by reason of push down accounting under GAAP, (v) for the avoidance of doubt, any Qualified Equity Interests issued by theBorrower, (vi) obligations in respect of any residual value guarantees on equipment leases, (vii) any earn-out, take-or-pay or similarobligation to the extent such obligation is not shown as a liability on the balance sheet of such Person in accordance with GAAP andis not paid after becoming due and payable and (viii) asset retirement obligations and obligations in respect of reclamation andworkers’ compensation (including pensions and retiree medical care) . The Indebtedness of any Person shall include theIndebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person isliable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the termsof such Indebtedness provide that such Person is not liable therefor. The amount of Indebtedness of any Person for purposes ofclause (e) above shall (unless such Indebtedness has been assumed by such Person) be deemed to be equal to the lesser of (A) theaggregate unpaid amount of such Indebtedness and (B) the fair market value of the property encumbered thereby as determined bysuch Person in good faith. For all purposes hereof, the Indebtedness of the Borrower and its Restricted Subsidiaries shall excludeintercompany liabilities arising from their cash management, tax, and accounting operations and intercompany loans, advances orIndebtedness having a term not exceeding 364 days (inclusive of any rollover or extensions of terms).-39- “ Indemnified Taxes ” means all Taxes, other than Excluded Taxes and Other Taxes.“ Indemnitee ” has the meaning assigned to such term in Section 9.03(b).“ Information ” has the meaning assigned to such term in Section 9.12(a).“ Information Memorandum ” means the Confidential Information Memorandum dated July 14, 2015, relating tothe Borrower and the Transactions.“ Initial Incremental Revolving Facility ” has the meaning assigned to such term in Section 2.20(a).“ Initial Revolving Loans ” means the Loans made pursuant to the Initial Incremental Revolving Facility.“ Initial Term Loans ” means the Loans made pursuant to Section 2.01 on the Effective Date.“ Insignificant Subsidiary ” means, at any time, any Subsidiary of the Borrower that is not a “significantsubsidiary” within the meaning of Rule 405 of the Securities Act of 1933, as amended, in each case determined as of the mostrecently ended Test Period as of such time.“ Intellectual Property ” has the meaning assigned to such term in the Term Collateral Agreement.“ Intercreditor Agreements ” means the Pari Passu Intercreditor Agreement, the Second Lien IntercreditorAgreement, the ABL/Bond Intercreditor Agreement and any Customary Intercreditor Agreement, collectively, in each case to theextent in effect.“ Interest Coverage Ratio ” means, with respect to any Test Period, the ratio of (x) Consolidated EBITDA forsuch Test Period to (y) Consolidated Cash Interest Expense for such Test Period.“ Interest Election Request ” means a request by the Borrower to convert or continue a Term Borrowing inaccordance with Section 2.07.“ Interest Payment Date ” means (a) with respect to any ABR Loan, the last Business Day of each March, June,September and December and (b) with respect to any Eurodollar Loan, the last Business Day of the Interest Period applicable to theBorrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than threemonths’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the firstday of such Interest Period.“ Interest Period ” means, with respect to any Eurodollar Borrowing, the period commencing on the date suchBorrowing is disbursed or converted to or continued as a Eurodollar Borrowing and ending on the date that is one, two, three or sixmonths thereafter as selected by the Borrower in its Borrowing Request (or, if consented to by each Lender participating therein,twelve months or such other period less than one month thereafter as the Borrower may elect);-40- provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to thenext succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case suchInterest Period shall end on the immediately preceding Business Day, (b) any Interest Period that commences on the last BusinessDay of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such InterestPeriod) shall end on the last Business Day of the last calendar month at the end of such Interest Period and (c) no Interest Periodshall extend beyond the Term Maturity Date. For purposes hereof, the date of a Borrowing initially shall be the date on which suchBorrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.“ Interpolated Rate ” means, in relation to the “LIBO Rate” for any Loan, the rate which results frominterpolating on a linear basis between: (i) the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitutepage of such service) for the longest period (for which that rate is available) which is less than the Interest Period and (ii) the rateappearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such service) for the shortest period (forwhich that rate is available) which exceeds the Interest Period, each as of approximately 11:00 A.M., London, England time, twoBusiness Days prior to the commencement of such Interest Period.“ Investment ” means, as to any Person, any direct or indirect acquisition or investment by such Person, whetherby means of (a) the purchase or other acquisition of Equity Interests or debt or other securities of another Person, (b) a loan, advanceor capital contribution to, Guarantee or assumption of Indebtedness of, or purchase or other acquisition of any other debt or equityparticipation or interest in, another Person, including any partnership or joint venture interest in such other Person (excluding, in thecase of the Borrower and its Restricted Subsidiaries (i) intercompany advances arising from their cash management, tax, andaccounting operations and (ii) intercompany loans, advances, or Indebtedness having a term not exceeding 364 days (inclusive of anyroll-over or extensions of terms) and made in the ordinary course of business) or (c) the purchase or other acquisition (in onetransaction or a series of transactions) of all or substantially all of the property and assets or business of another Person or assetsconstituting a business unit, line of business or division of such Person. The amount, as of any date of determination, of (a) anyInvestment in the form of a loan or an advance shall be the principal amount thereof outstanding on such date, minus any cashpayments actually received by such investor representing interest in respect of such Investment (to the extent any such payment to bededucted does not exceed the remaining principal amount of such Investment and without duplication of amounts increasing theAvailable Amount or the Available Equity Amount), but without any adjustment for write-downs or write-offs (including as a resultof forgiveness of any portion thereof) with respect to such loan or advance after the date thereof, (b) any Investment in the form of aGuarantee shall be equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect ofwhich such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof, asdetermined in good faith by a Financial Officer, (c) any Investment in the form of a transfer of Equity Interests or other non-cashproperty by the investor to the investee, including any such transfer in the form of a capital contribution, shall be the fair marketvalue (as determined in good faith by a Financial Officer) of such Equity Interests or other property as of the time of the transfer,minus any payments actually received by such investor representing a return of capital of, or dividends or-41- other distributions in respect of, such Investment (to the extent such payments do not exceed, in the aggregate, the original amount ofsuch Investment and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but withoutany other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investmentafter the date of such Investment, and (d) any Investment (other than any Investment referred to in clause (a), (b) or (c) above) by thespecified Person in the form of a purchase or other acquisition for value of any Equity Interests, evidences of Indebtedness or othersecurities of any other Person shall be the original cost of such Investment (including any Indebtedness assumed in connectiontherewith), plus (i) the cost of all additions thereto and minus (ii) the amount of any portion of such Investment that has been repaidto the investor in cash as a repayment of principal or a return of capital, and of any cash payments actually received by such investorrepresenting interest, dividends or other distributions in respect of such Investment (to the extent the amounts referred to in clause(ii) do not, in the aggregate, exceed the original cost of such Investment plus the costs of additions thereto and without duplication ofamounts increasing the Available Amount or the Available Equity Amount), but without any other adjustment for increases ordecreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the date of such Investment. Forpurposes of Section 6.04, if an Investment involves the acquisition of more than one Person, the amount of such Investment shall beallocated among the acquired Persons in accordance with GAAP; provided that pending the final determination of the amounts to beso allocated in accordance with GAAP, such allocation shall be as reasonably determined by a Financial Officer.“ Investor ” means Warburg Pincus LLC and JLL Partners, Inc. and any funds, partnerships or other investmentvehicles managed or directly or indirectly controlled by either of them, but not including, however, any portfolio companies of theforegoing.“ Joint Lead Arrangers ” means each of Deutsche Bank Securities Inc., Citigroup Global Markets Inc., CreditSuisse Securities (USA) LLC, KeyBank Capital Markets Inc. and SunTrust Robinson Humphrey, Inc. and any permitted successorsand assigns thereof, in their respective capacities as joint lead arrangers and joint bookrunners hereunder.“ Junior Financing ” means (a) any Indebtedness (other than (i) any permitted intercompany Indebtedness owingto the Borrower or any Restricted Subsidiary or any Permitted Unsecured Refinancing Debt or (ii) any Indebtedness in an aggregateprincipal amount not exceeding $125,000,000) that is subordinated in right of payment to the Loan Document Obligations, and (b)any Permitted Refinancing in respect of the foregoing.“ Latest Maturity Date ” means, at any date of determination, the latest maturity or expiration date applicable toany Loan or Commitment hereunder at such time, including the latest maturity or expiration date of any Other Term Loan or anyOther Term Commitment, in each case as extended in accordance with this Agreement from time to time.“ LCA Election ” has the meaning assigned to such term in Section 1.06.“ LCA Test Date ” has the meaning assigned to such term in Section 1.06.-42- “ Leaseholds ” of any Person means all the right, title and interest of such Person as lessee or licensee in, to andunder leases or licenses of land, improvements and/or fixtures.“ Lenders ” means the Persons listed on Schedule 2.01 and any other Person that shall have become a partyhereto pursuant to an Assignment and Assumption, an Incremental Facility Amendment, a Loan Modification Agreement or aRefinancing Amendment, in each case, other than any such Person that ceases to be a party hereto pursuant to an Assignment andAssumption.“ LIBO Rate ” means for any Interest Period with respect to a Eurodollar Borrowing, the rate per annum equal to(i) the ICE Benchmark Administration LIBOR Rate or the successor thereto if the ICE Benchmark Administration is no longermaking a LIBOR rate available, as published by Reuters (or such other commercially available source providing quotations of ICELIBOR as may be designated by the Term Administrative Agent from time to time) at approximately 11:00 a.m., London time, two(2) London Banking Days prior to the commencement of such Interest Period, for dollar deposits (for delivery on the first day ofsuch Interest Period) with a term equivalent to such Interest Period or (ii) if such published rate is not available at such time for anyreason, then the “LIBO Rate” for such Interest Period shall be the Interpolated Rate.“ Lien ” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation,encumbrance, charge, security assignment, security transfer of title or security interest in, on or of such asset and (b) the interest of avendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease havingsubstantially the same economic effect as any of the foregoing) relating to such asset.“ Limited Condition Acquisition ” means any acquisition, including by way of merger, by the Borrower or oneor more of its Restricted Subsidiaries permitted pursuant to this Agreement whose consummation is not conditioned upon theavailability of, or on obtaining, third party financing.“ Loan Document Obligations ” means (a) the due and punctual payment by the Borrower of (i) the principal ofthe Loans and all accrued and unpaid interest thereon at the applicable rate or rates provided in this Agreement (including interestaccruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowedor allowable in such proceeding), when and as due, whether at maturity, by acceleration, upon one or more dates set for prepaymentor otherwise and (ii) all other monetary obligations of the Borrower under or pursuant to this Agreement and each of the other LoanDocuments, including obligations to pay fees, expenses, reimbursement obligations and indemnification obligations, whetherprimary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of anybankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b)the due and punctual payment and performance of all other obligations of the Borrower under or pursuant to each of the LoanDocuments and (c) the due and punctual payment and performance of all the obligations of each other Loan Party under or pursuantto this Agreement and each of the other Loan Documents (including interest and monetary obligations-43- incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowedor allowable in such proceeding).“ Loan Documents ” means this Agreement, the Fee Letter, any Refinancing Amendment, any ModificationAgreement, any Incremental Facility Amendment, the Term Guarantee Agreement, the Term Collateral Agreement, the other TermSecurity Documents, the Pari Passu Intercreditor Agreement, the Second Lien Intercreditor Agreement (if applicable), the ABL/BondIntercreditor Agreement, any Customary Intercreditor Agreement and, except for purposes of Section 9.02, any Term Note deliveredpursuant to Section 2.09(e).“ Loan Guarantors ” means the Borrower and the Subsidiary Loan Parties.“ Loan Modification Agreement ” means a Loan Modification Agreement, in form reasonably satisfactory to theTerm Administrative Agent, among the Borrower, the Term Administrative Agent and one or more Accepting Lenders, effecting oneor more Permitted Amendments and such other amendments hereto and to the other Loan Documents as are contemplated by Section2.24.“ Loan Modification Offer ” has the meaning specified in Section 2.24(a).“ Loan Parties ” means the Borrower and the Subsidiary Loan Parties.“ Loans ” means the loans made by the Lenders to the Borrower pursuant to this Agreement.“ London Banking Day ” means any day on which dealings in dollar deposits are conducted by and betweenbanks in the London interbank eurodollar market.“ Majority in Interest ”, when used in reference to Lenders of any Class, means, at any time, Lenders holdingoutstanding Term Loans of such Class representing more than 50% of all Term Loans of such Class outstanding at such time;provided that whenever there are one or more Defaulting Lenders, the total outstanding Term Loans of each Defaulting Lender shallbe excluded for purposes of making a determination of the Majority in Interest.“ Management Investors ” means the members of the Board of Directors, officers and employees of theBorrower and/or its Subsidiaries who are (directly or indirectly through one or more investment vehicles) investors in the Borrower(or any direct or indirect parent thereof).“ Master Agreement ” has the meaning assigned to such term in the definition of “Swap Agreement.”“ Material Adverse Effect ” means a circumstance or condition affecting the business, financial condition, orresults of operations of the Borrower and its Subsidiaries, taken as a whole, that would reasonably be expected to have a materiallyadverse effect on (a) the ability of the Borrower and the other Loan Parties, taken as a whole, to perform their payment obligationsunder the Loan Documents or (b) the material rights and remedies of the Term Administrative Agent and the Lenders under the LoanDocuments.-44- “ Material Indebtedness ” means Indebtedness for borrowed money (other than the Loan DocumentObligations), Capital Lease Obligations, unreimbursed obligations for letter of credit drawings and financial guarantees (other thanordinary course of business contingent reimbursement obligations) or obligations in respect of one or more Swap Agreements, of anyone or more of the Borrower and its Restricted Subsidiaries in an aggregate principal amount exceeding $50,000,000. For purposesof determining Material Indebtedness, the “principal amount” of the obligations in respect of any Swap Agreement at any time shallbe the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Restricted Subsidiary wouldbe required to pay if such Swap Agreement were terminated at such time.“ Material Non-Public Information ” means (a) if the Borrower is a public reporting company, material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing for purposes ofUnited States Federal and state securities laws and (b) if the Borrower is not a public reporting company, information that is (i) of thetype that would be required to be made publicly available if the Borrower or any of its Subsidiaries were a public reporting companyand (ii) material with respect to the Borrower and its Subsidiaries or any of their respective securities for purposes of United StatesFederal or state securities laws.“ Material Real Property ” means real property (including fixtures) located in the United States and owned byany Loan Party with a Fair Market Value, as reasonably determined by the Borrower in good faith, greater than or equal to$3,500,000.“ Material Subsidiary ” means (i) each Wholly Owned Restricted Subsidiary that, as of the last day of the fiscalquarter of the Borrower most recently ended, had net revenues or total assets for such quarter in excess of 5.0% of the consolidatednet revenues or total assets, as applicable, of the Borrower and its Restricted Subsidiaries for such quarter; provided that in the eventthat the Immaterial Subsidiaries, taken together, had as of the last day of the fiscal quarter of the Borrower most recently ended netrevenues or total assets in excess of 10.0 % of the consolidated revenues or total assets, as applicable, of the Borrower and itsRestricted Subsidiaries for such quarter, the Borrower shall designate one or more Immaterial Subsidiaries to be a MaterialSubsidiary as may be necessary such that the foregoing 10.0% limit shall not be exceeded, and any such Subsidiary shall thereafterbe deemed to be an Material Subsidiary hereunder; provided further that the Borrower may re-designate Material Subsidiaries asImmaterial Subsidiaries so long as Borrower is in compliance with the foregoing.“ Maximum Rate ” has the meaning assigned to such term in Section 9.16.“ Model ” means that certain financial model delivered by the Borrower to the Term Administrative Agent onMarch 30, 2015 (together with any updates or modifications thereto reasonably agreed between the Borrower and the TermAdministrative Agent and/or necessary to reflect any exercise of “market flex” pursuant to the Fee Letter).“ Moody’s ” means Moody’s Investors Service, Inc. and any successor to its rating agency business.-45- “ Mortgage ” means a mortgage, deed of trust, hypothecation, assignment of leases and rents, leaseholdmortgage, debenture, legal charge or other security document granting a Lien on any Mortgaged Property in favor of the TermCollateral Agent for the benefit of the Secured Parties to secure the Secured Obligations, as the same may be amended, amended andrestated, supplemented or otherwise modified from time to time. Each Mortgage shall be in form and substance reasonablysatisfactory to the Term Administrative Agent and the Borrower. For the avoidance of doubt, no Mortgage shall be required withrespect to any Excluded Real Property.“ Mortgaged Property ” means each parcel of real property with respect to which a Mortgage is granted pursuantto the Collateral and Guarantee Requirement, Section 5.11, Section 5.12 or Section 5.14 (if any).“ Multiemployer Plan ” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.“ Net Proceeds ” means, with respect to any event, (a) the proceeds received in respect of such event in cash orPermitted Investments, including (i) any cash or Permitted Investments received in respect of any non‑cash proceeds (including anycash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase priceadjustment or earn-out, but excluding any interest payments), but only as and when received, (ii) in the case of a casualty, insuranceproceeds that are actually received, and (iii) in the case of a condemnation or similar event, condemnation awards and similarpayments that are actually received, minus (b) the sum of (i) all fees and out‑of‑pocket expenses paid by the Borrower and itsRestricted Subsidiaries in connection with such event (including attorney’s fees, investment banking fees, survey costs, titleinsurance premiums, and related search and recording charges, transfer taxes, deed or mortgage recording taxes, underwritingdiscounts and commissions, other customary expenses and brokerage, consultant, accountant and other customary fees), (ii) in thecase of a sale, transfer or other disposition of an asset (including pursuant to a sale and leaseback transaction or a casualty or acondemnation or similar proceeding), (x) the amount of all payments that are permitted hereunder and are made by the Borrower andits Restricted Subsidiaries as a result of such event to repay Indebtedness (other than the Loans) secured by such asset or otherwisesubject to mandatory prepayment as a result of such event, (y) the pro rata portion of net cash proceeds thereof (calculated withoutregard to this clause (y)) attributable to minority interests and not available for distribution to or for the account of the Borrower orits Restricted Subsidiaries as a result thereof and (z) the amount of any liabilities directly associated with such asset and retained bythe Borrower or any Restricted Subsidiary and (iii) the amount of all taxes paid (or reasonably estimated to be payable), the amountof Tax Distributions, dividends and other restricted payments that the Borrower and/or the Restricted Subsidiaries may makepursuant to Section 6.07(a)(vii)(A) or (B) as a result of such event, and the amount of any reserves established by the Borrower andits Restricted Subsidiaries to fund contingent liabilities reasonably estimated to be payable, that are directly attributable to suchevent, provided that any reduction at any time in the amount of any such reserves (other than as a result of payments made in respectthereof) shall be deemed to constitute the receipt by the Borrower at such time of Net Proceeds in the amount of such reduction.“ New Project ” shall mean (a) each facility which is either a new facility, branch or office or an expansion,relocation, remodeling or substantial modernization of an existing facility,-46- branch or office owned by the Borrower or its Subsidiaries which in fact commences operations and (b) each creation (in one or aseries of related transactions) of a business unit to the extent such business unit commences operations or each expansion (in one or aseries of related transactions) of business into a new market.“ Non-Accepting Lender ” has the meaning assigned to such term in Section 2.24(c).“ Non-Cash Charges ” means (a) any impairment charge or asset write-off or write-down, including impairmentcharges or asset write-offs or write-downs related to intangible assets (including goodwill), long-lived assets, and Investments in debtand equity securities or as a result of a change in law or regulation, in each case pursuant to GAAP, and the amortization ofintangibles pursuant to GAAP (which, without limiting the foregoing, shall include any impairment charges resulting from theapplication of FASB Statements No. 142 and 144 and the amortization of intangibles arising pursuant to No. 141), (b) all losses fromInvestments recorded using the equity method, (c) all Non-Cash Compensation Expenses, (d) the non-cash impact of acquisitionmethod accounting, (e) depreciation and amortization (including, without limitation, as they relate to acquisition accounting,amortization of deferred financing fees or costs, Capitalized Software Expenditures and amortization of unrecognized prior servicecosts and actuarial gains and losses related to pension and other post-employment benefits) and (f) other non-cash charges (includingnon-cash charges related to deferred rent) ( provided , in each case, that if any non-cash charges represent an accrual or reserve forpotential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted fromConsolidated EBITDA to such extent, and excluding amortization of a prepaid cash item that was paid in a prior period).“ Non-Cash Compensation Expense ” means any non-cash expenses and costs that result from the issuance ofstock-based awards, partnership interest-based awards and similar incentive based compensation awards or arrangements.“ Non-Consenting Lender ” has the meaning assigned to such term in Section 9.02(c).“ Non-Wholly Owned Subsidiary ” of any Person means any Subsidiary of such Person other than a WhollyOwned Subsidiary.“ Not Otherwise Applied ” means, with reference to the Available Amount or the Available Equity Amount, asapplicable, that such amount was not previously applied pursuant to Sections 6.04(m), 6.07(a)(viii) and 6.07(b)(iv).“ Offered Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).“ Offered Discount ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).“ Organizational Documents ” means, with respect to any Person, the charter, articles or certificate oforganization or incorporation and bylaws or other organizational or governing documents of such Person.-47- “ Other Taxes ” means any and all present or future recording, stamp, documentary, excise, transfer, sales,property or similar Taxes, charges or levies arising from any payment made under any Loan Document or from the execution,delivery or enforcement of, or otherwise with respect to, any Loan Document.“ Other Term Commitments ” means one or more Classes of term loan commitments that result from aRefinancing Amendment or a Loan Modification Agreement.“ Other Term Loans ” means one or more Classes of Term Loans hereunder that result from a RefinancingAmendment or a Loan Modification Agreement.“ Pari Passu Intercreditor Agreement ” means the Pari Passu Intercreditor Agreement in the form of Exhibit Famong the Term Administrative Agent and one or more Senior Representatives for holders of Indebtedness permitted by thisAgreement to be secured by the Collateral on a pari passu basis (but without regard to the control of remedies).“ Participant ” has the meaning assigned to such term in Section 9.04(c)(i).“ Participant Register ” has the meaning assigned to such term in Section 9.04(c)(ii).“ Participating Lender ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(2).“ PBGC ” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successorentity performing similar functions.“ Perfection Certificate ” means a certificate substantially in the form of Exhibit C.“ Permitted ABL Debt ” means the ABL Obligations (including any additional Indebtedness permitted to beincurred under any incremental facilities potentially available under the ABL Credit Agreement as in effect on the Effective Date)permitted to be incurred and secured pursuant to the terms of the ABL Credit Agreement as in effect on the Effective Date (as maybe amended in accordance with the express terms of the ABL/Bond Intercreditor Agreement) and any Permitted Refinancingthereof. For the avoidance of doubt, the aggregate principal amount of ABL Facilities on the Effective Date shall not exceed$800,000,000.“ Permitted Acquisition ” means the purchase or other acquisition, by merger, consolidation or otherwise, by theBorrower or any Subsidiary of any Equity Interests in, or all or substantially all the assets of (or all or substantially all the assetsconstituting a business unit, division, product line or line of business of), any Person; provided that (a) in the case of any purchase orother acquisition of Equity Interests in a Person, (i) such Person, upon the consummation of such purchase or acquisition, will be aSubsidiary (including as a result of a merger, amalgamation or consolidation between any Subsidiary and such Person), or (ii) suchPerson is merged or amalgamated into or consolidated with a Subsidiary and such Subsidiary is the surviving entity of such merger,amalgamation or consolidation, (b) the business of such Person, or such assets, as the case may be, constitute a business permitted bySection 5.16, (c) with respect to each such purchase or other acquisition, all actions required to be taken with respect to such newlycreated or acquired Subsidiary (including each subsidiary thereof) or assets in order to-48- satisfy the requirements set forth in clauses (a), (b), (c) and (d) of the definition of the term “Collateral and Guarantee Requirement”to the extent applicable shall have been taken (or arrangements for the taking of such actions after the consummation of the PermittedAcquisition shall have been made that are reasonably satisfactory to the Term Administrative Agent) (unless such newly created oracquired Subsidiary is designated as an Unrestricted Subsidiary pursuant to Section 5.13 or is otherwise an Excluded Subsidiary) and(d) after giving Pro Forma Effect to any such purchase or other acquisition, no Event of Default shall have occurred and becontinuing (except this clause (d) shall not apply with respect to any Limited Condition Acquisition).“ Permitted Amendment ” means an amendment to this Agreement and, if applicable the other Loan Documents,effected in connection with a Loan Modification Offer pursuant to Section 2.24, providing for an extension of a maturity dateapplicable to the Loans and/or Commitments of the Accepting Lenders and, in connection therewith, (a) a change in the ApplicableRate with respect to the Loans and/or Commitments of the Accepting Lenders and/or (b) a change in the fees payable to, or theinclusion of new fees to be payable to, the Accepting Lenders and/or (c) additional covenants, events of default, and guarantees orother provisions applicable only to periods after the Latest Maturity Date at the time of such Loan Modification Offer (it beingunderstood that to the extent that any financial maintenance covenant is added for the benefit of any such Loans and/orCommitments, no consent shall be required by the Term Administrative Agent or any of the Lenders if such financial maintenancecovenant is also added for the benefit of any corresponding Loans remaining outstanding after the issuance or incurrence of suchLoans and/or Commitments or only applicable after the Latest Maturity Date at the time of such Loan Modification Offer).“ Permitted Encumbrances ” means:(a) Liens for Taxes, assessments or governmental charges that are (i) not overdue for a period of the greater of(x) 30 days and (y) any applicable grace period related thereto, or otherwise not at such time required to be paid pursuantto Section 5.05 or (ii) being contested in good faith and by appropriate proceedings, if adequate reserves with respectthereto are maintained on the books of the applicable Person in accordance with GAAP (or other applicable accountingprinciples);(b) Liens with respect to outstanding motor vehicle fines and Liens imposed by law, such as carriers’,warehousemen’s, mechanics’, materialmen’s, repairmen’s or construction contractors’ Liens and other similar Liensarising in the ordinary course of business, in each case so long as such Liens do not individually or in the aggregate have aMaterial Adverse Effect;(c) Liens incurred or deposits made in the ordinary course of business (i) in connection with workers’compensation, unemployment insurance and other social security legislation or (ii) securing liability for reimbursement orindemnification obligations of (including obligations in respect of letters of credit or bank guarantees or similar instrumentfor the benefit of) insurance carriers providing property, casualty or liability insurance to the Borrower or any RestrictedSubsidiary or otherwise supporting the payment of items set forth in the foregoing clause (i), whether pursuant to statutoryrequirements, common law or consensual arrangements;-49- (d) Liens incurred or deposits made to secure the performance of bids, trade contracts, governmental contractsand leases, statutory obligations, surety, stay, customs and appeal bonds, performance bonds, return-of-money bonds,bankers acceptance facilities and other obligations of a like nature (including those to secure health, safety andenvironmental obligations) and obligations in respect of letters of credit, bank guarantees or similar instruments that havebeen posted to support the same, in each case incurred in the ordinary course of business or consistent with past practice,whether pursuant to statutory requirements, common law or consensual arrangements;(e) (i) survey exceptions, encumbrances, charges, easements, rights-of-way, restrictions, encroachments,protrusions, by-law, regulation or zoning restrictions, reservations of or rights of other Persons and other similarencumbrances and title defects or irregularities affecting real property, that, in the aggregate, would not reasonably beexpected to have a Material Adverse Effect and (ii) any exception on the title policies issued in connection with anyMortgaged Property;(f) Liens securing, or otherwise arising from, judgments, decrees or attachments not constituting an Event ofDefault under Section 7.01(j);(g) Liens on (i) goods the purchase price of which is financed by a documentary letter of credit issued for theaccount of the Borrower or any of its Subsidiaries or Liens on bills of lading, drafts or other documents of title arising byoperation of law or pursuant to the standard terms of agreements relating to letters of credit, bank guarantees and othersimilar instruments; provided that such Lien secures only the obligations of the Borrower or such Subsidiaries in respect ofsuch letter of credit to the extent such obligations are permitted by Section 6.01 and (ii) specific items of inventory orother goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued orcreated for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;(h) Liens arising from precautionary Uniform Commercial Code financing statements or similar filings made inrespect of operating leases entered into by the Borrower or any of its Subsidiaries;(i) rights of recapture of unused real property (other than any Mortgaged Property) in favor of the seller of suchproperty set forth in customary purchase agreements and related arrangements with any Governmental Authority;(j) Liens in favor of deposit banks or securities intermediaries securing customary fees, expenses or charges inconnection with the establishment, operation or maintenance of deposit accounts or securities accounts;(k) Liens in favor of obligations in respect of performance, bid, appeal and surety bonds and performance andcompletion guarantees and similar obligations provided by the Borrower or any of the Restricted Subsidiaries orobligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case in theordinary course of business or consistent with past practice;-50- (l) Liens arising from grants of non-exclusive licenses or sublicenses of Intellectual Property made in theordinary course of business;(m) rights of setoff, banker’s lien, netting agreements and other Liens arising by operation of law or by of theterms of documents of banks or other financial institutions in relation to the maintenance of administration of depositaccounts, securities accounts, cash management arrangements or in connection with the issuance of letters of credit, bankguarantees or other similar instruments;(n) Liens arising from the right of distress enjoyed by landlords or Liens otherwise granted to landlords, in eithercase, to secure the payment of arrears of rent or performance of other obligations in respect of leased properties, so long assuch Liens are not exercised or except where the exercise of such Liens would not reasonably be expected to have aMaterial Adverse Effect;(o) Liens or security given to public utilities or to any municipality or Governmental Authority when requiredby the utility, municipality or Governmental Authority in connection with the supply of services or utilities to theBorrower and any other Restricted Subsidiaries;(p) servicing agreements, development agreements, site plan agreements, subdivision agreements, facilitiessharing agreements, cost sharing agreements and other agreements pertaining to the use or development of any of theassets of the Person, provided the same do not result in (i) a substantial and prolonged interruption or disruption of thebusiness activities of the Borrower and its Restricted Subsidiaries, taken as a whole, or (ii) a Material Adverse Effect;(q) Liens solely on any cash earnest money deposits made by the Borrower or any of its Restricted Subsidiariesin connection with any letter of intent or purchase agreement permitted under this Agreement;(r) the rights reserved to or vested in any Person or Governmental Authority by the terms of any lease, license,franchise, grant or permit held by the Borrower or any of its Subsidiaries or by a statutory provision, to terminate any suchlease, license, franchise, grant or permit, or to require annual or periodic payments as a condition to the continuancethereof;(s) restrictive covenants affecting the use to which real property may be put;(t) operating leases of vehicles or equipment which are entered into in the ordinary course of business;(u) Liens or covenants restricting or prohibiting access to or from lands abutting on controlled access highwaysor covenants affecting the use to which lands may be put; provided that such Liens or covenants do not interfere with theordinary conduct of business of the Borrower or any Restricted Subsidiary;-51- (v) statutory Liens incurred or pledges or deposits made, in each case in the ordinary course of business, in favorof a Governmental Authority to secure the performance of obligations of the Borrower or any Restricted Subsidiary underEnvironmental Laws to which any such Person is subject;(w) Liens on cash collateral that are required to be granted by the Borrower or any Restricted Subsidiary inconnection with swap arrangements for gas or electricity used in the business of such Person;(x) receipt of progress payments and advances from customers in the ordinary course of business to the extentthe same creates a Lien on the related inventory and proceeds thereof; and(y) Liens securing Priority Obligations;provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness for borrowed money other thanLiens referred to in clauses (d) and (k) above securing obligations under letters of credit or bank guarantees or similar instrumentsrelated thereto and in clause (g) above, in each case to the extent any such Lien would constitute a Lien securing Indebtedness forborrowed money.“ Permitted First Priority Refinancing Debt ” means any secured Indebtedness incurred by the Borrower and/orany Loan Party in the form of one or more series of senior secured notes or senior secured loans; provided that (i) such Indebtednessis secured by the Collateral on a pari passu basis (but without regard to the control of remedies) with the Loan DocumentObligations, (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness, (iii) such Indebtedness does not havemandatory redemption features (other than customary asset sale, insurance and condemnation proceeds events, change of controloffers or events of default) that could result in redemptions of such Indebtedness prior to the maturity of the Refinanced Debt and(iv) a Senior Representative acting on behalf of the holders of such Indebtedness shall have become party to a CustomaryIntercreditor Agreement providing that the Liens on the Collateral securing such obligations shall rank equal in priority to the Lienson the Collateral securing the Loan Document Obligations (but without regard to the control of remedies). Permitted First PriorityRefinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.“ Permitted Holders ” means (a) the Investors, (b) the Management Investors and (c) any other holder of a director indirect equity interest in the Borrower (or any direct or indirect parent thereof) that becomes a holder of such interest prior to theninetieth (90th) day after the Effective Date that was identified in writing to the Joint Lead Arrangers prior to the Effective Date.“ Permitted Investments ” means any of the following, to the extent owned by the Borrower or any RestrictedSubsidiary:(a) dollars, euro, Canadian dollars, or such other currencies held by it from time to time in the ordinary course ofbusiness;-52- (b) readily marketable obligations issued or directly and fully guaranteed or insured by the government or anyagency or instrumentality of (i) the United States, (ii) the United Kingdom, (iii) Canada, (iv) Switzerland or (v) anymember nation of the European Union, having average maturities of not more than 24 months from the date of acquisitionthereof; provided that the full faith and credit of such country or such member nation of the European Union is pledged insupport thereof;(c) time deposits and Eurodollar time deposits with, or certificates of deposit or bankers’ acceptances of, anycommercial bank that (i) is a Lender or (ii) has combined capital and surplus of at least $250,000,000 in the case of U.S.banks and $100,000,000 (or the U.S. dollar equivalent as of the date of determination) in the case of foreign banks (anysuch bank in the foregoing clauses (i) or (ii) being an “ Approved Bank ”), in each case with average maturities of notmore than 12 months from the date of acquisition thereof;(d) commercial paper and variable or fixed rate notes issued by an Approved Bank (or by the parent companythereof) or any commercial paper and variable or fixed rate note issued by, or guaranteed by, a corporation rated A-2 (orthe equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or better by Moody’s, in each case with averagematurities of not more than 12 months from the date of acquisition thereof;(e) repurchase agreements entered into by any Person with an Approved Bank, a bank or trust company(including any of the Lenders) or recognized securities dealer covering securities described in clauses (b) and (c) above;(f) marketable short-term money market and similar highly liquid funds substantially all of the assets of whichare comprised of securities of the types described in clauses (b) through (e) above;(g) securities with average maturities of 12 months or less from the date of acquisition issued or fully guaranteedby any state, commonwealth or territory of the United States, Switzerland, a member of the European Union or by anypolitical subdivision or taxing authority of any such state, member, commonwealth or territory having an investment graderating from either S&P or Moody’s (or the equivalent thereof);(h) investments with average maturities of 12 months or less from the date of acquisition in mutual funds ratedAAA- (or the equivalent thereof) or better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s;(i) instruments equivalent to those referred to in clauses (a) through (h) above denominated in euros or any otherforeign currency comparable in credit quality and tenor to those referred to above and customarily used by corporations forcash management purposes in any jurisdiction outside the United States to the extent reasonably required in connectionwith any business conducted by any Subsidiary organized in such jurisdiction;(j) investments, classified in accordance with GAAP as current assets of the Borrower or any Subsidiary, inmoney market investment programs that are registered under the Investment Company Act of 1940 or that areadministered by financial institutions having capital of at least $250,000,000 or its equivalent, and, in either case, the-53- portfolios of which are limited such that substantially all of such investments are of the character, quality and maturitydescribed in clauses (a) through (i) of this definition;(k) with respect to any Subsidiary that is organized under the laws of a jurisdiction other than the United Statesof America, any State thereof or the District of Columbia: (i) obligations of the national government of the country inwhich such Subsidiary maintains its chief executive office and principal place of business; provided such country is amember of the Organization for Economic Cooperation and Development, in each case maturing within one year after thedate of investment therein, (ii) certificates of deposit of, bankers acceptances of, or time deposits with, any commercialbank which is organized and existing under the laws of the country in which such Subsidiary maintains its chief executiveoffice and principal place of business; provided such country is a member of the Organization for Economic Cooperationand Development, and whose short-term commercial paper rating from S&P is at least “A-2” or the equivalent thereof orfrom Moody’s is at least “P-2” or the equivalent thereof (any such bank being an “ Approved Foreign Bank ”), and in eachcase with maturities of not more than 24 months from the date of acquisition and (iii) the equivalent of demand depositaccounts which are maintained with an Approved Foreign Bank;(l) investments in money market funds access to which is provided as part of “sweep” accounts maintained withan Approved Bank;(m) investments in industrial development revenue bonds that (i) “re-set” interest rates not less frequently thanquarterly, (ii) are entitled to the benefit of a remarketing arrangement with an established broker dealer and (iii) aresupported by a direct pay letter of credit covering principal and accrued interest that is issued by an Approved Bank;(n) investments in pooled funds or investment accounts consisting of investments of the nature described in theforegoing clause (m);(o) Sterling bills of exchange eligible for rediscount at the Bank of England (or their dematerialized equivalent);and(p) investment funds investing at least 90% of their assets in securities of the types described in clauses (a)through (k) above.“ Permitted Refinancing ” means, with respect to any Person, any modification, refinancing, refunding, renewalor extension of any Indebtedness of such Person; provided that (a) other than with respect to a Permitted Refinancing in respect ofIndebtedness permitted pursuant to Section 6.01(a)(ii),the principal amount (or accreted value, if applicable) thereof does not exceedthe principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed or extendedexcept by an amount equal to unpaid accrued interest and premium thereon plus other amounts paid, and fees and expenses incurred,in connection with such modification, refinancing, refunding, renewal or extension and by an amount equal to any existingcommitments unutilized thereunder, (b) other than with respect to a Permitted Refinancing in respect of Indebtedness permittedpursuant to Section 6.01(a)(v), Indebtedness resulting from such modification, refinancing, refunding, renewal or extension has afinal maturity-54- date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than theWeighted Average Life to Maturity of, the Indebtedness being modified, refinanced, refunded, renewed or extended, (c) if theIndebtedness being modified, refinanced, refunded, renewed or extended is subordinated in right of payment to the Loan DocumentObligations, Indebtedness resulting from such modification, refinancing, refunding, renewal or extension is subordinated in right ofpayment to the Loan Document Obligations on terms at least as favorable to the Lenders as those contained in the documentationgoverning the Indebtedness being modified, refinanced, refunded, renewed or extended, (d) if the Indebtedness being modified,refinanced, refunded, renewed or extended is permitted pursuant to Section 6.01(a)(xviii) or (a)(xix), such Indebtedness complieswith the Required Additional Debt Terms, (e) if the Indebtedness being modified, refinanced, refunded, renewed or extended ispermitted pursuant to Section 6.01(a)(ii), (i) the other terms and conditions of any such Permitted Refinancing shall be as agreedbetween the Borrower and the lenders providing any such Permitted Refinancing, (ii) the primary obligor in respect of, and/or thePersons (if any) that Guarantee, the Indebtedness resulting from such modification, refinancing, refunding, renewal or extension isthe primary obligor in respect of, and/or Persons (if any) that Guaranteed the Indebtedness being modified, refinanced, refunded,renewed or extended and (iii) the principal amount (or accreted value, if applicable) of the Indebtedness being modified, refinanced,refunded, renewed or extended does not exceed the original principal amount (or accreted value, if applicable) of such Indebtedness,except by an amount equal to unpaid accrued interest and premium thereon plus other amounts paid, and fees and expenses incurred,in connection with such modification, refinancing, refunding, renewal or extension and by an amount equal to any existingcommitments unutilized thereunder and (f) if the Indebtedness being modified, refinanced, refunded, renewed or extended ispermitted pursuant to Section 6.01(a)(vii) or (a)(viii), the Indebtedness resulting from such modification, refinancing, refunding,renewal or extension is (x) unsecured if the Indebtedness being modified, refinanced, refunded, renewed or extended is unsecured or(y) not secured on a more favorable basis than the Indebtedness being modified, refinanced, refunded, renewed or extended if suchIndebtedness being modified, refinanced, refunded, renewed or extended is secured. For the avoidance of doubt, it is understood thata Permitted Refinancing may constitute a portion of an issuance of Indebtedness in excess of the amount of such PermittedRefinancing; provided that such excess amount is otherwise permitted to be incurred under Section 6.01. For the avoidance of doubt,it is understood and agreed that a Permitted Refinancing includes successive Permitted Refinancings of the same Indebtedness.“ Permitted Second Priority Refinancing Debt ” means any secured Indebtedness incurred by the Borrowerand/or any Loan Party in the form of one or more series of junior lien secured notes or junior lien secured loans; provided that(i) such Indebtedness is secured by the Collateral on a junior lien, subordinated basis to the Secured Obligations and the obligationsin respect of any Permitted First Priority Refinancing Debt, (ii) such Indebtedness constitutes Credit Agreement RefinancingIndebtedness, (iii) such Indebtedness does not have mandatory redemption features (other than customary asset sale, insurance andcondemnation proceeds events, change of control offers or events of default) that could result in redemptions of such Indebtednessprior to the maturity of the Refinanced Debt, and (iv) a Senior Representative acting on behalf of the holders of such Indebtednessshall have become party to a Customary Intercreditor Agreement. Permitted Second Priority Refinancing Debt will include anyRegistered Equivalent Notes issued in exchange therefor.-55- “ Permitted Unsecured Refinancing Debt ” means any unsecured Indebtedness incurred by the Borrower and/orany Loan Party in the form of one or more series of senior unsecured notes or senior unsecured loans; provided that (i) suchIndebtedness constitutes Credit Agreement Refinancing Indebtedness, (ii) such Indebtedness does not have mandatory redemptionfeatures (other than customary asset sale, insurance and condemnation proceeds events, change of control offers or events of default)that could result in redemptions of such Indebtedness prior to the maturity of the Refinanced Debt, and (iii) such Indebtedness is notsecured by any Lien on any property or assets of the Borrower or any Restricted Subsidiary. Permitted Unsecured Refinancing Debtwill include any Registered Equivalent Notes issued in exchange therefor.“ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association,company, partnership, Governmental Authority or other entity.“ Plan ” means any employee pension benefit plan as such term is defined in Section 3(2) of ERISA (other thana Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and inrespect of which a Loan Party or any ERISA Affiliate is an “employer” as defined in Section 3(5) of ERISA.“ Planned Expenditures ” has the meaning assigned to such term in clause (b) of the definition of “Excess CashFlow.”“ Platform ” has the meaning assigned to such term in the last paragraph of Section 5.01.“ Post-Transaction Period ” means, with respect to any Specified Transaction, the period beginning on the datesuch Specified Transaction is consummated and ending on the last day of the eighth full consecutive fiscal quarter immediatelyfollowing the date on which such Specified Transaction is consummated.“ Prepayment Event ” means:(a) any non-ordinary course sale, transfer or other disposition of any property or asset of the Borrower or any ofits Restricted Subsidiaries permitted by Section 6.05(j) and (k) other than dispositions resulting in aggregate Net Proceedsnot exceeding (A) $37,500,000 in the case of any single transaction or series of related transactions and (B) $75,000,000for all such transactions during any fiscal year of the Borrower; or(b) the incurrence by the Borrower or any of its Restricted Subsidiaries of any Indebtedness, other thanIndebtedness permitted under Section 6.01 (other than Permitted Unsecured Refinancing Debt, Permitted First PriorityRefinancing Debt, Permitted Second Priority Refinancing Debt and Other Term Loans which shall constitute a PrepaymentEvent to the extent required by the definition of “Credit Agreement Refinancing Indebtedness”) or permitted by theRequired Lenders pursuant to Section 9.02.-56- “ Prime Rate ” means the rate of interest per annum announced from time to time by DBNY (or any successor toDBNY in its capacity as Term Administrative Agent) as its prime commercial lending rate in effect at its principal office in NewYork City and notified to the Borrower. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rateactually charged to any customer.“ Priority Obligation ” means any obligation that is secured by a Lien on any Collateral in favor of aGovernmental Authority, which Lien ranks or is capable of ranking prior to or pari passu with the Liens created thereon by theapplicable Term Security Documents, including any such Lien securing amounts owing for wages, vacation pay, severance pay,employee deductions, sales tax, excise tax, other Taxes, workers compensation, governmental royalties and stumpage or pensionfund obligations.“ Pro Forma Adjustment ” means, for any Test Period that includes all or any part of a fiscal quarter included inany Post-Transaction Period with respect to the Acquired EBITDA of the applicable Pro Forma Entity or the Consolidated EBITDAof the Borrower, the pro forma increase or decrease in such Acquired EBITDA or such Consolidated EBITDA, as the case may be,projected by the Borrower in good faith as a result of (a) actions taken, prior to or during such Post-Transaction Period, for thepurposes of realizing reasonably identifiable and quantifiable cost savings, or (b) any additional costs incurred prior to or during suchPost-Transaction Period in connection with the combination of the operations of such Pro Forma Entity with the operations of theBorrower and its Restricted Subsidiaries; provided that (A) so long as such actions are taken prior to or during such Post-Transaction Period or such costs are incurred prior to or during such Post-Transaction Period it may be assumed, for purposes ofprojecting such pro forma increase or decrease to such Acquired EBITDA or such Consolidated EBITDA, as the case may be, thatsuch cost savings will be realizable during the entirety of such Test Period, or such additional costs will be incurred during theentirety of such Test Period, (B) any Pro Forma Adjustment to Consolidated EBITDA shall be certified by a Financial Officer, thechief executive officer or president of the Borrower and (C) any such pro forma increase or decrease to such Acquired EBITDA orsuch Consolidated EBITDA, as the case may be, shall be without duplication for cost savings or additional costs already included insuch Acquired EBITDA or such Consolidated EBITDA, as the case may be, for such Test Period.“ Pro Forma Basis ,” “ Pro Forma Compliance ” and “ Pro Forma Effect ” mean, with respect to compliance withany test, financial ratio or covenant hereunder required by the terms of this Agreement to be made on a Pro Forma Basis or aftergiving Pro Forma Effect thereto, that (a) to the extent applicable, the Pro Forma Adjustment shall have been made and (b) allSpecified Transactions and the following transactions in connection therewith that have been made during the applicable period ofmeasurement or subsequent to such period and prior to or simultaneously with the event for which the calculation is made shall bedeemed to have occurred as of the first day of the applicable period of measurement in such test, financial ratio orcovenant: (i) income statement items (whether positive or negative) attributable to the property or Person subject to such SpecifiedTransaction, (A) in the case of a Disposition of all or substantially all Equity Interests in any subsidiary of the Borrower or anydivision, product line, or facility used for operations of the Borrower or any of its Subsidiaries, shall be excluded and (B) in the caseof a Permitted Acquisition or Investment described in the definition of “Specified Transaction,” shall be included, (ii) any retirementof Indebtedness, and (iii) any Indebtedness incurred or assumed by-57- the Borrower or any of its Subsidiaries in connection therewith and if such Indebtedness has a floating or formula rate, shall have animplied rate of interest for the applicable period for purposes of this definition determined by utilizing the rate that is or would be ineffect with respect to such Indebtedness as at the relevant date of determination and interest on any Indebtedness under a revolvingcredit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness duringthe applicable period; provided that, without limiting the application of the Pro Forma Adjustment pursuant to clause (a) above, theforegoing pro forma adjustments may be applied to any such test or covenant solely to the extent that such adjustments are consistentwith the definition of Consolidated EBITDA and give effect to operating expense reductions that are (i) (x) directly attributable tosuch transaction, (y) expected to have a continuing impact on the Borrower or any of its Subsidiaries and (z) factually supportable or(ii) otherwise consistent with the definition of Pro Forma Adjustment.“ Pro Forma Disposal Adjustment ” means, for any Test Period that includes all or a portion of a fiscal quarterincluded in any Post-Transaction Period with respect to any Sold Entity or Business, the pro forma increase or decrease inConsolidated EBITDA projected by the Borrower in good faith as a result of contractual arrangements between the Borrower or anyRestricted Subsidiary entered into with such Sold Entity or Business at the time of its disposal or within the Post-Transaction Periodand which represent an increase or decrease in Consolidated EBITDA which is incremental to the Disposed EBITDA of such SoldEntity or Business for the most recent Test Period prior to its disposal.“ Pro Forma Entity ” has the meaning given to such term in the definition of “Acquired EBITDA.”“ Pro Forma Financial Statements ” has the meaning assigned to such term in Section 3.04(c).“ Proposed Change ” has the meaning assigned to such term in Section 9.02(c).“ Public Company Costs ” means, as to any Person, costs associated with, or in anticipation of, or preparationfor, compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connectiontherewith and costs relating to compliance with the provisions of the Securities Act and the Exchange Act or any other comparablebody of laws, rules or regulations, as companies with listed equity, directors’ compensation, fees and expense reimbursement, costsrelating to investor relations, shareholder meetings and reports to shareholders, directors’ and officers’ insurance and other executivecosts, legal and other professional fees, and listing fees, in each case to the extent arising solely by virtue of the listing of suchPerson’s equity securities on a national securities exchange.“ Public Lender ” has the meaning assigned to such term in the last paragraph of Section 5.01.“ Qualified Equity Interests ” means Equity Interests of the Borrower other than Disqualified Equity Interests.“ Qualified Securitization Facility ” means any Securitization Facility that meets the followingconditions: (a) the Borrower shall have determined in good faith that such-58- Securitization Facility (including financing terms, covenants, termination events and other provisions) is in the aggregateeconomically fair and reasonable to the Borrower and the applicable Securitization Subsidiary and (b) the financing terms,covenants, termination events and other provisions thereof shall be market terms (as determined in good faith by the Borrower).“ Qualifying Lender ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).“ Refinanced Debt ” has the meaning assigned to such term in the definition of “Credit Agreement RefinancingIndebtedness.”“ Refinancing ” means the refinancing, repayment, redemption, satisfaction and discharge, or defeasance of allthe existing third party Indebtedness for borrowed money of the Acquired Company and its Restricted Subsidiaries under (x) thatcertain amended and restated credit agreement dated as of March 12, 2012, among, inter alios , the Acquired Company, as borrower,the lenders and issuing bank from time to time party thereto and Wells Fargo Capital Finance, LLC as administrative agent and (y)those certain unsecured subordinated notes, due January 27, 2017.“ Refinancing Amendment ” means an amendment to this Agreement in form and substance reasonablysatisfactory to the Term Administrative Agent and the Borrower executed by each of (a) the Borrower, (b) the Term AdministrativeAgent and (c) each Additional Term Lender and Lender that agrees to provide any portion of the Credit Agreement RefinancingIndebtedness being incurred pursuant thereto, in accordance with Section 2.21.“ Register ” has the meaning assigned to such term in Section 9.04(b)(iv).“ Registered Equivalent Notes ” means, with respect to any notes originally issued in a Rule 144A or otherprivate placement transaction under the Securities Act of 1933, substantially identical notes (having the same Guarantees) issued in adollar-for-dollar exchange therefor pursuant to an exchange offer registered with the SEC.“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors,officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’sAffiliates and permitted successors and assigns of each of the foregoing.“ Release ” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge,dispersal, leaching or migration into the environment (including ambient air, surface water, groundwater, land surface or subsurfacestrata), including the environment within any building or any occupied structure, facility or fixture.“ Removal Effective Date ” has the meaning assigned to such term in Section 8.05.“ Repricing Transaction ” means (a) the incurrence by the Borrower or any Guarantor of any Indebtedness in theform of long-term bank debt financing (i) for the primary purpose (as reasonably determined by the Borrower) of reducing theEffective Yield for the respective Type of such Indebtedness to less than the Effective Yield for the Term Loans of the-59- respective equivalent Type, but excluding Indebtedness incurred in connection with (A) a Change of Control or (B) any amendment,waiver, refinancing or other reduction that involves an upsizing in connection with an Acquisition Transaction and (ii) the proceedsof which are used to prepay (or, in the case of a conversion, deemed to prepay or replace), in whole or in part, outstanding principalof Term Loans or (b) any effective reduction in the Effective Yield for the Term Loans (e.g., by way of amendment, waiver orotherwise), except for a reduction in connection with (A) a Change of Control or (B) any amendment, waiver, refinancing or otherreduction that involves an upsizing in connection with an Acquisition Transaction. Any determination by the Term AdministrativeAgent with respect to whether a Repricing Transaction shall have occurred shall be conclusive and binding on all Lenders holdingthe Term Loans.“ Required Additional Debt Terms ” means with respect to any Indebtedness, (a) such Indebtedness does notmature earlier than the Latest Maturity Date (except in the case of customary bridge loans which subject to customary conditions(including no payment or bankruptcy event of default), would either automatically be converted into or required to be exchanged forpermanent refinancing which does not mature earlier than the Latest Maturity Date ), (b) such Indebtedness does not have mandatoryredemption features (other than customary asset sale, insurance and condemnation proceeds events, change of control offers orevents of default or, if term loans, excess cash flow prepayments applicable to periods before the Latest Maturity Date) that couldresult in redemptions of such Indebtedness prior to the Latest Maturity Date, (c) such Indebtedness is not guaranteed by any entitythat is not a Loan Party, (d) if secured, such Indebtedness (i) is not secured by any assets not securing the Secured Obligations and(ii) is subject to a Customary Intercreditor Agreement(s) and (e) the other terms and conditions of such Indebtedness shall be asagreed between the Borrower and the lenders providing any such Indebtedness.“ Required Lenders ” means, at any time, Lenders having Term Loans representing more than 50% of theoutstanding Term Loans at such time; provided that to the extent set forth in Section 9.02 or Section 9.04 whenever there are one ormore Defaulting Lenders, the total outstanding Term Loans of each Defaulting Lender shall be excluded for purposes of making adetermination of Required Lenders.“ Requirements of Law ” means, with respect to any Person, any statutes, laws, treaties, rules, regulations,orders, decrees, writs, injunctions or determinations of any arbitrator or court or other Governmental Authority, in each caseapplicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.“ Resignation Effective Date ” has the meaning assigned to such term in Section 8.06.“ Responsible Officer ” means the chief executive officer, president, vice president, chief financial officer,treasurer or assistant treasurer, or other similar officer, manager or a member of the Board of Directors of a Loan Party and withrespect to certain limited liability companies or partnerships that do not have officers, any manager, sole member, managing memberor general partner thereof, and as to any document delivered on the Effective Date or thereafter pursuant to paragraph (a)(i) of thedefinition of the term “Collateral and Guarantee Requirement,” any secretary or assistant secretary of a Loan Party. Any documentdelivered-60- hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by allnecessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall beconclusively presumed to have acted on behalf of such Loan Party.“ Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other property)with respect to any Equity Interests in the Borrower or any Restricted Subsidiary, or any payment (whether in cash, securities orother property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition,cancellation or termination of any Equity Interests in the Borrower or any Restricted Subsidiary or any option, warrant or other rightto acquire any such Equity Interests in the Borrower or any Restricted Subsidiary.“ Restricted Subsidiary ” means any Subsidiary of the Borrower other than an Unrestricted Subsidiary.“ Retained Declined Proceeds ” has the meaning assigned to such term in Section 2.11(e).“ S&P ” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, andany successor to its rating agency business.“ SEC ” means the Securities and Exchange Commission or any Governmental Authority succeeding to any ofits principal functions.“ Second Amendment ” shall mean that certain Second Amendment to Credit Agreement dated as of February23, 2017 by and among the Borrower, the lenders party thereto and the Administrative Agent.“ Second Amendment Effective Date ” shall mean the date on which the conditions set forth in Article IV of theSecond Amendment have been satisfied or waived.“ Second Lien Intercreditor Agreement ” means the Second Lien Intercreditor Agreement in the form ofExhibit G among the Term Administrative Agent and one or more Senior Representatives for holders of Indebtedness permitted bythis Agreement to be secured by the Collateral. “ Secured Cash Management Obligations ” means the due and punctual payment and performance of allobligations of the Borrower and its Restricted Subsidiaries in respect of any overdraft and related liabilities arising from treasury,depository, cash pooling arrangements and cash management services, corporate credit and purchasing cards and related programs orany automated clearing house transfers of funds (collectively, “ Cash Management Services ”) provided to the Borrower or anyRestricted Subsidiary (whether absolute or contingent and howsoever and whenever created, arising, evidenced or acquired(including all renewals, extensions and modifications thereof and substitutions therefor)) that are (a) owed to the TermAdministrative Agent, a Lender or any of their respective Affiliates, (b) owed on the Effective Date to a Person that is a Lender or anAffiliate of a Lender as of the Effective Date or (c) owed to a Person that is an Agent, a Lender or an Affiliate of an Agent or Lenderat the time such obligations are incurred.-61- “ Secured Notes ” means those 7.625% Senior Secured Notes due 2021 issued by the Borrower pursuant to theSenior Notes Indenture.“ Secured Notes Indenture ” means the Indenture, dated as of May 29, 2013, among the Borrower, the subsidiaryguarantors party thereto from time to time and Wilmington Trust, National Association, as trustee, governing the Secured Notes, asthe same may be amended, supplemented, waived or otherwise modified from time to time.“ Secured Obligations ” means the Loan Document Obligations, the Secured Cash Management Obligations andthe Secured Swap Obligations (excluding with respect to any Loan Guarantor, Excluded Swap Obligations of such Loan Guarantor).“ Secured Parties ” has the meaning assigned to such term in the Term Collateral Agreement.“ Secured Swap Obligations ” means the due and punctual payment and performance of all obligations of theBorrower and its Restricted Subsidiaries under each Swap Agreement that (a) is with a counterparty that is the Term AdministrativeAgent, a Lender or any of their respective Affiliates, (b) is in effect on the Effective Date with a counterparty that is a Lender, anAgent or an Affiliate of a Lender or an Agent as of the Effective Date or (c) is entered into after the Effective Date with anycounterparty that is a Lender, an Agent or an Affiliate of a Lender or an Agent at the time such Swap Agreement is entered into.“ Securitization Assets ” means the accounts receivable, royalty and other similar rights to payment and anyother assets related thereto subject to a Qualified Securitization Facility that are customarily sold or pledged in connection withsecuritization transactions and the proceeds thereof.“ Securitization Facility ” means any of one or more receivables securitization financing facilities as amended,supplemented, modified, extended, renewed, restated or refunded from time to time, the obligations of which are non-recourse(except for customary representations, warranties and indemnities made in connection with such facilities) to the Borrower or anyRestricted Subsidiary (other than a Securitization Subsidiary) pursuant to which the Borrower or any Restricted Subsidiary sells orgrants a security interest in its accounts receivable or assets related thereto that are customarily sold or pledged in connection withsecuritization transactions to either (a) a Person that is not a Restricted Subsidiary or (b) a Securitization Subsidiary that in turn sellsits accounts receivable to a Person that is not a Restricted Subsidiary.“ Securitization Fees ” means distributions or payments made directly or by means of discounts with respect toany participation interest issued or sold in connection with, and other fees paid to a Person that is not a Securitization Subsidiary inconnection with, any Qualified Securitization Facility.“ Securitization Subsidiary ” means any Subsidiary formed for the purpose of, and that solely engages only inone or more Qualified Securitization Facilities and other activities reasonably related thereto.-62- “ Senior Representative ” means, with respect to any series of Indebtedness permitted by this Agreement to besecured on the Collateral on a pari passu or junior or subordinated basis, the trustee, administrative agent, collateral agent, securityagent or similar agent under the indenture or agreement pursuant to which such Indebtedness is issued, incurred or otherwiseobtained, as the case may be, and each of their successors in such capacities.“ Settlement ” means the transfer of cash or other property with respect to any credit or debit card charge, checkor other instrument, electronic funds transfer, or other type of paper-based or electronic payment, transfer, or charge transaction forwhich a Person acts as a processor, remitter, funds recipient or funds transmitter in the ordinary course of its business.“ Settlement Asset ” means any cash, receivable or other property, including a Settlement Receivable, due orconveyed to a Person in consideration for a Settlement made or arranged, or to be made or arranged, by such Person or an Affiliate ofsuch Person.“ Settlement Indebtedness ” means any payment or reimbursement obligation in respect of a SettlementPayment.“ Settlement Lien ” means any Lien relating to any Settlement or Settlement Indebtedness (and may include, forthe avoidance of doubt, the grant of a Lien in or other assignment of a Settlement Asset in consideration of a Settlement Payment,Liens securing intraday and overnight overdraft and automated clearing house exposure, and similar Liens).“ Settlement Payment ” means the transfer, or contractual undertaking (including by automated clearing housetransaction) to effect a transfer, of cash or other property to effect a Settlement.“ Settlement Receivable ” means any general intangible, payment intangible, or instrument representing orreflecting an obligation to make payments to or for the benefit of a Person in consideration for a Settlement made or arranged, or tobe made or arranged, by such Person.“ Sold Entity or Business ” has the meaning assigned to such term in the definition of the term “ConsolidatedEBITDA.”“ Solicited Discount Proration ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).“ Solicited Discounted Prepayment Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).“ Solicited Discounted Prepayment Notice ” means an irrevocable written notice of a Borrower Solicitation ofDiscounted Prepayment Offers made pursuant to Section 2.11(a)(ii)(D) substantially in the form of Exhibit N.“ Solicited Discounted Prepayment Offer ” means the irrevocable written offer by each Term Lender,substantially in the form of Exhibit O, submitted following the Term Administrative Agent’s receipt of a Solicited DiscountedPrepayment Notice.-63- “ Solicited Discounted Prepayment Response Date ” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).“ Specified Acquisition Agreement Representations ” means such of the representations and warranties in theAcquisition Agreement made by the Acquired Company with respect to the Acquired Company and its subsidiaries as are materialto the interests of the Lenders, but only to the extent that the Borrower (and/or its applicable Affiliate) has the right to terminate itsand/or such Affiliate’s obligations under the Acquisition Agreement as a result of a breach of such representations in the AcquisitionAgreement.“ Specified Discount ” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).“ Specified Discount Prepayment Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).“ Specified Discount Prepayment Notice ” means an irrevocable written notice of the Borrower of SpecifiedDiscount Prepayment made pursuant to Section 2.11(a)(ii)(B) substantially in the form of Exhibit J.“ Specified Discount Prepayment Response ” means the irrevocable written response by each Term Lender,substantially in the form of Exhibit K, to a Specified Discount Prepayment Notice.“ Specified Discount Prepayment Response Date ” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).“ Specified Discount Proration ” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(3).“ Specified Event of Default ” means an Event of Default under Section 7.01(a), (b), (h) or (i).“ Specified Representations ” means the representations and warranties of the Borrower, and to the extentapplicable, the other Subsidiary Loan Parties (other than any Subsidiary Loan Party that is an Insignificant Subsidiary), set forth in(i) Section 3.01, Section 3.02, Section 3.03(b)(i) (with respect to the entering into and performance of the Term Loan Documents),Section 3.08, Section 3.14 and Section 3.16 (only with respect to the second sentence thereof) and (ii) Sections 2.03(f) and 3.02(c) ofthe Term Collateral Agreement.“ Specified Transaction ” means, with respect to any period, any Investment, sale, transfer or other disposition ofassets, incurrence or repayment of Indebtedness, Restricted Payment, subsidiary designation, New Project or other event that by theterms of the Loan Documents requires “Pro Forma Compliance” with a test or covenant hereunder or requires such test or covenantto be calculated on a Pro Forma Basis or after giving Pro Forma Effect thereto.“ Starter Basket ” has the meaning assigned to such term in the definition of “Available Amount.”-64- “ Statutory Reserve Rate ” means a fraction (expressed as a decimal), the numerator of which is the number oneand the denominator of which is the number one minus the aggregate of the maximum reserve, liquid asset or similar percentages(including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by any GovernmentalAuthority of the United States. Such reserve, liquid asset or similar percentages shall include those imposed pursuant toRegulation D of the Board of Governors. Eurodollar Loans shall be deemed to be subject to such reserve, liquid asset or similarrequirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lenderunder Regulation D of the Board of Governors or any other applicable law, rule or regulation. The Statutory Reserve Rate shall beadjusted automatically on and as of the effective date of any change in any reserve percentage.“ Submitted Amount ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).“ Submitted Discount ” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).“ subsidiary ” means, with respect to any Person (the “ parent ”) at any date, any corporation, limited liabilitycompany, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’sconsolidated financial statements if such financial statements were prepared in accordance with GAAP, as well as any othercorporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interestsrepresenting more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than50% of the general partnership interests are, as of such date, owned, controlled or held (unless parent does not Control such entity),or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one ormore subsidiaries of the parent.“ Subsidiary ” means any subsidiary of the Borrower (unless otherwise specified).“ Subsidiary Loan Party ” means each Subsidiary of the Borrower that is a party to the Term GuaranteeAgreement.“ Successor Borrower ” has the meaning assigned to such term in Section 6.03(a)(iv).“ Swap Agreement ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions,forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps oroptions, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond indextransactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions,currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactionsor any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any suchtransaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the relatedconfirmations, which are subject to the terms and conditions of, or-65- governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., anyInternational Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with anyrelated schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master Agreement.“ Tax Distributions ” has the meaning assigned to such term in Section 6.07(a)(vii)(A).“ Taxes ” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdingsimposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.“ Term Administrative Agent ” means DBNY, in its capacity as administrative agent hereunder and under theother Loan Documents, and its successors in such capacity as provided in Article VIII.“ Term Collateral Agent ” has the meaning given to such term in Section 8.01(b) and its successors in suchcapacity as provided in Article VIII.“ Term Collateral Agreement ” means the Term Collateral Agreement among the Borrower, each other LoanParty and the Term Collateral Agent, substantially in the form of Exhibit D.“ Term Commitment ” means, with respect to each Lender, the commitment, if any, of such Lender to make aTerm Loan hereunder, expressed as an amount representing the maximum principal amount of the Term Loan to be made by suchLender hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increasedfrom time to time pursuant to (i) assignments by or to such Lender pursuant to an Assignment and Assumption, (ii) a RefinancingAmendment, (iii) an Incremental Facility Amendment in respect of any Term Loans or (iv) a Loan Modification Agreement. Theamount of each Lender’s Term Commitment as of the Effective Date is set forth on Schedule 2.01 or in the Assignment andAssumption pursuant to which such Lender shall have assumed its Term Commitment, Loan Modification Agreement orRefinancing Amendment, as the case may be. As of the Effective Date, the total Term Commitment is $600,000,000.“ Term Guarantee Agreement ” means the Term Guarantee Agreement among the Loan Parties and the TermAdministrative Agent, substantially in the form of Exhibit B.“ Term Lender ” means a Lender with a Term Commitment or an outstanding Term Loan.“ Term Loans ” means Initial Term Loans, Other Term Loans and Incremental Term Loans, as the contextrequires.“ Term Maturity Date ” means February 29, 2024 (or, with respect to any Term Lender that has the maturity dateof its Term Loans pursuant to a Permitted Amendment, the extended maturity date set forth in any such Loan ModificationAgreement with respect thereto).-66- “ Term Note ” means a promissory note of the Borrower, substantially in the form of Exhibit R, payable to aLender in a principal amount equal to the principal amount of the Term Loans of such Lender.“ Term Security Documents ” means the Term Collateral Agreement, the Mortgages and each other securityagreement or pledge agreement executed and delivered pursuant to the Collateral and Guarantee Requirement, Sections 5.11, 5.12 or5.14 to secure any of the Secured Obligations.“ Termination Date ” means the date on which all Commitments have expired or been terminated, all SecuredObligations have been paid in full in cash (other than (x) Secured Swap Obligations not yet due and payable, (y) Secured CashManagement Obligations not yet due and payable and (z) contingent indemnification obligations not yet accrued and payable).“ Test Period ” means, at any date of determination, the period of four consecutive fiscal quarters of theBorrower then last ended as of such time for which financial statements have been delivered pursuant to Section 5.01(a) or (b);provided that for any date of determination before the delivery of the first financial statements pursuant to Section 5.01(a) or (b), theTest Period shall be the period of four consecutive fiscal quarters of the Borrower then last ended as of such time.“ Total Net Leverage Ratio ” means, as of any date of determination, the ratio, on a Pro Forma Basis, of (a)Consolidated Total Indebtedness as of such date to (b) Consolidated EBITDA for the most recently completed Test Period.“ Transaction Costs ” means all fees, costs and expenses incurred or payable by the Borrower or any Subsidiaryin connection with the Transactions.“ Transactions ” means (a) the Financing Transactions, (b) the ABL Financing Transactions, (c) the issuance ofthe Unsecured Notes, (d) the Acquisition and the other transactions contemplated by the Acquisition Documents, (e) the EquityIssuance, (f) the Refinancing and (g) the payment of the Transaction Costs.“ Type ,” when used in reference to any Loan or Borrowing, refers 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 ” or “ Uniform Commercial Code ” means the Uniform Commercial Code as in effect from time to timein the State of New York; provided , however , that, at any time, if by reason of mandatory provisions of law, any or all of theperfection or priority of the Term Collateral Agent’s security interest in any item or portion of the Collateral is governed by theUniform Commercial Code as in effect in a U.S. jurisdiction other than the State of New York, the term “UCC” and “UniformCommercial Code” shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of theprovisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.“ Unaudited Financial Statements ” means (a) the unaudited consolidated balance sheet of the AcquiredCompany dated March 31, 2015, and the related consolidated statements of-67- income and cash flows of the Acquired Company for the fiscal quarter ended on that date and (b) the unaudited consolidated balancesheet of the Borrower dated March 31, 2015, and the related consolidated statements of income and cash flows of the Borrower forthe fiscal quarter ended on that date.“ United States Tax Compliance Certificate ” has the meaning assigned to such term in Section 2.17(e)(ii)(C).“ Unrestricted Subsidiary ” means (i) as of the Effective Date, Dixieline Builders Fund Control, Inc. and (ii)thereafter, any Subsidiary designated by the Borrower as an Unrestricted Subsidiary pursuant to Section 5.13.“ Unsecured Notes ” means the Borrower’s $700,000,000 10.75% Senior Notes due 2023 issued pursuant to theUnsecured Notes Indenture on July 31, 2015.“ Unsecured Notes Indenture ” means the indenture, dated as of July 31, 2015, by and among the Borrower andWilmington Trust, National Association, as trustee.“ USA PATRIOT Act ” means the Uniting and Strengthening America by Providing Appropriate ToolsRequired to Intercept and Obstruct Terrorism Act of 2001, as amended from time to time.“ Weighted Average Life to Maturity ” means, when applied to any Indebtedness at any date, the number ofyears obtained by dividing: (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment,sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii)the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by(b) the then outstanding principal amount of such Indebtedness.“ Wholly Owned Restricted Subsidiary ” means any Restricted Subsidiary that is a Wholly Owned Subsidiary.“ Wholly Owned Subsidiary ” means, with respect to any Person at any date, a subsidiary of such Person ofwhich securities or other ownership interests representing 100% of the Equity Interests (other than (a) directors’ qualifying sharesand (b) nominal shares issued to foreign nationals to the extent required by applicable Requirements of Law) are, as of such date,owned, controlled or held by such Person or one or more Wholly Owned Subsidiaries of such Person or by such Person and one ormore Wholly Owned Subsidiaries of such Person.“ Withdrawal Liability ” means liability to a Multiemployer Plan as a result of a complete or partial withdrawalfrom such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.-68- SECTION 1.02 Classification of Loans and Borrowings.For purposes of this Agreement, Loans and Borrowings may be classified and referred to by Class ( e.g ., a “Term Loan ”) or by Type ( e.g ., a “ Eurodollar Loan ” or “ ABR Loan ”) or by Class and Type ( e.g ., a “ Eurodollar Term Loan”). Borrowings also may be classified and referred to by Class ( e.g ., a “ Term Borrowing ”) or by Type ( e.g ., a “ EurodollarBorrowing ”) or by Class and Type ( e.g ., a “ Eurodollar Term Borrowing ”).SECTION 1.03 Terms Generally.The definitions of terms herein shall apply equally to the singular and plural forms of the termsdefined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuterforms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” Theword “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise,(a) any definition of or reference to any agreement (including this Agreement and the other Loan Documents), instrument or otherdocument herein shall be construed as referring to such agreement, instrument or other document as from time to time amended,amended and restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements,supplements or other modifications set forth herein), (b) any reference herein to any Person shall be construed to include suchPerson’s successors and assigns (subject to any restrictions on assignment set forth herein) and, in the case of any GovernmentalAuthority, any other Governmental Authority that shall have succeeded to any or all functions thereof, (c) 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 anyparticular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer toArticles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construedto 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.SECTION 1.04 Accounting Terms; GAAP.(a) All accounting terms not specifically or completely defined herein shall be construed in conformity with, andall financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreementshall be prepared in conformity with, GAAP, applied in a manner consistent with that used in preparing the Audited FinancialStatements, except as otherwise specifically prescribed herein.(b) Notwithstanding anything to the contrary herein, for purposes of determining compliance with any testcontained in this Agreement, the Total Net Leverage Ratio, the Consolidated Senior Secured Net Leverage Ratio, the ConsolidatedSenior Secured First Lien Net Leverage Ratio, the Interest Coverage Ratio and any other financial ratio or test shall be calculated ona Pro Forma Basis, including to give effect to all Specified Transactions that have been made during the applicable period ofmeasurement or subsequent to such period and prior to or simultaneously with the event for which the calculation is made, and inmaking any determination on a Pro Forma Basis, such calculations shall be made in good faith by a Financial Officer and shall beconclusive absent manifest error.-69- SECTION 1.05 Effectuation of Transactions.All references herein to the Borrower and the other Subsidiaries shall be deemed to be references to suchPersons, and all the representations and warranties the Borrower and the other Loan Parties contained in this Agreement and theother Loan Documents shall be deemed made, in each case, after giving effect to the Acquisition and the other Transactions to occuron the Effective Date, unless the context otherwise requires.SECTION 1.06 Limited Condition Acquisitions.Notwithstanding anything in this Agreement or any Loan Document to the contrary, when calculating anyapplicable ratio, the amount or availability of the Available Amount or any other basket based on Consolidated EBITDA or totalassets, or determining other compliance with this Agreement (including the determination of compliance with any provision of thisAgreement which requires that no Default or Event of Default has occurred, is continuing or would result therefrom) in connectionwith a Specified Transaction undertaken in connection with the consummation of a Limited Condition Acquisition, the date ofdetermination of such ratio, the amount or availability of the Available Amount or any other basket based on Consolidated EBITDAor total assets, and determination of whether any Default or Event of Default has occurred, is continuing or would result therefrom orother applicable covenant shall, at the option of the Borrower (the Borrower’s election to exercise such option in connection with anyLimited Condition Acquisition, an “ LCA Election ”), be deemed to be the date the definitive agreements for such Limited ConditionAcquisition are entered into (the “ LCA Test Date ”) and if, after such ratios and other provisions are measured on a Pro Forma Basisafter giving effect to such Limited Condition Acquisition and the other Specified Transactions to be entered into in connectiontherewith (including any incurrence of Indebtedness and the use of proceeds thereof) as if they occurred at the beginning of theapplicable Test Period ending prior to the LCA Test Date, the Borrower could have taken such action on the relevant LCA Test Datein compliance with such ratios and provisions, such provisions shall be deemed to have been complied with. For the avoidance ofdoubt, (x) if any of such ratios are exceeded as a result of fluctuations in such ratio (including due to fluctuations in ConsolidatedEBITDA of the Borrower and its Subsidiaries) at or prior to the consummation of the relevant Limited Condition Acquisition, suchratios and other provisions will not be deemed to have been exceeded as a result of such fluctuations solely for purposes ofdetermining whether the Limited Condition Acquisition is permitted hereunder and (y) such ratios and other provisions shall not betested at the time of consummation of such Limited Condition Acquisition or related Specified Transactions. If the Borrower hasmade an LCA Election for any Limited Condition Acquisition, then in connection with any subsequent calculation of any ratio orbasket availability with respect to any other Specified Transaction on or following the relevant LCA Test Date and prior to the earlierof the date on which such Limited Condition Acquisition is consummated or the date that the definitive agreement for such LimitedCondition Transaction is terminated or expires without consummation of such Limited Condition Acquisition, any such ratio orbasket shall be calculated on a Pro Forma Basis assuming such Limited Condition Acquisition and other transactions in connectiontherewith (including any incurrence of Indebtedness and the use of proceeds thereof) have been consummated.-70- SECTION 1.07 Certain Determinations.(a) For purposes of determining compliance with any of the covenants set forth in Article V or Article VI(including in connection with any Incremental Facility) at any time (whether at the time of incurrence or thereafter), any Lien,Investment, Indebtedness, Disposition, Restricted Payment or Affiliate transaction meets the criteria of one, or more than one, of thecategories permitted pursuant to Article V or Article VI (including in connection with any Incremental Facility), the Borrower (i)shall in its sole discretion determine under which category such Lien (other than Liens with respect to the Initial Term Loans),Investment, Indebtedness (other than Indebtedness consisting of the Initial Term Loans), Disposition, Restricted Payment or Affiliatetransaction (or, in each case, any portion there) is permitted and (ii) shall be permitted, in its sole discretion, to make anyredetermination and/or to divide, classify or reclassify under which category or categories such Lien, Investment, Indebtedness,Disposition, Restricted Payment or Affiliate transaction is permitted from time to time as it may determine and without notice to theTerm Administrative Agent or any Lender. For the avoidance of doubt, if the applicable date for meeting any requirement hereunderor under any other Loan Document falls on a day that is not a Business Day, compliance with such requirement shall not be requireduntil noon on the first Business Day following such applicable date.(b) Notwithstanding anything to the contrary herein, with respect to any amounts incurred or transactionsentered into (or consummated) in reliance on a provision of this Agreement that does not require compliance with a financial ratio ortest (including, without limitation, any Total Net Leverage Ratio, Consolidated Senior Secured Net Leverage Ratio, ConsolidatedSenior Secured First Lien Net Leverage Ratio and/or Interest Coverage 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 thisAgreement that requires compliance with any such financial ratio or test (any such amounts, the “ Incurrence Based Amounts ”), it isunderstood and agreed that the Fixed Amounts (and any cash proceeds thereof) shall be disregarded in the calculation of thefinancial ratio or test applicable to the Incurrence Based Amounts in connection with such substantially concurrent incurrence,except that incurrences of Indebtedness and Liens constituting Fixed Amounts shall be taken into account for purposes of IncurrenceBased Amounts other than Incurrence Based Amounts contained in Section 6.01 or Section 6.02 .(c) Notwithstanding anything to the contrary herein, the Form Intercreditor Agreements shall be deemed to bereasonable and acceptable to the Term Administrative Agent and the Lenders, and the Term Administrative Agent and the Lendersshall be deemed to have consented to the use of each such Form Intercreditor Agreement (and to the Term Administrative Agent’sexecution thereof) in connection with any Indebtedness permitted to be incurred, issued and/or assumed by the Borrower or any of itsSubsidiaries pursuant to Section 6.01.-71- ARTICLE IITHE CREDITSSECTION 2.01 Commitments.Subject to the terms and conditions set forth herein, each Term Lender agrees to make Initial Term Loans to theBorrower on the Effective Date denominated in dollars in a principal amount not exceeding such Term Lender’s TermCommitment. Amounts repaid or prepaid in respect of Term Loans may not be reborrowed.SECTION 2.02 Loans and Borrowings.(a) Each Loan shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by theLenders ratably in accordance with their respective Commitments of the applicable Class. The failure of any Lender to make anyLoan required to be made by it shall not relieve any other Lender of its obligations hereunder, provided that the Commitments of theLenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required hereby.(b) Subject to Section 2.14, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans asthe Borrower may request in accordance herewith. Each Lender at its option may make any Loan by causing any domestic orforeign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect theobligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.(c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in anaggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum; provided that aEurodollar Borrowing that results from a continuation of an outstanding Eurodollar Borrowing may be in an aggregate amount that isequal to such outstanding Borrowing. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregateamount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum. Borrowings of more thanone Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of sixEurodollar Borrowings outstanding.-72- SECTION 2.03 Requests for Borrowings.To request a Borrowing, the Borrower shall notify the Term Administrative Agent of such request by telephone(a) in the case of a Eurodollar Borrowing, not later than 2:00 p.m., New York City time, three (3) Business Days before the date ofthe proposed Borrowing (or, in the case of any Eurodollar Borrowing to be made on the Effective Date, one (1) Business Day) or(b) in the case of an ABR Borrowing, not later than 10:00 a.m., New York City time, on the date of the proposed Borrowing. Eachsuch telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or facsimile to the TermAdministrative Agent of a written Borrowing Request signed by the Borrower substantially in the form of Exhibit T. Each suchtelephonic and written Borrowing Request shall specify the following information:(i) specifying the Class of the requested Borrowing;(ii) the aggregate amount of such Borrowing;(iii) the date of such Borrowing, which shall be a Business Day;(iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;(v) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be aperiod contemplated by the definition of the term “Interest Period”; and(vi) the location and number of the Borrower’s account to which funds are to be disbursed, which shallcomply with the requirements of Section 2.06.If no election as to the Type of Borrowing is specified as to any Borrowing, then the requested Borrowing shall be an ABRBorrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemedto have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance withthis Section 2.03, the Term Administrative Agent shall advise each Lender of the applicable Class of the details thereof and of theamount of such Lender’s Loan to be made as part of the requested Borrowing.SECTION 2.04 [Reserved].SECTION 2.05 [Reserved].SECTION 2.06 Funding of Borrowings.(a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transferof immediately available funds by 12:00 noon, New York City time, to the Applicable Account of the Term Administrative Agentmost recently designated by it for such purpose by notice to the Lenders. The Term Administrative Agent will make such Loansavailable to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower designated bythe Borrower in the applicable Borrowing Request.-73- (b) Unless the Term Administrative Agent shall have received notice from a Lender prior to the proposed date ofany Borrowing that such Lender will not make available to the Term Administrative Agent such Lender’s share of such Borrowing,the Term Administrative Agent may assume that such Lender has made such share available on such date in accordance withparagraph (a) of this Section 2.06 and may, in reliance on such assumption and in its sole discretion, make available to the Borrowera corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the TermAdministrative Agent, then the applicable Lender agrees to pay to the Term Administrative Agent an amount equal to such share ondemand of the Term Administrative Agent. If such Lender does not pay such corresponding amount forthwith upon demand of theTerm Administrative Agent therefor, the Term Administrative Agent shall promptly notify the Borrower, and the Borrower agrees topay such corresponding amount to the Term Administrative Agent forthwith on demand. If such Lender pays such amount to theTerm Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing. The TermAdministrative Agent shall also be entitled to recover from such Lender or from the Borrower interest on such correspondingamount, for each day from and including the date such amount is made available to the Borrower to but excluding the date ofpayment to the Term Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and arate determined by the Term Administrative Agent in accordance with banking industry rules on interbank compensation, or (ii) inthe case of the Borrower, the interest rate applicable to such Borrowing in accordance with Section 2.13. (c) The obligations of the Lenders hereunder to make Term Loans and to make payments pursuant to Section9.03(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make anypayment under Section 9.03(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation todo so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase itsparticipation or to make its payment under Section 9.03(c).SECTION 2.07 Interest Elections.(a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request or designated bySection 2.03 and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Requestor designated by Section 2.03. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue suchBorrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.07. TheBorrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portionshall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each suchportion shall be considered a separate Borrowing.(b) To make an election pursuant to this Section 2.07, the Borrower shall notify the Term Administrative Agentof such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower wererequesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each suchtelephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery, facsimile or otherelectronic transmission to the Term Administrative Agent of a written Interest Election Request signed by a Responsible Officer ofthe Borrower.-74- (c) Each telephonic and written Interest Election Request shall specify the following information in compliancewith Section 2.03:(i) the Borrowing to which such Interest Election Request applies and, if different options are being electedwith respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which casethe information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be aBusiness Day;(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and(iv) if the resulting Borrowing is to be a Eurodollar Borrowing, the Interest Period to be applicable theretoafter 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 Borrowershall be deemed to have selected an Interest Period of one month’s duration.(d) Promptly following receipt of an Interest Election Request in accordance with this Section 2.07, the TermAdministrative Agent shall advise each Lender of the applicable Class of the details thereof and of such Lender’s portion of eachresulting Borrowing.(e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowingprior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of suchInterest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if anEvent of Default has occurred and is continuing and the Term Administrative Agent, at the request of the Required Lenders, sonotifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to orcontinued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing atthe end of the Interest Period applicable thereto.SECTION 2.08 Termination of Commitments.(a) Unless previously terminated, the Term Commitments shall terminate at 5:00 p.m., New York City time, onthe Effective Date.(b) The Borrower may at any time terminate, or from time to time reduce, the Commitments of any Class,provided that each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $500,000 and notless than $1,000,000 unless such amount represents all of the remaining Commitments of such Class.-75- (c) The Borrower shall notify the Term Administrative Agent of any election to terminate or reduce theCommitments under paragraph (b) of this Section 2.08 at least one (1) Business Day prior to the effective date of such termination orreduction, specifying such election and the effective date thereof. Promptly following receipt of any such notice, the TermAdministrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to thisSection 2.08 shall be irrevocable. Any termination or reduction of the Commitments of any Class shall be permanent. Eachreduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respectiveCommitments of such Class.SECTION 2.09 Repayment of Loans; Evidence of Debt.(a) The Borrower hereby unconditionally promises to pay to the Term Administrative Agent for the account ofeach Lender the then unpaid principal amount of each Term Loan of such Lender as provided in Section 2.10.(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing theindebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal andinterest payable and paid to such Lender from time to time hereunder.(c) The Term Administrative Agent shall, in connection with maintenance of the Register in accordance withSection 9.04(b)(iv) maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Typethereof and the Interest Period applicable thereto, (ii) the amount of any principal, premium, interest or fees due and payable or tobecome due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the TermAdministrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section 2.09 shall beprima facie evidence of the existence and amounts of the obligations recorded therein, provided that the failure of any Lender or theTerm Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of theBorrower to pay any amounts due hereunder in accordance with the terms of this Agreement. In the event of any inconsistencybetween the entries made pursuant to paragraphs (b) and (c) of this Section 2.09, the accounts maintained by the TermAdministrative Agent pursuant to paragraph (c) of this Section 2.09 shall control.(e) Any Lender may request through the Term Administrative Agent that Loans of any Class made by it beevidenced by a Term Note. In such event, the Borrower shall execute and deliver to such Lender a Term Note payable to suchLender (or, if requested by such Lender, to such Lender and its registered assigns).SECTION 2.10 Amortization of Term Loans.(a) Subject to adjustment pursuant to paragraph (c) of this Section 2.10, the Borrower shall repay Borrowings ofTerm Loans on the last day of each March, June, September and December (commencing September 30, 2016) in the principalamount of Term Loans equal to-76- 0.25% of the original aggregate principal amount of the Term Loans outstanding on the First Amendment Effective Date; providedthat if any such date is not a Business Day, such payment shall be due on the immediately preceding Business Day.(b) To the extent not previously paid, all Term Loans shall be due and payable on the Term Maturity Date.(c) Any prepayment of a Borrowing of any Class (i) pursuant to Section 2.11(a)(i) shall be applied to reduce thesubsequent scheduled and outstanding repayments of the Term Borrowings of such Class to be made pursuant to this Section 2.10 asdirected by the Borrower (and absent such direction, in direct order of maturity) and (ii) pursuant to Section 2.11(c) or 2.11(d) shallbe applied to reduce the subsequent scheduled and outstanding repayments of the Term Borrowings of such Class to be madepursuant to this Section 2.10, or, except as otherwise provided in any Refinancing Amendment or Loan Modification Agreement,pursuant to the corresponding section of such Refinancing Amendment or Loan Modification Agreement, as applicable, as directedby the Borrower (and absent such direction, in direct order of maturity).(d) Prior to any repayment of any Borrowings of any Class hereunder, the Borrower shall select the Borrowingor Borrowings of the applicable Class to be repaid and shall notify the Term Administrative Agent by telephone (confirmed by handdelivery or facsimile) of such election not later than 2:00 p.m., New York City time, one (1) Business Day before the scheduled dateof such repayment. In the absence of a designation by the Borrower as described in the preceding sentence, the Term AdministrativeAgent shall make such designation in its reasonable discretion with a view, but no obligation, to minimize breakage costs owingunder Section 2.16. Each repayment of a Borrowing shall be applied ratably to the Loans included in the repaidBorrowing. Repayments of Term Borrowings shall be accompanied by accrued interest on the amount repaid.SECTION 2.11 Prepayment of Loans.(a) (i) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole orin part, without premium or penalty; provided that in the event that, on or prior to the date that is six months after the SecondAmendment Effective Date, the Borrower (x) makes any prepayment of Term Loans in connection with any Repricing Transactionfor the primary purpose of reducing the Effective Yield on such Term Loans or (y) effects any amendment of this Agreementresulting in a Repricing Transaction for the primary purpose of reducing the Effective Yield on the Term Loans, the Borrower shallpay to the Term Administrative Agent, for the ratable account of each of the applicable Term Lenders, (I) a prepayment premium of1.00% of the principal amount of the Term Loans being prepaid in connection with such Repricing Transaction and (II) in the case ofclause (y), an amount equal to 1.00% of the aggregate amount of the applicable Term Loans outstanding immediately prior to suchamendment that are subject to an effective pricing reduction pursuant to such Repricing Transaction.-77- (ii) Notwithstanding anything in any Loan Document to the contrary, so long as no Default or Event of Defaulthas occurred and is continuing, the Borrower or any of its Subsidiaries may offer to prepay all or a portion of the outstanding TermLoans on the following basis:(A) the Borrower or any of its Subsidiaries shall have the right to make a voluntary prepayment of Term Loansat a discount to par (such prepayment, the “ Discounted Term Loan Prepayment ”) pursuant to a Borrower Offer ofSpecified Discount Prepayment, Borrower Solicitation of Discount Range Prepayment Offers or Borrower Solicitation ofDiscounted Prepayment Offers, in each case made in accordance with this Section 2.11(a)(ii); provided that the Borroweror any of its Subsidiaries shall not initiate any action under this Section 2.11(a)(ii) in order to make a Discounted TermLoan Prepayment unless (I) at least ten (10) Business Days shall have passed since the consummation of the most recentDiscounted Term Loan Prepayment as a result of a prepayment made by the Borrower or any of its Subsidiaries on theapplicable Discounted Prepayment Effective Date; or (II) at least three (3) Business Days shall have passed since the datethe Borrower or any of its Subsidiaries were notified that no Term Lender was willing to accept any prepayment of anyTerm Loan and/or Other Term Loan at the Specified Discount, within the Discount Range or at any discount to par value,as applicable, or in the case of Borrower Solicitation of Discounted Prepayment Offers, the date of the Borrower’s or anyof its Subsidiaries’ election not to accept any Solicited Discounted Prepayment Offers and (z) each Lender participating inany Discounted Term Loan Prepayment acknowledges and agrees that in connection with such Discounted Term LoanPrepayment, (1) the Borrower then may have, and later may come into possession of, information regarding the TermLoans or the Loan Parties hereunder that is not known to such Lender and that may be material to a decision by suchLender to participate in such Discounted Term Loan Prepayment (“ Excluded Information ”), (2) such Lender hasindependently and, without reliance on the Borrower, any of its Subsidiaries, the Term Administrative Agent or any oftheir respective Affiliates, made its own analysis and determination to participate in such Discounted Term LoanPrepayment notwithstanding such Lender’s lack of knowledge of the Excluded Information and (3) none of the Borrower,its Subsidiaries, the Term Administrative Agent, or any of their respective Affiliates shall have any liability to suchLender, and such Lender hereby waives and releases, to the extent permitted by Requirements of Law, any claims suchLender may have against the Borrower, its Subsidiaries, the Term Administrative Agent, and their respective Affiliates,under applicable laws or otherwise, with respect to the nondisclosure of the Excluded Information; provided further thatany Term Loan that is prepaid will be automatically and irrevocably cancelled.(B) (1) Subject to the proviso to subsection (A) above, the Borrower or any of its Subsidiaries may from time totime offer to make a Discounted Term Loan Prepayment by providing the Auction Agent with three (3) Business Days’notice in the form of a Specified Discount Prepayment Notice; provided that (I) any such offer shall be made available, atthe sole discretion of the Borrower or any of its Subsidiaries, to each Term Lender and/or each Lender with respect to anyClass of Term Loans on an individual tranche basis, (II) any such offer shall specify the aggregate principal amountoffered to be prepaid (the “ Specified Discount Prepayment Amount ”) with respect to each applicable tranche, the trancheor tranches of Term Loans subject to such offer and the specific-78- percentage discount to par (the “ Specified Discount ”) of such Term Loans to be prepaid (it being understood thatdifferent Specified Discounts and/or Specified Discount Prepayment Amounts may be offered with respect to differenttranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms ofthis Section), (III) the Specified Discount Prepayment Amount shall be in an aggregate amount not less than $1,000,000and whole increments of $500,000 in excess thereof and (IV) each such offer shall remain outstanding through theSpecified Discount Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lenderwith a copy of such Specified Discount Prepayment Notice and a form of the Specified Discount Prepayment Response tobe completed and returned by each such Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., NewYork City time, on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “Specified Discount Prepayment Response Date ”).(2) Each relevant Term Lender receiving such offer shall notify the Auction Agent (or its delegate) by theSpecified Discount Prepayment Response Date whether or not it agrees to accept a prepayment of any of its relevant thenoutstanding Term Loans at the Specified Discount and, if so (such accepting Term Lender, a “ Discount PrepaymentAccepting Lender ”), the amount and the tranches of such Lender’s Term Loans to be prepaid at such offereddiscount. Each acceptance of a Discounted Term Loan Prepayment by a Discount Prepayment Accepting Lender shall beirrevocable. Any Term Lender whose Specified Discount Prepayment Response is not received by the Auction Agent bythe Specified Discount Prepayment Response Date shall be deemed to have declined to accept the applicable BorrowerOffer of Specified Discount Prepayment.(3) If there is at least one Discount Prepayment Accepting Lender, the Borrower or any of its Subsidiaries willmake prepayment of outstanding Term Loans pursuant to this paragraph (B) to each Discount Prepayment AcceptingLender in accordance with the respective outstanding amount and tranches of Term Loans specified in such Lender’sSpecified Discount Prepayment Response given pursuant to subsection (2); provided that, if the aggregate principalamount of Term Loans accepted for prepayment by all Discount Prepayment Accepting Lenders exceeds the SpecifiedDiscount Prepayment Amount, such prepayment shall be made pro-rata among the Discount Prepayment AcceptingLenders in accordance with the respective principal amounts accepted to be prepaid by each such Discount PrepaymentAccepting Lender and the Auction Agent (in consultation with the Borrower or any of its Subsidiaries and subject torounding requirements of the Auction Agent made in its reasonable discretion) will calculate such proration (the “Specified Discount Proration ”). The Auction Agent shall promptly, and in any case within three (3) Business Daysfollowing the Specified Discount Prepayment Response Date, notify (I) the Borrower or any of its Subsidiaries of therespective Term Lenders’ responses to such offer, the Discounted Prepayment Effective Date and the aggregate principalamount of the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender of the DiscountedPrepayment Effective Date, and the aggregate principal amount and the tranches of Term Loans to be prepaid at theSpecified Discount on such date and (III) each Discount Prepayment Accepting Lender of the Specified DiscountProration, if any, and confirmation of the principal amount, tranche and Type of Loans of such Lender to be prepaid at theSpecified Discount on such date. Each determination by the Auction Agent-79- of the amounts stated in the foregoing notices to the Borrower or any of its Subsidiaries and Lenders shall be conclusiveand binding for all purposes absent manifest error. The payment amount specified in such notice to the Borrower or any ofits Subsidiaries shall be due and payable by the Borrower or any of its Subsidiaries on the Discounted PrepaymentEffective Date in accordance with subsection (F) below (subject to subsection (J) below).(C) (1) Subject to the proviso to subsection (A) above, the Borrower or any of its Subsidiaries may from time totime solicit Discount Range Prepayment Offers by providing the Auction Agent with three (3) Business Days’ notice in theform of a Discount Range Prepayment Notice; provided that (I) any such solicitation shall be extended, at the solediscretion of the Borrower or any of its Subsidiaries, to each Term Lender and/or each Lender with respect to any Class ofLoans on an individual tranche basis, (II) any such notice shall specify the maximum aggregate principal amount of therelevant Term Loans (the “ Discount Range Prepayment Amount ”), the tranche or tranches of Term Loans subject to suchoffer and the maximum and minimum percentage discounts to par (the “ Discount Range ”) of the principal amount of suchTerm Loans with respect to each relevant tranche of Term Loans willing to be prepaid by the Borrower or any of itsSubsidiaries (it being understood that different Discount Ranges and/or Discount Range Prepayment Amounts may beoffered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separateoffer pursuant to the terms of this Section), (III) the Discount Range Prepayment Amount shall be in an aggregate amountnot less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such solicitation by theBorrower or any of its Subsidiaries shall remain outstanding through the Discount Range Prepayment Response Date. TheAuction Agent will promptly provide each relevant Term Lender with a copy of such Discount Range Prepayment Noticeand a form of the Discount Range Prepayment Offer to be submitted by a responding relevant Term Lender to the AuctionAgent (or its delegate) by no later than 5:00 p.m., New York City time, on the third Business Day after the date of deliveryof such notice to the relevant Term Lenders (the “ Discount Range Prepayment Response Date ”). Each relevant TermLender’s Discount Range Prepayment Offer shall be irrevocable and shall specify a discount to par within the DiscountRange (the “ Submitted Discount ”) at which such Term Lender is willing to allow prepayment of any or all of its thenoutstanding Term Loans of the applicable tranche or tranches and the maximum aggregate principal amount and tranchesof such Lender’s Term Loans (the “ Submitted Amount ”) such Lender is willing to have prepaid at the SubmittedDiscount. Any Term Lender whose Discount Range Prepayment Offer is not received by the Auction Agent by theDiscount Range Prepayment Response Date shall be deemed to have declined to accept a Discounted Term LoanPrepayment of any of its Term Loans at any discount to their par value within the Discount Range.(2) The Auction Agent shall review all Discount Range Prepayment Offers received on or before the applicableDiscount Range Prepayment Response Date and shall determine (in consultation with the Borrower or any of itsSubsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) theApplicable Discount and Term Loans to be prepaid at such Applicable Discount in accordance with this subsection (C) theBorrower or any of its Subsidiaries agree to accept on the Discount Range Prepayment Response Date all Discount RangePrepayment Offers-80- received by the Auction Agent by the Discount Range Prepayment Response Date, in the order from the SubmittedDiscount that is the largest discount to par to the Submitted Discount that is the smallest discount to par, up to andincluding the Submitted Discount that is the smallest discount to par within the Discount Range (such Submitted Discountthat is the smallest discount to par within the Discount Range being referred to as the “ Applicable Discount ”) whichyields a Discounted Term Loan Prepayment in an aggregate principal amount equal to the lower of (I) the Discount RangePrepayment Amount and (II) the sum of all Submitted Amounts. Each Lender that has submitted a Discount RangePrepayment Offer to accept prepayment at a discount to par that is larger than or equal to the Applicable Discount shall bedeemed to have irrevocably consented to prepayment of Term Loans equal to its Submitted Amount (subject to anyrequired proration pursuant to the following subsection (3)) at the Applicable Discount (each such Lender, a “ ParticipatingLender ”).(3) If there is at least one Participating Lender, the Borrower or any of its Subsidiaries will prepay the respectiveoutstanding Term Loans of each Participating Lender in the aggregate principal amount and of the tranches specified insuch Lender’s Discount Range Prepayment Offer at the Applicable Discount; provided that if the Submitted Amount by allParticipating Lenders offered at a discount to par greater than the Applicable Discount exceeds the Discount RangePrepayment Amount, prepayment of the principal amount of the relevant Term Loans for those Participating Lenderswhose Submitted Discount is a discount to par greater than or equal to the Applicable Discount (the “ IdentifiedParticipating Lenders ”) shall be made pro-rata among the Identified Participating Lenders in accordance with theSubmitted Amount of each such Identified Participating Lender and the Auction Agent (in consultation with the Borroweror any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion)will calculate such proration (the “ Discount Range Proration ”). The Auction Agent shall promptly, and in any casewithin five (5) Business Days following the Discount Range Prepayment Response Date, notify (I) the Borrower or any ofits Subsidiaries of the respective Term Lenders’ responses to such solicitation, the Discounted Prepayment Effective Date,the Applicable Discount, and the aggregate principal amount of the Discounted Term Loan Prepayment and the tranches tobe prepaid, (II) each Term Lender of the Discounted Prepayment Effective Date, the Applicable Discount, and theaggregate principal amount and tranches of Term Loans to be prepaid at the Applicable Discount on such date, (III) eachParticipating Lender of the aggregate principal amount and tranches of such Lender to be prepaid at the ApplicableDiscount on such date, and (z) if applicable, each Identified Participating Lender of the Discount Range Proration. Eachdetermination by the Auction Agent of the amounts stated in the foregoing notices to the Borrower or any of itsSubsidiaries and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amountspecified in such notice to the Borrower or any of its Subsidiaries shall be due and payable by such Borrower on theDiscounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).(D) (1) Subject to the proviso to subsection (A) above, the Borrower or any of its Subsidiaries may from time totime solicit Solicited Discounted Prepayment Offers by providing the Auction Agent with three (3) Business Days’ noticein the form of a Solicited-81- Discounted Prepayment Notice; provided that (I) any such solicitation shall be extended, at the sole discretion of theBorrower or any of its Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Term Loans onan individual tranche basis, (II) any such notice shall specify the maximum aggregate dollar amount of the Term Loans(the “ Solicited Discounted Prepayment Amount ”) and the tranche or tranches of Term Loans, the Borrower or any of itsSubsidiaries is willing to prepay at a discount (it being understood that different Solicited Discounted PrepaymentAmounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will betreated as a separate offer pursuant to the terms of this Section), (III) the Solicited Discounted Prepayment Amount shall bein an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each suchsolicitation by the Borrower or any of its Subsidiaries shall remain outstanding through the Solicited DiscountedPrepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of suchSolicited Discounted Prepayment Notice and a form of the Solicited Discounted Prepayment Offer to be submitted by aresponding Term Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time on the thirdBusiness Day after the date of delivery of such notice to the relevant Term Lenders (the “ Solicited DiscountedPrepayment Response Date ”). Each Term Lender’s Solicited Discounted Prepayment Offer shall (x) be irrevocable, (y)remain outstanding until the Acceptance Date, and (z) specify both a discount to par (the “ Offered Discount ”) such TermLender is willing to allow to be applied to the prepayment of its then outstanding Term Loan and the maximum aggregateprincipal amount and tranches of such Term Loans (the “ Offered Amount ”) such Term Lender is willing to have prepaidsubject to such Offered Discount. Any Term Lender whose Solicited Discounted Prepayment Offer is not received by theAuction Agent by the Solicited Discounted Prepayment Response Date shall be deemed to have declined prepayment ofany of its Term Loans at any discount.(2) The Auction Agent shall promptly provide the Borrower or any of its Subsidiaries with a copy of all SolicitedDiscounted Prepayment Offers received on or before the Solicited Discounted Prepayment Response Date. the Borroweror any of its Subsidiaries shall review all such Solicited Discounted Prepayment Offers and select the largest of the OfferedDiscounts specified by the relevant responding Term Lenders in the Solicited Discounted Prepayment Offers that isacceptable to the Borrower or any of its Subsidiaries (the “ Acceptable Discount ”), if any. If the Borrower or any of itsSubsidiaries elects to accept any Offered Discount as the Acceptable Discount, then as soon as practicable after thedetermination of the Acceptable Discount, but in no event later than by the third Business Day after the date of receipt bythe Borrower or any of its Subsidiaries from the Auction Agent of a copy of all Solicited Discounted Prepayment Offerspursuant to the first sentence of this subsection (2) (the “ Acceptance Date ”), the Borrower or any of its Subsidiaries shallsubmit an Acceptance and Prepayment Notice to the Auction Agent setting forth the Acceptable Discount. If the AuctionAgent shall fail to receive an Acceptance and Prepayment Notice from the Borrower or any of its Subsidiaries by theAcceptance Date, the Borrower or any of its Subsidiaries shall be deemed to have rejected all Solicited DiscountedPrepayment Offers.-82- (3) Based upon the Acceptable Discount and the Solicited Discounted Prepayment Offers received by AuctionAgent by the Solicited Discounted Prepayment Response Date, within three (3) Business Days after receipt of anAcceptance and Prepayment Notice (the “ Discounted Prepayment Determination Date ”), the Auction Agent willdetermine (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of theAuction Agent made in its sole reasonable discretion) the aggregate principal amount and the tranches of Term Loans (the“ Acceptable Prepayment Amount ”) to be prepaid by the Borrower or any of its Subsidiaries at the Acceptable Discount inaccordance with this Section 2.11(a)(ii)(D). If the Borrower or any of its Subsidiaries elects to accept any AcceptableDiscount, then the Borrower or any of its Subsidiaries agrees to accept all Solicited Discounted Prepayment Offersreceived by Auction Agent by the Solicited Discounted Prepayment Response Date, in the order from largest OfferedDiscount to smallest Offered Discount, up to and including the Acceptable Discount. Each Lender that has submitted aSolicited Discounted Prepayment Offer with a Offered Discount that is greater than or equal to the Acceptable Discountshall be deemed to have irrevocably consented to prepayment of Term Loans equal to its Offered Amount (subject to anyrequired pro-rata reduction pursuant to the following sentence) at the Acceptable Discount (each such Lender, a “Qualifying Lender ”). The Borrower or any of its Subsidiaries will prepay outstanding Term Loans pursuant to thissubsection (D) to each Qualifying Lender in the aggregate principal amount and of the tranches specified in such Lender’sSolicited Discounted Prepayment Offer at the Acceptable Discount; provided that if the aggregate Offered Amount by allQualifying Lenders whose Offered Discount is greater than or equal to the Acceptable Discount exceeds the SolicitedDiscounted Prepayment Amount, prepayment of the principal amount of the Term Loans for those Qualifying Lenderswhose Offered Discount is greater than or equal to the Acceptable Discount (the “ Identified Qualifying Lenders ”) shall bemade pro-rata among the Identified Qualifying Lenders in accordance with the Offered Amount of each such IdentifiedQualifying Lender and the Auction Agent (in consultation with the Borrower or any of its Subsidiaries and subject torounding requirements of the Auction Agent made in its sole reasonable discretion) will calculate such proration (the “Solicited Discount Proration ”). On or prior to the Discounted Prepayment Determination Date, the Auction Agent shallpromptly notify (I) the Borrower or any of its Subsidiaries of the Discounted Prepayment Effective Date and AcceptablePrepayment Amount comprising the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each TermLender who made a Solicited Discounted Prepayment Offer of the Discounted Prepayment Effective Date, the AcceptableDiscount, and the Acceptable Prepayment Amount of all Term Loans and the tranches to be prepaid to be prepaid at theApplicable Discount on such date, (III) each Qualifying Lender of the aggregate principal amount and the tranches of suchLender to be prepaid at the Acceptable Discount on such date, and (IV) if applicable, each Identified Qualifying Lender ofthe Solicited Discount Proration. Each determination by the Auction Agent of the amounts stated in the foregoing noticesto such Borrower and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amountspecified in such notice to such Borrower shall be due and payable by such Borrower on the Discounted PrepaymentEffective Date in accordance with subsection (F) below (subject to subsection (J) below).-83- (E) In connection with any Discounted Term Loan Prepayment, the Borrower or any of its Subsidiaries and theLenders acknowledge and agree that the Auction Agent may require as a condition to any Discounted Term LoanPrepayment, the payment of reasonable and customary fees and expenses from the Borrower or any of its Subsidiaries inconnection therewith.(F) If any Term Loan is prepaid in accordance with paragraphs (B) through (D) above, the Borrower or any of itsSubsidiaries shall prepay such Term Loans on the Discounted Prepayment Effective Date. The Borrower or any of itsSubsidiaries shall make such prepayment to the Auction Agent, for the account of the Discount Prepayment AcceptingLenders, Participating Lenders, or Qualifying Lenders, as applicable, at the Term Administrative Agent’s Office inimmediately available funds not later than 11:00 a.m. (New York City time) on the Discounted Prepayment Effective Dateand all such prepayments shall be applied to the remaining principal installments of the relevant tranche of Term Loans ona pro rata basis across such installments. The Term Loans so prepaid shall be accompanied by all accrued and unpaidinterest on the par principal amount so prepaid up to, but not including, the Discounted Prepayment Effective Date. Eachprepayment of the outstanding Term Loans pursuant to this Section 2.11(a)(ii) shall be paid to the Discount PrepaymentAccepting Lenders, Participating Lenders, or Qualifying Lenders, as applicable. The aggregate principal amount of thetranches and installments of the relevant Term Loans outstanding shall be deemed reduced by the full par value of theaggregate principal amount of the tranches of Term Loans prepaid on the Discounted Prepayment Effective Date in anyDiscounted Term Loan Prepayment.(G) To the extent not expressly provided for herein, each Discounted Term Loan Prepayment shall beconsummated pursuant to procedures consistent with the provisions in this Section 2.11(a)(ii), established by the AuctionAgent acting in its reasonable discretion and as reasonably agreed by the Borrower or any of its Subsidiaries.(H) Notwithstanding anything in any Loan Document to the contrary, for purposes of this Section 2.11(a)(ii),each notice or other communication required to be delivered or otherwise provided to the Auction Agent (or its delegate)shall be deemed to have been given upon Auction Agent’s (or its delegate’s) actual receipt during normal business hours ofsuch notice or communication; provided that any notice or communication actually received outside of normal businesshours shall be deemed to have been given as of the opening of business on the next Business Day.(I) Each of the Borrower or any of its Subsidiaries and the Lenders acknowledges and agrees that the AuctionAgent may perform any and all of its duties under this Section 2.11(a)(ii) by itself or through any Affiliate of the AuctionAgent and expressly consents to any such delegation of duties by the Auction Agent to such Affiliate and the performanceof such delegated duties by such Affiliate. The exculpatory provisions pursuant to this Agreement shall apply to eachAffiliate of the Auction Agent and its respective activities in connection with any Discounted Term Loan Prepaymentprovided for in this Section 2.11(a)(ii) as well as activities of the Auction Agent.-84- (J) The Borrower or any of its Subsidiaries shall have the right, by written notice to the Auction Agent, to revokein full (but not in part) its offer to make a Discounted Term Loan Prepayment and rescind the applicable SpecifiedDiscount Prepayment Notice, Discount Range Prepayment Notice or Solicited Discounted Prepayment Notice therefor atits discretion at any time on or prior to the applicable Specified Discount Prepayment Response Date, Discount RangePrepayment Response Date or Solicited Discounted Prepayment Response Date, as applicable (and if such offer is revokedpursuant to the preceding clauses, any failure by such Borrower to make any prepayment to a Term Lender, as applicable,pursuant to this Section 2.11(a)(ii) shall not constitute a Default or Event of Default under Section 7.01 or otherwise).(b) [Reserved].(c) In the event and on each occasion that any Net Proceeds are received by or on behalf of the Borrower or anyof its Restricted Subsidiaries in respect of any Prepayment Event, the Borrower shall, within five (5) Business Days after such NetProceeds are received (or, in the case of a Prepayment Event described in clause (b) of the definition of the term “PrepaymentEvent,” on the date of such Prepayment Event), prepay Term Loans in an aggregate amount equal to 100% of the amount of such NetProceeds; provided that, in the case of any event described in clause (a) of the definition of the term “Prepayment Event”, if theBorrower or any of the Restricted Subsidiaries invest (or commit to invest) the Net Proceeds from such event (or a portion thereof)within 12 months after receipt of such Net Proceeds in the business of the Borrower and the Subsidiaries (including any acquisitionspermitted under Section 6.04), then no prepayment shall be required pursuant to this paragraph in respect of such Net Proceeds inrespect of such event (or the applicable portion of such Net Proceeds, if applicable) except to the extent of any such Net Proceedstherefrom that have not been so invested (or committed to be invested) by the end of such 12-month period (or if committed to be soinvested within such 12-month period, have not been so invested within 18 months after receipt thereof), at which time a prepaymentshall be required in an amount equal to such Net Proceeds that have not been so invested (or committed to be invested); providedfurther that the Borrower may use a portion of such Net Proceeds to prepay or repurchase any other Indebtedness that is secured bythe Collateral on a pari passu basis with the Loans to the extent such other Indebtedness and the Liens securing the same arepermitted hereunder and the documentation governing such other Indebtedness requires such a prepayment or repurchase thereofwith the proceeds of such Prepayment Event, in each case in an amount not to exceed the product of (x) the amount of such NetProceeds and (y) a fraction, the numerator of which is the outstanding principal amount of such other Indebtedness and thedenominator of which is the aggregate outstanding principal amount of Term Loans and such other Indebtedness.(d) Following the end of each fiscal year of the Borrower, commencing with the fiscal year ending December31, 2016, the Borrower shall prepay Term Loans in an aggregate amount equal to the ECF Percentage of Excess Cash Flow for suchfiscal year; provided that such amount shall, at the option of the Borrower, be reduced on a dollar-for-dollar basis for such fiscal yearby the aggregate amount of prepayments and repurchases of (i) Term Loans made pursuant to Section 2.11(a) or otherwise in amanner not prohibited by Section 9.04(g) and (ii) other Consolidated Senior Secured First Lien Indebtedness, in each case duringsuch fiscal year, subject to the immediately succeeding clause (w), or after such fiscal year and prior to the 90th day after the end ofsuch fiscal year; provided further that (w) any such voluntary prepayments that have not-85- been applied to reduce the payments which may be due from time to time pursuant to this Section 2.11(d) shall be carried over tosubsequent periods, and may reduce the payments due from time to time pursuant to this Section 2.11(d) during such subsequentperiods, until such time as such voluntary prepayments reduce such payments which may be due from time to time, (x) suchreduction as a result of prepayments pursuant to Section 2.11(a)(ii) or Section 9.04(g) shall be limited to the actual amount of suchcash prepayment, (y) in the case of the prepayment of any revolving commitments, there is a corresponding reduction incommitments and (z) such reduction shall exclude all such prepayments funded with the proceeds of other long-termIndebtedness). Each prepayment pursuant to this paragraph shall be made on or before the date that is ten (10) days after the date onwhich financial statements are required to be delivered pursuant to Section 5.01 with respect to the fiscal year for which Excess CashFlow is being calculated.(e) Prior to any optional prepayment of Borrowings pursuant to Section 2.11(a)(i), the Borrower shall select theBorrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (f) ofthis Section 2.11. In the event of any mandatory prepayment of Borrowings made at a time when Borrowings of more than oneClass remain outstanding, the Borrower shall select Borrowings to be prepaid so that the aggregate amount of such prepayment isallocated between Borrowings (and, to the extent provided in the Refinancing Amendment for any Class of Other Term Loans, theBorrowings of such Class) pro rata based on the aggregate principal amount of outstanding Borrowings of each such Class; providedthat any Term Lender (and, to the extent provided in the Refinancing Amendment or Loan Modification Agreement for any Class ofOther Term Loans, any Lender that holds Other Term Loans of such Class) may elect, by notice to the Term Administrative Agentby telephone (confirmed by facsimile) at least two (2) Business Days prior to the prepayment date, to decline all or any portion ofany prepayment of its Term Loans or Other Term Loans of any such Class pursuant to this Section 2.11 (other than an optionalprepayment pursuant to paragraph (a)(i) of this Section 2.11 or a mandatory prepayment as a result of the Prepayment Event set forthin clause (b) of the definition thereof, which may not be declined), in which case the aggregate amount of the prepayment that wouldhave been applied to prepay Term Loans or Other Term Loans of any such Class but was so declined (and not used pursuant to theimmediately following sentence) shall be retained by the Borrower (such amounts, “ Retained Declined Proceeds ”). An amountequal to any portion of a mandatory prepayment of Borrowings that is declined by the Lenders under this Section 2.11(e) may, to theextent not prohibited hereunder or under the documentation governing the Permitted First Priority Refinancing Debt or ABL/BondIntercreditor Agreement, be applied by the Borrower to prepay (at the Borrower’s election) Permitted Second Priority RefinancingDebt. Optional prepayments of Borrowings shall be allocated among the Classes of Borrowings as directed by the Borrower. In theabsence of a designation by the Borrower as described in the preceding provisions of this paragraph of the Type of Borrowing of anyClass, the Term Administrative Agent shall make such designation in its reasonable discretion with a view, but no obligation, tominimize breakage costs owing under Section 2.16 and shall be applied in direct order of maturity; provided that, in connection withany mandatory prepayments by the Borrower of the Term Loans pursuant to Section 2.11(c) or (d), such prepayments shall beapplied on a pro rata basis to the then outstanding Term Loans being prepaid irrespective of whether such outstanding Term Loansare ABR Loans or Eurodollar Loans.(f) The Borrower shall notify the Term Administrative Agent of any prepayment hereunder by telephone(confirmed by facsimile) (i) in the case of prepayment of a Eurodollar-86- Borrowing, not later than 11:00 a.m., New York City time, three (3) Business Days before the date of prepayment or (ii) in the caseof prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one (1) Business Day before the date ofprepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of eachBorrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of theamount of such prepayment; provided that a notice of optional prepayment may state that such notice is conditional upon theeffectiveness of other credit facilities or the receipt of the proceeds from the issuance of other Indebtedness or the occurrence ofsome other identifiable event or condition, in which case such notice of prepayment may be revoked by the Borrower (by notice tothe Term Administrative Agent on or prior to the specified date of prepayment) if such condition is not satisfied. Promptly followingreceipt of any such notice, the Term Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepaymentof any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type asprovided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of aBorrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accruedinterest to the extent required by Section 2.13, and subject to Section 2.11(a)(i), shall be without premium or penalty. At theBorrower’s election in connection with any prepayment pursuant to this Section 2.11, such prepayment shall not be applied to anyTerm Loan of a Defaulting Lender (under any of subclauses (a), (b) or (c) of the definition of “Defaulting Lender”) and shall beallocated ratably among the relevant non-Defaulting Lenders.(g) Notwithstanding any other provisions of Section 2.11(c) or (d), (A) to the extent that any of or all the NetProceeds of any Prepayment Event by or Excess Cash Flow of a Foreign Subsidiary of the Borrower giving rise to a prepaymentpursuant to Section 2.11(c) or (d) (a “ Foreign Prepayment Event ”) are prohibited or delayed by applicable local law from beingrepatriated to the Borrower, the portion of such Net Proceeds or Excess Cash Flow so affected will not be required to be taken intoaccount in determining the amount to be applied to repay Term Loans at the times provided in Section 2.11(c) or (d), as the case maybe, and such amounts may be retained by such Subsidiary, and once the Borrower has determined in good faith that such repatriationof any of such affected Net Proceeds or Excess Cash Flow is permitted under the applicable local law, then the amount of such NetProceeds or Excess Cash Flow will be taken into account as soon as practicable in determining the amount to be applied (net ofadditional taxes payable or reserved if such amounts were repatriated) to the repayment of the Term Loans pursuant to Section2.11(c) or (d), as applicable, (B) to the extent that and for so long as the Borrower has determined in good faith that repatriation ofany of or all the Net Proceeds of any Foreign Prepayment Event or Excess Cash Flow would have a material adverse tax or costconsequence with respect to such Net Proceeds or Excess Cash Flow, the amount of Net Proceeds or Excess Cash Flow so affectedwill not be required to be taken into account as soon as practicable in determining the amount to be applied to repay Term Loans atthe times provided in Section 2.11(c) or Section 2.11(d), as the case may be, and such amounts may be retained by such Subsidiary;provided that when the Borrower determines in good faith that repatriation of any of or all the Net Proceeds of any ForeignPrepayment Event or Excess Cash Flow would no longer have a material adverse tax consequence with respect to such Net Proceedsor Excess Cash Flow, such Net Proceeds or Excess Cash Flow shall be taken into account in determining the amount to be applied(net of additional taxes payable or reserved against if such amounts were repatriated) to the repayment of the Term Loans pursuant toSection 2.11(c) or Section 2.11(d), as applicable, and (C)-87- to the extent that and for so long as the Borrower has determined in good faith that repatriation of any of or all the Net Proceeds ofany Foreign Prepayment Event or Excess Cash Flow would give rise to a risk of liability for the directors of such Subsidiary, the NetProceeds or Excess Cash Flow so affected will not be required to be taken into account in determining the amount to be applied torepay Term Loans at the times provided in Section 2.11(c) or Section 2.11(d), as the case may be, and such amounts may be retainedby such Subsidiary.SECTION 2.12 Fees.(a) The Borrower agrees to pay to the Term Administrative Agent, for its own account, fees payable in theamounts and at the times separately agreed upon between the Borrower and the Term Administrative Agent.(b) The Borrower agrees to pay on the Effective Date to each Term Lender party to this Agreement as a TermLender on the Effective Date, as fee compensation for the funding of such Term Lender’s Term Loan, a closing fee in an amountequal to 1.00% of the stated principal amount of such Term Lender’s Term Loan. Such fees shall be payable to each Lender out ofthe proceeds of such Term Lender’s Term Loan as and when funded on the Effective Date and shall be treated (and reported) by theBorrower and Term Lenders as a reduction in issue price of the Term Loans for U.S. federal, state and local income taxpurposes. Such closing fee will be in all respects fully earned, due and payable on the Effective Date and non-refundable and non-creditable thereafter.(c) Notwithstanding the foregoing, and subject to Section 2.22, the Borrower shall not be obligated to pay anyamounts to any Defaulting Lender pursuant to this Section 2.12.SECTION 2.13 Interest.(a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus theApplicable Rate.(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for theInterest Period in effect for such Borrowing plus the Applicable Rate.(c) Notwithstanding the foregoing, if upon the occurrence and during the continuance of any Specified Event ofDefault any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due,whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment,at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2.00% per annum plus the rate otherwise applicable tosuch Loan as provided in the preceding paragraphs of this Section 2.13 or (ii) in the case of any other amount, 2.00% per annum plusthe rate applicable to ABR Loans as provided in paragraph (a) of this Section 2.13; provided that no amount shall be payablepursuant to this Section 2.13(c) to a Defaulting Lender so long as such Lender shall be a Defaulting Lender; provided , further thatno amounts shall accrue pursuant to this Section 2.13(c) on any overdue amount or other amount payable to a Defaulting Lender solong as such Lender shall be a Defaulting Lender.-88- (d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan;provided that (i) interest accrued pursuant to paragraph (c) of this Section 2.13 shall be payable on demand, (ii) in the event of anyrepayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date ofsuch repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current InterestPeriod therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed byreference to the Alternate Base Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in eachcase shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicableAlternate Base Rate or Adjusted LIBO Rate shall be determined by the Term Administrative Agent, and such determination shall beconclusive absent manifest error.SECTION 2.14 Alternate Rate of Interest.If at least two (2) Business Days prior to the commencement of any Interest Period for a Eurodollar Borrowing:(a) the Term Administrative Agent determines (which determination shall be conclusive absent manifest error)that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or(b) the Term Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate for suchInterest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in suchBorrowing for such Interest Period (in each case with respect to the Loans impacted by this clause (b) or clause (a) above, “ ImpactedLoans ”);(c) the Term Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone orfacsimile as promptly as practicable thereafter and, until the Term Administrative Agent notifies the Borrower and the Lenders thatthe circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of anyBorrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Requestrequests a Eurodollar Borrowing, then such Borrowing shall be made as an ABR Borrowing; provided , however , that, in each case,the Borrower may revoke any Borrowing Request that is pending when such notice is received.(d) Notwithstanding the foregoing, if the Term Administrative Agent has made the determination described inclause (a) of this Section 2.14 and/or is advised by the Required Lenders of their determination in accordance with clause (b) of thisSection 2.14 and the Borrower shall so request, the Term Administrative Agent, the Required Lenders and the Borrower shallnegotiate in good faith to amend the definition of “LIBO Rate” and other applicable provisions to preserve the original intent thereofin light of such change; provided that, until so amended, such Impacted Loans will be handled as otherwise provided pursuant to theterms of this Section 2.14.-89- SECTION 2.15 Increased Costs.(a) If any Change in Law shall:(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge orsimilar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except anysuch reserve requirement reflected in the Adjusted LIBO Rate); or(ii) impose on any Lender or the London interbank market any other condition, cost or expense affecting thisAgreement or Eurodollar Loans made by such Lender;and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (orof maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lenderhereunder (whether of principal, interest or otherwise), then, from time to time upon request of such Lender, the Borrower will pay tosuch Lender such additional amount or amounts as will compensate such Lender for such increased costs actually incurred orreduction actually suffered.(b) If any Lender determines that any Change in Law regarding capital requirements has the effect of reducingthe rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of thisAgreement or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company couldhave achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’sholding company with respect to capital adequacy), then, from time to time upon request of such Lender, the Borrower will pay tosuch Lender, as the case may be, such additional amount or amounts as will compensate such Lender or such Lender’s holdingcompany for any such reduction actually suffered.(c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or itsholding company in reasonable detail, as the case may be, as specified in paragraph (a) or (b) of this Section 2.15 delivered to theBorrower shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any suchcertificate within 15 days after receipt thereof.(d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section 2.15 shall notconstitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required tocompensate a Lender pursuant to this Section 2.15 for any increased costs incurred or reductions suffered more than 180 days priorto the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of suchLender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs orreductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effectthereof.-90- SECTION 2.16 Break Funding Payments.In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an InterestPeriod applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on thelast day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Term Loan on the datespecified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(f) and isrevoked in accordance therewith) or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Periodapplicable thereto as a result of a request by the Borrower pursuant to Section 2.19 or Section 9.02(c), then, in any such event, theBorrower shall, after receipt of a written request by any Lender affected by any such event (which request shall set forth inreasonable detail the basis for requesting such amount), compensate each Lender for the loss, cost and expense (excluding loss ofprofit) actually incurred by it as a result of such event. For purposes of calculating amounts payable by the Borrowers to the Lendersunder this Section 2.16, each Lender shall be deemed to have funded each Eurodollar Loan made by it at the Adjusted LIBO Rate forsuch Loan by a matching deposit or other borrowing in the applicable interbank eurodollar market for a comparable amount and for acomparable period, whether or not such Eurodollar Loan was in fact so funded. A certificate of any Lender setting forth inreasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.16 and the reasons therefordelivered to the Borrower shall be prima facie evidence of such amounts. The Borrower shall pay such Lender the amount shown asdue on any such certificate within 15 days after receipt of such demand. Notwithstanding the foregoing, this Section 2.16 will notapply to losses, costs or expenses resulting from Taxes, as to which Section 2.17 shall govern. Notwithstanding the foregoing, noLender shall demand compensation pursuant to this Section 2.16 if it shall not at the time be the general policy or practice of suchLender to demand such compensation in similar circumstances under comparable provisions of other credit agreements.SECTION 2.17 Taxes.(a) Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shallbe made free and clear of and without deduction for any Taxes, except as required by applicable Requirements of Law. If theapplicable withholding agent shall be required by applicable Requirements of Law (as determined in the good faith discretion of theapplicable withholding agent) to deduct any Taxes from such payments, then the applicable withholding agent shall make suchdeductions and shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicableRequirements of Law, and if such Taxes are Indemnified Taxes or Other Taxes, then the amount payable by the applicable LoanParty shall be increased as necessary so that after all such required deductions have been made (including such deductions applicableto additional amounts payable under this Section 2.17), each Lender (or, in the case of a payment made to the Term AdministrativeAgent for its own account, the Term Administrative Agent) receives an amount equal to the sum it would have received had no suchdeductions been made.(b) Without limiting the provisions of paragraph (a) above, the Borrower shall timely pay any Other Taxes to therelevant Governmental Authority in accordance with Requirements of Law.-91- (c) The Borrower shall indemnify the Term Administrative Agent and each Lender within 30 days after writtendemand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Term Administrative Agent or suchLender as the case may be, on or with respect to any payment by or on account of any obligation of any Loan Party under any LoanDocument and any Other Taxes paid by the Term Administrative Agent or such Lender, as the case may be (including IndemnifiedTaxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.17) and any reasonableexpenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legallyimposed or asserted by the relevant Governmental Authority. A certificate setting forth in reasonable detail the basis and calculationof the amount of such payment or liability delivered to the Borrower by a Lender, or by the Term Administrative Agent on its ownbehalf or on behalf of a Lender, shall be conclusive absent manifest error.(d) As soon as practicable after any payment of any Taxes by a Loan Party to a Governmental Authority, theBorrower shall deliver to the Term Administrative Agent the original or a certified copy of a receipt issued by such GovernmentalAuthority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonablysatisfactory to the Term Administrative Agent.(e) Each Lender shall, at such times as are reasonably requested by Borrower or the Term Administrative Agent,provide Borrower and the Term Administrative Agent with any properly completed and executed documentation prescribed by anyRequirement of Law, or reasonably requested by Borrower or the Term Administrative Agent, certifying as to any entitlement ofsuch Lender to an exemption from, or reduction in, any withholding Tax with respect to any payments to be made to such Lenderunder the Loan Documents. Each such Lender shall, whenever a lapse in time or change in circumstances renders any suchdocumentation expired, obsolete or inaccurate in any respect (including any specific documentation required below in this Section2.17(e)), deliver promptly to the Borrower and the Term Administrative Agent updated or other appropriate documentation(including any new documentation reasonably requested by the applicable withholding agent) or promptly notify the Borrower andthe Term Administrative Agent in writing of its legal ineligibility to do so. Unless the applicable withholding agent has receivedforms or other documents satisfactory to it indicating that payments under any Loan Document to or for a Lender are not subject towithholding tax or are subject to Tax at a rate reduced by an applicable tax treaty, the Borrower, the Term Administrative Agent orother applicable withholding agent shall withhold amounts required to be withheld by applicable law from such payments at theapplicable statutory rate.Without limiting the generality of the foregoing:(i) Each Lender that is a United States person (as defined in Section 7701(a)(30) of the Code) shall deliver tothe Borrower and the Term Administrative Agent on or before the date on which it becomes a party to this Agreement twoproperly completed and duly signed copies of Internal Revenue Service Form W-9 (or any successor form) certifying thatsuch Lender is exempt from U.S. federal backup withholding.-92- (ii) Each Lender that is not a United States person (as defined in Section 7701(a)(30) of the Code) shalldeliver to the Borrower and the Term Administrative Agent on or before the date on which it becomes a party to thisAgreement (and from time to time thereafter upon the reasonable request of the Borrower or the Term AdministrativeAgent) whichever of the following is applicable:(A) two properly completed and duly signed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable (or any successor forms) claiming eligibility for benefits of an income tax treaty to whichthe United States of America is a party,(B) two properly completed and duly signed copies of Internal Revenue Service Form W-8ECI (or anysuccessor forms),(C) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest underSection 871(h) or Section 881(c) of the Code, (x) two properly completed and duly signed certificates,substantially in the form of Exhibit Q (any such certificate a “ United States Tax Compliance Certificate ”), and(y) two properly completed and duly signed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E,as applicable (or any successor forms),(D) to the extent a Foreign Lender is not the beneficial owner (for example, where the Lender is apartnership or a participating Lender), two properly completed and duly signed copies of Internal RevenueService Form W-8IMY (or any successor forms) of the Foreign Lender, accompanied by a Form W-8ECI, W-8BEN or W-8BEN-E, United States Tax Compliance Certificate, Form W-9, Form W-8IMY (or other successorforms) or any other required information from each beneficial owner that would be required under this Section2.17 if such beneficial owner were a Lender, as applicable ( provided that, if the Lender is a partnership (and nota participating Lender) and one or more direct or indirect partners are claiming the portfolio interest exemption,the United States Tax Compliance Certificate may be provided by such Lender on behalf of such direct orindirect partner(s)), or(E) two properly completed and duly signed copies of any other form prescribed by applicableRequirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax dulycompleted together with such supplementary documentation as may be prescribed by applicable Requirementsof Law to permit the Borrower and the Term Administrative Agent to determine the withholding or deductionrequired to be made.(iii) If a payment made to any Lender under any Loan Document would be subject to U.S. federal withholdingtax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA(including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to theBorrower and the Term Administrative Agent at the time or times prescribed by law and at such time or times reasonablyrequested by the Borrower or the Term Administrative-93- Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code)and such additional documentation reasonably requested by the Borrower or the Term Administrative Agent as may benecessary for the Borrower and the Term Administrative Agent to comply with their obligations under FATCA, todetermine whether such Lender has or has not complied with such Lender’s obligations under FATCA and, if necessary, todetermine the amount to deduct and withhold from such payment. Solely for purposes of this clause (iii), “FATCA” shallinclude any amendments made to FATCA after the date of this Agreement. Notwithstanding any other provision of thisclause (e), a Lender shall not be required to deliver any form that such Lender is not legally eligible to deliver.(f) If the Borrower determines in good faith that a reasonable basis exists for contesting any Taxes for whichindemnification has been demanded hereunder, the Term Administrative Agent or the relevant Lender, as applicable, shall usecommercially reasonable efforts to cooperate with the Borrower in a reasonable challenge of such Taxes if so requested by theBorrower, provided that (a) the Term Administrative Agent or such Lender determines in its reasonable discretion that it would notbe subject to any unreimbursed third party cost or expense or otherwise be prejudiced by cooperating in such challenge, (b) theBorrower pays all related expenses of the Term Administrative Agent or such Lender, as applicable and (c) the Borrower indemnifiesthe Term Administrative Agent or such Lender, as applicable, for any liabilities or other costs incurred by such party in connectionwith such challenge. If the Term Administrative Agent or a Lender receives a refund of any Indemnified Taxes or Other Taxes as towhich it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to thisSection 2.17, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additionalamounts paid, by the Borrower under this Section 2.17 with respect to the Indemnified Taxes or Other Taxes giving rise to suchrefund), net of all out-of-pocket expenses (including Taxes) of the Term Administrative Agent or such Lender and without interest(other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, uponthe request of the Term Administrative Agent or such Lender, agrees promptly to repay the amount paid over to the Borrower (plusany penalties, interest or other charges imposed by the relevant Governmental Authority) to the Term Administrative Agent or suchLender in the event the Term Administrative Agent or such Lender is required to repay such refund to such GovernmentalAuthority. The Term Administrative Agent or such Lender, as the case may be, shall, at the Borrower’s request, provide theBorrower with a copy of any notice of assessment or other evidence of the requirement to repay such refund received from therelevant taxing authority ( provided that the Term Administrative Agent or such Lender may delete any information therein that theTerm Administrative Agent or such Lender deems confidential). Notwithstanding anything to the contrary, this Section 2.17(f) shallnot be construed to require the Term Administrative Agent or any Lender to make available its Tax returns (or any other informationrelating to Taxes which it deems confidential) to any Loan Party or any other person.(g) The agreements in this Section 2.17 shall survive the resignation or replacement of the Term AdministrativeAgent or any assignment of rights by, or the replacement of, a Lender, the termination of this Agreement and the payment of theLoans and all other amounts payable hereunder.-94- (h) For purposes of this Section 2.17, the term “applicable Requirements of Law” includes FATCA.SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of Setoffs.(a) The Borrower shall make each payment required to be made by it under any Loan Document (whether ofprincipal, interest or fees, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to the time expressly requiredhereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 2:00 p.m., NewYork City time), on the date when due, in immediately available funds, without condition or deduction for any counterclaim,recoupment or setoff. Any amounts received after such time on any date may, in the discretion of the Term Administrative Agent, bedeemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such paymentsshall be made to such account as may be specified by the Term Administrative Agent, except that payments pursuant to Sections2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shallbe made to the Persons specified therein. The Term Administrative Agent shall distribute any such payments received by it for theaccount of any other Person to the appropriate recipient promptly following receipt thereof. Except as otherwise provided herein, ifany payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended tothe next succeeding Business Day. If any payment on a Eurodollar Loan becomes due and payable on a day other than a BusinessDay, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be toextend such payment into another calendar month, in which event such payment shall be made on the immediately precedingBusiness Day. In the case of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable atthe then applicable rate for the period of such extension. All payments or prepayments of any Loan shall be made in dollars, allpayments of accrued interest payable on a Loan shall be made in dollars, and all other payments under each Loan Document shall bemade in dollars.(b) If at any time insufficient funds are received by and available to the Term Administrative Agent to pay fullyall amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first , towards payment of interest andfees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due tosuch parties, and (ii) second , towards payment of principal then due hereunder, ratably among the parties entitled thereto inaccordance with the amounts of principal then due to such parties.(c) If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respectof any principal of or interest on any of its Term Loans resulting in such Lender receiving payment of a greater proportion of theaggregate amount of its Term Loans and accrued interest thereon than the proportion received by any other Lender, then the Lenderreceiving such greater proportion shall purchase (for cash at face value) participations in the Term Loans of other Lenders to theextent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregateamount of principal of and accrued interest on their respective Term Loans; provided that (i) if any such participations are purchasedand all or any portion of the payment giving rise thereto is recovered, such-95- participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest and (ii) the provisionsof this paragraph shall not be construed to apply to (A) any payment made by the Borrower pursuant to and in accordance with theexpress terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (B) anypayment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee orparticipant or (C) any disproportionate payment obtained by a Lender of any Class as a result of the extension by Lenders of thematurity date or expiration date of some but not all Loans of that Class or any increase in the Applicable Rate in respect of Loans ofLenders that have consented to any such extension. The Borrower consents to the foregoing and agrees, to the extent it mayeffectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements mayexercise against the Borrower’s rights of setoff and counterclaim with respect to such participation as fully as if such Lender were adirect creditor of the Borrower in the amount of such participation.(d) Unless the Term Administrative Agent shall have received notice from the Borrower prior to the date onwhich any payment is due to the Term Administrative Agent for the account of the Lenders hereunder that the Borrower will notmake such payment, the Term Administrative Agent may assume that the Borrower has made such payment on such date inaccordance herewith and may, in reliance upon such assumption and in its sole discretion, distribute to the Lenders the amountdue. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to theTerm Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day fromand including the date such amount is distributed to it to but excluding the date of payment to the Term Administrative Agent, at thegreater of the Federal Funds Effective Rate and a rate determined by the Term Administrative Agent in accordance with bankingindustry rules on interbank compensation.(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.06(a) or Section2.06(b), Section 2.18(d) or Section 9.03(c), then the Term Administrative Agent may, in its discretion and in the order determined bythe Term Administrative Agent (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received by theTerm Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Section until all suchunsatisfied obligations are fully paid and/or (ii) hold any such amounts in a segregated account as cash collateral for, and to beapplied to, any future funding obligations of such Lender under any such Section.SECTION 2.19 Mitigation Obligations; Replacement of Lenders.(a) If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any additionalamount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17 or any event gives riseto the operation of Section 2.23, then such Lender shall use reasonable efforts to designate a different lending office for funding orbooking its Loans hereunder affected by such event, or to assign and delegate its rights and obligations hereunder to another of itsoffices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment and delegation (i) would eliminateor reduce amounts payable pursuant to Section 2.15 or 2.17 or mitigate the applicability of Section 2.23, as the case may be, and (ii)would not subject such Lender to any unreimbursed cost or expense reasonably-96- deemed by such Lender to be material and would not be inconsistent with the internal policies of, or otherwise be disadvantageous inany material economic, legal or regulatory respect to, such Lender.(b) If (i) any Lender requests compensation under Section 2.15 or gives notice under Section 2.23, (ii) theBorrower is required to pay any additional amount to any Lender or to any Governmental Authority for the account of any Lenderpursuant to Section 2.17 or (iii) any Lender is a Defaulting Lender, then the Borrower may, at its sole expense and effort, upon noticeto such Lender and the Term Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance withand subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement and the otherLoan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lenderaccepts such assignment and delegation); provided that (A) the Borrower shall have received the prior written consent of the TermAdministrative Agent to the extent such consent would be required under Section 9.04(b) for an assignment of Loans orCommitments, as applicable, which consents, in each case, shall not unreasonably be withheld or delayed, (B) such Lender shallhave received payment of an amount equal to the outstanding principal of its Loans, accrued but unpaid interest thereon, accrued butunpaid fees and all other amounts payable to it hereunder from the assignee (to the extent of such outstanding principal and accruedinterest and fees) or the Borrower (in the case of all other amounts), (C) the Borrower or such assignee shall have paid (unlesswaived) to the Term Administrative Agent the processing and recordation fee specified in Section 9.04(b)(ii) and (D) in the case ofany such assignment resulting from a claim for compensation under Section 2.15, or payments required to be made pursuant toSection 2.17 or a notice given under Section 2.23, such assignment will result in a material reduction in such compensation orpayments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver bysuch Lender or otherwise (including as a result of any action taken by such Lender under paragraph (a) above), the circumstancesentitling the Borrower to require such assignment and delegation cease to apply. Each party hereto agrees that an assignmentrequired pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by the Borrower, the TermAdministrative Agent and the assignee and that the Lender required to make such assignment need not be a party thereto.SECTION 2.20 Incremental Credit Extensions.(a) The Borrower may at any time or from time to time on one or more occasions after the Effective Date, bywritten notice delivered to the Term Administrative Agent request (i) one or more additional Classes of term loans (each, an “Incremental Term Facility ”), (ii) one or more additional term loans of the same Class of any existing Class of term loans (each, an “Incremental Term Increase ”), (iii) one or more tranches of cash-flow revolving credit facilities (the first of such tranches, the “Initial Incremental Revolving Facility ” and, together with each such tranche thereafter, the " Incremental Revolving Facilities ”) or(iv) one or more increases in the amount of any existing Class of Incremental Revolving Loans (each, an “ Incremental RevolvingIncrease ”, and together with any Incremental Term Facility, Incremental Term Increase and Incremental Revolving Facilities, the “Incremental Facilities ”); provided that, after giving effect to any Incremental Facility Amendment referred to below and at the timethat any such Incremental Term Loan or Incremental Revolving Loan is made or effected, no Event of Default (except, in the case ofthe incurrence or provision of any Incremental Facility in connection with a Permitted-97- Acquisition or other Investment not prohibited by the terms of this Agreement) shall have occurred and becontinuing. Notwithstanding anything to contrary herein, the aggregate principal amount of the Incremental Facilities that can beincurred at any time shall not exceed the Incremental Cap at such time. Each Incremental Facility shall be in a minimum principalamount of $10,000,000 and integral multiples of $1,000,000 in excess thereof if such Incremental Facilities are denominated indollars (unless the Borrower and the Term Administrative Agent otherwise agree); provided that such amount may be less than$10,000,000 if such amount represents all the remaining availability under the aggregate principal amount of Incremental Facilitiesset forth above.(b) The Incremental Term Loans (a) shall (i) rank equal or junior in right of payment with the Term Loans, (ii) ifsecured, be secured only by the Collateral securing the Obligations and (iii) only be guaranteed by the Loan Parties, (b) shall notmature earlier than the Term Maturity Date, (c) shall not have a shorter Weighted Average Life to Maturity than the remaining TermLoans, (d) shall have a maturity date (subject to clause (b)), an amortization schedule (subject to clause (c)), interest rates (includingthrough fixed interest rates), “most favored nation” provisions, interest margins, rate floors, upfront fees, funding discounts, originalissue discounts, financial covenants, prepayment terms and premiums and other terms and conditions as determined by the Borrowerand the Additional Term Lenders thereunder; provided that, for any Incremental Term Loans that rank equal in right of payment withthe Term Loans and are secured on a pari passu basis with the Collateral securing the Loan Document Obligations, in the event thatthe Effective Yield for any such Incremental Term Loans is greater than the Effective Yield for the Term Loans by more than 0.50%per annum, then the Effective Yield for the Term Loans shall be increased to the extent necessary so that the Effective Yield for theTerm Loans is equal to the Effective Yield for such Incremental Term Loans minus 0.50% per annum (provided that the “LIBORfloor” applicable to the outstanding Term Loans shall be increased to an amount not to exceed the “LIBOR floor” applicable to suchIncremental Term Loans prior to any increase in the Applicable Rate applicable to such Term Loans then outstanding); and (e) mayotherwise have terms and conditions different from those of the Term Loans (including currency denomination); provided that (x) tothe extent the terms and documentation with respect to any Incremental Facility are not consistent with the existing Term Loans(except with respect to matters contemplated by clauses (b), (c) and (d) above) the terms, conditions and documentation of any suchIncremental Facility shall be as agreed between the Borrower and the Additional Term Lenders providing such Incremental Facilityand (y) in no event shall it be a condition to the effectiveness of, or borrowing under, any such Incremental Term Loans that anyrepresentation or warranty of any Loan Party set forth herein be true and correct, except and solely to the extent required by theAdditional Term Lenders providing such Incremental Term Loans. Any Incremental Term Facility or Incremental Term Increaseshall be pursuant to documentation as determined by the Borrower and the Additional Term Lenders providing such IncrementalTerm Facility or Incremental Term Increase, subject to the restrictions and exceptions set forth above.(c) The Incremental Revolving Facilities shall be on terms and documentation as determined by the Borrowerand the lenders providing such Incremental Revolving Facility; provided that any Incremental Revolving Facility (a) shall (i) rankequal or junior in right of payment with the Term Loans, (ii) if secured, be secured only by the Collateral securing the Obligationsand (iii) only be guaranteed by the Loan Parties, (b) shall not provide for scheduled amortization or mandatory commitmentreductions prior to the final scheduled maturity date of the-98- Term Loans, (c) may provide for the ability to participate with respect to borrowings and, subject to exceptions set forth in the LoanDocuments, repayments on a pro rata basis or less than pro rata basis (but not greater than pro rata basis) with any other existingcash-flow revolving facility tranche, (d) may not have a final scheduled maturity date earlier than the Term Loans, (e) may providefor the ability to permanently repay and terminate the Incremental Revolving Loans on a pro rata basis, less than a pro rata basis, orgreater than a pro rata basis with any existing cash-flow revolving facility tranche and (f) may otherwise have terms and conditionsdifferent from those of the Term Loans (including currency denomination); provided that (x) to the extent the terms anddocumentation with respect to any Incremental Revolving Facility are not consistent with the Term Loans, the terms, conditions anddocumentation of any such Incremental Revolving Facility shall be as agreed between the Borrower and the Additional RevolvingLenders providing such Incremental Revolving Facility and (y) in no event shall it be a condition to the effectiveness of, orborrowing under, any such Incremental Revolving Facility that any representation or warranty of any Loan Party set forth herein betrue and correct, except and solely to the extent required by the Additional Revolving Lenders providing such Incremental RevolvingLoans. Any Incremental Revolving Facility or Incremental Revolving Increase shall be pursuant to documentation as determined bythe Borrower and the Additional Revolving Lenders providing such Incremental Revolving Facility or Incremental RevolvingIncrease, subject to the restrictions and exceptions set forth above.(d) The Incremental Revolving Increase shall be treated the same as the Class of Incremental Revolving Loansbeing increased (including with respect to maturity date thereof) and shall be considered to be part of the Class of IncrementalRevolving Loans being increased (it being understood that, if required to consummate an Incremental Revolving Increase, thepricing, interest rate margins, “most favored nation” provisions, rate floors and undrawn commitment fees on the Class ofIncremental Revolving Loans being increased may be increased and additional upfront or similar fees may be payable to the lendersproviding the Incremental Revolving Increase (without any requirement to pay such fees to any existing Incremental RevolvingLenders)). Any Incremental Revolving Increase shall be on the same terms and pursuant to the same documentation applicable to theIncremental Revolving Loans (excluding upfront fees and customary arranger fees).(e) Each notice from the Borrower pursuant to this Section 2.20 shall set forth the requested amount of therelevant Incremental Term Loans or Incremental Revolving Loans.(f) Commitments in respect of any Incremental Term Increase or Incremental Revolving Increase shall becomeCommitments under this Agreement pursuant to an amendment (an “ Incremental Facility Amendment ”) to this Agreement and, asappropriate, the other Loan Documents, executed by the Borrower, each Lender agreeing to provide such Commitment, if any, eachAdditional Term Lender, if any, and the Term Administrative Agent. An Incremental Facility may be provided, subject to the priorwritten consent of the Borrower (not to be unreasonably withheld), by any existing Lender (it being understood that no existingLender shall have the right to participate in any Incremental Facility or, unless it agrees, be obligated to provide any IncrementalTerm Loans or Incremental Revolving Loans) or by any Additional Term Lender or Additional Revolving Lender. IncrementalTerm Loans and Incremental Revolving Loans shall be a “Loan” for all purposes of this Agreement and the other LoanDocuments. The Incremental Facility Amendment may, subject to Section 2.20(b), without the consent of any other Lenders,-99- effect such amendments to this Agreement and the other Loan Documents as may be necessary, in the reasonable opinion of theTerm Administrative Agent and the Borrower, to effect the provisions of this Section 2.20. The effectiveness of any IncrementalFacility Amendment and the occurrence of any credit event (including the making (but not the conversion or continuation) of a Loan)pursuant to such Incremental Facility Amendment shall be subject to the satisfaction of such conditions as the parties thereto shallagree and as required by this Section 2.20. The Borrower will use the proceeds of the Incremental Term Loans or IncrementalRevolving Loans for any purpose not prohibited by this Agreement.(g) Notwithstanding anything to the contrary, this Section 2.20 shall supersede any provisions in Section 2.18 orSection 9.02 to the contrary.SECTION 2.21 Refinancing Amendments.(a) At any time after the Effective Date, the Borrower may obtain, from any Lender or any Additional TermLender, Credit Agreement Refinancing Indebtedness in respect of all or any portion of the Term Loans then outstanding under thisAgreement (which for purposes of this clause (a) will be deemed to include any then outstanding Other Term Loans) in the form ofOther Term Loans or Other Term Commitments pursuant to a Refinancing Amendment; provided that such Credit AgreementRefinancing Indebtedness (i) will be unsecured or will rank pari passu or junior in right of payment and of security with the otherLoans and Commitments hereunder, (ii) will have such pricing and optional prepayment terms as may be agreed by the Borrowerand the Lenders thereof, and (iii) the Net Proceeds of such Credit Agreement Refinancing Indebtedness shall be applied,substantially concurrently with the incurrence thereof, to the prepayment of outstanding Term Loans being so refinanced. Theeffectiveness of any Refinancing Amendment shall be subject to the satisfaction on the date thereof of the conditions as agreedbetween the lenders providing such Credit Agreement Refinancing Indebtedness and the Borrower and, to the extent reasonablyrequested by the Term Administrative Agent, receipt by the Term Administrative Agent of legal opinions, board resolutions,officers’ certificates and/or reaffirmation agreements consistent with those delivered on the Effective Date under Section 4.01 (otherthan changes to such legal opinions resulting from a change in law, change in fact or change to counsel’s form of opinion reasonablysatisfactory to the Term Administrative Agent). Each Class of Credit Agreement Refinancing Indebtedness incurred under thisSection 2.21 shall be in an aggregate principal amount that is (x) not less than $10,000,000 in the case of Other Term Loans and(y) an integral multiple of $1,000,000 in excess thereof (in each case unless the Borrower and the Term Administrative Agentotherwise agree). The Term Administrative Agent shall promptly notify each Lender as to the effectiveness of each RefinancingAmendment. Each of the parties hereto hereby agrees that, upon the effectiveness of any Refinancing Amendment, this Agreementshall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Credit AgreementRefinancing Indebtedness incurred pursuant thereto (including any amendments necessary to treat the Loans and Commitmentssubject thereto as Other Term Loans and/or Other Term Commitments). Any Refinancing Amendment may, without the consent ofany other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, inthe reasonable opinion of the Term Administrative Agent and the Borrower, to effect the provisions of this Section.-100- (b) This Section 2.21 shall supersede any provisions in Section 2.18 or Section 9.02 to the contrary.SECTION 2.22 Defaulting Lenders.(a) Adjustments . Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomesa Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:(i) Waivers and Amendments . Such Defaulting Lender’s right to approve or disapprove anyamendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 9.02.(ii) Reallocation of Payments . Subject to the last sentence of Section 2.11(f), any payment ofprincipal, interest, fees or other amounts received by the Term Administrative Agent for the account of thatDefaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VII or otherwise, andincluding any amounts made available to the Term Administrative Agent by that Defaulting Lender pursuant toSection 9.08), shall be applied at such time or times as may be determined by the Term Administrative Agent asfollows: first , to the payment of any amounts owing by that Defaulting Lender to the Term AdministrativeAgent hereunder; second , as the Borrower may request (so long as no Default or Event of Default exists), to thefunding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as requiredby this Agreement, as determined by the Term Administrative Agent; third , to the payment of any amountsowing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lenderagainst that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under thisAgreement; fourth , so long as no Default or Event of Default exists, to the payment of any amounts owing toany Loan Party as a result of any judgment of a court of competent jurisdiction obtained by any Loan Partyagainst that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under thisAgreement; and fifth , to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction;provided that if such payment is a payment of the principal amount of any Loans and such Lender is aDefaulting Lender under clause (a) of the definition thereof, such payment shall be applied solely to pay therelevant Loans of the relevant non-Defaulting Lenders on a pro rata basis prior to being applied pursuant to thisSection 2.22(a)(ii). (b) Defaulting Lender Cure . If the Borrower and the Term Administrative Agent agree in writing in their solediscretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Term Administrative Agent will sonotify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein,such Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such actions as theTerm Administrative Agent may determine to be necessary, whereupon that Lender will cease to be a Defaulting Lender; providedthat no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower-101- while that Lender was a Defaulting Lender; and provided further that except to the extent otherwise expressly agreed by the affectedparties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any partyhereunder arising from that Lender’s having been a Defaulting Lender.SECTION 2.23 Illegality.If any Lender determines that any law has made it unlawful, or that any Governmental Authority has assertedthat it is unlawful, for any Lender to make, maintain or fund Loans whose interest is determined by reference to the Adjusted LIBORate, or to determine or charge interest rates based upon the Adjusted LIBO Rate, then, on notice thereof by such Lender to theBorrower through the Term Administrative Agent, (i) any obligation of such Lender to make or continue Eurodollar Loansdenominated in dollars or to convert ABR Loans denominated in dollars to Eurodollar Loans shall be suspended, and (ii) if suchnotice asserts the illegality of such Lender making or maintaining ABR Loans the interest rate on which is determined by referenceto the Adjusted LIBO Rate component of the Alternate Base Rate, the interest rate on such ABR Loans of such Lender shall, ifnecessary to avoid such illegality, be determined by the Term Administrative Agent without reference to the Adjusted LIBO Ratecomponent of the Alternate Base Rate, in each case until such Lender notifies the Term Administrative Agent and the Borrower thatthe circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrower shall, upon threeBusiness Days’ notice from such Lender (with a copy to the Term Administrative Agent), prepay or, if applicable, convert allEurodollar Loans denominated in dollars 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 Term Administrative Agent without reference to the Adjusted LIBO Ratecomponent of the Alternate Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue tomaintain such Eurodollar Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such EurodollarLoans, and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the AdjustedLIBO Rate, the Term Administrative Agent shall during the period of such suspension compute the Alternate Base Rate applicable tosuch Lender without reference to the Adjusted LIBO Rate component thereof until the Term Administrative Agent is advised inwriting by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the AdjustedLIBO Rate. Each Lender agrees to notify the Term Administrative Agent and the Borrower in writing promptly upon becomingaware that it is no longer illegal for such Lender to determine or charge interest rates based upon the Adjusted LIBO Rate. Upon anysuch prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.SECTION 2.24 Loan Modification Offers.(a) At any time after the Effective Date, the Borrower may on one or more occasions, by written notice to theTerm Administrative Agent, make one or more offers (each, a “ Loan Modification Offer ”) to all the Lenders of one or more Classes(each Class subject to such a Loan Modification Offer, an “ Affected Class ”) to effect one or more Permitted Amendments relatingto such Affected Class pursuant to procedures reasonably specified by the Term Administrative Agent and reasonably acceptable tothe Borrower (including mechanics to permit cashless rollovers and exchanges by Lenders). Such notice shall set forth (i) the termsand-102- conditions of the requested Permitted Amendment and (ii) the date on which such Permitted Amendment is requested to becomeeffective. Permitted Amendments shall become effective only with respect to the Loans and Commitments of the Lenders of theAffected Class that accept the applicable Loan Modification Offer (such Lenders, the “ Accepting Lenders ”) and, in the case of anyAccepting Lender, only with respect to such Lender’s Loans and Commitments of such Affected Class as to which such Lender’sacceptance has been made.(b) A Permitted Amendment shall be effected pursuant to a Loan Modification Agreement executed anddelivered by the Borrower, each applicable Accepting Lender and the Term Administrative Agent; provided that no PermittedAmendment shall become effective unless the Borrower shall have delivered to the Term Administrative Agent such legal opinions,board resolutions, secretary’s certificates, officer’s certificates and other documents as shall be reasonably requested by the TermAdministrative Agent in connection therewith. The Term Administrative Agent shall promptly notify each Lender as to theeffectiveness of each Loan Modification Agreement. Each Loan Modification Agreement may, without the consent of any Lenderother than the applicable Accepting Lenders, effect such amendments to this Agreement and the other Loan Documents as may benecessary or appropriate, in the opinion of the Term Administrative Agent, to give effect to the provisions of this Section 2.24,including any amendments necessary to treat the applicable Loans and/or Commitments of the Accepting Lenders as a new “Class”of loans and/or commitments hereunder.(c) If, in connection with any proposed Loan Modification Offer, any Lender declines to consent to such LoanModification Offer on the terms and by the deadline set forth in such Loan Modification Offer (each such Lender, a “ Non-AcceptingLender ”) then the Borrower may, on notice to the Term Administrative Agent and the Non-Accepting Lender, (i) replace such Non-Accepting Lender in whole or in part by causing such Lender to (and such Lender shall be obligated to) assign and delegate, withoutrecourse (in accordance with and subject to the restrictions contained in Section 9.04) all or any part of its interests, rights andobligations under this Agreement in respect of the Loans and Commitments of the Affected Class to one or more Eligible Assignees(which Eligible Assignee may be another Lender, if a Lender accepts such assignment); provided that neither the TermAdministrative Agent nor any Lender shall have any obligation to the Borrower to find a replacement Lender; provided, further, that(a) the applicable assignee shall have agreed to provide Loans and/or Commitments on the terms set forth in the applicable PermittedAmendment, (b) such Non-Accepting Lender shall have received payment of an amount equal to the outstanding principal of theLoans of the Affected Class assigned by it pursuant to this Section 2.24(c), accrued interest thereon, accrued fees and all otheramounts (including any amounts under Section 2.11(a)(i)) payable to it hereunder from the Eligible Assignee (to the extent of suchoutstanding principal and accrued interest and fees) and (c) unless waived, the Borrower or such Eligible Assignee shall have paid tothe Term Administrative Agent the processing and recordation fee specified in Section 9.04(b).(d) Notwithstanding anything to the contrary, this Section 2.24 shall supersede any provisions in Section 2.18 orSection 9.02 to the contrary.-103- ARTICLE IIIREPRESENTATIONS AND WARRANTIESThe Borrower represents and warrants to the Lenders that as of the Effective Date; provided that on the EffectiveDate, such Person’s representations and warranties shall be limited to the Specified Representations:SECTION 3.01 Organization; Powers.Each of the Borrower and its Restricted Subsidiaries is (a) duly organized or incorporated, validly existing andin good standing (to the extent such concept exists in the relevant jurisdictions) under the laws of the jurisdiction of its organization,(b) has the corporate or other organizational power and authority to carry on its business as now conducted and to execute, deliverand perform its obligations under each Loan Document to which it is a party and (c) is qualified to do business in, and is in goodstanding in, every jurisdiction where such qualification is required, except in each case where the failure to do so, individually or inthe aggregate, would not reasonably be expected to result in a Material Adverse Effect.SECTION 3.02 Authorization; Enforceability.This Agreement has been duly authorized, executed and delivered by the Borrower and constitutes, and eachother Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, alegal, valid and binding obligation of the Borrower or such Loan Party, as the case may be, enforceable against it in accordance withits terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generallyand subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.SECTION 3.03 Governmental Approvals; No Conflicts.Except as set forth on Schedule 3.03, the Financing Transactions (a) do not require any consent or approval of,registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are infull force and effect and except filings necessary to perfect Liens created under the Loan Documents, (b) will not violate (i) theOrganizational Documents of, or (ii) any Requirements of Law applicable to, the Borrower or any Restricted Subsidiary, (c) will notviolate or result in a default under any indenture or other agreement or instrument binding upon the Borrower or any RestrictedSubsidiary or their respective assets, or give rise to a right thereunder to require any payment, repurchase or redemption to be madeby the Borrower or any Restricted Subsidiary, or give rise to a right of, or result in, termination, cancellation or acceleration of anyobligation thereunder and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any RestrictedSubsidiary, except Liens created under the Loan Documents or permitted by Section 6.02 , except to the extent that the failure toobtain or make such consent, approval, registration, filing or action, or such violation, default or right, or imposition of Lien, as thecase may be, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.-104- SECTION 3.04 Financial Condition; No Material Adverse Effect.(a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently appliedthroughout the period covered thereby, except as otherwise expressly noted therein and (ii) fairly present in all material respects thefinancial condition of the Acquired Company and its Subsidiaries as of the respective dates thereof and their results of operations forthe period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except asotherwise expressly noted therein.(b) The Unaudited Financial Statements (i) were prepared in accordance with GAAP consistently appliedthroughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present in all material respects thefinancial condition of the Acquired Company and its Subsidiaries as of the dates thereof and their results of operations for theperiods covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end auditadjustments.(c) The Borrower has heretofore furnished to the Joint Lead Arrangers the consolidated pro forma balance sheetof the Borrower and its Subsidiaries as of March 31, 2015, and the related consolidated pro forma statement of operations of theBorrower as of and for the twelve-month period then ended (such pro forma balance sheet and statement of operations, the “ ProForma Financial Statements ”), which have been prepared giving effect to the Transactions (excluding the impact of purchaseaccounting effects required by GAAP) as if such Transactions had occurred as of such date (in the case of such balance sheet) or atthe beginning of such period (in the case of such statement of operations). The Pro Forma Financial Statements have been preparedin good faith, based on assumptions believed by the Borrower to be reasonable as of the date of delivery thereof, and present fairly inall material respects on a pro forma basis and in accordance with GAAP the estimated financial position of the Borrower and itsSubsidiaries as of March 31, 2015, and their estimated results of operations for the periods covered thereby, assuming that theTransactions had actually occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the caseof such statement of operations).(d) Since the Effective Date, there has been no Material Adverse Effect.SECTION 3.05 Properties.Each of the Borrower and its Restricted Subsidiaries has good title to, or valid interests in, all its real andpersonal property material to its business, if any (including all of the Mortgaged Properties), (i) free and clear of all Liens except forLiens permitted by Section 6.02 and (ii) except for minor defects in title that do not interfere with its ability to conduct its business ascurrently conducted or as proposed to be conducted or to utilize such properties for their intended purposes, in each case, exceptwhere the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.-105- SECTION 3.06 Litigation and Environmental Matters.(a) Except as set forth on Schedule 3.06, there are no actions, suits or proceedings by or before any arbitrator orGovernmental Authority pending against or, to the knowledge of the Borrower, threatened in writing against or affecting theBorrower or any Restricted Subsidiary that would reasonably be expected, individually or in the aggregate, to result in a MaterialAdverse Effect.(b) Except as set forth on Schedule 3.06, and except with respect to any other matters that, individually or in theaggregate, would not reasonably be expected to result in a Material Adverse Effect, none of the Borrower or any RestrictedSubsidiary (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or otherapproval required under any Environmental Law, (ii) has, to the knowledge of the Borrower, become subject to any EnvironmentalLiability or (iii) has received written notice of any claim with respect to any Environmental Liability .SECTION 3.07 Compliance with Laws.Each of the Borrower and its Restricted Subsidiaries is in compliance with all Requirements of Law applicableto it or its property, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in aMaterial Adverse Effect.SECTION 3.08 Investment Company Status.None of the Loan Parties is required to register as an “investment company” under the Investment Company Actof 1940, as amended from time to time.SECTION 3.09 Taxes.Except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect,the Borrower and each Restricted Subsidiary (a) have timely filed or caused to be filed all Tax returns and reports required to havebeen filed and (b) have paid or caused to be paid all Taxes levied or imposed on their properties, income or assets (whether or notshown on a Tax return) including in their capacity as tax withholding agents, except any Taxes that are being contested in good faithby appropriate proceedings, provided that the Borrower or such Subsidiary, as the case may be, has set aside on its books adequatereserves therefor in accordance with GAAP and applicable local standards. There is no proposed Tax assessment, deficiency orother claim against the Borrower or any Restricted Subsidiary that would reasonably be expected to, individually or in the aggregate,have a Material Adverse Effect.SECTION 3.10 ERISA.(a) Except as could not, individually or in the aggregate, reasonably be expected to result in a Material AdverseEffect, each Plan is in compliance with the applicable provisions of ERISA, the Code and other federal or state laws.(b) Except as would not reasonably be expected, individually or in the aggregate, to result in a Material AdverseEffect, (i) no ERISA Event has occurred during the six year period-106- prior to the date on which this representation is made or deemed made or is reasonably expected to occur, and (ii) neither any LoanParty nor any ERISA Affiliate has engaged in a transaction that would reasonably be expected to be subject to Section 4069 or4212(c) of ERISA.(c) Except as would not reasonably be expected, individually or in the aggregate to result in a Material AdverseEffect: (i) each employee benefit plan (as defined in Section 3(2) of ERISA) that is intended to be a qualified plan under Section401(a) of the Code has received a favorable determination letter from the Internal Revenue Service to the effect that the form of suchplan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Serviceto be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently beingprocessed by the Internal Revenue Service, (ii) to the knowledge of the Borrower, nothing has occurred that would prevent or causethe loss of such tax-qualified status, and (iii) there are no pending or, to the knowledge of the Borrower, threatened claims, actionsor lawsuits, or action by any Governmental Authority, with respect to any such plan.SECTION 3.11 Disclosure.As of the Effective Date (to the Borrower’s knowledge), all written factual information and written factual data(other than projections and information of a general economic or industry specific nature) furnished by or on behalf of any LoanParty to the Term Administrative Agent or any Lender in connection with the negotiation of any Loan Document or deliveredthereunder (as modified or supplemented by other information so furnished), when taken as a whole when furnished, do not containany untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of thecircumstances under which they were made, not materially misleading; provided that, with respect to projected financial information,the Borrower represents only that such information, when taken as a whole, was prepared in good faith based upon assumptionsbelieved by them to be reasonable at the time delivered, it being understood that (i) any such projected financial information ismerely a prediction as to future events and its not to be viewed as fact, (ii) such projected financial information is subject tosignificant uncertainties and contingencies, many of which are beyond the control of the Borrower or any of its Subsidiaries and (iii)no assurance can be given that any particular projections will be realized and that actual results during the period or periods coveredby any such projections may differ significantly from the projected results and such differences may be material.SECTION 3.12 Subsidiaries.As of the Effective Date, Schedule 3.12 sets forth the name of, and the ownership interest of the Borrower andeach of its subsidiaries in, each subsidiary of the Borrower.SECTION 3.13 Intellectual Property; Licenses, Etc.Except as would not reasonably be expected to have a Material Adverse Effect, each of the Borrower and itsRestricted Subsidiaries owns, licenses or possesses the right to use all Intellectual Property that is reasonably necessary for theoperation of its business substantially as currently conducted. To the knowledge of the Borrower, no Intellectual Property used bythe-107- Borrower or any Restricted Subsidiary in the operation of its business as currently conducted infringes upon the Intellectual Propertyof any Person except for such infringements that would not reasonably be expected to have, individually or in the aggregate, aMaterial Adverse Effect. No claim or litigation regarding any of the Intellectual Property is pending or, to the knowledge of theBorrower, threatened against the Borrower or any Restricted Subsidiary, which, individually or in the aggregate, would reasonablybe expected to have a Material Adverse Effect.SECTION 3.14 Solvency.Immediately after the consummation of each of the Transactions to occur on the Effective Date, after taking intoaccount all applicable rights of indemnity and contribution, (a) the sum of the debt (including contingent liabilities) of the Borrowerand its Subsidiaries, on a consolidated basis, does not exceed the present fair saleable value of the present assets of the Borrower andits Subsidiaries, on a consolidated basis, (b) the capital of the Borrower and its Subsidiaries, on a consolidated basis, is notunreasonably small in relation to their business as contemplated on the Effective Date, (c) the Borrower and its Subsidiaries, on aconsolidated basis, have not incurred and do not intend to incur, or believe that they will incur, debts including current obligations,beyond their ability to pay such debts as they become due (whether at maturity or otherwise) and (d) the Borrower and itsSubsidiaries, on a consolidated basis, are “solvent” within the meaning given to that term and similar terms under applicable lawsrelating to fraudulent transfers and conveyances. For purposes of this Section 3.14, the amount of any contingent liability at any timeshall be computed as the amount that, in the light of all of the facts and circumstances existing at such time, represents the amountthat would reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meetthe criteria for accrual pursuant to Financial Accounting Standards Board Statement No. 5).SECTION 3.15 Senior Indebtedness.The Loan Document Obligations constitute “Senior Indebtedness” (or any comparable term) under and asdefined in the documentation governing any other Junior Financing.SECTION 3.16 Federal Reserve Regulations.None of the Borrower or any Restricted Subsidiary is engaged or will engage, principally or as one of itsimportant activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U of the Board ofGovernors), or extending credit for the purpose of purchasing or carrying margin stock. No part of the proceeds of the Loans will beused, directly or indirectly, to purchase or carry any margin stock or to refinance any Indebtedness originally incurred for suchpurpose, or for any other purpose that entails a violation (including on the part of any Lender) of the provisions of Regulations U orX of the Board of Governors.SECTION 3.17 Use of Proceeds.The Borrower will use the proceeds of the Term Loans made on the Effective Date to directly or indirectlyfinance the Transactions and otherwise for general corporate purposes.-108- ARTICLE IVCONDITIONSSECTION 4.01 Effective Date.The obligation of each Lender to make Loans hereunder on the Effective Date shall be subject to satisfaction ofthe following conditions (or waiver thereof in accordance with Section 9.02):(a) The Term Administrative Agent (or its counsel) shall have received from each party hereto either (i) acounterpart of this Agreement signed on behalf of such party or (ii) otherwise, written evidence satisfactory to the TermAdministrative Agent (which may include facsimile or other electronic transmission of a signed counterpart of thisAgreement) that such party has signed a counterpart of this Agreement.(b) The Term Administrative Agent shall have received a written opinion (addressed to the Term AdministrativeAgent and the Lenders and dated the Effective Date) of each of (i) Kirkland & Ellis LLP, Delaware, New York and Texascounsel for the Loan Parties and (ii) Davis Wright Tremaine LLP, Alaska and Washington counsel for the Loan Parties, ineach case in form and substance reasonably satisfactory to the Term Administrative Agent. The Borrower hereby requestseach such counsel to deliver such opinions.(c) The Term Administrative Agent shall have received a certificate of each Loan Party, dated the EffectiveDate, substantially in the form of Exhibit H with appropriate insertions, or otherwise in form and substance reasonablysatisfactory to the Term Administrative Agent, executed by any Responsible Officer of such Loan Party, and including orattaching the documents referred to in paragraph (d) of this Section 4.01.(d) The Term Administrative Agent shall have received a copy of (i) each Organizational Document of eachLoan Party certified, to the extent applicable, as of a recent date by the applicable Governmental Authority, (ii) signatureand incumbency certificates of the Responsible Officers of each Loan Party executing the Loan Documents to which it is aparty, (iii) copies of resolutions of the board of directors and/or similar governing bodies of each Loan Party approving andauthorizing the execution, delivery and performance of Loan Documents to which it is a party, certified as of the EffectiveDate by its secretary, an assistant secretary or a Responsible Officer as being in full force and effect without modificationor amendment and (iv) a good standing certificate (to the extent such concept exists) from the applicable GovernmentalAuthority of each Loan Party’s jurisdiction of incorporation, organization or formation.(e) The Term Administrative Agent shall have received all fees and other amounts previously agreed in writingby the Joint Lead Arrangers and the Borrower to be due and payable on or prior to the Effective Date, including, to theextent invoiced at least three (3) Business Days prior to the Effective Date, reimbursement or payment of all reasonableand documented out-of-pocket expenses (including reasonable fees, charges and disbursements of counsel) required to bereimbursed or paid by any Loan Party under any Loan Document.-109- (f) The Collateral and Guarantee Requirement (other than in accordance with Section 5.14) shall have beensatisfied and the Term Administrative Agent shall have received a completed Perfection Certificate dated the EffectiveDate and signed by a Responsible Officer of the Borrower, together with all attachments contemplated thereby; providedthat if, notwithstanding the use by the Borrower of commercially reasonable efforts without undue burden or expense tocause the Collateral and Guarantee Requirement to be satisfied on the Effective Date, the requirements thereof (other than(a) the execution and delivery of the Term Guarantee Agreement and the Term Collateral Agreement by the Loan Parties,(b) creation of and perfection of security interests in the Equity Interests of wholly-owned Domestic Subsidiaries that areRestricted Subsidiaries of the Borrower ( provided that such Equity Interests are not Excluded Assets or owned or held byan Excluded Subsidiary), to the extent received from the Acquired Company and (c) delivery of Uniform CommercialCode financing statements with respect to perfection of security interests in the assets of the Loan Parties that may beperfected by the filing of a financing statement under the Uniform Commercial Code) are not satisfied as of the EffectiveDate, the satisfaction of such requirements shall not be a condition to the availability of the initial Loans on the EffectiveDate (but shall be required to be satisfied as promptly as practicable after the Effective Date and in any event within theperiod specified therefor in Schedule 5.14 or such later date as the Term Administrative Agent may otherwise reasonablyagree).(g) Since April 13, 2015, there shall not have occurred a Material Adverse Effect (as defined in the AcquisitionAgreement) with respect to the Acquired Companies.(h) The Joint Lead Arrangers shall have received the Audited Financial Statements, the Unaudited FinancialStatements and the Pro Forma Financial Statements.(i) (A) The Specified Acquisition Agreement Representations shall be true and correct in all material respects onand as of the Effective Date and (B) the Specified Representations shall be true and correct in all material respects on andas of the Effective Date.(j) The Acquisition shall have been consummated, or substantially simultaneously with the initial funding ofLoans on the Effective Date, shall be consummated, in all material respects in accordance with the terms of the AcquisitionAgreement, without giving effect to any modifications, amendments, consents or waivers by the Acquired Company to orof the Acquisition Agreement that are materially adverse to the Joint Lead Arrangers without the consent of each JointLead Arranger (such consent not to be unreasonably withheld, delayed or conditioned and provided that the Joint LeadArrangers shall be deemed to have consented to such amendment, waiver or consent unless they shall object thereto within48 hours after notice of such proposed amendment, waiver or consent) (it being understood that (x) any substantivemodification, amendment, consent or waiver to the definition of Material Adverse Effect (as defined in the AcquisitionAgreement as in effect on April 13, 2015) shall be deemed to be materially adverse to the interest of the Lenders and theJoint Lead Arrangers, (y) any increase in the purchase price of the Acquisition shall be deemed not to be materiallyadverse to the Joint Lead Arrangers so long as such increase is funded by an increase in the Equity Issuance, and (z) any-110- reduction in the purchase price of the Acquisition shall not be deemed to be material and adverse to the interests of theJoint Lead Arrangers but shall be allocated to reduce the Term Loans and the Unsecured Notes pro rata).(k) The Refinancing shall have been consummated, or substantially concurrently with the initial funding ofLoans on the Effective Date, shall be consummated.(l) The Lenders shall have received a certificate from the chief financial officer of the Borrower certifying as tothe solvency of the Borrower and its Subsidiaries on a consolidated basis after giving effect to the Transactions,substantially in the form of Exhibit S.(m) The Term Administrative Agent and the Joint Lead Arrangers shall have received, at least three (3) BusinessDays prior to the Effective Date, all documentation and other information about the Loan Parties as shall have beenreasonably requested in writing at least ten (10) Business Days prior to the Effective Date by the Term AdministrativeAgent or the Joint Lead Arrangers that they shall have reasonably determined is required by regulatory authorities underapplicable “know your customer” and anti-money laundering rules and regulations, including without limitation the USAPATRIOT Act.(n) The Equity Issuance shall have been consummated, or substantially concurrently with, or prior to, the initialfunding of Loans on the Effective Date, shall be consummated.(o) The ABL Loan Documents shall have been executed and delivered by all of the ABL Loan Parties stated tobe party thereto and the Borrower shall have received no less than $700,000,000 of gross proceeds from the issuance of theUnsecured Notes in accordance with the Unsecured Notes Indenture.(p) The Grantor Intercreditor Agreement Joinder to the ABL/Bond Intercreditor Agreement and the Pari PassuIntercreditor Agreement shall have been duly executed and delivered by all of the Loan Parties stated to be party thereto.Notwithstanding the foregoing, the obligations of the Lenders to make Loans hereunder shall not becomeeffective unless each of the foregoing conditions shall have been satisfied (or waived pursuant to Section 9.02) at or priorto 5:00 p.m., New York City time, on the Effective Date (and, in the event such conditions are not so satisfied or waived,the Commitments shall terminate at such time).For purposes of determining whether the conditions set forth in this Section 4.01 have been satisfied, byreleasing its signature page hereto or to an Assignment and Assumption, the Term Administrative Agent and each Lenderparty hereto shall be deemed to have consented to, approved, accepted or be satisfied with each document or other matterrequired hereunder to be consented to or approved by, or acceptable or satisfactory to, the Term Administrative Agent orsuch Lender, as the case may be.-111- ARTICLE VAFFIRMATIVE COVENANTSFrom and after the Effective Date and until the Termination Date, the Borrower covenants and agrees with theLenders that:SECTION 5.01 Financial Statements and Other Information.The Borrower will furnish to the Term Administrative Agent, on behalf of each Lender:(a) on or before the date that is one hundred and twenty-five (125) days after the end of each fiscal year of theBorrower (or, in the case of financial statements for the fiscal year ending December 31, 2015, on or before the date that isone hundred and fifty (150) days after the end of such fiscal year), audited consolidated balance sheet and auditedconsolidated statements of operations and comprehensive income, shareholders’ equity and cash flows of the Borrower andits Subsidiaries as of the end of and for such year, and related notes thereto, setting forth in each case in comparative formthe figures for the previous fiscal year, all reported on by PricewaterhouseCoopers LLP or another independent publicaccounting firm of recognized national standing (without a “going concern” or like qualification or exception and withoutany qualification or exception as to the scope of such audit (other than with respect to, or resulting from, (A) an upcomingmaturity date of any Indebtedness occurring within one year from the time such opinion is delivered or (B) any actualfailure to satisfy a financial maintenance covenant or any potential inability to satisfy a financial maintenance covenant ona future date or in a future period)) to the effect that such consolidated financial statements present fairly in all materialrespects the financial condition as of the end of and for such year and results of operations and cash flows of the Borrowerand its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;(b) commencing with the financial statements for the fiscal quarter ended June 30, 2015, on or before the datethat is sixty (60) days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower (or, in thecase of financial statements for the fiscal quarters ended June 30, 2015 and ending September 30, 2015, on or before thedate that is ninety (90) days after the end of such fiscal quarter), unaudited consolidated balance sheet and unauditedconsolidated statements of operations and comprehensive income, shareholders’ equity and cash flows as of the end of andfor such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form thefigures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscalyear, all certified by a Financial Officer as presenting fairly in all material respects the financial condition as of the end ofand for such fiscal quarter and such portion of the fiscal year and results of operations and cash flows of the Borrower andits Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end auditadjustments and the absence of footnotes;-112- (c) simultaneously with the delivery of each set of consolidated financial statements referred to in clauses (a) and(b) above, the related unaudited consolidating financial information reflecting adjustments necessary to eliminate theaccounts of Unrestricted Subsidiaries (if any) from such consolidated financial statements;(d) not later than five days after any delivery of financial statements under paragraph (a) or (b) above, acertificate of a Financial Officer (i) certifying as to whether a Default then exists and, if a Default does then exist,specifying the details thereof and any action taken or proposed to be taken with respect thereto and (ii) in the case offinancial statements delivered under paragraph (a) above, setting forth a reasonably detailed calculation of, beginning withthe financial statements for the fiscal year of the Borrower ending December 31, 2016 of Excess Cash Flow for such fiscalyear and (iii) in the case of financial statements delivered under paragraph (a) above, setting forth a reasonably detailedcalculation of the Net Proceeds received during the applicable period by or on behalf of the Borrower or any of itsRestricted Subsidiaries in respect of any event described in clause (a) of the definition of the term “Prepayment Event” andthe portion of such Net Proceeds that has been invested or are intended to be reinvested in accordance with the proviso inSection 2.11(c);(e) promptly after the same become publicly available, copies of all periodic and other reports, proxy statementsand registration statements (other than amendments to any registration statement (to the extent such registration statement,in the form it became effective, is delivered to the Term Administrative Agent), exhibits to any registration statement and,if applicable, any registration statement on Form S-8) filed by the Borrower or any Restricted Subsidiary with the SEC orwith any national securities exchange; and(f) promptly following any request therefor, such other information regarding the operations, business affairs andfinancial condition of the Borrower or any Restricted Subsidiary, or compliance with the terms of any Loan Document, asthe Term Administrative Agent on its own behalf or on behalf of any Lender may reasonably request in writing.Notwithstanding the foregoing, the obligations in paragraphs (a) and (b) of this Section 5.01 may be satisfiedwith respect to financial information of the Borrower and its Subsidiaries by furnishing the Form 10-K or 10-Q (or the equivalent), asapplicable, of the Borrower (or a parent company thereof) filed with the SEC within the applicable time periods required byapplicable law and regulations; provided that (i) to the extent such information relates to a parent of the Borrower, such informationis accompanied by consolidating information, which may be unaudited, that explains in reasonable detail the differences between theinformation relating to such parent, on the one hand, and the information relating to the Borrower and its Subsidiaries on astandalone basis, on the other hand, and (ii) to the extent such information is in lieu of information required to be provided underSection 5.01(a), such materials are accompanied by a report and opinion of an independent registered public accounting firm ofnationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standardsand shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope ofsuch audit (other than with respect to, or resulting from, (i) an upcoming maturity date of any Indebtedness occurring within one year-113- from the time such opinion is delivered or (ii) any actual failure to satisfy a financial maintenance covenant or any potential inabilityto satisfy a financial maintenance covenant on a future date or in a future period).Documents required to be delivered pursuant to Section 5.01(a), (b) or (e) (to the extent any such documents areincluded in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have beendelivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on theInternet at the website address listed on Schedule 9.01 (or otherwise notified pursuant to Section 9.01(d)); or (ii) on which suchdocuments are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the TermAdministrative Agent have access (whether a commercial, third-party website or whether sponsored by the Term AdministrativeAgent). The Term Administrative Agent shall have no obligation to request the delivery of or maintain paper copies of thedocuments referred to above, and each Lender shall be solely responsible for timely accessing posted documents or requestingdelivery of paper copies of such documents from the Term Administrative Agent and maintaining its copies of such documents.Notwithstanding anything to the contrary herein, neither the Borrower nor any Subsidiary shall be required todeliver, disclose, permit the inspection, examination or making of copies of or excerpts from, or any discussion of, any document,information, or other matter (i) that constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect ofwhich disclosure to the Term Administrative Agent (or any Lender (or their respective representatives or contractors)) is prohibitedby applicable law, (iii) that is subject to attorney-client or similar privilege or constitutes attorney work product, (iv) with respect towhich any Loan Party owes confidentiality obligations (to the extent not created in contemplation of such Loan Party’s Obligationsunder this Section 5.01) to any third party or (v) that relates to any investigation by any Governmental Authority to the extent (x)such information is identifiable to a particular individual and the Borrower in good faith determines such information should remainconfidential or (y) the information requested is not factual in nature.The Borrower hereby acknowledges that (a) the Term Administrative Agent and/or the Joint Lead Arrangers willmake available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials ”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “ Platform ”) and(b) certain of the Lenders (each, a “ Public Lender ”) may have personnel who do not wish to receive Material Non-PublicInformation and who may be engaged in investment and other market-related activities with respect to the Borrower’s or itsAffiliates’ securities. The Borrower hereby agrees that it will use commercially reasonable efforts to identify that portion of theBorrower Materials that may be distributed to the Public Lenders and that (w) all such Borrower Materials shall be clearly andconspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the firstpage thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the TermAdministrative Agent, the Joint Lead Arrangers and the Lenders to treat such Borrower Materials as not containing any MaterialNon-Public Information (although it may be sensitive and proprietary) ( provided , however , that to the extent such BorrowerMaterials constitute Information, they shall be treated as set forth in Section 9.12); (y) all Borrower Materials marked “PUBLIC” arepermitted to be made-114- available through a portion of the Platform designated “Public Side Information”; and (z) the Term Administrative Agent and theJoint Lead Arrangers shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only forposting on a portion of the Platform not designated “Public Side Information”; provided that the Borrower’s failure to comply withthis sentence shall not constitute a Default or an Event of Default under this Agreement or the Loan Documents. Notwithstandingthe foregoing, the Borrower shall be under no obligation to mark any Borrower Materials as “PUBLIC” . Each Loan Party herebyacknowledges and agrees that, unless the Borrower notifies the Term Administrative Agent in advance, all financial statements andcertificates furnished pursuant to Sections 5.01(a), (b), (c) and (d) above are hereby deemed to be suitable for distribution, and to bemade available, to all Lenders and may be treated by the Term Administrative Agent and the Lenders as not containing any MaterialNon-Public Information.SECTION 5.02 Notices of Material Events.Promptly after any Responsible Officer of the Borrower obtains actual knowledge thereof, the Borrower willfurnish to the Term Administrative Agent (for distribution to each Lender through the Term Administrative Agent) written notice ofthe following:(a) the occurrence of any Default;(b) to the extent permissible by Requirements of Law, the filing or commencement of any action, suit orproceeding by or before any arbitrator or Governmental Authority against or, to the knowledge of a Financial Officer oranother executive officer of the Borrower or any Subsidiary, affecting the Borrower or any Subsidiary or the receipt of awritten notice of an Environmental Liability, in each case that would reasonably be expected to result in a MaterialAdverse Effect; and(c) the occurrence of any ERISA Event that would reasonably be expected, individually or in the aggregate, toresult in a Material Adverse Effect.Each notice delivered under this Section 5.02 shall be accompanied by a written statement of a Responsible Officer of the Borrowersetting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respectthereto.SECTION 5.03 Information Regarding Collateral.(a) The Borrower will furnish to the Term Administrative Agent prompt (and in any event within thirty (30)days or such longer period as reasonably agreed to by the Term Administrative Agent) written notice of any change (i) in any LoanParty’s legal name (as set forth in its certificate of organization or like document), (ii) in the jurisdiction of incorporation ororganization of any Loan Party or in the form of its organization or (iii) in any Loan Party’s organizational identification number tothe extent that such Loan Party is organized or owns Mortgaged Property in a jurisdiction where an organizational identificationnumber is required to be included in a UCC financing statement for such jurisdiction.(b) Not later than five days after delivery of financial statements pursuant to Section 5.01(a), the Borrower shalldeliver to the Term Administrative Agent a certificate-115- executed by a Responsible Officer of the Borrower (i) setting forth the information required pursuant to Paragraphs 1, 6, 7, 8, 9 and10 of the Perfection Certificate or confirming that there has been no change in such information since the date of the PerfectionCertificate delivered on the Effective Date or the date of the most recent certificate delivered pursuant to this Section 5.03, (ii)identifying any Wholly Owned Restricted Subsidiary that has become, or ceased to be, a Material Subsidiary or an ExcludedSubsidiary during the most recently ended fiscal quarter and (iii) certifying that all notices required to be given prior to the date ofsuch certificate by Section 5.03 have been given.SECTION 5.04 Existence; Conduct of Business.The Borrower will, and will cause each Restricted Subsidiary to, do or cause to be done all things necessary toobtain, preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises,Intellectual Property and Governmental Approvals material to the conduct of its business, except to the extent (other than withrespect to the preservation of the existence of the Borrower) that the failure to do so would not reasonably be expected to have aMaterial Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolutionpermitted under Section 6.03 or any Disposition permitted by Section 6.05.SECTION 5.05 Payment of Taxes, etc.The Borrower will, and will cause each Restricted Subsidiary to, pay all Taxes (whether or not shown on a Taxreturn) imposed upon it or its income or properties or in respect of its property or assets, before the same shall become delinquent orin default, except where (a) the same are being contested in good faith by an appropriate proceeding diligently conducted by theBorrower or any of its Subsidiaries or (b) the failure to make payment would not reasonably be expected, individually or in theaggregate, to result in a Material Adverse Effect.SECTION 5.06 Maintenance of Properties.The Borrower will, and will cause each Restricted Subsidiary to, keep and maintain all tangible propertymaterial to the conduct of its business in good working order and condition (subject to casualty, condemnation and ordinary wear andtear), except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a MaterialAdverse Effect.SECTION 5.07 Insurance.(a) The Borrower will, and will cause each Restricted Subsidiary to, maintain, with insurance companies that theBorrower believes (in the good faith judgment of the management of the Borrower) are financially sound and responsible at the timethe relevant coverage is placed or renewed, insurance in at least such amounts (after giving effect to any self-insurance which theBorrower believes (in the good faith judgment of management of the Borrower) is reasonable and prudent in light of the size andnature of its business) and against at least such risks (and with such risk retentions) as the Borrower believes (in the good faithjudgment or the management of the Borrower) are reasonable and prudent in light of the size and nature of its business, and willfurnish to the Lenders, upon written request from the Term Collateral Agent, information presented in-116- reasonable detail as to the insurance so carried. The Borrower shall cause (i) each such general liability policy of insurance (otherthan directors and officers policies, workers compensation policies and business interruption insurance) to name the Term CollateralAgent, on behalf of the Secured Parties, as an additional insured thereunder as its interests may appear and (ii) in the case of eachcasualty insurance policy, contain a loss payable clause or mortgagee endorsement that names the Term Collateral Agent, on behalfof the Secured Parties as the loss payee or mortgagee thereunder.(b) If any portion of any Mortgaged Property is at any time located in an area identified by the FederalEmergency Management Agency (or any successor agency) as a special flood hazard area with respect to which flood insurance hasbeen made available under the National Flood Insurance Act of 1968 (as now or hereafter in effect or successor act thereto), then theBorrower shall, or shall cause each Loan Party to (i) maintain, or cause to be maintained, with insurance companies that theBorrower believes (in the good faith judgment of the management of the Borrower) are financially sound and responsible at the timethe relevant coverage is placed or renewed, flood insurance in an amount and otherwise sufficient to comply with all applicable rulesand regulations promulgated pursuant to the Flood Insurance Laws and (ii) furnish to the Lenders, upon written request from theTerm Collateral Agent, information presented in reasonable detail as to the flood insurance so carried.SECTION 5.08 Books and Records; Inspection and Audit Rights.The Borrower will, and will cause each Restricted Subsidiary to, maintain proper books of record and account inwhich entries that are full, true and correct in all material respects and are in conformity with GAAP (or applicable local standards)consistently applied shall be made of all material financial transactions and matters involving the assets and business of the Borroweror its Restricted Subsidiary, as the case may be. The Borrower will, and will cause each Restricted Subsidiary to, permit anyrepresentatives designated by the Term Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect itsproperties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with itsofficers and independent accountants, all at such reasonable times and as often as reasonably requested; provided that, (i) suchrepresentatives shall use commercially reasonable efforts to avoid interruption of the normal business operations of the Borrower andits Subsidiaries and (ii) excluding any such visits and inspections during the continuation of an Event of Default, only the TermAdministrative Agent on behalf of the Lenders may exercise visitation and inspection rights of the Term Administrative Agent andthe Lenders under this Section 5.08 and the Term Administrative Agent shall not exercise such rights more often than one timeduring any calendar year absent the existence of an Event of Default and such time shall be at the Borrower’s expense; provided,further that (a) when an Event of Default exists, the Term Administrative Agent or any Lender (or any of their respectiverepresentatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normalbusiness hours and upon reasonable advance notice and (b) the Term Administrative Agent and the Lenders shall give the Borrowerthe opportunity to participate in any discussions with the Borrower’s independent public accountants.-117- SECTION 5.09 Compliance with Laws.The Borrower will, and will cause each Restricted Subsidiary to, comply with all Requirements of Law(including ERISA and other applicable pension laws, Environmental Laws and the USA PATRIOT Act) with respect to it, itsproperty and operations, except where the failure to do so, individually or in the aggregate, would not reasonably be expected toresult in a Material Adverse Effect.SECTION 5.10 Use of Proceeds.The Borrower will use the proceeds of the Term Loans, together with cash on hand, proceeds of the UnsecuredNotes and proceeds of the Equity Issuance, to directly or indirectly finance the Transactions and for other general corporatepurposes. The Borrower shall use the Net Proceeds of the Refinancing Term Loans (as defined in the First Amendment) to prepay infull the principal amount of all Existing Term Loans (as defined in the First Amendment), other than Exchanged Term Loans (asdefined in the First Amendment).SECTION 5.11 Additional Subsidiaries.(a) If (i) any additional Restricted Subsidiary is formed or acquired after the Effective Date, (ii) any RestrictedSubsidiary ceases to be an Excluded Subsidiary or (iii) the Borrower, at its option, elects to cause a Domestic Subsidiary, or to theextent reasonably acceptable to the Term Administrative Agent, a Foreign Subsidiary that is not a Wholly Owned Subsidiary(including any consolidated Affiliate in which the Borrower and its Subsidiaries own no Equity Interest) to become a SubsidiaryLoan Party, then, the Borrower will, within 30 days (or such longer period as may be agreed to by the Term Administrative Agent inits reasonable discretion) after such newly formed or acquired Restricted Subsidiary is formed or acquired or such RestrictedSubsidiary ceases to be an Excluded Subsidiary or the Borrower has made such election, notify the Term Administrative Agentthereof, and will cause such Restricted Subsidiary (unless such Restricted Subsidiary is an Excluded Subsidiary) to satisfy theCollateral and Guarantee Requirement with respect to such Restricted Subsidiary and with respect to any Equity Interest in orIndebtedness of such Restricted Subsidiary owned by or on behalf of any Loan Party within 30 days after such notice (or such longerperiod as the Term Administrative Agent shall reasonably agree) and the Term Administrative Agent shall have received acompleted Perfection Certificate (or supplement thereto) with respect to such Restricted Subsidiary signed by a Responsible Officer,together with all attachments contemplated thereby.(b) Within 45 days (or such longer period as otherwise provided in this Agreement or as the TermAdministrative Agent may reasonably agree) after the Borrower identifies any new Material Subsidiary pursuant to Section 5.03(b),all actions (if any) required to be taken with respect to such Subsidiary in order to satisfy the Collateral and Guarantee Requirementshall have been taken with respect to such Subsidiary, to the extent not already satisfied pursuant to Section 5.11(a).(c) Notwithstanding the foregoing, in the event any real property would be required to be mortgaged pursuant tothis Section 5.11, the Borrower shall be required to comply with the “Collateral and Guarantee Requirement” as it relates to such realproperty within 90 days,-118- following the formation or acquisition of such real property or such Restricted Subsidiary or the identification of such new MaterialSubsidiary, or such longer time period as agreed by the Term Administrative Agent in its reasonable discretion.SECTION 5.12 Further Assurances.(a) Subject to (i) the proviso to Section 4.01(f) solely with respect to the Effective Date and (ii) the lastparagraph of the definition of “Collateral and Guarantee Requirement”, the Borrower will, and will cause each Loan Party to,execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (includingthe filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents), that may be requiredunder any applicable law and that the Term Administrative Agent or the Required Lenders may reasonably request, to cause theCollateral and Guarantee Requirement to be and remain satisfied, all at the expense of the Loan Parties.(b) If, after the Effective Date, any material assets (other than Excluded Assets), including any owned (but notleased or ground-leased) Material Real Property or improvements thereto or any interest therein, are acquired by the Borrower or anyother Loan Party or are held by any Subsidiary on or after the time it becomes a Loan Party pursuant to Section 5.11 (other thanassets constituting Collateral under a Term Security Document that become subject to the Lien created by such Term SecurityDocument upon acquisition thereof or constituting Excluded Assets), the Borrower will notify the Term Administrative Agentthereof, and, if requested by the Term Administrative Agent, the Borrower will cause such assets to be subjected to a Lien securingthe Secured Obligations and will take and cause the other Loan Parties to take, such actions as shall be necessary and reasonablyrequested by the Term Administrative Agent to grant and perfect such Liens, including actions described in paragraph (a) of thisSection and as required pursuant to the “Collateral and Guarantee Requirement,” all at the expense of the Loan Parties and subject tothe last paragraph of the definition of the term “Collateral and Guarantee Requirement.” In the event any Material Real Property ismortgaged pursuant to this Section 5.12(b), the Borrower or such other Loan Party, as applicable, shall be required to comply withthe “Collateral and Guarantee Requirement” and paragraph (a) of this Section 5.12 within 90 days following the acquisition of suchMaterial Real Property or such longer time period as agreed by the Term Administrative Agent in its reasonable discretion.SECTION 5.13 Designation of Subsidiaries.The Borrower may at any time after the Effective Date designate any Restricted Subsidiary of the Borrower asan Unrestricted Subsidiary or any Unrestricted Subsidiary as a Restricted Subsidiary; provided that (i) immediately after suchdesignation on a Pro Forma Basis, no Event of Default shall have occurred and be continuing and (ii) no Subsidiary may bedesignated as an Unrestricted Subsidiary or continue as an Unrestricted Subsidiary if it is a “Restricted Subsidiary” for the purpose ofany other Material Indebtedness of the Borrower. The designation of any Subsidiary as an Unrestricted Subsidiary after the EffectiveDate shall constitute an Investment by the Borrower therein at the date of designation in an amount equal to the fair market value ofthe Borrower’s or its Subsidiary’s (as applicable) investment therein. The designation of any Unrestricted Subsidiary as a RestrictedSubsidiary shall constitute (i) the incurrence at the time of designation of any Investment, Indebtedness or Liens of such Subsidiary-119- existing at such time and (ii) a return on any Investment by the Borrower in Unrestricted Subsidiaries pursuant to the precedingsentence in an amount equal to the fair market value at the date of such designation of the Borrower’s or its Subsidiary’s (asapplicable) Investment in such Subsidiary.SECTION 5.14 Certain Post-Closing Obligations.As promptly as practicable, and in any event within the time periods after the Effective Date specified inSchedule 5.14 or such later date as the Term Administrative Agent agrees to in writing, including to reasonably accommodatecircumstances unforeseen on the Effective Date, the Borrower and each other Loan Party shall deliver the documents or take theactions specified on Schedule 5.14 that would have been required to be delivered or taken on the Effective Date, in each case exceptto the extent otherwise agreed by the Term Administrative Agent pursuant to its authority as set forth in the definition of the term“Collateral and Guarantee Requirement.”SECTION 5.15 Maintenance of Rating of the Borrower and the Facilities.The Loan Parties shall use commercially reasonable efforts to maintain (i) a public corporate credit rating (butnot any particular rating) from S&P and a public corporate family rating (but not any particular rating) from Moody’s, in each case inrespect of the Borrower and (ii) a public rating (but not any particular rating) in respect of the Loans from each of S&P and Moody’s.SECTION 5.16 Lines of Business.The Borrower and its Restricted Subsidiaries, taken as a whole, will not fundamentally and substantively alterthe character of their business, taken as a whole, from the business conducted by them on the Effective Date and other businessactivities which are extensions thereof or otherwise incidental, reasonably related or ancillary to any of the foregoing.SECTION 5.17 Transactions with Affiliates.The Borrower will not, and will not permit any Restricted Subsidiary to, sell, lease or otherwise transfer anyproperty or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any othertransactions with, any of its Affiliates, except (i) (A) (x) transactions between or among the Borrower or any Restricted Subsidiary orany entity that becomes a Restricted Subsidiary as a result of such transaction and (y) any merger, amalgamation or consolidationwith any direct or indirect parent of the Borrower; provided that such parent entity shall have no material liabilities and no materialassets other than cash, Permitted Investments and the Equity Interests of the Borrower and such merger, amalgamation orconsolidation is otherwise consummated in compliance with this Agreement and (B) transactions involving aggregate payment orconsideration of less than $75,000,000, (ii) on terms substantially as favorable to the Borrower or such Restricted Subsidiary aswould be obtainable by such Person at the time in a comparable arm’s-length transaction with a Person other than an Affiliate, (iii)the payment of fees and expenses related to the Transactions, (iv) the payment of management, consulting, advisory and monitoringfees to the Investors (or management companies of the Investors) in an aggregate amount in any fiscal year not to exceed 2.5 % ofConsolidated EBITDA for the most recently-120- ended Test Period for which financial statements have been delivered pursuant to Section 5.01(a) or (b), (v) issuances of EquityInterests of the Borrower to the extent otherwise permitted by this Agreement, (vi) employment and severance arrangements betweenthe Borrower and its Restricted Subsidiaries and their respective officers and employees in the ordinary course of business orotherwise in connection with the Transactions (including loans and advances pursuant to Sections 6.04(b) and 6.04(n)), (vii)payments by the Borrower and its Restricted Subsidiaries pursuant to tax sharing agreements among the Borrower (and any suchparent thereof) and its Restricted Subsidiaries on customary terms to the extent attributable to the ownership or operation of theBorrower and its Restricted Subsidiaries, to the extent such payments are permitted by Section 6.07, (viii) the payment of customaryfees and reasonable out-of-pocket costs to, and indemnities provided on behalf of, members of the Board of Directors, officers andemployees of the Borrower (or any direct or indirect parent thereof) and the Restricted Subsidiaries in the ordinary course of businessto the extent attributable to the ownership or operation of the Borrower and its Restricted Subsidiaries, (ix) transactions pursuant topermitted agreements in existence or contemplated on the Effective Date and set forth on Schedule 5.17 or any amendment thereto tothe extent such an amendment is not adverse to the Lenders in any material respect, (x) [reserved], (xi) payments to or from, andtransactions with, any joint venture in the ordinary course of business (including, without limitation, any cash management activitiesrelated thereto), (xii) transactions with customers, clients, suppliers, contractors, joint venture partners or purchasers or sellers ofgoods or services that are Affiliates, in each case in the ordinary course of business and which are fair to the Borrower and theRestricted Subsidiaries, in the reasonable determination of the Borrower, or are on terms at least as favorable as might reasonablyhave been obtained at such time from an unaffiliated party, (xiii) sales of accounts receivable, or participations therein, orSecuritization Assets or related assets in connection with or any Qualified Securitization Facility, (xiv) payments made in connectionwith the Transactions, (xv) customary payments by the Borrower and any Restricted Subsidiaries to the Investors made for anyfinancial advisory, consulting, financing, underwriting or placement services or in respect of other investment banking activities(including in connection with acquisitions, divestitures or financings), which payments are approved by the majority of the membersof the Board of Directors or a majority of the disinterested members of the Board of Directors of the Borrower and any otherRestricted Subsidiary in good faith and (xvi) any other (A) Indebtedness permitted under Section 6.01 and Liens permitted underSection 6.02; provided that such Indebtedness and Liens are on terms which are fair and reasonable to the Borrower and itsSubsidiaries as determined by the majority of disinterested members of the board of directors of the Borrower and (B) transactionspermitted under Section 6.04, Investments permitted under Section 6.03 and Restricted Payments permitted under Section 6.07.-121- ARTICLE VINEGATIVE COVENANTSFrom and after the Effective Date and until the Termination Date, the Borrower covenants and agrees with theLenders that:SECTION 6.01 Indebtedness; Certain Equity Securities.(a) The Borrower will not, and will not permit any Restricted Subsidiary to, create, incur, assume or permit toexist any Indebtedness, except:(i) Indebtedness of the Borrower and any of the Restricted Subsidiaries under the Loan Documents (includingany Indebtedness incurred pursuant to Section 2.20 or 2.21);(ii) (x) Indebtedness outstanding on the Effective Date and listed on Schedule 6.01 and any PermittedRefinancing thereof and (y) intercompany Indebtedness outstanding on the Effective Date and any Permitted Refinancingthereof; provided that any such intercompany Indebtedness of any Loan Party owed to any Restricted Subsidiary that is nota Loan Party shall be subordinated in right of payment to the Secured Obligations;(iii) Guarantees by the Borrower and its Restricted Subsidiaries in respect of Indebtedness of the Borrower orany Restricted Subsidiary otherwise permitted hereunder; provided that (A) such Guarantee is otherwise permitted bySection 6.04, (B) no Guarantee by any Restricted Subsidiary of any Junior Financing, the Secured Notes or the UnsecuredNotes shall be permitted unless such Restricted Subsidiary shall have also provided a Guarantee of the Loan DocumentObligations pursuant to the Term Guarantee Agreement and (C) if the Indebtedness being Guaranteed is subordinated tothe Loan Document Obligations, such Guarantee shall be subordinated to the Guarantee of the Loan Document Obligationson terms at least as favorable to the Lenders as those contained in the subordination of such Indebtedness;(iv) Indebtedness of the Borrower owing to any Restricted Subsidiary or of any Restricted Subsidiary owing toany other Restricted Subsidiary or the Borrower, to the extent permitted by Section 6.04; provided that all suchIndebtedness of any Loan Party owing to any Restricted Subsidiary that is not a Loan Party shall be subordinated to theLoan Document Obligations (to the extent any such Indebtedness is outstanding at any time after the date that is thirty (30)days after the Effective Date or such later date as the Term Administrative Agent may reasonably agree) (but only to theextent permitted by applicable law and not giving rise to adverse tax consequences) on terms (i) at least as favorable to theLenders as those set forth in the form of intercompany note attached as Exhibit I or (ii) otherwise reasonably satisfactory tothe Term Administrative Agent;(v) (A) Indebtedness (including Capital Lease Obligations and purchase money indebtedness) incurred, issued orassumed by the Borrower or any Restricted Subsidiary to finance the acquisition, purchase, lease, construction, repair,replacement or improvement of fixed or capital property, equipment or other assets; provided that such Indebtedness isincurred concurrently with or within 270 days after the applicable acquisition, purchase,-122- lease, construction, repair, replacement or improvement, and (B) any Permitted Refinancing of any Indebtedness set forthin the immediately preceding clause (A) (or successive Permitted Refinancings thereof); provided, further that, at the timeof any such incurrence of Indebtedness and after giving Pro Forma Effect thereto and the use of the proceeds thereof, theaggregate principal amount of Indebtedness that is outstanding in reliance on this clause (v) shall not exceed the greater of(A) $75,000,000 and (B) 20.0% of Consolidated EBITDA for the most recently ended Test Period as of such time;(vi) Indebtedness in respect of Swap Agreements incurred in the ordinary course of business and not forspeculative purposes;(vii) (A) Indebtedness of the Borrower, any Restricted Subsidiary or any Person that becomes a RestrictedSubsidiary (or of any Person not previously a Restricted Subsidiary that is merged or consolidated with or into theBorrower or a Restricted Subsidiary) either (a) incurred or issued and/or (b) assumed after the Effective Date in connectionwith any Permitted Acquisition or any other Investment not prohibited by Section 6.04; provided that, with respect toclause (a) above, (i) to the extent such obligor or guarantor is a Loan Party, such Indebtedness is secured by the Collateralon a pari passu basis (but without regard to the control of remedies) with the Secured Obligations and is subject to theterms of a Customary Intercreditor Agreement, (ii) after giving effect to each such incurrence and/or issuance of suchIndebtedness on a Pro Forma Basis, the Consolidated Senior Secured First Lien Net Leverage Ratio as of such time is lessthan or equal to either (x) 3.75 to 1.00 or (y) the Consolidated Senior Secured First Lien Net Leverage Ratio immediatelyprior to such Permitted Acquisition or Investment (and related issuance and/or incurrence of Consolidated Senior SecuredFirst Lien Indebtedness) and (iii) with respect to any such newly incurred Indebtedness, (1) such Indebtedness does notmature earlier than the Term Maturity Date as of the Effective Date (except in the case of customary bridge loans which,subject to customary conditions (including no payment or bankruptcy event of default), would either automatically beconverted into or required to be exchanged for permanent refinancing which does not mature earlier than the TermMaturity Date as of the Effective Date), (2) such Indebtedness does not have a shorter Weighted Average Life to Maturitythan the remaining Term Loans (except in the case of customary bridge loans which, subject to customary conditions(including no payment or bankruptcy event of default), would either automatically be converted into or required to beexchanged for permanent refinancing Indebtedness which does not have a shorter Weighted Average Life to Maturity thansuch remaining Term Loans) and (3) the other terms and conditions of such Indebtedness shall be as determined by theBorrower and the lenders providing such Indebtedness (subject to the restrictions and exceptions set forth above); and withrespect to clause (b) above, such Indebtedness is and remains the obligation of the Person and/or such Person’s subsidiariesthat are acquired and such Indebtedness was not incurred in anticipation of such Permitted Acquisition or Investment; and(B) any Permitted Refinancing of Indebtedness incurred pursuant to the foregoing subclause (A); provided further that theaggregate principal amount of Indebtedness of which the primary obligor or a guarantor is a Restricted Subsidiary that isnot a Loan Party outstanding in reliance on this clause (vii)(A)(a) or (vii)(B) (together with the aggregate principal amountof Indebtedness incurred in reliance Section 6.01(a)(viii) and outstanding of which the primary obligor or a guarantor is aRestricted Subsidiary that is not a Loan-123- Party) shall not exceed, at the time of incurrence thereof and after giving Pro Forma Effect thereto, the greater of$75,000,000 and 20.0% of Consolidated EBITDA for the most recently ended Test Period as of such time;(viii) (A) Indebtedness of the Borrower, any Restricted Subsidiary or any Person that becomes a RestrictedSubsidiary (or any Person not previously a Restricted Subsidiary that is merged or consolidated with or into the Borroweror a Restricted Subsidiary) either (a) incurred or issued and/or (b) assumed after the Effective Date in connection with anyPermitted Acquisition or any other Investment not prohibited by Section 6.04; provided that, with respect to clause (a)above, (i) such Indebtedness is either (1) to the extent such obligor or guarantor is a Loan Party, secured by the Collateralon a junior or subordinated basis to the Secured Obligations and the agent for such Indebtedness has become a party to aCustomary Intercreditor Agreement or (2) unsecured, (ii) after giving effect to each such incurrence and/or issuance ofsuch Indebtedness on a Pro Forma Basis, (1) if such Indebtedness is secured on a junior or subordinated basis to theSecured Obligations, the Consolidated Senior Secured Net Leverage Ratio as of such time is either (x) less than or equal to4.50 to 1.00 or (y) less than or equal to the Consolidated Senior Secured Net Leverage Ratio immediately prior to suchPermitted Acquisition or Investment (and related incurrence and/or issuance of Indebtedness) and (2) if such Indebtednessis unsecured, either (x) the Total Net Leverage Ratio as of such time is either (I) less than or equal to 6.00 to 1.00 or(II) less than or equal to the Total Net Leverage Ratio immediately prior to such Permitted Acquisition or Investment (andrelated incurrence and/or issuance of Indebtedness) or (y) the Interest Coverage Ratio as of such time is either (I) not lessthan 2.00 to 1.00 or (II) not less than the Interest Coverage Ratio immediately prior to such Permitted Acquisition orInvestment (and related incurrence and/or issuance of Indebtedness) and (iii) with respect to any such newly incurredIndebtedness, (1) such Indebtedness does not mature earlier than the Term Maturity Date as of the Effective Date (exceptin the case of customary bridge loans which, subject to customary conditions (including no payment or bankruptcy eventof default), would either automatically be converted into or required to be exchanged for permanent refinancing whichdoes not mature earlier than the Term Maturity Date as of the Effective Date), (2) such Indebtedness does not have ashorter Weighted Average Life to Maturity than the remaining Term Loans (except in the case of customary bridge loanswhich, subject to customary conditions (including no payment or bankruptcy event of default), would either automaticallybe converted into or required to be exchanged for permanent refinancing Indebtedness which does not have a shorterWeighted Average Life to Maturity than such remaining Term Loans) and (3) the other terms and conditions of suchIndebtedness shall be as determined by the Borrower and the lenders providing such Indebtedness (subject to therestrictions and exceptions set forth above); and with respect to clause (b) above, such Indebtedness is and remains theobligation of the Person and/or such Person’s subsidiaries that are acquired and such Indebtedness was not incurred inanticipation of such Permitted Acquisition or Investment; and (B) any Permitted Refinancing of Indebtedness incurredpursuant to the foregoing subclause (A); provided further that the aggregate principal amount of Indebtedness of which theprimary obligor or a guarantor is a Restricted Subsidiary that is not a Loan Party outstanding in reliance on this clause(viii)(A)(a) or (viii)(B) (solely with respect to any Permitted Refinancing of any Indebtedness incurred pursuant to clause(viii)(A)(a)) (together with the aggregate principal amount of Indebtedness incurred in-124- reliance Section 6.01(a)(vii) and outstanding of which the primary obligor or a guarantor is a Restricted Subsidiary that isnot a Loan Party) shall not exceed, at the time of incurrence thereof and after giving Pro Forma Effect thereto, the greaterof $75,000,000 and 20.0% of Consolidated EBITDA for the most recently ended Test Period as of such time;(ix) Settlement Indebtedness;(x) Indebtedness in respect of Cash Management Obligations and other Indebtedness in respect of nettingservices, automated clearinghouse arrangements, overdraft protections and similar arrangements, in each case, inconnection with deposit accounts or from the honoring of a bank or other financial institution of a check, draft or similarinstrument drawn against insufficient funds in the ordinary course of business;(xi) Indebtedness consisting of obligations under deferred compensation (including indemnification obligations,obligations in respect of purchase price adjustments, earn-outs, incentive non-competes and other contingent obligations)or other similar arrangements incurred or assumed in connection with the Acquisition, any Permitted Acquisition, anyother Investment or any Disposition, in each case, permitted under this Agreement;(xii) Indebtedness of the Borrower or any of the Restricted Subsidiaries or any Person that becomes a RestrictedSubsidiary after the Effective Date (or of any Person not previously a Restricted Subsidiary that is merged or consolidatedwith or into the Borrower or a Restricted Subsidiary); provided that, at the time of the incurrence thereof and after givingPro Forma Effect thereto, the aggregate principal amount of Indebtedness outstanding in reliance on this clause (xii) shallnot exceed the sum of the greater of $190,000,000 and 50.0% of Consolidated EBITDA for the most recently ended TestPeriod as of such time;(xiii) (A) Indebtedness of the Borrower or any of the Restricted Subsidiaries or any Person that becomes aRestricted Subsidiary after the Effective Date (or of any Person not previously a Restricted Subsidiary that is merged orconsolidated with or into the Borrower or a Restricted Subsidiary) in an aggregate amount not to exceed (i) $75,000,000plus (ii) unlimited additional Indebtedness; provided that, with respect to clause (ii), (I) (x) if such Indebtedness is securedby the Collateral on a pari passu basis, after giving effect to the incurrence of such Indebtedness on a Pro Forma Basis, theConsolidated Senior Secured First Lien Net Leverage Ratio as of such time is less than or equal to 3.75 to 1.00, (y) if suchIndebtedness is secured on a junior or subordinated basis to the Secured Obligations, after giving effect to the incurrence ofsuch Indebtedness on a Pro Forma Basis, the Consolidated Senior Secured Net Leverage Ratio as of such time is less thanor equal to 4.50 to 1.00 and (z) if such Indebtedness is unsecured, after giving effect to the incurrence of such Indebtednesson a Pro Forma Basis, either (1) the Total Net Leverage Ratio as of such time is less than or equal to 6.00 to 1.00 or (2) theInterest Coverage Ratio as of such time is no less than 2.00 to 1.00 and (II) such Indebtedness complies with the RequiredAdditional Debt Terms and (B) any Permitted Refinancing of Indebtedness incurred pursuant to the foregoingsubclause (A); provided further that the aggregate principal amount of Indebtedness of which the primary obligor or aguarantor is a Restricted-125- Subsidiary that is not a Loan Party outstanding in reliance on this clause (xiii) shall not exceed, at the time of incurrencethereof and after giving Pro Forma Effect thereto, the greater of $75,000,000 and 20.0% of Consolidated EBITDA for themost recently ended Test Period as of such time;(xiv) Indebtedness of the Borrower or any of the Restricted Subsidiaries in an aggregate principal amount notgreater than the aggregate amount of cash contributions made to the capital of the Borrower or any other RestrictedSubsidiary (to the extent Not Otherwise Applied) after the Effective Date; provided that (i) the aggregate principal amountof Indebtedness of which the primary obligor or a guarantor is a Restricted Subsidiary that is not a Loan Party outstandingin reliance on this clause (xiv) (together with the aggregate principal amount of Indebtedness incurred in reliance onSection 6.01(a)(xiii) and outstanding of which the primary obligor or a guarantor is a Restricted Subsidiary that is not aLoan Party) shall not exceed, at the time of incurrence thereof, the greater of $40,000,000 and 10.0% of ConsolidatedEBITDA for the most recently Test Period as of such time;(xv) Indebtedness consisting of (A) the financing of insurance premiums or (B) take-or-pay obligationscontained in supply arrangements, in each case, in the ordinary course of business;(xvi) Indebtedness supported by a letter of credit, in a principal amount not to exceed the face amount of suchletter of credit;(xvii) Indebtedness consisting of Permitted ABL Debt and the Secured Notes, and any Permitted Refinancingthereof;(xviii) Permitted Unsecured Refinancing Debt, and any Permitted Refinancing thereof;(xix) Permitted First Priority Refinancing Debt and Permitted Second Priority Refinancing Debt, and anyPermitted Refinancing of any of the foregoing;(xx) Indebtedness of the Borrower or any Subsidiary Loan Party issued in lieu of Incremental Facilitiesconsisting of one or more series of (i) secured or unsecured bonds, notes or debentures (which bonds, notes or debentures,if secured, may be secured either by Liens pari passu with the Liens on the Collateral securing the Secured Obligations(but without regard to control of remedies) or by Liens having a junior priority relative to the Liens on the Collateralsecuring the Secured Obligations), or (ii) secured or unsecured loans (which loans, if secured, must be secured either byLiens pari passu with the Liens on the Collateral securing the Secured Obligations or by Liens having a junior priorityrelative to the Liens on the Collateral securing the Secured Obligations) (and any Registered Equivalent Notes issued inexchange therefor) (the “ Incremental Equivalent Debt ”); provided that (i) the aggregate principal amount of all suchIndebtedness incurred pursuant to this clause shall not exceed at the time of incurrence the Incremental Cap at such time,(ii) such Indebtedness complies with the Required Additional Debt Terms and (iii) such indebtedness shall not have ashorter Weighted Average Life to Maturity than the-126- remaining Term Loans; provided that if such Incremental Equivalent Debt is a term loan that is not subordinated in right ofpayment to the Loan Document Obligations and that is secured by a Lien on the Collateral that ranks pari passu in right ofsecurity with the Term Loans, the Term Loans shall be subject to the “most favored nation” pricing adjustment (ifapplicable) set forth in the proviso to Section 2.20(b)(d) as if such Incremental Equivalent Debt were an Incremental TermLoan or an Incremental Revolving Loan incurred hereunder;(xxi) Indebtedness of any Restricted Subsidiary that is not a Loan Party; provided that the aggregate principalamount of Indebtedness of which the primary obligor or a guarantor is a Restricted Subsidiary that is not a Loan Partyoutstanding in reliance of this clause (xxi) shall not exceed, at the time of incurrence thereof and after giving Pro FormaEffect thereto, the greater of $40,000,000 and 10.0% of Consolidated EBITDA for the most recently ended Test Period;(xxii) Indebtedness incurred by the Borrower or any of the Restricted Subsidiaries in respect of letters of credit,bank guarantees, warehouse receipts, bankers’ acceptances or similar instruments issued or created in the ordinary courseof business or consistent with past practice, including in respect of workers compensation claims, health, disability or otheremployee benefits or property, casualty or liability insurance or self-insurance or other reimbursement-type obligationsregarding workers compensation claims;(xxiii) Indebtedness and obligations in respect of self-insurance and obligations in respect of performance, bid,appeal and surety bonds and performance and completion guarantees and similar obligations provided by the Borrower orany Restricted Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments relatedthereto, in each case, in the ordinary course of business or consistent with past practice;(xxiv) (x) Indebtedness representing deferred compensation or stock-based compensation owed to employees,consultants or independent contractors of the Borrower or its Restricted Subsidiaries incurred in the ordinary course ofbusiness or consistent with past practice and (y) Indebtedness consisting of obligations of the Borrower (or any direct orindirect parent thereof) or its Restricted Subsidiaries under deferred compensation to employees, consultants orindependent contractors of the Borrower (or any direct or indirect parent thereof) or its Restricted Subsidiaries or othersimilar arrangements incurred by such Persons in connection with the Transactions and Permitted Acquisitions or anyother Investment permitted by this Agreement;(xxv) Indebtedness consisting of promissory notes issued by the Borrower or any Restricted Subsidiary to future,current or former officers, directors, employees, managers and consultants or their respective estates, spouses or formerspouses, successors, executors, administrators, heirs, legatees or distributees, in each case to finance the purchase orredemption of Equity Interests of the Borrower (or any direct or indirect parent thereof) to the extent permitted by Section6.07(a);(xxvi) Indebtedness incurred in connection with a Qualified Securitization Facility;-127- (xxvii) Indebtedness consisting of the Unsecured Notes and any Permitted Refinancing thereof;(xxviii) [reserved];(xxix) (x) Indebtedness in respect of obligations of the Borrower or any Restricted Subsidiary to pay the deferredpurchase price of goods or services or progress payments in connection with such goods and services; provided that suchobligations are incurred in connection with open accounts extended by suppliers on customary trade terms in the ordinarycourse of business and not in connection with the borrowing of money and (y) Indebtedness in respect of intercompanyobligations of the Borrower or any Restricted Subsidiary in respect of accounts payable incurred in connection with goodssold or services rendered in the ordinary course of business and not in connection with the borrowing of money;(xxx) Indebtedness to a customer to finance the acquisition of any equipment necessary to perform services forsuch customer; provided that the terms of such Indebtedness are consistent with those entered into with respect to similarIndebtedness prior to the Effective Date, including that (x) the repayment of such Indebtedness is conditional upon suchcustomer ordering a specific volume of goods and (y) such Indebtedness does not bear interest or provide for scheduledamortization or maturity;(xxxi) Indebtedness incurred in connection with any sale-leaseback transaction; and(xxxii) all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional orcontingent interest on obligations described in clauses (i) through (xxxi) above.(b) The Borrower will not, and will not permit any Restricted Subsidiary to, issue any preferred Equity Interestsor any Disqualified Equity Interests, except (A) in the case of the Borrower, preferred Equity Interests that are Qualified EquityInterests and (B)(x) preferred Equity Interests issued to and held by the Borrower or any Restricted Subsidiary and (y) preferredEquity Interests issued to and held by joint venture partners after the Effective Date; provided that in the case of this clause (y) anysuch issuance of preferred Equity Interests shall be deemed to be incurred Indebtedness and subject to the provisions set forth inSection 6.01(a).SECTION 6.02 Liens.The Borrower will not, and will not permit any Restricted Subsidiary to, create, incur, assume or permit to existany Lien on any property or asset now owned (but not leased) or hereafter acquired (but not leased) by it, except:(i) Liens created under the Loan Documents;(ii) Permitted Encumbrances;-128- (iii) Liens existing on the Effective Date; provided that any Lien securing Indebtedness or other obligations inexcess of $5,000,000 individually shall only be permitted if set forth on Schedule 6.02 (unless such Lien is permitted byanother clause in this Section 6.02) and any modifications, replacements, renewals or extensions thereof; provided furtherthat such modified, replacement, renewal or extension Lien does not extend to any additional property other than (1) after-acquired property that is affixed or incorporated into the property covered by such Lien or financed by Indebtednesspermitted under Section 6.01 and (2) proceeds and products thereof;(iv) Liens securing Indebtedness permitted under Section 6.01(a)(v); provided that (A) such Liens attachconcurrently with or within 270 days after the acquisition, repair, replacement, construction or improvement (asapplicable) of the property subject to such Liens, (B) such Liens do not at any time encumber any property other than theproperty financed by such Indebtedness except for replacements, additions, accessions and improvements to such propertyand the proceeds and the products thereof, and any lease of such property (including accessions thereto) and the proceedsand products thereof and customary security deposits and (C) with respect to Capital Lease Obligations, such Liens do notat any time extend to or cover any assets (except for replacements, additions, accessions and improvements to or proceedsof such assets) other than the assets subject to such Capital Lease Obligations; provided further that individual financingsof equipment provided by one lender may be cross collateralized to other financings of equipment provided by such lender;(v) (i) easements, leases, licenses, subleases or sublicenses granted to others (including licenses and sublicensesof Intellectual Property) that do not (A) interfere in any material respect with the business of the Borrower and itsRestricted Subsidiaries, taken as a whole, or (B) secure any Indebtedness and (ii) any interest or title of a lessor or licenseeunder any lease (including financing statements regarding property subject to lease) or license entered into by theBorrower or any Restricted Subsidiary not in violation of this Agreement; provided that with respect to this clause (ii),such Liens are only in respect of the property subject to, and secure only, the respective lease (and any other lease with thesame or an affiliated lessor);(vi) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customsduties in connection with the importation of goods;(vii) Liens (A) of a collection bank arising under Section 4-210 of the Uniform Commercial Code, or anycomparable or successor provision, on items in the course of collection; (B) attaching to pooling, commodity tradingaccounts or other commodity brokerage accounts incurred in the ordinary course of business; or (C) in favor of a bankingor other financial institution or entity, or electronic payment service provider, encumbering deposits (including the right ofsetoff);(viii) Liens (A) on cash advances or escrow deposits in favor of the seller of any property to be acquired in anInvestment permitted pursuant to Section 6.04 to be applied against the purchase price for such Investment or otherwise inconnection with any escrow arrangements with respect to any such Investment or any Disposition permitted under-129- Section 6.05 (including any letter of intent or purchase agreement with respect to such Investment or Disposition), or(B) consisting of an agreement to dispose of any property in a Disposition permitted under Section 6.05, in each case,solely to the extent such Investment or Disposition, as the case may be, would have been permitted on the date of thecreation of such Lien;(ix) Liens on property or other assets of any Restricted Subsidiary that is not a Loan Party, which Liens secureIndebtedness of such Restricted Subsidiary or another Restricted Subsidiary that is not a Loan Party, in each case permittedunder Section 6.01(a);(x) Liens granted by a Restricted Subsidiary that is not a Loan Party in favor of any Restricted Subsidiary andLiens granted by a Loan Party in favor of any other Loan Party;(xi) Liens existing on property or other assets at the time of its acquisition or existing on the property or otherassets of any Person at the time such Person becomes a Restricted Subsidiary, in each case after the Effective Date and anymodifications, replacements, renewals or extensions thereof; provided that (A) such Lien was not created in contemplationof such acquisition or such Person becoming a Restricted Subsidiary, and (B) such Lien does not extend to or cover anyother assets or property (other than any replacements of such property or assets and additions and accessions thereto, theproceeds or products thereof and other than after-acquired property subject to a Lien securing Indebtedness and otherobligations incurred prior to such time and which Indebtedness and other obligations are permitted hereunder that requireor include, pursuant to their terms at such time, a pledge of after-acquired property, it being understood that suchrequirement shall not be permitted to apply to any property to which such requirement would not have applied but for suchacquisition);(xii) rights of consignors of goods, whether or not perfected by the filing of a financing statement or otherregistration, recording or filing;(xiii) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale orpurchase of goods by any of the Borrower or any Restricted Subsidiaries in the ordinary course of business;(xiv) Liens deemed to exist in connection with Investments in repurchase agreements under clause (e) of thedefinition of the term “Permitted Investments”;(xv) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching tocommodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not forspeculative purposes;(xvi) Liens that are contractual rights of setoff (A) relating to the establishment of depository relations withbanks not given in connection with the incurrence of Indebtedness, (B) relating to pooled deposit or sweep accounts topermit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower and itsRestricted Subsidiaries or (C) relating to purchase orders and other agreements entered into with customers of theBorrower or any Restricted Subsidiary in the ordinary course of business;-130- (xvii) ground leases in respect of real property on which facilities owned or leased by the Borrower or any of theRestricted Subsidiaries are located;(xviii) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respectthereto;(xix) Liens securing Indebtedness permitted under Section 6.01(a)(xix) or 6.01(a)(xx);(xx) Liens on real property other than the Mortgaged Properties;(xxi) Settlement Liens;(xxii) Liens securing Indebtedness permitted under Section 6.01(a)(vii), (viii) or (xii);(xxiii) Liens securing Indebtedness permitted under Section 6.01(a)(xiii) or 6.01(a)(xxviii); provided that suchIndebtedness shall be subject to a Customary Intercreditor Agreement;(xxiv) Liens on cash and Permitted Investments used to satisfy or discharge Indebtedness; provided suchsatisfaction or discharge is permitted hereunder;(xxv) Receipt of progress payments and advances from customers in the ordinary course of business to the extentthe same creates a Lien on the related inventory and proceeds thereof;(xxvi) Liens on Equity Interests of any joint venture or Unrestricted Subsidiary (a) securing obligations of suchjoint venture or Unrestricted Subsidiary or (b) pursuant to the relevant joint venture agreement or arrangement;(xxvii) Liens on cash or Permitted Investments securing Swap Agreements in the ordinary course of businesssubmitted for clearing in accordance with applicable Requirements of Law; provided that the aggregate outstandingamount of obligations secured by Liens existing in reliance on this clause (xxvii) shall not exceed $25,000,000;(xxviii) other Liens; provided that at the time of the granting thereof and after giving Pro Forma Effect to anysuch Lien and the obligations secured thereby (including the use of proceeds thereof) the lesser of (x) the aggregateoutstanding face amount of obligations secured by Liens existing in reliance on this clause (xxviii) and (y) the fair marketvalue of the assets securing such obligations shall not exceed the greater of $75,000,000 and 20.0% of ConsolidatedEBITDA for the Test Period then last ended;(xxix) Liens securing Indebtedness permitted under Section 6.01(a)(xvii) so long as such Liens are subject to aCustomary Intercreditor Agreement;-131- (xxx) Liens on accounts receivable, Securitization Assets and related assets incurred in connection with aQualified Securitization Facility; and(xxxi) Liens in connection with sale-leaseback transactions.SECTION 6.03 Fundamental Changes.(a) The Borrower will not, and will not permit any other Restricted Subsidiary to, merge into or consolidate withany other Person, or permit any other Person to merge into or consolidate with it, or liquidate or dissolve (which, for the avoidance ofdoubt, shall not restrict the Borrower or any Restricted Subsidiary from changing its organizational form), except that:(i) any Restricted Subsidiary may merge or consolidate with (A) the Borrower; provided that the Borrower shallbe the continuing or surviving Person, or (B) any one or more other Restricted Subsidiaries; provided that when anySubsidiary Loan Party is merging or consolidating with another Restricted Subsidiary (1) the continuing or survivingPerson shall be a Subsidiary Loan Party or (2) if the continuing or surviving Person is not a Subsidiary Loan Party, theacquisition of such Subsidiary Loan Party by such surviving Restricted Subsidiary is otherwise permitted under Section6.04;(ii) (A) any Restricted Subsidiary that is not a Loan Party may merge or consolidate with or into any otherRestricted Subsidiary that is not a Loan Party and (B) any Restricted Subsidiary may liquidate or dissolve or change itslegal form if the Borrower determines in good faith that such action is in the best interests of the Borrower and itsRestricted Subsidiaries and is not materially disadvantageous to the Lenders;(iii) any Restricted Subsidiary may make a Disposition of all or substantially all of its assets (upon voluntaryliquidation or otherwise) to the Borrower or another Restricted Subsidiary; provided that if the transferor in such atransaction is a Loan Party, then (A) the transferee must be a Loan Party, (B) to the extent constituting an Investment, suchInvestment is a permitted Investment in a Restricted Subsidiary that is not a Loan Party in accordance with Section 6.04 or(C) to the extent constituting a Disposition to a Restricted Subsidiary that is not a Loan Party, such Disposition is for fairmarket value (as determined in good faith by the Borrower) and any promissory note or other non-cash considerationreceived in respect thereof is a permitted Investment in a Restricted Subsidiary that is not a Loan Party in accordance withSection 6.04;(iv) the Borrower may merge or consolidate with (or Dispose of all or substantially all of its assets to) any otherPerson; provided that (A) the Borrower shall be the continuing or surviving Person or (B) if the Person formed by orsurviving any such merger or consolidation is not the Borrower or is a Person into which the Borrower has been liquidated(or, in connection with a Disposition of all or substantially all of the Borrower’s assets, if the transferee of such assets)(any such Person, the “ Successor Borrower ”), (1) the Successor Borrower shall be an entity organized or existing underthe laws of a Covered Jurisdiction, (2) the Successor Borrower shall expressly assume all the obligations of the Borrowerunder this Agreement and the other Loan Documents to which the Borrower is a party pursuant to a supplement hereto orthereto in form and substance reasonably-132- satisfactory to the Term Administrative Agent, (3) each Loan Party other than the Borrower, unless it is the other party tosuch merger or consolidation, shall have reaffirmed, pursuant to an agreement in form and substance reasonablysatisfactory to the Term Administrative Agent, that its Guarantee of and grant of any Liens as security for the SecuredObligations shall apply to the Successor Borrower’s obligations under this Agreement and (4) the Borrower shall havedelivered to the Term Administrative Agent a certificate of a Responsible Officer and an opinion of counsel, each statingthat such merger or consolidation complies with this Agreement; provided further that (y) if such Person is not a LoanParty, no Event of Default (or, to the extent related to a Permitted Acquisition or any Investment not prohibited by Section6.04, no Specified Event of Default) shall exist after giving effect to such merger or consolidation and (z) if the foregoingrequirements are satisfied, the Successor Borrower will succeed to, and be substituted for, the Borrower under thisAgreement and the other Loan Documents; provided further that the Borrower will use commercially reasonable efforts toprovide any documentation and other information about the Successor Borrower as shall have been reasonably requested inwriting by any Lender through the Term Administrative Agent that such Lender shall have reasonably determined isrequired by regulatory authorities under applicable “know your customer” and anti-money laundering rules andregulations, including Title III of the USA PATRIOT Act;(v) any Restricted Subsidiary may merge, consolidate or amalgamate with any other Person in order to effect anInvestment permitted pursuant to Section 6.04; provided that the continuing or surviving Person shall be the Borrower or aRestricted Subsidiary, which together with each of the Restricted Subsidiaries, shall have complied with the requirementsof Sections 5.11 and 5.12;(vi) any Restricted Subsidiary may effect a merger, dissolution, liquidation consolidation or amalgamation toeffect a Disposition permitted pursuant to Section 6.05; and(vii) the Borrower and its Restricted Subsidiaries may consummate the Acquisition.SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions.The Borrower will not, and will not permit any Restricted Subsidiary to, make or hold any Investment, except:(a) Permitted Investments at the time such Permitted Investment is made and purchases of assets, in the ordinarycourse of business consistent with past practice;(b) loans, advances and other credit extensions to officers, members of the Board of Directors and employees ofthe Borrower and its Restricted Subsidiaries (i) for reasonable and customary business-related travel, entertainment,relocation (including moving expenses and costs of replacement homes), business machines or supplies, automobiles andanalogous ordinary business purposes, (ii) in connection with such Person’s purchase of Equity Interests of the Borrower(or any direct or indirect parent thereof) ( provided that-133- the amount of such loans and advances made in cash to such Person shall be contributed to the Borrower in cash ascommon equity or Qualified Equity Interests) and (iii) for purposes not described in the foregoing clauses (i) and (ii), in anaggregate principal amount outstanding under this clause (iii) at any time not to exceed $40,000,000;(c) Investments by the Borrower in any Restricted Subsidiary and Investments by any Restricted Subsidiary inany of the Borrower or any other Restricted Subsidiary; provided that, in the case of any Investment by a Loan Party in aRestricted Subsidiary that is not a Loan Party, no Event of Default shall have occurred and be continuing or would resulttherefrom;(d) Investments consisting of (i) extensions of trade credit and accommodation guarantees in the ordinary courseof business and (ii) loans and advances to customers; provided that the aggregate principal amount of such loans andadvances outstanding under this clause (ii) at any time shall not exceed $10,000,000;(e) Investments (i) existing or contemplated on the Effective Date and set forth on Schedule 6.04(e) and anymodification, replacement, renewal, reinvestment or extension thereof and (ii) Investments existing on the Effective Dateby the Borrower or any Restricted Subsidiary in the Borrower or any Restricted Subsidiary and any modification, renewalor extension thereof; provided that the amount of the original Investment is not increased except by the terms of suchInvestment to the extent as set forth on Schedule 6.04(e) or as otherwise permitted by this Section 6.04;(f) Investments in Swap Agreements incurred in the ordinary course of business and not for speculativepurposes;(g) promissory notes and other non-cash consideration received in connection with Dispositions permitted bySection 6.05;(h) Permitted Acquisitions;(i) the Transactions;(j) Investments in the ordinary course of business consisting of Uniform Commercial Code Article 3endorsements for collection or deposit and Uniform Commercial Code Article 4 customary trade arrangements withcustomers in the ordinary course of business;(k) Investments (including debt obligations and Equity Interests) received in connection with the bankruptcy orreorganization of suppliers and customers or in settlement of delinquent obligations of, or other disputes with, customersand suppliers or upon the foreclosure with respect to any secured Investment or other transfer of title with respect to anysecured Investment;(l) (i) loans and advances to the Borrower (or any direct or indirect parent thereof) (x) in lieu of, and not inexcess of the amount of (after giving effect to any other loans, advances or Restricted Payments in respect thereof),Restricted Payments to the extent-134- permitted to be made to the Borrower (or such parent) in accordance with Section 6.07(a) and (y) to the extent the proceedsthereof are contributed or loaned or advanced to any Restricted Subsidiary and (ii) Investments or Guarantees with respectto any direct or indirect parent of the Borrower that could otherwise be made as a Restricted Payment under Section 6.07,so long as the amount of such Investment or Guarantee is deducted from the amount available to be made as a RestrictedPayment under the applicable clause of Section 6.07;(m) additional Investments and other acquisitions; provided that at the time any such Investment or otheracquisition is made, the aggregate outstanding amount of such Investment or acquisition made in reliance on thisclause (m), together with the aggregate amount of all consideration paid in connection with all other Investments andacquisitions made in reliance on this clause (m) (including the aggregate principal amount of all Indebtedness assumed inconnection with any such other Investment or acquisition previously made under this clause (m)), shall not exceed the sumof (A) the greater of $190,000,000 and 50.0% of Consolidated EBITDA for the most recently ended Test Period aftergiving Pro Forma Effect to the making of such Investment or other acquisition, plus (B) the Available Equity Amount thatis Not Otherwise Applied as in effect immediately prior to the time of making of such Investment;(n) advances of payroll payments to employees in the ordinary course of business;(o) Investments and other acquisitions to the extent that payment for such Investments is made with QualifiedEquity Interests of the Borrower (or any direct or indirect parent thereof);(p) Investments of a Subsidiary acquired after the Effective Date or of a Person merged or consolidated with anySubsidiary in accordance with this Section 6.04 and Section 6.03 after the Effective Date or that otherwise becomes aSubsidiary ( provided that if such Investment is made under Section 6.04(h), existing Investments in subsidiaries of suchSubsidiary or Person shall comply with the requirements of Section 6.04(h)) to the extent that such Investments were notmade in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the dateof such acquisition, merger or consolidation;(q) receivables owing to the Borrower or any Restricted Subsidiary, if created or acquired in the ordinary courseof business;(r) Investments (A) for utilities, security deposits, leases and similar prepaid expenses incurred in the ordinarycourse of business and (B) trade accounts created, or prepaid expenses accrued, in the ordinary course of business;(s) non-cash Investments in connection with tax planning and reorganization activities; provided that after givingeffect to any such activities, the security interests of the Lenders in the Collateral, taken as a whole, would not bematerially impaired;-135- (t) additional Investments so long as at the time of any such Investment and after giving effect thereto, on a ProForma Basis, the Total Net Leverage Ratio is no greater than 4.00 to 1.00;(u) Investments consisting of Indebtedness, Liens, fundamental changes, Dispositions and Restricted Paymentspermitted (other than by reference to this Section 6.04(u)) under Sections 6.01, 6.02, 6.03, 6.05 and 6.07, respectively;(v) contributions to a “rabbi” trust for the benefit of employees, directors, consultants, independent contractors orother service providers or other grantor trust subject to claims of creditors in the case of a bankruptcy of the Borrower;(w) to the extent that they constitute Investments, purchases and acquisitions of inventory, supplies, materials orequipment or purchases, acquisitions, licenses or leases of other assets, Intellectual Property, or other rights, in each case inthe ordinary course of business;(x) any Investment in any Subsidiary or any joint venture in connection with intercompany cash managementarrangements or related activities arising in the ordinary course of business;(y) Investments by an Unrestricted Subsidiary entered into prior to the day such Unrestricted Subsidiary isredesignated as a Restricted Subsidiary pursuant to the definition of “Unrestricted Subsidiary”;(z) Investments in or relating to a Securitization Subsidiary that, in the good faith determination of the Borrowerare necessary or advisable to effect any Qualified Securitization Facility or any repurchase obligation in connectiontherewith, including, without limitation, Investments of funds held in accounts permitted or required by the arrangementsgoverning such Qualified Securitization Facilities or any related Indebtedness;(aa) Investments in the ordinary course of business in connection with Settlements;(bb) Investments arising as a result of sale-leaseback transactions; and(cc) Investments in joint ventures and Unrestricted Subsidiaries in an aggregate principal amount outstanding atany time not to exceed the greater of $75,000,000 and 20.0% of Consolidated EBITDA for the most recently ended TestPeriod as of such time.SECTION 6.05 Asset Sales.The Borrower will not, and will not permit any Restricted Subsidiary to, (i) voluntarily sell, transfer, lease orotherwise dispose of any asset, including any Equity Interest owned by it or (ii) permit any Restricted Subsidiary to issue anyadditional Equity Interest in such Restricted Subsidiary (other than issuing directors’ qualifying shares, nominal shares issued toforeign nationals to the extent required by applicable Requirements of Law and other than issuing-136- Equity Interests to the Borrower or a Restricted Subsidiary in compliance with Section 6.04(c)) (each, a “ Disposition ” and the term“ Dispose ” as a verb has the corresponding meaning), except:(a) Dispositions of obsolete, damaged, used, surplus or worn out property, whether now owned or hereafteracquired, and Dispositions of non-core assets or property, (including assets or property no longer used or useful, oreconomically practicable to maintain, in the conduct of the core or principal business of the Borrower and its RestrictedSubsidiaries) (including allowing any registration or application for registration of any Intellectual Property that is nolonger used or useful, or economically practicable to maintain, to lapse, go abandoned, or be invalidated);(b) Dispositions of inventory and other assets (including Settlement Assets) in the ordinary course of business orconsistent with past practice or held for sale or no longer used in the ordinary course of business and immaterial assets(considered in the aggregate) in the ordinary course of business;(c) Dispositions of property to the extent that (i) such property is exchanged for credit against the purchase priceof similar replacement property or (ii) an amount equal to Net Proceeds of such Disposition are promptly applied to thepurchase price of such replacement property;(d) Dispositions of property to the Borrower or a Restricted Subsidiary; provided that if the transferor in such atransaction is a Loan Party, then either (i) the transferee must be a Loan Party, (ii) to the extent constituting an Investment,such Investment must be a permitted Investment in a Restricted Subsidiary that is not a Loan Party in accordance withSection 6.04 or (iii) to the extent constituting a Disposition to a Restricted Subsidiary that is not a Loan Party, suchDisposition is for fair market value (as determined in good faith by the Borrower) and any promissory note or other non-cash consideration received in respect thereof is a permitted investment in a Restricted Subsidiary that is not a Loan Partyin accordance with Section 6.04;(e) Dispositions permitted by Section 6.03, Investments permitted by Section 6.04, Restricted Paymentspermitted by Section 6.07 and Liens permitted by Section 6.02;(f) Dispositions of property acquired by the Borrower or any of the Restricted Subsidiaries pursuant to sale-leaseback transactions;(g) Dispositions of Permitted Investments;(h) Dispositions or forgiveness of accounts receivable in the ordinary course of business in connection with thecollection or compromise thereof (including sales to factors or other third parties);(i) leases, subleases, service agreements, product sales, licenses or sublicenses (including licenses andsublicenses of Intellectual Property), in each case that do not materially interfere with the business of the Borrower and itsRestricted Subsidiaries, taken as a whole;-137- (j) transfers of property subject to Casualty Events;(k) Dispositions of property to Persons other than Restricted Subsidiaries (including the sale or issuance ofEquity Interests of a Restricted Subsidiary) for fair market value (as determined by a Responsible Officer of the Borrowerin good faith) not otherwise permitted under this Section 6.05; provided that with respect to any Disposition pursuant tothis clause (k) for a purchase price in excess of $50,000,000, the Borrower or any Restricted Subsidiary shall receive notless than 75% of such consideration in the form of cash or Permitted Investments; provided , however , that solely for thepurposes of this clause (k), (A) any liabilities (as shown on the most recent balance sheet of the Borrower or suchRestricted Subsidiary or in the footnotes thereto) of the Borrower or such Restricted Subsidiary, other than liabilities thatare by their terms subordinated in right of payment to the Loan Document Obligations, that are assumed by the transfereewith respect to the applicable Disposition and for which the Borrower and all of the Restricted Subsidiaries shall have beenvalidly released by all applicable creditors in writing, shall be deemed to be cash, (B) any securities, notes or otherobligations or assets received by the Borrower or such Restricted Subsidiary from such transferee that are converted by theBorrower or such Restricted Subsidiary into cash or Permitted Investments (to the extent of the cash or PermittedInvestments received) within one hundred and eighty (180) days following the closing of the applicable Disposition, shallbe deemed to be cash, (C) Indebtedness of any Restricted Subsidiary that ceases to be a Restricted Subsidiary as a result ofsuch Disposition (other than intercompany debt owed to the Borrower or its Restricted Subsidiaries), to the extent that theBorrower and all of the Restricted Subsidiaries (to the extent previously liable thereunder) are released from any guaranteeof payment of the principal amount of such Indebtedness in connection with such Disposition, shall be deemed to be cashand (D) any Designated Non-Cash Consideration received by the Borrower or such Restricted Subsidiary in respect ofsuch Disposition having an aggregate fair market value (as determined by a Responsible Officer of the Borrower in goodfaith), taken together with all other Designated Non-Cash Consideration received pursuant to this clause (k) that is at thattime outstanding, not in excess of $50,000,000 at the time of the receipt of such Designated Non-Cash Consideration, withthe fair market value (as determined in good faith by the Borrower) of each item of Designated Non-Cash Considerationbeing measured at the time received and without giving effect to subsequent changes in value, shall be deemed to be cash;(l) Dispositions of Investments in joint ventures to the extent required by, or made pursuant to customarybuy/sell arrangements between, the joint venture parties set forth in joint venture arrangements and similar bindingarrangements;(m) Dispositions of any assets (including Equity Interests) (A) acquired in connection with any PermittedAcquisition or other Investment not prohibited hereunder, which assets are not used or useful to the core or principalbusiness of the Borrower and its Restricted Subsidiaries and/or (B) made to obtain the approval of any applicable antitrustauthority in connection with a Permitted Acquisition;-138- (n) any Disposition of accounts receivable, Securitization Assets, any participations thereof, or related assets inconnection with or any Qualified Securitization Facility;(o) transfers of condemned property as a result of the exercise of “eminent domain” or other similar powers tothe respective Governmental Authority or agency that has condemned the same (whether by deed in lieu of condemnationor otherwise), and transfers of property arising from foreclosure or similar action or that have been subject to a casualty tothe respective insurer of such real property as part of an insurance settlement; and(p) any Disposition of the Equity Interests of any Immaterial Subsidiary or Unrestricted Subsidiary.SECTION 6.06 [Reserved].SECTION 6.07 Restricted Payments; Certain Payments of Indebtedness.(a) The Borrower will not, and will not permit any Restricted Subsidiary to, declare or make, or agree to pay ormake, directly or indirectly, any Restricted Payment, except:(i) each Restricted Subsidiary may make Restricted Payments to the Borrower or any other RestrictedSubsidiary; provided that in the case of any such Restricted Payment by a Restricted Subsidiary that is not a WhollyOwned Subsidiary, such Restricted Payment is made to the Borrower, any Restricted Subsidiary and to each other ownerof Equity Interests of such Restricted Subsidiary based on their relative ownership interests of the relevant class of EquityInterests;(ii) the Borrower and each Restricted Subsidiary may declare and make dividend payments or other distributionspayable solely in the Equity Interests of such Person;(iii) Restricted Payments made to consummate the Transactions;(iv) repurchases of Equity Interests in the Borrower (or any direct or indirect parent of the Borrower) or anyRestricted Subsidiary deemed to occur upon exercise of stock options or warrants if such Equity Interests represent aportion of the exercise price or withholding taxes payable in connection with the exercise of such options or warrants orother incentive interests;(v) Restricted Payments to the Borrower, which the Borrower may use to redeem, acquire, retire, repurchase orsettle its Equity Interests (or any options, warrants, restricted stock or stock appreciation rights or similar securities issuedwith respect to any such Equity Interests) or Indebtedness or to service Indebtedness incurred by the Borrower or anydirect or indirect parent companies of the Borrower to finance the redemption, acquisition, retirement, repurchase orsettlement of such Equity Interest or Indebtedness (or make Restricted Payments to allow any of the Borrower’s direct orindirect parent companies to so redeem, retire, acquire or repurchase their Equity Interests or their Indebtedness or toservice Indebtedness incurred by the Borrower to finance the redemption, acquisition, retirement, repurchase or settlementof such Equity Interests or-139- Indebtedness or to service Indebtedness incurred to finance the redemption, retirement, acquisition or repurchase of suchEquity Interests or Indebtedness), held directly or indirectly by current or former officers, managers, consultants, membersof the Board of Directors, employees or independent contractors (or their respective spouses, former spouses, successors,executors, administrators, heirs, legatees or distributees) of the Borrower (or any direct or indirect parent thereof) and itsRestricted Subsidiaries, upon the death, disability, retirement or termination of employment of any such Person orotherwise in accordance with any stock option or stock appreciation rights plan, any management, director and/oremployee stock ownership or incentive plan, stock subscription plan, employment termination agreement or any otheremployment agreements or equity holders’ agreement in an aggregate amount after the Effective Date together with theaggregate amount of loans and advances to the Borrower made pursuant to Section 6.04(m) in lieu of Restricted Paymentspermitted by this clause (v) not to exceed $75,000,000 in any calendar year with unused amounts in any calendar yearbeing carried over to succeeding calendar years subject to a maximum of $150,000,000 in any calendar year (withoutgiving effect to the following proviso); provided that such amount in any calendar year may be increased by (1) an amountnot to exceed the cash proceeds of key man life insurance policies received by the Borrower (or any direct or indirectparent thereof and contributed to the Borrower) or the Restricted Subsidiaries after the Effective Date, or (2) the amount ofany bona fide cash bonuses otherwise payable to members of the Board of Directors, consultants, officers, employees,managers or independent contractors of the Borrower or any Restricted Subsidiary that are foregone in return for thereceipt of Equity Interests, the fair market value of which is equal to or less than the amount of such cash bonuses, which,if not used in any year, may be carried forward to any subsequent fiscal year; provided further that cancellation ofIndebtedness owing to the Borrower or any Restricted Subsidiary from members of the Board of Directors, consultants,officers, employees, managers or independent contractors (or their respective spouses, former spouses, successors,executors, administrators, heirs, legatees or distributees) of the Borrower or any Restricted Subsidiary in connection with arepurchase of Equity Interests of the Borrower (or any direct or indirect parent thereof) will not be deemed to constitute aRestricted Payment for purposes of this Section 6.07 or any other provisions of this Agreement.(vi) other Restricted Payments made by the Borrower; provided that, at the time of making such RestrictedPayments, on a Pro Forma Basis, the Total Net Leverage Ratio is equal to or less than 4.00 to 1.00;(vii) the Borrower and its Restricted Subsidiaries may make Restricted Payments in cash to the Borrower (or anydirect or indirect parent thereof):(A) as distributions by any Restricted Subsidiary to the Borrower (or any direct or indirect parent ofthe Borrower) in amounts required for the Borrower (or any direct or indirect parent of the Borrower) to paywith respect to any taxable period in which the Borrower and/or any of its Subsidiaries is a member of (or is aflow-through entity for U.S. federal income tax purposes owned directly or indirectly by one or more suchmembers of) a consolidated, combined, unitary or similar tax group (a “ Tax Group ”) of which the Borrower orany other direct or-140- indirect parent of the Borrower is the common parent, U.S. federal, state and local and foreign taxes that areattributable to the taxable income of the Borrower and/or its Subsidiaries; provided that for each taxable period,the amount of such payments made in respect of such taxable period in the aggregate shall not exceed theamount of such taxes that the Borrower and its Subsidiaries would have been required to pay if they were astand-alone Tax Group with the Borrower as the corporate common parent of such stand-alone Tax Group(collectively, “ Tax Distributions ”);(B) the proceeds of which shall be used by any direct or indirect parent of the Borrower to pay (or tomake Restricted Payments to allow any direct or indirect parent of the Borrower to pay) (1) its operatingexpenses incurred in the ordinary course of business and other corporate overhead costs and expenses (includingadministrative, legal, accounting and similar expenses payable to third parties) that are reasonable and customaryand incurred in the ordinary course of business, (2) any reasonable and customary indemnification claims madeby members of the Board of Directors or officers, employees, directors, managers, consultants or independentcontractors of the Borrower (or any parent thereof) attributable to the ownership or operations of the Borrower’sRestricted Subsidiaries, (3) fees and expenses (x) due and payable by any of the Borrower and its RestrictedSubsidiaries and (y) otherwise permitted to be paid by the Borrower and its Restricted Subsidiaries under thisAgreement, (4) to the extent constituting a Restricted Payment, amounts due and payable pursuant to anyinvestor management agreement entered into with the Investors after the Effective Date in an aggregate amountnot to exceed the amount permitted to be paid pursuant to Section 5.17(iv) and (5) amounts that would otherwisebe permitted to be paid pursuant to Section 5.17(iii) or (xi);(C) the proceeds of which shall be used by any direct or indirect parent of the Borrower to payfranchise and similar Taxes, and other fees and expenses, required to maintain its corporate or other legalexistence;(D) to finance any Investment made by the Borrower (or any direct or indirect parent of the Borrower)that, if made by the Borrower, would be permitted to be made pursuant to Section 6.04; provided that (A) suchRestricted Payment shall be made substantially concurrently with the closing of such Investment and (B) theBorrower (or any direct or indirect parent of the Borrower) shall, immediately following the closing thereof,cause (1) all property acquired (whether assets or Equity Interests but not including any loans or advances madepursuant to Section 6.04(b)) to be contributed to the Borrower or its Restricted Subsidiaries or (2) the Personformed or acquired to merge into or consolidate with the Borrower or any of the Restricted Subsidiaries to theextent such merger or consolidation is permitted in Section 6.03) in order to consummate such Investment, ineach case in accordance with the requirements of Sections 5.11 and 5.12;(E) the proceeds of which shall be used to pay (or to make Restricted Payments to allow the Borroweror any direct or indirect parent thereof to pay) fees and expenses related to any equity or debt offering;-141- (F) the proceeds of which shall be used to pay customary salary, bonus and other benefits payable toofficers and employees of the Borrower or any direct or indirect parent company of the Borrower to the extentsuch salaries, bonuses and other benefits are attributable to the ownership or operation of the Borrower and itsRestricted Subsidiaries; and(G) the proceeds of which shall be used to make payments permitted by clause (b)(iv) and (b)(v) ofSection 6.07;(viii) in addition to the foregoing Restricted Payments, the Borrower may make additional Restricted Payments,in an aggregate amount, when taken together with the aggregate amount of loans and advances previously made pursuantto Section 6.04(m) in lieu of Restricted Payments permitted by this clause (viii), not to exceed the sum of (A) the AvailableAmount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Restricted Payment;provided that amounts pursuant to clause (b) of the definition of “Available Amount” may only be used to fund aRestricted Payment pursuant to this clause (viii)(A) to the extent that the Interest Coverage Ratio on a Pro Forma Basisafter giving effect thereto is at least 2.00 to 1.00, plus (B) the Available Equity Amount that is Not Otherwise Applied as ineffect immediately prior to the time of making of such Restricted Payment;(ix) redemptions in whole or in part of any of its Equity Interests for another class of its Equity Interests or withproceeds from substantially concurrent equity contributions or issuances of new Equity Interests;(x) payments made or expected to be made in respect of withholding or similar Taxes payable by any future,present or former employee, director, manager or consultant and any repurchases of Equity Interests in consideration ofsuch payments including deemed repurchases in connection with the exercise of stock options and the vesting of restrictedstock and restricted stock units;(xi) the Borrower may (a) pay cash in lieu of fractional Equity Interests in connection with any dividend, split orcombination thereof or any Permitted Acquisition (or other similar Investment) and (b) honor any conversion request by aholder of convertible Indebtedness and make cash payments in lieu of fractional shares in connection with any suchconversion and may make payments on convertible Indebtedness in accordance with its terms;(xii) payments made or expected to be made by the Borrower or any Restricted Subsidiary in respect ofwithholding or similar taxes payable upon exercise of Equity Interests by any future, present or former employee, director,officer, manager or consultant (or their respective controlled Affiliates or permitted transferees) and any repurchases ofEquity Interests deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion ofthe exercise price of such options or warrants or required withholding or similar taxes;-142- (xiii) the distribution, by dividend or otherwise, of shares of Equity Interests of, or Indebtedness owed to theBorrower (or any direct or indirect parent thereof) or a Restricted Subsidiary by, Unrestricted Subsidiaries (other thanUnrestricted Subsidiaries, the primary assets of which are Permitted Investments);(xiv) the declaration and payment of Restricted Payments on the Borrower’s common stock (or the payment ofRestricted Payments to any direct or indirect parent company of the Borrower to fund a payment of dividends on suchcompany’s common stock), following consummation of any public offering, of up to 6.0% per annum of the net cashproceeds of such public offering received by or contributed to the Borrower, other than public offerings registered on FormS-8;(xv) any distributions or payments of Securitization Fees; and(xvi) additional Restricted Payments in an amount not to exceed the greater of $60,000,000 and 15.0% ofConsolidated EBITDA for the most recently ended Test Period after giving Pro Forma Effect to the making of suchRestricted Payment.(b) The Borrower will not, and will not permit any Restricted Subsidiary to, make or agree to pay or make,directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal ofor interest on any Junior Financing, or any payment or other distribution (whether in cash, securities or other property), including anysinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of anyJunior Financing, or any other payment (including any payment under any Swap Agreement) that has a substantially similar effect toany of the foregoing, except:(i) payment of regularly scheduled interest and principal payments, mandatory offers to repay, repurchase orredeem, mandatory prepayments of principal premium and interest, and payment of fees, expenses and indemnificationobligations, with respect to such Junior Financing, other than payments in respect of any Junior Financing prohibited bythe subordination provisions thereof;(ii) refinancings of Indebtedness to the extent permitted by Section 6.01;(iii) the conversion of any Junior Financing to Equity Interests (other than Disqualified Equity Interests) of theBorrower or any of its direct or indirect parent companies, and any payment that is intended to prevent any JuniorFinancing from being treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) ofthe Code;(iv) prepayments, redemptions, repurchases, defeasances and other payments in respect of Junior Financingsprior to their scheduled maturity in an aggregate amount, not to exceed the sum of (A) an amount at the time of makingany such prepayment, redemption, repurchase, defeasance or other payment and together with any other prepayments,redemptions, repurchases, defeasances and other payments made utilizing this subclause (A) not to exceed the greater of$60,000,000 and 15.0% of Consolidated EBITDA for the most recently ended Test Period after giving Pro Forma Effect tothe making of such prepayment, redemption, purchase, defeasance or other payment plus-143- (B) (x) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of suchInvestment; provided that amounts pursuant to clause (b) of the definition of “Available Amount” may only be used tofund any such prepayment, redemption, purchase, defeasance or other payment pursuant to this clause (iv)(B)(x) to theextent that the Interest Coverage Ratio on a Pro Forma Basis after giving effect thereto is at least 2.00 to 1.00 plus (y) theAvailable Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of suchInvestment;(v) payments made in connection with the Transactions;(vi) prepayments, redemptions, purchases, defeasances and other payments in respect of Junior Financing priorto their scheduled maturity; provided that after giving effect to such prepayment, redemption, repurchase, defeasance orother payment, on a Pro Forma Basis, the Total Net Leverage Ratio is less than or equal to 4.00 to 1.00; and(vii) prepayment of Junior Financing owed to the Borrower or a Restricted Subsidiary or the prepayment ofPermitted Refinancing of such Indebtedness with the proceeds of any other Junior Financing.SECTION 6.08 [Reserved].SECTION 6.09 Restrictive Agreements.The Borrower will not, and will not permit any Restricted Subsidiary to enter into any agreement, instrument,deed or lease that prohibits or limits the ability of any Loan Party to create, incur, assume or suffer to exist any Lien upon any oftheir respective properties or revenues, whether now owned or hereafter acquired, for the benefit of the Secured Parties with respectto the Secured Obligations or under the Loan Documents; provided that the foregoing shall not apply to:(a) restrictions and conditions imposed by (1) Requirements of Law, (2) any Loan Document, the ABL LoanDocuments, the Secured Notes or the Unsecured Notes, (3) any documentation governing Incremental Equivalent Debt, (4)any documentation governing Permitted Unsecured Refinancing Debt, Permitted First Priority Refinancing Debt orPermitted Second Priority Refinancing Debt, (5) any documentation governing Indebtedness incurred pursuant to Section6.01(a)(xx), (xxi) or (xxvi) and (6) any documentation governing any Permitted Refinancing incurred to refinance any suchIndebtedness referenced in clauses (1) through (5) above;(b) customary restrictions and conditions existing on the Effective Date and any extension, renewal, amendment,modification or replacement thereof, except to the extent any such amendment, modification or replacement expands thescope of any such restriction or condition;(c) restrictions and conditions contained in agreements relating to the sale of a Subsidiary or any assets pendingsuch sale; provided that such restrictions and conditions apply only to the Subsidiary or assets that is or are to be sold andsuch sale is permitted hereunder;-144- (d) customary provisions in leases, licenses and other contracts restricting the assignment thereof;(e) restrictions imposed by any agreement relating to secured Indebtedness permitted by this Agreement to theextent such restriction applies only to the property securing such Indebtedness;(f) any restrictions or conditions set forth in any agreement in effect at any time any Person becomes a RestrictedSubsidiary (but not any modification or amendment expanding the scope of any such restriction or condition); providedthat such agreement was not entered into in contemplation of such Person becoming a Restricted Subsidiary and therestriction or condition set forth in such agreement does not apply to the Borrower or any Restricted Subsidiary;(g) restrictions or conditions in any Indebtedness permitted pursuant to Section 6.01 that is incurred or assumedby Restricted Subsidiaries that are not Loan Parties to the extent such restrictions or conditions are no more restrictive inany material respect than the restrictions and conditions in the Loan Documents or, in the case of Junior Financing, aremarket terms at the time of issuance and are imposed solely on such Restricted Subsidiary and its Subsidiaries;(h) restrictions on cash (or Permitted Investments) or other deposits imposed by agreements entered into in theordinary course of business (or other restrictions on cash or deposits constituting Permitted Encumbrances);(i) restrictions set forth on Schedule 6.09 and any extension, renewal, amendment, modification or replacementthereof, except to the extent any such amendment, modification or replacement expands the scope of any such restrictionor condition;(j) customary provisions in joint venture agreements and other similar agreements applicable to joint venturespermitted by Section 6.04;(k) customary restrictions contained in leases, subleases, licenses, sublicenses or asset sale agreements otherwisepermitted hereby so long as such restrictions relate only to the assets subject thereto;(l) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of theBorrower or any Restricted Subsidiary; and(m) customary net worth provisions contained in real property leases entered into by Subsidiaries, so long as theBorrower has determined in good faith that such net worth provisions would not reasonably be expected to impair theability of the Borrower and its Subsidiaries to meet their ongoing obligations.SECTION 6.10 Amendment of Junior Financing.The Borrower will not, and will not permit any Restricted Subsidiary to, amend or modify the documentationgoverning any Junior Financing, in each case if the effect of such-145- amendment or modification is materially adverse to the Lenders; provided that such modification will not be deemed to be materiallyadverse if such Junior Financing could be otherwise incurred under this Agreement (including as Indebtedness that does notconstitute a Junior Financing) with such terms as so modified at the time of such modification.SECTION 6.11 [Reserved].SECTION 6.12 Changes in Fiscal Periods.The Borrower will not make any change in fiscal year; provided , however , that the Borrower may, upon writtennotice to the Term Administrative Agent, change its fiscal year to any other fiscal year reasonably acceptable to the TermAdministrative Agent, in which case, the Borrower and the Term Administrative Agent will, and are hereby authorized by theLenders to, make any adjustments to this Agreement that are necessary to reflect such change in fiscal year.ARTICLE VIIEVENTS OF DEFAULTSECTION 7.01 Events of Default.If any of the following events (any such event, an “ Event of Default ”) shall occur:(a) any Loan Party shall fail to pay any principal of any Loan when and as the same shall become due andpayable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;(b) any Loan Party shall fail to pay any interest on any Loan or any fee or any other amount (other than anamount referred to in paragraph (a) of this Section 7.01) payable under any Loan Document, when and as the same shallbecome due and payable, and such failure shall continue unremedied for a period of five (5) Business Days;(c) any representation or warranty made or deemed made by or on behalf of the Borrower or any of theRestricted Subsidiaries in connection with any Loan Document or any amendment or modification thereof or waiverthereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection withany Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect inany material respect when made or deemed made, and such incorrect representation or warranty (if curable) shall remainincorrect for a period of 30 days after written notice thereof from the Term Administrative Agent to the Borrower;provided that this clause (c) shall be limited on the Effective Date to the Specified Representations and the SpecifiedAcquisition Agreement Representations;(d) the Borrower or any of the Restricted Subsidiaries shall fail to observe or perform any covenant, condition oragreement contained in Sections 5.02, 5.04 (with respect to the existence of the Borrower or such Restricted Subsidiaries),5.10, 5.14 or in Article VI (other than Section 6.12);-146- (e) the Borrower or any of the Restricted Subsidiaries shall fail to observe or perform any covenant, condition oragreement contained in any Loan Document (other than those specified in paragraph (a), (b) or (d) of this Section 7.01),and such failure shall continue unremedied for a period of thirty (30) days after written notice thereof from the TermAdministrative Agent to the Borrower; provided that any Default or Event of Default which may occur as a result of thefailure to timely meet any delivery requirements under the Loan Documents shall cease to exist upon any deliveryotherwise in compliance with such requirement.(f) the Borrower or any of the Restricted Subsidiaries shall fail to make any payment (whether of principal orinterest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due andpayable (after giving effect to any applicable grace period); provided that an event of default under the ABL CreditAgreement shall not constitute an Event of Default unless and until the ABL Lenders have actually declared all suchobligations under the ABL Credit Agreement to be immediately due and payable in accordance with the terms of the ABLCredit Agreement and such declaration has not been rescinded by the ABL Lenders on or before such date;(g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduledmaturity or that enables or permits (with all applicable grace periods having expired) the holder or holders of any MaterialIndebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to requirethe prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity, provided that thisparagraph (g) shall not apply to (i) secured Indebtedness that becomes due as a result of the sale, transfer or otherdisposition (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) or (ii) termination events orsimilar events occurring under any Swap Agreement that constitutes Material Indebtedness (it being understood thatparagraph (f) of this Section 7.01 will apply to any failure to make any payment required as a result of any suchtermination or similar event); provided that an event of default under the ABL Credit Agreement shall not constitute anEvent of Default unless and until the ABL Lenders have actually declared all such obligations under the ABL CreditAgreement to be immediately due and payable in accordance with the terms of the ABL Credit Agreement and suchdeclaration has not been rescinded by the ABL Lenders on or before such date;(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking(i) liquidation, court protection, reorganization or other relief in respect of the Borrower or any Material Subsidiary or itsdebts, or of a material part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similarlaw now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, examiner, sequestrator, conservatoror similar official for the Borrower or any Material Subsidiary or for a material part of its assets, and, in any such case,such proceeding or petition shall continue undismissed and unstayed for 60 days or an order or decree approving orordering any of the foregoing shall be entered;-147- (i) the Borrower or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petitionseeking liquidation, court protection, reorganization or other relief under any Federal, state or foreign bankruptcy,insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in atimely and appropriate manner, any proceeding or petition described in paragraph (h) of this Section 7.01, (iii) apply for orconsent to the appointment of a receiver, trustee, examiner, custodian, sequestrator, conservator or similar official for theBorrower or any Material Subsidiary or for a material part of its assets, (iv) file an answer admitting the materialallegations of a petition filed against it in any such proceeding or (v) make a general assignment for the benefit ofcreditors;(j) one or more enforceable judgments for the payment of money in an aggregate amount in excess of$50,000,000 (to the extent not covered by insurance as to which the insurer has been notified of such judgment or orderand has not denied coverage) shall be rendered against the Borrower and any of the Restricted Subsidiaries or anycombination thereof and the same shall remain undischarged for a period of 90 consecutive days during which executionshall not be effectively stayed, or any judgment creditor shall legally attach or levy upon assets of such Loan Party that arematerial to the businesses and operations of the Borrower and its Restricted Subsidiaries, taken as a whole, to enforce anysuch judgment;(k) an ERISA Event occurs that has resulted or would reasonably be expected to result in a Material AdverseEffect;(l) any Lien purported to be created under any Term Security Document shall cease to be, or shall be asserted byany Loan Party not to be, a valid and perfected Lien on any material portion of the Collateral, with the priority required bythe applicable Term Security Documents, except (i) as a result of the sale or other disposition of the applicable Collateralto a Person that is not a Loan Party in a transaction permitted under the Loan Documents, (ii) as a result of the TermAdministrative Agent’s failure to (A) maintain possession of any stock certificates, promissory notes or other instrumentsdelivered to it under the Term Security Documents or (B) file Uniform Commercial Code continuation statements or(iii) as to Collateral consisting of real property to the extent that such losses are covered by a lender’s title insurance policyand such insurer has not denied coverage or (iv) as a result of acts or omissions of the Term Administrative Agent or anyLender;(m) any material provision of any Loan Document or any Guarantee of the Loan Document Obligations shall forany reason be asserted by any Loan Party not to be a legal, valid and binding obligation of any Loan Party thereto otherthan as expressly permitted hereunder or thereunder;(n) any Guarantees of the Loan Document Obligations by any Loan Party pursuant to the Term GuaranteeAgreement shall cease to be in full force and effect (in each case, other than in accordance with the terms of the LoanDocuments); or(o) a Change of Control shall occur;-148- then, and in every such event (other than an event with respect to the Borrower described in paragraph (h) or (i) of this Section 7.01),and at any time thereafter during the continuance of such event, the Term Administrative Agent may, and at the request of theRequired Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or differenttimes: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans thenoutstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable maythereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, togetherwith accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payableimmediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; andin case of any event with respect to the Borrower described in paragraph (h) or (i) of this Section 7.01, the Commitments shallautomatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and otherobligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protestor other notice of any kind, all of which are hereby waived by the Borrower.For the avoidance of doubt, (i) any “going concern” or like qualification or exception in connection with anupcoming maturity date of any Indebtedness or any actual failure to satisfy a financial maintenance covenant or any potentialinability to satisfy a financial maintenance covenant on a future date or in a future period or any projected Default or Event ofDefault in connection with financial statements delivered pursuant to Section 5.01(a) shall not be a Default or Event of Default, (ii)any Default or Event of Default which may have occurred shall cease to exist upon compliance with such requirement, includingwith respect to an Event of Default pursuant to (x) Section 7.01(a) or Section 7.01(b) upon payment of any overdue amounts and (y)the failure to timely meet any delivery requirements under the Loan Documents, upon any delivery otherwise in compliance withsuch requirement, and (iii) the failure of any representation or warranty (other than the Specified Representations and the SpecifiedAcquisition Agreement Representations) to be true and correct on the Effective Date will not constitute a Default or Event of Defaulthereunder.SECTION 7.02 Application of Proceeds.After the exercise of remedies provided for in Section 7.01, any amounts received on account of the SecuredObligations shall be applied by the Term Administrative Agent in accordance with Section 4.02 of the Term Collateral Agreementand/or the similar provisions in the other Term Security Documents.ARTICLE VIIIADMINISTRATIVE AGENTSECTION 8.01 Appointment and Authority.(a) Each of the Lenders hereby irrevocably appoints DBNY to act on its behalf as the Term AdministrativeAgent and Term Collateral Agent hereunder and under the other Loan Documents and authorizes the Term Administrative Agent totake such actions on its behalf and to-149- exercise such powers as are delegated to the Term Administrative Agent and Term Collateral 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 ofthe Term Administrative Agent and the Term Collateral Agent, the Lenders, and the Borrower shall not have rights as a third partybeneficiary of any of such provisions.(b) The Term Administrative Agent shall also act as the “Term Collateral Agent” under the Loan Documents,and each of the Lenders hereby irrevocably appoints and authorizes the Term Collateral Agent to act as the agent of such Lender forpurposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of theSecured Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the TermCollateral Agent and any co-agents, sub-agents and attorneys-in-fact appointed by the Term Administrative Agent and TermCollateral Agent pursuant to Section 8.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof)granted under the Term Security Documents, or for exercising any rights and remedies thereunder at the direction of the TermAdministrative Agent, shall be entitled to the benefits of all provisions of this Article VIII and Article IX (including Section 9.03 asthough such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in fullherein with respect thereto.SECTION 8.02 Rights as a Lender.The Person serving as the Term Administrative Agent hereunder shall have the same rights and powers in itscapacity as a Lender as any other Lender and may exercise the same as though it were not the Term Administrative Agent and theterm “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Personserving as the Term Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept depositsfrom, own securities of, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in anykind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Term AdministrativeAgent hereunder and without any duty to account therefor to the Lenders.SECTION 8.03 Exculpatory Provisions.The Term Administrative Agent shall not have any duties or obligations except those expressly set forth hereinand in the other Loan Documents. Without limiting the generality of the foregoing, the Term Administrative Agent:(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred andis continuing;(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, exceptdiscretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the TermAdministrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number orpercentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that theTerm Administrative Agent shall not be required to take any-150- action that, in its opinion or the opinion of its counsel, may expose the Term Administrative Agent to liability or that iscontrary to any Loan Document or applicable law;(c) 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 the Borrower or any of its Affiliates that iscommunicated to or obtained by the Person serving as the Term Administrative Agent or any of its Affiliates in anycapacity;(d) shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the RequiredLenders (or such other number or percentage of the Lenders as shall be necessary, or as the Term Administrative Agentshall believe in good faith shall be necessary, under the circumstances as provided in Section 9.02 and in the last paragraphof Section 7.01) or (ii) in the absence of its own gross negligence, bad faith or willful misconduct as determined by a courtof competent jurisdiction by final and non-appealable judgment; provided that the Term Administrative Agent shall bedeemed not to have knowledge of any Default unless and until written notice describing such Default is given to the TermAdministrative Agent by the Borrower or a Lender; and(e) shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty orrepresentation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of anycertificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) theperformance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein orthe occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any otherLoan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lienpurported to be created by the Term Security Documents, (v) the value or the sufficiency of any Collateral, or (vi) thesatisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expresslyrequired to be delivered to the Term Administrative Agent.SECTION 8.04 Reliance by Administrative Agent.The Term 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, Internetor intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticatedby the proper Person. The Term Administrative Agent also may rely upon any statement made to it orally or by telephone andbelieved by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determiningcompliance with any condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender,the Term Administrative Agent may presume that such condition is satisfactory to such Lender unless the Term AdministrativeAgent shall have received notice to the contrary from such Lender prior to the making of such Loan. The Term AdministrativeAgent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts-151- 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 8.05 Delegation of Duties.The Term Administrative Agent may perform any and all of its duties and exercise its rights and powershereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Term AdministrativeAgent. The Term Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights andpowers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agentand to the Related Parties of the Term Administrative Agent and any such sub-agent, and shall apply to their respective activities inconnection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.SECTION 8.06 Resignation of Administrative Agent.Subject to the appointment and acceptance of a successor Term Administrative Agent as provided in thisparagraph, the Term Administrative Agent may resign upon thirty (30) days’ notice to the Lenders and the Borrower. Upon receiptof any such notice of resignation, the Required Lenders shall have the right, with the Borrower’s consent (such consent not to beunreasonably withheld or delayed) unless a Specified Event of Default has occurred and is continuing), to appoint a successor, whichshall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no suchsuccessor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) daysafter the retiring Term Administrative Agent gives notice of its resignation, then such resignation shall nevertheless be effective andthe retiring Term Administrative Agent may (but shall not be obligated to) on behalf of the Lenders, appoint a successor TermAdministrative Agent, which shall be an Approved Bank with an office in New York, New York, or an Affiliate of any suchApproved Bank (the date upon which the retiring Term Administrative Agent is replaced, the “ Resignation Effective Date ”);provided that if the Term Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person accepted suchappointment, then such resignation shall nonetheless become effective in accordance with such notice.If the Person serving as Term Administrative Agent is a Defaulting Lender pursuant to clause (d) of thedefinition thereof, the Required Lenders and the Borrower may, to the extent permitted by applicable law, by notice in writing tosuch Person remove such Person as Term Administrative Agent and, with the consent of the Borrower, appoint a successor. If nosuch successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30)days (the “ Removal Effective Date ”), then such removal shall nonetheless become effective in accordance with such notice on theRemoval Effective Date.With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring orremoved Term Administrative Agent shall be discharged from its duties and obligations hereunder and under the other LoanDocuments (except (i) that in the case of any collateral security held by the Term Administrative Agent on behalf of the Lendersunder any of the Loan Documents, the retiring or removed Term Administrative Agent shall continue to hold such collateral securityuntil such time as a successor Term Administrative Agent is-152- appointed and (ii) with respect to any outstanding payment obligations) and (2) except for any indemnity payments or other amountsthen owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be madeby, to or through the Term Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as theRequired Lenders appoint a successor Term Administrative Agent as provided for above. Upon the acceptance of a successor’sappointment as Term Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights,powers, privileges and duties of the retiring (or removed) Term Administrative Agent (other than any rights to indemnity paymentsor other amounts owed to the retiring or removed Term Administrative Agent as of the Resignation Effective Date or the RemovalEffective Date, as applicable), and the retiring or removed Term Administrative Agent shall be discharged from all of its duties andobligations hereunder and under the other Loan Documents as set forth in this Section. The fees payable by the Borrower to asuccessor Term Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between theBorrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under theother Loan Documents, the provisions of this Article and Section 9.04 shall continue in effect for the benefit of such retiring orremoved Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to betaken by any of them while the retiring or removed Term Administrative Agent was acting as Administrative Agent. SECTION 8.07 Non-Reliance on Term Administrative Agent and Other Lenders.Each Lender acknowledges that it has, independently and without reliance upon the Term Administrative Agentor any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, madeits own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently andwithout reliance upon the Term Administrative Agent or any other Lender or any of their Related Parties and based on suchdocuments and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not takingaction under or based upon this Agreement, any other Loan Document or any related agreement or any document furnishedhereunder or thereunder.Each Lender, by delivering its signature page to this Agreement and funding its Loans on the Effective Date, ordelivering its signature page to an Assignment and Assumption, Incremental Facility Amendment or Refinancing Amendmentpursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to andapproved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the TermAdministrative Agent or the Lenders on the Effective Date.No Lender shall have any right individually to realize upon any of the Collateral or to enforce any Guarantee ofthe Secured Obligations, it being understood and agreed that all powers, rights and remedies under the Loan Documents may beexercised solely by the Term Administrative Agent and Term Collateral Agent on behalf of the Lenders in accordance with the termsthereof. In the event of a foreclosure by the Term Administrative Agent or Term Collateral Agent on any of the Collateral pursuantto a public or private sale or other disposition, the Term Administrative Agent, the Term Collateral Agent or any Lender may be thepurchaser or licensor-153- of any or all of such Collateral at any such sale or other disposition, and the Term Administrative Agent or Term Collateral Agent, asagent for and representative of the Lenders (but not any Lender or Lenders in its or their respective individual capacities unlessRequired Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment ofthe purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the SecuredObligations as a credit on account of the purchase price for any collateral payable by the Term Administrative Agent or TermCollateral Agent on behalf of the Lenders at such sale or other disposition. Each Lender, whether or not a party hereto, will bedeemed, by its acceptance of the benefits of the Collateral and of the Guarantees of the Secured Obligations, to have agreed to theforegoing provisions.SECTION 8.08 No Other Duties, Etc.Anything herein to the contrary notwithstanding, neither any Joint Lead Arrangers nor any person named on thecover page hereof as a joint bookrunner shall have any powers, duties or responsibilities under this Agreement or any of the otherLoan Documents, except in its capacity, as applicable, as the Term Administrative Agent or a Lender hereunder.SECTION 8.09 Term Administrative Agent May File Proofs of Claim.In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relativeto any Loan Party, the Term Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payableas herein expressed or by declaration or otherwise and irrespective of whether the Term Administrative Agent shall have made anydemand on the Borrower) shall be entitled and empowered, 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 theLoans and all other Secured Obligations that are owing and unpaid and to file such other documents as may be necessaryor advisable in order to have the claims of the Lenders and the Term Administrative Agent (including any claim for thereasonable compensation, expenses, disbursements and advances of the Lenders and the Term Administrative Agent andtheir respective agents and counsel and all other amounts due the Lenders and the Term Administrative Agent underSections 2.12 and 9.03) allowed in such judicial proceeding; and(b) to collect and receive any monies or other property payable or deliverable on any such claims and todistribute the same;and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding ishereby authorized by each Lender to make such payments to the Term Administrative Agent and, if the Term Administrative Agentshall consent to the making of such payments directly to the Lenders, to pay to the Term Administrative Agent any amount due forthe reasonable compensation, expenses, disbursements and advances of the Term Administrative Agent and its agents and counsel,and any other amounts due the Term Administrative Agent under Sections 2.12 and 9.03.-154- Nothing contained herein shall be deemed to authorize the Term Administrative Agent to authorize or consent toor accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the SecuredObligations or the rights of any Lender to authorize the Term Administrative Agent to vote in respect of the claim of any Lender orin any such proceeding.SECTION 8.10 No Waiver; Cumulative Remedies; Enforcement.No failure by any Lender or the Term Administrative Agent to exercise, and no delay by any such Person inexercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; norshall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereofor the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, andprovided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges providedby law.Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority toenforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vestedexclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintainedexclusively by, the Term Administrative Agent in accordance with Article VII for the benefit of all the Lenders; provided , however ,that the foregoing shall not prohibit (a) the Term Administrative Agent from exercising on its own behalf the rights and remedies thatinure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) any Lenderfrom exercising setoff rights in accordance with Section 9.08 (subject to the terms of Section 2.18), or (c) any Lender from filingproofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Partyunder any Debtor Relief Law; and provided further that if at any time there is no Person acting as Term Administrative Agenthereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the TermAdministrative Agent pursuant to Article VII and (ii) in addition to the matters set forth in clauses (b) and (c) of the precedingproviso and subject to Section 2.18, any Lender may, with the consent of the Required Lenders, enforce any rights and remediesavailable to it and as authorized by the Required Lenders.SECTION 8.11 Withholding Taxes.To the extent required by any applicable Requirements of Law (as determined in good faith by the TermAdministrative Agent), the Term Administrative Agent may deduct or withhold from any payment to any Lender an amountequivalent to any applicable withholding Tax. If the Internal Revenue Service or any other Governmental Authority of the UnitedStates or other jurisdiction asserts a claim that the Term Administrative Agent did not properly withhold Tax from amounts paid toor for the account of any Lender for any reason (including because the appropriate form was not delivered or not property executed,or because such Lender failed to notify the Term Administrative Agent of a change in circumstance that rendered the exemptionfrom, or reduction of withholding Tax ineffective), such Lender shall indemnify and hold harmless the Term Administrative Agent(to the extent that the Term Administrative Agent has not already been reimbursed by the Loan Parties pursuant to Section 2.17 andwithout limiting any obligation-155- of the Loan Parties to do so pursuant to such Section) fully for all amounts paid, directly or indirectly, by the Term AdministrativeAgent as Taxes or otherwise, 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 theamount of such payment or liability delivered to any Lender by the Term Administrative Agent shall be conclusive absent manifesterror. Each Lender hereby authorizes the Term Administrative Agent to set off and apply any and all amounts at any time owing tosuch Lender under this Agreement or any other Loan Document against any amount due to the Term Administrative Agent under thisSection 8.11. The agreements in this Section 8.11 shall survive the resignation and/or replacement of the Term AdministrativeAgent, any assignment of rights by, or the replacement of, a Lender, the termination of this Agreement and the repayment,satisfaction or discharge of all other obligations under any Loan Document.ARTICLE IXMISCELLANEOUSSECTION 9.01 Notices.(a) Except in the case of notices and other communications expressly permitted to be given by telephone, allnotices 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 fax or other electronic transmission, as follows:(i) if to the Borrower or the Term Administrative Agent, to the address, fax number, e-mail address or telephonenumber specified for such Person on Schedule 9.01; and(ii) if to any other Lender, to it at its address (or fax number, telephone number or e-mail address) set forth in itsAdministrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender onits Administrative Questionnaire then in effect for the delivery of notices that may contain Material Non-PublicInformation relating to the Borrower).Notices and other communications sent by hand or overnight courier service, or mailed by certified or registeredmail, shall be deemed to have been given when received; notices and other communications sent by fax shall be deemed to have beengiven when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at theopening of business on the next Business Day for the recipient). Notices and other communications delivered through electroniccommunications to the extent provided in subsection (b) below shall be effective as provided in such subsection (b).(b) Electronic Communications . Notices and other communications to the Lenders hereunder may be deliveredor furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures reasonablyapproved by the Term Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant toArticle II if such Lender has notified the Term Administrative Agent that it is incapable of receiving notices under such Article byelectronic communication.-156- Unless the Term Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the“return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice orother communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed tohave been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to anInternet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address asdescribed in the foregoing clause (i) of notification that such notice or communication is available and identifying the websiteaddress therefor.(c) The Platform . THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENTPARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWERMATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OROMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED ORSTATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, ISMADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In noevent shall the Term Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to theBorrower, any Lender or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract orotherwise) arising out of the Borrower’s or the Term Administrative Agent’s transmission of Borrower Materials through theInternet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competentjurisdiction by a final and non-appealable judgment to have resulted from the gross negligence, bad faith or willful misconduct ofsuch Agent Party; provided , however , that in no event shall any Agent Party have any liability to the Borrower, any Lender or anyother Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).(d) Change of Address, Etc . Each of the Borrower and the Term Administrative Agent may change its address,electronic mail address, fax or telephone number for notices and other communications or website hereunder by notice to the otherparties hereto. Each other Lender may change its address, fax or telephone number for notices and other communications hereunderby notice to the Borrower and the Term Administrative Agent. In addition, each Lender agrees to notify the Term AdministrativeAgent from time to time to ensure that the Term Administrative Agent has on record (i) an effective address, contact name, telephonenumber, fax number and electronic mail address to which notices and other communications may be sent and (ii) accurate wireinstructions for such Lender.(e) Reliance by Term Administrative Agent and Lenders . The Term Administrative Agent and the Lendersshall be entitled to rely and act upon any notices purportedly given by or on behalf of the Borrower even if (i) such notices were notmade in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein,or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify theTerm Administrative Agent, each Lender-157- and the Related Parties from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each noticepurportedly given by or on behalf of the Borrower in the absence of gross negligence or willful misconduct as determined in a finaland non-appealable judgment by a court of competent jurisdiction. All telephonic notices to and other telephonic communicationswith the Term Administrative Agent may be recorded by the Term Administrative Agent and each of the parties hereto herebyconsents to such recording.SECTION 9.02 Waivers; Amendments.(a) No failure or delay by the Term Administrative Agent or any Lender in exercising any right or power underthis Agreement or any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right orpower, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercisethereof or the exercise of any other right or power. The rights and remedies of the Term Administrative Agent and the Lendershereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they wouldotherwise have. No waiver of any provision of this Agreement or any Loan Document or consent to any departure by any LoanParty therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 9.02, and then suchwaiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generalityof the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the TermAdministrative Agent or any Lender may have had notice or knowledge of such Default at the time. No notice or demand on theBorrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.(b) Except as provided in Section 2.20 with respect to any Incremental Facility Amendment, Section 2.21 withrespect to any Refinancing Amendment or Section 2.24 with respect to any Permitted Amendment, neither this Agreement, any LoanDocument nor any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuantto an agreement or agreements in writing entered into by the Borrower, the Term Administrative Agent (to the extent that suchwaiver, amendment or modification does not affect the rights, duties, privileges or obligations of the Term Administrative Agentunder this Agreement, the Term Administrative Agent shall execute such waiver, amendment or other modification to the extentapproved by the Required Lenders) and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreementor agreements in writing entered into by the Term Administrative Agent and the Loan Party or Loan Parties that are parties thereto,in each case with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of anyLender without the written consent of such Lender (it being understood that a waiver of any Default or Event of Default, mandatoryprepayment or mandatory reduction of the Commitments shall not constitute an extension or increase of any Commitment of anyLender), (ii) reduce the principal amount of any Loan (it being understood that a waiver of any Default or Event of Default,mandatory prepayment or mandatory reduction of the Commitments shall not constitute a reduction or forgiveness of principal) orreduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender directly andadversely affected thereby (it being understood that any change to the definition of Total Net Leverage Ratio, Consolidated SeniorSecured Net Leverage Ratio, Consolidated Senior Secured First Lien Net Leverage Ratio or Interest Coverage Ratio or in thecomponent definitions thereof-158- shall not constitute a reduction of interest or fees), provided that only the consent of the Required Lenders shall be necessary towaive any obligation of the Borrower to pay default interest pursuant to Section 2.13(c), (iii) postpone the maturity of any Loan (itbeing understood that a waiver of any Default or Event of Default, mandatory prepayment or mandatory reduction of theCommitments shall not constitute a reduction or forgiveness of principal), or the date of any scheduled amortization payment of theprincipal amount of any Term Loan under Section 2.10 or the applicable Refinancing Amendment, or any date for the payment ofany interest or fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled dateof expiration of any Commitment (it being understood that a waiver of any Default or Event of Default shall not constitute anextension of any maturity date, date of any scheduled amortization payment or date for payment of interest or fees), without thewritten consent of each Lender directly and adversely affected thereby, (iv) change any of the provisions of this Section 9.02 withoutthe written consent of each Lender directly and adversely affected thereby; provided that any such change which is in favor of aClass of Lenders holding Loans maturing after the maturity of other Classes of Lenders (and only takes effect after the maturity ofsuch other Classes of Loans or Commitments) will require the written consent of the Required Lenders with respect to each Classdirectly and adversely affected thereby, (v) change the percentage set forth in the definition of “Required Lenders” or any otherprovision of any Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive,amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent ofeach Lender (or each Lender of such Class, as the case may be), (vi) release all or substantially all the value of the Guarantees underthe Term Guarantee Agreement (except as expressly provided in the Loan Documents) without the written consent of each Lender(other than a Defaulting Lender), (vii) release all or substantially all the Collateral from the Liens of the Term Security Documents,without the written consent of each Lender (other than a Defaulting Lender), except as expressly provided in the Loan Documents or(viii) amend or modify any provisions of Section 2.18(a) or Section 7.02 hereof or Section 4.02 of the Term Collateral Agreementand/or the similar provisions in the other Term Security Documents, in each case without the consent of each Lender directly andadversely affected thereby; provided further that (A) no such agreement shall amend, modify or otherwise affect the rights or dutiesof the Term Administrative Agent without the prior written consent of the Term Administrative Agent, (B) any provision of thisAgreement or any other Loan Document may be amended by an agreement in writing entered into by the Borrower and the TermAdministrative Agent to cure any ambiguity, omission, defect or inconsistency and (C) any waiver, amendment or modification ofthis Agreement that by its terms affects the rights or duties under this Agreement of Lenders holding Loans or Commitments of aparticular Class (but not the Lenders holding Loans or Commitments of any other Class) may be effected by an agreement oragreements in writing entered into by the Borrower and the requisite percentage in interest of the affected Class of Lenders statingthat would be required to consent thereto under this Section 9.02 if such Class of Lenders were the only Class of Lenders hereunderat the time. Notwithstanding the foregoing, (a) this Agreement may be amended (or amended and restated) with the written consentof the Required Lenders, the Term Administrative Agent, the Borrower (i) to add one or more additional credit facilities to thisAgreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees inrespect thereof to share ratably in the benefits of this Agreement and the other Loan Documents and (ii) to include appropriately theLenders holding such credit facilities in any determination of the Required Lenders on substantially the same basis as the Lendersprior to such inclusion and (b)-159- guarantees, Term Security Documents and related documents in connection with this Agreement may be in a form reasonablydetermined by the Term Administrative Agent and may be, together with this Agreement and the other Loan Documents, amendedand waived with the consent of the Term Administrative Agent at the request of the Borrower without the need to obtain the consentof any other Lender if such amendment or waiver is delivered in order (i) to comply with local law or advice of local counsel, (ii) tocure ambiguities or defects, (iii) to cause such guarantee, collateral security document or other document to be consistent with thisAgreement and the other Loan Documents or (iv) to integrate any Incremental Facility or Credit Agreement RefinancingIndebtedness in a manner consistent with this Agreement and the other Loan Documents.(c) In connection with any proposed amendment, modification, waiver or termination (a “ Proposed Change ”)requiring the consent of all Lenders or all directly and adversely affected Lenders, if the consent of the Required Lenders (and, to theextent any Proposed Change requires the consent of Lenders holding Loans of any Class pursuant to clause (iv), (ix) or (xi) ofparagraph (b) of this Section 9.02, the consent of a Majority in Interest of the outstanding Loans of such Class) to such ProposedChange is obtained, but the consent to such Proposed Change of other Lenders whose consent is required is not obtained (any suchLender whose consent is not obtained as described in paragraph (b) of this Section 9.02 being referred to as a “ Non-ConsentingLender ”), then, so long as the Lender that is acting as Term Administrative Agent is not a Non-Consenting Lender, the Borrowermay, at its sole expense and effort, upon notice to such Non-Consenting Lender and the Term Administrative Agent, (i) if noSpecified Event of Default exists, permanently prepay all of the Loans of any Class owing by it to, and terminating anyCommitments of, such Non-Consenting Lender or (ii) require such Non-Consenting Lender to assign and delegate, without recourse(in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under thisAgreement to an Eligible Assignee that shall assume such obligations (which Eligible Assignee may be another Lender, if a Lenderaccepts such assignment), provided that, with respect to this clause (ii), (a) the Borrower shall have received the prior written consentof the Term Administrative Agent to the extent such consent would be required under Section 9.04(b) for an assignment of Loans orCommitments, as applicable, which consent shall not unreasonably be withheld, (b) such Non-Consenting Lender shall have receivedpayment of an amount equal to the outstanding par principal amount of its Loans, accrued interest thereon, accrued fees and all otheramounts payable to it hereunder (including pursuant to Section 2.11(a)(i)) from the Eligible Assignee (to the extent of suchoutstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (c) unless waived, theBorrower or such Eligible Assignee shall have paid to the Term Administrative Agent the processing and recordation fee specified inSection 9.04(b).(d) Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, the Term Loans ofany Lender that is at the time a Defaulting Lender shall not have any voting or approval rights under the Loan Documents and shallbe excluded in determining whether all Lenders (or all Lenders of a Class), all affected Lenders (or all affected Lenders of a Class), aMajority in Interest of Lenders of any Class or the Required Lenders have taken or may take any action hereunder (including anyconsent to any amendment or waiver pursuant to this Section 9.02); provided that (x) the Commitment of any Defaulting Lender maynot be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification-160- requiring the consent of all Lenders or each affected Lender that affects any Defaulting Lender more adversely than other affectedLenders shall require the consent of such Defaulting Lender.(e) Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, each AffiliatedLender (other than an Affiliated Debt Fund) hereby agrees that, for purposes of any plan of reorganization, such Affiliated Lenderwill be deemed to have voted in the same proportion as non-Affiliated Lenders voting on such matter; provided that such AffiliatedLender shall be entitled to vote in accordance with its sole discretion in connection with any plan of reorganization (a) to the extentany such plan of reorganization proposes to treat any Secured Obligations held by such Affiliated Lender in a manner that is lessfavorable in any material respect to such Affiliated Lender than the proposed treatment of similar Secured Obligations held byLenders that are not Affiliates of the Borrower, (b) that would deprive such Affiliated Lender of its pro rata share of any payments towhich it is entitled or (c) if such plan of reorganization does not require the consent of each Lender or each affected Lender.SECTION 9.03 Expenses; Indemnity; Damage Waiver.(a) The Borrower shall pay, if the Effective Date occurs and the Transactions have been consummated, (i) allreasonable and documented and invoiced out-of-pocket costs and expenses incurred by the Term Administrative Agent, the JointLead Arrangers and their respective Affiliates (without duplication) (limited, in the case of (x) legal fees and expenses, to thereasonable, documented and invoiced fees, charges and disbursements of Cahill Gordon & Reindel LLP and to the extent reasonablydetermined by the Term Administrative Agent to be necessary, one firm of local counsel in each relevant material jurisdiction (whichmay include a single special counsel acting in multiple jurisdictions) and, in the case of an actual conflict of interest where theIndemnitee affected by such conflict notifies the Borrower of the existence of such conflict and thereafter retains its own counsel,one additional conflicts counsel for the affected Indemnitees similarly situated and (y) the fees and expenses of any other advisor orconsultant, to the reasonable, documented and invoiced fees, charges and disbursements of such advisor or consultant, but solely tothe extent that such consultant or advisor has been retained with the Borrower’s consent (such consent not to be unreasonablywithheld or delayed)), in each case, in connection with the syndication of the credit facilities provided for herein, and the preparation,execution, delivery and administration of the Loan Documents or any amendments, modifications or waivers of the provisionsthereof and (ii) all reasonable and documented and invoiced out‑of-pocket costs and expenses incurred by the Term AdministrativeAgent, any Joint Lead Arranger or any Lender, including the fees, charges and disbursements of counsel for the Term AdministrativeAgent, the Joint Lead Arrangers and the Lenders (without duplication) (limited, in the case of (x) legal fees and expenses, to thereasonable, documented and invoiced fees, charges and disbursements of Cahill Gordon & Reindel LLP and to the extent reasonablydetermined by the Term Administrative Agent to be necessary, one local counsel in each relevant material jurisdiction and, in thecase of an actual conflict of interest where the Indemnitee affected by such conflict notifies the Borrower of the existence of suchconflict and thereafter retains its own counsel, one additional conflicts counsel for the affected Indemnitees similarly situated and (y)the fees and expenses of any other advisor or consultant, to the reasonable, documented and invoiced fees, charges anddisbursements of such advisor or consultant, but solely to the extent that such consultant or advisor has been retained with theBorrower’s consent (such consent not to be unreasonably withheld or delayed), in connection with the enforcement or protection ofany rights-161- or remedies (A) in connection with the Loan Documents (including all such costs and expenses incurred during any legal proceeding,including any proceeding under any Debtor Relief Laws), including its rights under this Section 9.03 or (B) in connection with theLoans made hereunder, including all such out-of ‑pocket costs and expenses incurred during any workout, restructuring ornegotiations in respect of such Loan.(b) Without duplication of the expense reimbursement obligations pursuant to clause (a) above, the Borrowershall indemnify the Term Administrative Agent, each Lender, the Joint Lead Arrangers and each Related Party (other than ExcludedAffiliates to the extent acting in their capacities as such) of any of the foregoing Persons (each such Person being called an “Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and reasonable anddocumented and invoiced out-of-pocket fees and expenses (limited, in the case of (x) legal fees and expenses, to the reasonable,documented and invoiced fees, charges and disbursements of one counsel for all Indemnitees and to the extent reasonably determinedby the Term Administrative Agent to be necessary, one local counsel in each relevant material jurisdiction and, in the case of anactual conflict of interest where the Indemnitee affected by such conflict notifies the Borrower of the existence of such conflict andthereafter retains its own counsel, one additional conflicts counsel for the affected Indemnitees similarly situated and (y) the fees andexpenses of any other advisor or consultant, to the reasonable, documented and invoiced fees, charges and disbursements of suchadvisor or consultant, but solely to the extent that such consultant or advisor has been retained with the Borrower’s consent (suchconsent not to be unreasonably withheld or delayed)), incurred by or asserted against any Indemnitee by any third party or by theBorrower or any Subsidiary to the extent arising out of, in connection with, or as a result of (i) the execution or delivery of thisAgreement, any Loan Document or any other agreement or instrument contemplated hereby or thereby, the performance by theparties to the Loan Documents of their respective obligations thereunder or the consummation of the Transactions or any othertransactions contemplated thereby, the syndication of the credit facilities provided for herein, (ii) any Loan or the use of the proceedstherefrom, (iii) any actual or alleged presence or Release or threat of Release of Hazardous Materials on, at, to or from anyMortgaged Property or any other property currently or formerly owned or operated by the Borrower or any Subsidiary, or any otherEnvironmental Liability related in any way to the Borrower or any Subsidiary, 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 athird party or by the Borrower or any Subsidiary or their Affiliates 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,costs or related expenses (w) resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee or its RelatedParties (as determined by a court of competent jurisdiction in a final and non-appealable judgment), (x) resulted from a materialbreach of the Loan Documents by such Indemnitee or its Related Parties (as determined by a court of competent jurisdiction in afinal and non-appealable judgment), (y) arise from disputes between or among Indemnitees (other than disputes involving claimsagainst the Term Administrative Agent or the Joint Lead Arrangers, in each case, in their respective capacities) that do not involve anact or omission by the Borrower or any Restricted Subsidiary or (z) any settlement effected without the Borrower’s prior writtenconsent, but if settled with the Borrower’s prior written consent (such consent not to be unreasonably withheld or delayed), theBorrower will indemnify and hold harmless each Indemnitee from and against any and all losses, claims, damages, liabilities andexpenses by reason of such settlement in accordance-162- with this paragraph; provided further that (1) the Borrower shall not, without the prior written consent of the applicable Indemnitee(which consent shall not be unreasonably withheld, delayed or conditioned), effect any settlement of any pending or threatenedclaim, litigation, investigation or proceeding in respect of which indemnity could have been sought hereunder by such Indemniteeunless (a) such settlement includes a full and unconditional release of such Indemnitee in form and substance reasonably satisfactoryto such Indemnitee from all liability on claims that are the subject matter of such claim, litigation, investigation or proceeding and (b)does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of such Indemnitee and(2) to the extent of any amounts paid to an Indemnitee in respect of this Section 9.03, such Indemnitee, by its acceptance of thebenefits hereof, agrees to refund and return any and all amounts paid by the Borrower to it if, pursuant to the operation of any of theforegoing clauses (w) through (z), such Indemnitee was not entitled to receipt of such amount.(c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Term AdministrativeAgent or any Lender under paragraph (a) or (b) of this Section 9.03, each Lender severally agrees to pay to the Term AdministrativeAgent or such Lender, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursedexpense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim,damage, liability or related expense, as the case may be, was incurred by or asserted against the Term Administrative Agent or suchLender in its capacity as such. For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of theoutstanding Term Loans at such time. The obligations of the Lenders under this paragraph (c) are subject to the last sentence ofSection 2.02(a) (which shall apply mutatis mutandis to the Lenders’ obligations under this paragraph (c)).(d) To the extent permitted by applicable law, no party hereto nor any Affiliate of any party hereto, nor anyofficer, director, employee, agent, controlling person, advisor or other representative of the foregoing or any successor or permittedassign of any of the foregoing shall assert, and each hereby waives, any claim against any other such Person on any theory of liabilityfor special, indirect, consequential or punitive damages (as opposed to direct or actual damages, but in any event including, withoutlimitation, any loss of profits, business or anticipated savings) (whether or not the claim therefor is based on contract, tort or dutyimposed by any applicable legal requirement) arising out of, in connection with, arising out of, as a result of, or in any way relatedto, this Agreement or any agreement or instrument contemplated hereby or referred to herein, the transactions contemplated herebyor thereby, or any act or omission or event occurring in connection therewith and each such Person further agrees not to sue upon anysuch claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor; provided thatthe foregoing shall in no event limit the Borrower’s indemnification obligations under clause (b) above.(e) In case any proceeding is instituted involving any Indemnitee for which indemnification is to be soughthereunder by such Indemnitee, then such Indemnitee will promptly notify the Borrower of the commencement of any proceeding;provided , however , that the failure to do so will not relieve the Borrower from any liability that it may have to such Indemniteehereunder, except to the extent that the Borrower is materially prejudiced by such failure. -163- (f) Notwithstanding anything to the contrary in this Agreement, to the extent permitted by applicable law, noparty hereto or an Indemnitee shall assert, and each hereby waives, any claim against any other Person for any direct or actualdamages arising from the use by unintended recipients of information or other materials distributed to such unintended recipients bysuch Indemnitee through telecommunications, electronic or other information transmission systems (including the Internet) inconnection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby; except to theextent that such direct or actual damages are determined by a court of competent jurisdiction by final, non-appealable judgment tohave resulted from the gross negligence, bad faith or willful misconduct of, or a material breach of the Loan Documents by, suchIndemnitee or its Related Parties.(g) All amounts due under this Section 9.03 shall be payable not later than ten (10) Business Days after writtendemand therefor; provided , however , that any Indemnitee shall promptly refund an indemnification payment received hereunder tothe extent that there is a final judicial determination that such Indemnitee was not entitled to indemnification with respect to suchpayment pursuant to this Section 9.03.SECTION 9.04 Successors and Assigns.(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and theirrespective successors and assigns permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of its rightsor obligations hereunder without the prior written consent of each Lender and the acknowledgement of the Term AdministrativeAgent (and any attempted assignment or transfer by the Borrower without such consent shall be null and void), (ii) no assignmentshall be made to any Defaulting Lender or any of its Subsidiaries, or any Persons who, upon becoming a Lender hereunder, wouldconstitute any of the foregoing Persons described in this clause (ii) and (iii) no Lender may assign or otherwise transfer its rights orobligations hereunder except in accordance with this Section 9.04. Nothing in this Agreement, expressed or implied, shall beconstrued to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby,Participants (to the extent provided in paragraph (c) of this Section 9.04), the Indemnitees and, to the extent expressly contemplatedhereby, the Related Parties of each of the Term Administrative Agent and the Lenders) any legal or equitable right, remedy or claimunder or by reason of this Agreement.(b) (i) Subject to the conditions set forth in paragraphs (b)(ii) and (f) below, any Lender may assign to one ormore Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of the Loans atthe time owing to it) with the prior written consent (such consent (except with respect to assignments to competitors (as described inthe definition of “ Disqualified Lenders ”) of the Borrower) not to be unreasonably withheld or delayed) of (A) the Borrower;provided that no consent of the Borrower shall be required for an assignment (w) by any Joint Lead Arranger (or its affiliate) to theextent that an assignment by such Joint Lead Arranger (or such affiliate) is made in the primary syndication to Eligible Assignees towhom the Borrower has consented or to any other Joint Lead Arranger (or its affiliate), (x) by a Term Lender to any Lender or anAffiliate of any Lender, (y) by a Term Lender to an Approved Fund or (z) if a Specified Event of Default has occurred and iscontinuing; provided further that no assignee contemplated by the immediately preceding proviso shall be entitled to receive anygreater payment under Section 2.15 or Section 2.17 than the applicable-164- assignor would have been entitled to receive with respect to the assignment made to such assignee, unless the assignment to suchassignee is made with the Borrower’s prior written consent; provided further that the Borrower shall have the right to withhold itsconsent to any assignment if in order for such assignment to comply with applicable law, the Borrower would be required to obtainthe consent of, or make any filing or registration with, any Governmental Authority and (B) the Term Administrative Agent;provided that no consent of the Term Administrative Agent shall be required for an assignment of a Term Loan to (x) a Lender, anAffiliate of a Lender or an Approved Fund or (y) subject to Section 9.04(f) and (g), an Affiliated Lender, the Borrower or any of itsSubsidiaries. Notwithstanding anything in this Section 9.04 to the contrary, if the Borrower has not given the Term AdministrativeAgent written notice of its objection to an assignment of Term Loans within ten (10) Business Days after written notice of suchassignment, the Borrower shall be deemed to have consented to such assignment.(ii) Assignments shall be subject to the following additional conditions: (A) except in the case of an assignmentto a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’sCommitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each suchassignment (determined as of the trade date specified in the Assignment and Assumption with respect to such assignment or, if notrade date is so specified, as of the date the Assignment and Assumption with respect to such assignment is delivered to the TermAdministrative Agent) shall not be less than $1,000,000 (and integral multiples thereof), unless the Borrower and the TermAdministrative Agent otherwise consent (in each case, such consent not to be unreasonably withheld or delayed); provided that nosuch consent of the Borrower shall be required if a Specified Event of Default has occurred and is continuing, (B) each partialassignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under thisAgreement; provided that this clause (B) shall not be construed to prohibit assignment of a proportionate part of all the assigningLender’s rights and obligations in respect of one Class of Commitments or Loans, (C) the parties to each assignment shall executeand deliver to the Term Administrative Agent an Assignment and Assumption via an electronic settlement system acceptable to theTerm Administrative Agent or, if previously agreed with the Term Administrative Agent, manually execute and deliver to the TermAdministrative Agent an Assignment and Assumption, and, in each case, together with a processing and recordation fee of $3,500;provided that the Term Administrative Agent, in its sole discretion, may elect to waive or reduce such processing and recordationfee; provided further that any such Assignment and Assumption shall include a representation by the assignee that the assignee is nota Disqualified Lender or, to the assignee’s knowledge, an Affiliate of a Disqualified Lender (other than any bona fide debtinvestment fund Affiliate of a Disqualified Lender who is disqualified solely as a result of being a competitor of the Borrower and itsSubsidiaries); provided further that assignments made pursuant to Section 2.19(b) or Section 9.02(c) shall not require the signature ofthe assigning Lender to become effective and (D) the assignee, if it shall not be a Lender, shall deliver to the Term AdministrativeAgent any tax forms required by Section 2.17(e) and an Administrative Questionnaire in which the assignee designates one or morecredit contacts to whom all syndicate-level information (which may contain Material Non-Public Information about the Borrower,the Loan Parties and their Related Parties or their respective securities) will be made available and who may receive suchinformation in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securitieslaws.-165- (iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(v) of this Section 9.04, from and afterthe effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party hereto and, to the extent ofthe interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and theassigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from itsobligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rightsand obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of(and subject to the obligations and limitations of) Sections 2.15, 2.16, 2.17 and 9.03 and to any fees payable hereunder that haveaccrued for such Lender’s account but have not yet been paid). Any assignment or transfer by a Lender of rights or obligations underthis Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lenderof a participation in such rights and obligations in accordance with paragraph (c)(i) of this Section 9.04.(iv) The Term Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at oneof its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addressesof the Lenders, and the Commitment of, and principal, premium, interest and fees amounts of the Loans owing to, each Lenderpursuant to the terms hereof from time to time (the “ Register ”). Notwithstanding the foregoing, in no event shall the TermAdministrative Agent be obligated to ascertain, monitor or inquire as to whether any Lender is an Affiliated Lender, nor shall theTerm Administrative Agent be obligated to monitor the aggregate amount of the Loans or Incremental Loans held by AffiliatedLenders. The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Term Administrative Agent andthe Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for allpurposes of this Agreement, notwithstanding notice to the contrary. In addition, the Term Administrative Agent shall maintain onthe Register information regarding the designation, and revocation of designation, of any Lender as a Defaulting Lender. TheRegister shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time uponreasonable prior notice.(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and anassignee, the assignee’s completed Administrative Questionnaire and any tax forms required by Section 2.17(e) (unless the assigneeshall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section 9.04 and anywritten consent to such assignment required by paragraph (b) of this Section 9.04, the Term Administrative Agent shall accept suchAssignment and Assumption and record the information contained therein in the Register. No assignment shall be effective forpurposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.(vi) The words “execution,” “signed,” “signature” and words of like import in any Assignment and Assumptionshall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legaleffect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case maybe, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and NationalCommerce Act, the New York State Electronic Signatures and Records Act or any other similar state laws based on the UniformElectronic Transactions Act.-166- (c) (i)Any Lender may, without the consent of the Borrower or the Term Administrative Agent, sellparticipations to one or more banks or other Persons (other than to a Person that is not an Eligible Assignee) (a “ Participant ”) in allor a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and theLoans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shallremain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the TermAdministrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with suchLender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such aparticipation shall provide that such Lender shall retain the sole right to enforce this Agreement and any other Loan Documents andto approve any amendment, modification or waiver of any provision of this Agreement and any other Loan Documents; provided thatsuch agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment,modification or waiver described in the first proviso to Section 9.02(b) that directly and adversely affects such Participant. Subjectto paragraph (c)(iii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16and 2.17 (subject to the obligations and limitations thereof and Section 2.19, it being understood that any tax forms required bySection 2.17(e) shall be provided solely to the participating Lender) to the same extent as if it were a Lender and had acquired itsinterest by assignment pursuant to paragraph (b) of this Section 9.04. To the extent permitted by law, each Participant also shall beentitled to the benefits of Section 9.08 as though it were a Lender; provided that such Participant agrees to be subject toSection 2.18(c) as though it were a Lender.(ii) Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of theBorrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and relatedinterest amounts) of each participant’s interest in the Loans or other obligations under this Agreement (the “ Participant Register”). The entries in the Participant Register shall be conclusive, absent manifest error, and the parties hereto shall treat each personwhose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreementnotwithstanding any notice to the contrary. No Lender shall have any obligation to disclose all or any portion of its ParticipantRegister to any Person (including the identity of any Participant or any information relating to a Participant’s interest in anyCommitments, Loans or other obligations under the Loan Documents) except to the extent that the relevant parties, acting reasonablyand in good faith, determine that such disclosure is necessary in connection with a Tax audit or other proceeding to establish that anyLoan or other obligation under the Loan Documents is in registered form for U.S. federal income tax purposes.(iii) A Participant shall not be entitled to receive any greater payment under Section 2.15, 2.16 or 2.17 than theapplicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of theparticipation to such Participant is made with the Borrower’s prior written consent (not to be unreasonably withheld or delayed).(d) Any Lender may, without the consent of the Borrower or the Term Administrative Agent, at any time pledgeor assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, includingany pledge or-167- assignment to secure obligations to a Federal Reserve Bank or other “central” bank, and this Section 9.04 shall not apply to any suchpledge or assignment of a security interest, provided that no such pledge or assignment of a security interest shall release a Lenderfrom any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.(e) In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no suchassignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignmentshall make such additional payments to the Term Administrative Agent in an aggregate amount sufficient, upon distribution thereofas appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or othercompensating actions, including funding, with the consent of the Borrower and the Term Administrative Agent, the applicable prorata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee andassignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to theTerm Administrative Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its fullpro rata share of all Loans. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of anyDefaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph,then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such complianceoccurs.(f) Notwithstanding anything to the contrary herein, any Lender may, at any time, assign all or a portion of itsrights and obligations under this Agreement to an Affiliated Lender subject to the following limitations:(i) Affiliated Lenders (other than Affiliated Debt Funds) will not receive information provided solely to Lendersby the Term Administrative Agent or any Lender and will not be permitted to attend or participate in meetings attendedsolely by the Lenders and the Term Administrative Agent, other than the right to receives notices of Borrowings, notices ofprepayments and other administrative notices in respect of its Loans or Commitments required to be delivered to Lenderspursuant to Article II;(ii) for purposes of any amendment, waiver or modification of any Loan Document (including suchmodifications pursuant to Section 9.02), or, subject to Section 9.02(e), any plan of reorganization pursuant to the U.S.Bankruptcy Code, that in either case does not require the consent of each Lender or each affected Lender or does notadversely affect such Affiliated Lender in any material respect as compared to other Lenders, or that would deprive suchAffiliated Lender of its pro rata share of any payments to which it is entitled, Affiliated Lenders will be deemed to havevoted in the same proportion as the Lenders that are not Affiliated Lenders voting on such matter; and each AffiliatedLender hereby acknowledges, agrees and consents that if, for any reason, its vote to accept or reject any plan pursuant tothe U.S. Bankruptcy Code is not deemed to have been so voted, then such vote will be (x) deemed not to be in good faithand (y) “designated” pursuant to Section 1126(e) of the U.S. Bankruptcy Code such that the vote is not counted indetermining whether the applicable class has accepted or rejected such plan in accordance with Section 1126(c) of the U.S.Bankruptcy Code; provided that Affiliated Debt Funds will not be subject to such voting limitations and will be entitled tovote as any other Lender; provided-168- that Affiliated Debt Funds may not, in the aggregate, account for more than 49.9% of the “Required Lenders” in anyRequired Lender vote under the Facilities;(iii) the aggregate principal amount of Term Loans purchased by assignment pursuant to this Section 9.04 andheld at any one time by Affiliated Lenders (other than Affiliated Debt Funds) may not exceed 25.0% of the aggregateprincipal amount of all Term Loans outstanding at the time of such purchase, after giving effect to any substantiallysimultaneous cancellations thereof;(iv) Affiliated Lenders shall clearly identify themselves as an Affiliated Lender in the loan assignmentdocumentation. In no event shall the Term Administrative Agent be obligated to ascertain, monitor or inquire as towhether any lender is an Affiliated Lender or Affiliated Debt Fund nor shall the Term Administrative Agent be obligatedto monitor the number of Affiliated Lenders or Affiliated Debt Funds or the aggregate amount of Term Loans orIncremental Term Loans or the aggregate amount of Incremental Revolving Loans held by Affiliated Lenders or AffiliatedDebt Funds;(v) Affiliated Lenders (other than Affiliated Debt Funds) will not be permitted to vote on matters requiring aRequired Lender vote, and the Term Loans held by Affiliated Lenders (other than Affiliated Debt Funds) shall bedisregarded in determining (x) other Lenders’ commitment percentages (y) matters submitted to Lenders for considerationthat do not require the consent of each Lender or each affected Lender or do not adversely affect such Affiliated Lender inany material respect as compared to other Lenders that are not Affiliated Lenders; provided that the commitments of anyAffiliated Lender shall not be increased, the Interest Payment Dates and the dates of any scheduled amortization payments(including at maturity) owed to any Affiliated Lender hereunder will not be extended and the amounts owning to anyAffiliated Lender hereunder will not be reduced without the consent of such Affiliated Lender; and(vi) each Lender making such assignment to such Affiliated Lender acknowledges and agrees that in connectionwith such assignment, (1) such Affiliated Lender then may have, and later may come into possession of Material Non-Public Information, (2) such Lender has independently and, without reliance on the Borrower, any of its Subsidiaries, theTerm Administrative Agent or any of their respective Affiliates, made its own analysis and determination to enter into suchassignment notwithstanding such Lender’s lack of knowledge of the Material Non-Public Information and (3) none of theBorrower, its Subsidiaries, the Term Administrative Agent, or any of their respective Affiliates shall have any liability tosuch Lender, and such Lender hereby waives and releases, to the extent permitted by Requirements of Law, any claimssuch Lender may have against the Borrower, its Subsidiaries, the Term Administrative Agent, and their respectiveAffiliates, under applicable laws or otherwise, with respect to the nondisclosure of the Material Non-PublicInformation. Each Lender entering into such an assignment further acknowledges that the Material Non-PublicInformation may not be available to the Term Administrative Agent or the other Lenders.(g) Any Lender may, at any time, assign all or a portion of its Term Loans to the Borrower or any of itsSubsidiaries, through (x) Dutch auctions or other offers to purchase open to-169- all Lenders on a pro rata basis in accordance with procedures of the type described in Section 2.11(a)(ii) or other customaryprocedures acceptable to the Term Administrative Agent and/or (y) open market purchases on a non-pro rata basis, provided that (i)any Term Loans that are so assigned will be automatically and irrevocably cancelled and the aggregate principal amount of thetranches and installments of the relevant Term Loans then outstanding shall be reduced by an amount equal to the principal amountof such Term Loans, (ii) no Event of Default shall have occurred and be continuing and (iii) each Lender making such assignment tothe Borrower or any of its Subsidiaries acknowledges and agrees that in connection with such assignment, (1) the Borrower or itsSubsidiaries then may have, and later may come into possession of Material Non-Public Information, (2) such Lender hasindependently and, without reliance on the Borrower, any of its Subsidiaries, the Term Administrative Agent or any of theirrespective Affiliates, made its own analysis and determination to enter into such assignment notwithstanding such Lender’s lack ofknowledge of the Material Non-Public Information and (3) none of the Borrower, its Subsidiaries, the Term Administrative Agent, orany of their respective Affiliates shall have any liability to such Lender, and such Lender hereby waives and releases, to the extentpermitted by Requirements of Law, any claims such Lender may have against the Borrower, its Subsidiaries, the TermAdministrative Agent, and their respective Affiliates, under applicable laws or otherwise, with respect to the nondisclosure of theMaterial Non-Public Information. Each Lender entering into such an assignment further acknowledges that the Material Non-PublicInformation may not be available to the Term Administrative Agent or the other Lenders.(h) Notwithstanding the foregoing, no assignment may be made or participation knowingly sold to aDisqualified Lender without the prior written consent of the Borrower; provided that, upon inquiry by any Lender to the TermAdministrative Agent as to whether a specified potential assignee or prospective participant is on the list of Disqualified Lenders, theTerm Administrative Agent shall be permitted to disclose to such Lender whether such specific potential assignee or prospectiveparticipant is on the list of Disqualified Lenders; provided further that inclusion on the list of Disqualified Lenders shall not applyretroactively to disqualify any persons that have previously acquired an assignment or participation in the Loan if such person wasnot included on the list of Disqualified Lenders at the time of such assignment or participation. Notwithstanding anything containedin this Agreement or any other Loan Document to the contrary, if any Lender was a Disqualified Lender at the time of theassignment of any Loans or Commitments to such Lender, following written notice from the Borrower to such Lender and the TermAdministrative Agent: (1) such Lender shall promptly assign all Loans and Commitments held by such Lender to an EligibleAssignee; provided that (A) the Term Administrative Agent shall not have any obligation to the Borrower, such Lender or any otherPerson to find such a replacement Lender, (B) the Borrower shall not have any obligation to such Disqualified Lender or any otherPerson to find such a replacement Lender or accept or consent to any such assignment to itself or any other Person subject to theBorrower’s consent in accordance with Section 9.04(b)(i) and (C) the assignment of such Loans and/or Commitments, as the casemay be, shall be at par plus accrued and unpaid interest and fees; (2) such Lender shall not have any voting or approval rights underthe Loan Documents and shall be excluded in determining whether all Lenders (or all Lenders of any Class), all affected Lenders (orall affected Lenders of any Class), a Majority in Interest of Lenders of any Class or the Required Lenders have taken or may take anyaction hereunder (including any consent to any amendment or waiver pursuant to this Section 9.02); provided that (x) theCommitment of any Disqualified Lender may not be increased or extended without the consent of such Lender and (y) any waiver,amendment or modification requiring the-170- consent of all Lenders or each affected Lender that affects any Disqualified Lender adversely and in a manner that is disproportionateto other affected Lenders shall require the consent of such Disqualified Lender; and (3) no Disqualified Lender is entitled to receiveinformation provided solely to Lenders by the Term Administrative Agent or any Lender or will be permitted to attend or participatein meetings attended solely by the Lenders and the Term Administrative Agent, other than the right to receive notices or Borrowings,notices or prepayments and other administrative notices in respect of its Loans or Commitments required to be delivered to Lenderspursuant to Article II.(i) Notwithstanding the foregoing, any Affiliated Lender shall be permitted, at its option, to contribute any TermLoans so assigned to such Affiliated Lender pursuant to this Section 9.04 to the Borrower or any of its Subsidiaries for purposes ofcancellation, which contribution may be made (with the Borrower’s consent), in exchange for Qualified Equity Interests of theBorrower or Indebtedness of the Borrower to the extent such Indebtedness is permitted to be incurred pursuant to Section 6.01 atsuch time.SECTION 9.05 Survival.All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents andin the certificates or other instruments delivered in connection with or pursuant to any Loan Document shall be considered to havebeen relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making ofany Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the TermAdministrative Agent or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at thetime any credit is extended hereunder, and shall continue in full force and effect until the Termination Date. The provisions ofSections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummationof the transactions contemplated hereby, the repayment of the Loans and all other amounts payable hereunder, the expiration ortermination of the Commitments or the termination of this Agreement or any provision hereof.SECTION 9.06 Counterparts; Integration; Effectiveness.This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), eachof which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, theother Loan Documents and any separate letter agreements with respect to fees payable to the Term Administrative Agent or thesyndication of the Loans and Commitments constitute the entire contract among the parties relating to the subject matter hereof andsupersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except asprovided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Term Administrative Agentand when the Term Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures ofeach of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respectivesuccessors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronicmeans shall be effective as delivery of a manually executed counterpart of this Agreement.-171- SECTION 9.07 Severability.Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to suchjurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality andenforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall notinvalidate such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 9.07, if and to the extentthat the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, asdetermined in good faith by the Term Administrative Agent, then such provisions shall be deemed to be in effect only to the extentnot so limited.SECTION 9.08 Right of Setoff.If a Specified Event of Default shall have occurred and be continuing, each Lender is hereby authorized at anytime and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time ordemand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owingby such Lender to or for the credit or the account of the Borrower (excluding, for the avoidance of doubt, any Settlement Assetsexcept to effect Settlement Payments such Lender is obligated to make to a third party in respect of such Settlement Assets or asotherwise agreed in writing between the Borrower and such Lender) against any of and all the obligations of the Borrower then dueand owing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand underthis Agreement and although such obligations are owed to a branch or office of such Lender different from the branch or officeholding such deposit or obligated on such Indebtedness; provided that in the event that any Defaulting Lender shall exercise any suchright of setoff, (x) all amounts so set off shall be paid over immediately to the Term Administrative Agent for further application inaccordance with the provisions of Section 2.22 and, pending such payment, shall be segregated by such Defaulting Lender from itsother funds and deemed held in trust for the benefit of the Term Administrative Agent and the Lenders and (y) the Defaulting Lendershall provide promptly to the Term Administrative Agent a statement describing in reasonable detail the Secured Obligations owingto such Defaulting Lender as to which it exercised such right of setoff. The applicable Lender shall notify the Borrower and theTerm Administrative Agent of such setoff and application; provided that any failure to give or any delay in giving such notice shallnot affect the validity of any such setoff and application under this Section 9.08. The rights of each Lender under this Section 9.08are in addition to other rights and remedies (including other rights of setoff) that such Lender may have. Notwithstanding theforegoing, no amount set off from any Loan Party (other than the Borrower) shall be applied to any Excluded Swap Obligation ofsuch Loan Party (other than the Borrower).SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process.(a) This Agreement shall be construed in accordance with and governed by the laws of the State of New York,except that (x) the interpretation of the definition of “Material Adverse Effect” (and whether or not a Material Adverse Effect hasoccurred) for the purpose of Section 4.01(g), (y) the determination of the accuracy of any Specified Acquisition Agreement-172- Representation and whether as a result of any inaccuracy thereof the Borrower or any of its Affiliates have the right to terminate itsor their obligations under the Acquisition Agreement and (z) the determination of whether the Acquisition has been consummated inaccordance with the terms of the Acquisition Agreement shall in each case be determined pursuant to the Acquisition Agreement,which is governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that mightotherwise govern under applicable principles of conflicts of laws thereof.(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusivejurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of theSouthern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to anyLoan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably andunconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New YorkState or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any suchaction or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other mannerprovided by law. Nothing in any Loan Document shall affect any right that the Term Administrative Agent or any Lender mayotherwise have to bring any action or proceeding relating to any Loan Document against the Borrower or their respective propertiesin the courts of any jurisdiction.(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally andeffectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising outof or relating to any Loan Document in any court referred to in paragraph (b) of this Section 9.09. Each of the parties hereto herebyirrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action orproceeding in any such court.(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices inSection 9.01. Nothing in any Loan Document will affect the right of any party to this Agreement to serve process in any othermanner permitted by law.SECTION 9.10 WAIVER OF JURY TRIAL.EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BYAPPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY ORINDIRECTLY ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONSCONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTYHERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HASREPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OFLITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHERPARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THEMUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10.-173- SECTION 9.11 Headings.Article and Section headings and the Table of Contents used herein are for convenience of reference only, arenot part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.SECTION 9.12 Confidentiality.(a) Each of the Term Administrative Agent and the Lenders agrees to maintain the confidentiality of theInformation (as defined below), except that Information may be disclosed (i) to its Affiliates (other than Excluded Affiliates) and itsand their respective directors, officers, employees, trustees and agents, including accountants, legal counsel and other agents andadvisors and any numbering, administration or settlement service providers (it being understood that the Persons to whom suchdisclosure is made will be informed of the confidential nature of such Information and instructed to keep such Informationconfidential and any failure of such Persons acting on behalf of the Term Administrative Agent or the relevant Lender to complywith this Section 9.12 shall constitute a breach of this Section 9.12 by the Term Administrative Agent or the relevant Lender, asapplicable), (ii) to the extent requested by any regulatory authority or self-regulatory authority, required by applicable law or by anysubpoena or similar legal process or in connection with the exercise of remedies hereunder or any suit, action or proceeding relatingto this Agreement or the enforcement of rights hereunder; provided that (x) solely to the extent permitted by law and other than inconnection with routine audits and reviews by regulatory and self-regulatory authorities, each Lender and the Term AdministrativeAgent shall notify the Borrower as promptly as practicable of any such requested or required disclosure in connection with any legalor regulatory proceeding and (y) in the case of clause (ii) only, each Lender and the Term Administrative Agent shall usecommercially reasonable efforts to ensure that such Information is kept confidential in connection with the exercise of suchremedies, and provided further that in no event shall any Lender or the Term Administrative Agent be obligated or required to returnany materials furnished by the Borrower or any Subsidiary of the Borrower, (iii) to any other party to this Agreement, (iv) subject toan agreement containing confidentiality undertakings substantially similar to those of this Section 9.12, to (A) any assignee of orParticipant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (B) any actual orprospective counterparty (or its advisors) to any Swap Agreement or derivative transaction relating to any Loan Party or itsSubsidiaries and its obligations under the Loan Documents or (C) any pledgee referred to in Section 9.04(d), (v) if required by anyrating agency; provided that prior to any such disclosure, such rating agency shall have agreed in writing to maintain theconfidentiality of such Information, (vi) to service providers providing administrative and ministerial services solely in connectionwith the syndication and administration of the Loan Documents and the facilities (e.g., identities of parties, maturity dates, interestrates, etc.) on a confidential basis, or (vii) to the extent such Information (x) becomes publicly available other than as a result of abreach of this Section 9.12, (y) becomes available to the Term Administrative Agent, any Lender or any of their respective Affiliateson a nonconfidential basis from a source other than the Borrower or any Subsidiary, which source is not known by the recipient ofsuch information to be subject to a confidentiality obligation or (z) is independently developed by a Joint Lead Arranger. For thepurposes hereof, “Information” means all information received from or on behalf of the Borrower relating to the Borrower, any otherSubsidiary or their business, other than any such information that is available to the Term-174- Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary; provided that,in the case of information received from the Borrower or any Subsidiary after the Effective Date, such information is clearlyidentified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided inthis Section 9.12 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree ofcare to maintain the confidentiality of such Information as such Person would accord to its own confidentialinformation. Notwithstanding the foregoing, no such information shall be disclosed to a Disqualified Lender that constitutes aDisqualified Lender at the time of such disclosure without the Borrower’s prior written consent.(b) EACH LENDER ACKNOWLEDGES THAT INFORMATION (AS DEFINED IN SECTION 9.12(a))FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATIONCONCERNING THE BORROWER, THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVESECURITIES AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OFMATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLICINFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL ANDSTATE SECURITIES LAWS.(c) ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS FURNISHEDBY THE BORROWER OR THE TERM ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OFADMINISTERING, THIS AGREEMENT, WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAINMATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER, THE LOAN PARTIES AND THEIR RELATEDPARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWERAND THE TERM ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE ACREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLICINFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDINGFEDERAL AND STATE SECURITIES LAWS.SECTION 9.13 USA PATRIOT Act.Each Lender that is subject to the USA PATRIOT Act and the Term Administrative Agent (for itself and not onbehalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act, it is required toobtain, verify and record information that identifies each Loan Party, which information includes the name and address of each LoanParty and other information that will allow such Lender or the Term Administrative Agent, as applicable, to identify each Loan Partyin accordance with the USA PATRIOT Act.SECTION 9.14 Release of Liens and Guarantees.(a) A Subsidiary Loan Party shall automatically be released from its obligations under the Loan Documents, andall security interests created by the Term Security Documents in Collateral owned by such Subsidiary Loan Party shall beautomatically released, (1) upon the-175- consummation of any transaction or designation permitted by this Agreement as a result of which such Subsidiary Loan Party ceasesto be a Restricted Subsidiary (including pursuant to a permitted merger with a Subsidiary that is not a Loan Party or a designation asan Unrestricted Subsidiary) or becomes an Excluded Subsidiary or (2) upon the request of the Borrower, in connection with atransaction permitted under this Agreement, as a result of which such Subsidiary Loan Party ceases to be a Wholly OwnedSubsidiary; provided that, if so required by this Agreement, the Required Lenders shall have consented to such transaction and theterms of such consent shall not have provided otherwise. Upon any sale or other transfer by any Loan Party (other than to theBorrower or any Subsidiary Loan Party) of any Collateral in a transaction permitted under this Agreement, or upon the effectivenessof any written consent to the release of the security interest created under any Term Security Document in any Collateral, the securityinterests in such Collateral created by the Term Security Documents shall be automatically released. Upon the release of theBorrower or any Subsidiary Loan Party from its Guarantee in compliance with this Agreement, the security interest in any Collateralowned by the Borrower or such Subsidiary created by the Term Security Documents shall be automatically released. Upon thedesignation of a Restricted Subsidiary as an Unrestricted Subsidiary in compliance with this Agreement, the security interest createdby the Term Security Documents in the Equity Interests of such Subsidiary shall automatically be released. Upon the TerminationDate, all obligations under the Loan Documents and all security interests created by the Term Security Documents shall beautomatically released. In connection with any termination or release pursuant to this Section 9.14, the Term Administrative Agentor the Term Collateral Agent, as the case may be, shall execute and deliver to any Loan Party, at such Loan Party’s expense, alldocuments that such Loan Party shall reasonably request to evidence such termination or release so long as the Borrower orapplicable Loan Party shall have provided the Term Administrative Agent or the Term Collateral Agent, as the case may be, suchcertifications or documents as the Term Administrative Agent or the Term Collateral Agent, as the case may be, shall reasonablyrequest in order to demonstrate compliance with this Agreement.(b) The Term Administrative Agent or the Term Collateral Agent, as the case may be, will, at the Borrower’sexpense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to subordinateits Lien on any property granted to or held by the Term Administrative Agent or the Term Collateral Agent, as the case may be,under any Loan Document to the holder of any Lien on such property that is permitted by Section 6.02(iv).(c) Each of the Lenders irrevocably authorizes the Term Administrative Agent or the Term Collateral Agent, asthe case may be, to provide any release or evidence of release, termination or subordination contemplated by this Section 9.14. Uponrequest by the Term Administrative Agent or the Term Collateral Agent, as the case may be, at any time, the Required Lenders willconfirm in writing the Term Administrative Agent’s authority or the Term Collateral Agent’s authority, as the case may be, to releaseor subordinate its interest in particular types or items of property, or to release any Loan Party from its obligations under any LoanDocument, in each case in accordance with the terms of the Loan Documents and this Section 9.14.-176- SECTION 9.15 No Advisory or Fiduciary Responsibility.In connection with all aspects of each transaction contemplated hereby (including in connection with anyamendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees that (i)(A) the arranging and other services regarding this Agreement provided by the Term Administrative Agent, the Joint Lead Arrangersand the Lenders are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the TermAdministrative Agent, the Joint Lead Arrangers and the Lenders on the other hand, (B) the Borrower has consulted its own legal,accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, andunderstands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents;(ii) (A) each of the Term Administrative Agent, the Joint Lead Arrangers and the Lenders is and has been acting solely as a principaland, except as expressly agreed in writing by the relevant parties, has not been, is not and will not be acting as an advisor, agent orfiduciary for the Borrower, any of its Affiliates or any other Person and (B) none of the Term Administrative Agent, the Joint LeadArrangers and the Lenders has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplatedhereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Term Administrative Agent,the Joint Lead Arrangers and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involveinterests that differ from those of the Borrower and its Affiliates, and none of the Term Administrative Agent, the Joint LeadArrangers and the Lenders has any obligation to disclose any of such interests to the Borrower or any of its Affiliates. To the fullestextent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Term AdministrativeAgent, the Joint Lead Arrangers and the Lenders with respect to any breach or alleged breach of agency or fiduciary duty inconnection with any aspect of any transaction contemplated hereby.SECTION 9.16 Interest Rate Limitation.Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paidunder the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable law (the “ MaximumRate ”). If the Term Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, theexcess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. Indetermining whether the interest contracted for, charged or received by the Term Administrative Agent or a Lender exceeds theMaximum Rate, such Person may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as anexpense, fee or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate,allocate and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the obligationshereunder.SECTION 9.17 Intercreditor Agreements.(a) Notwithstanding anything to the contrary in this Agreement or in any other Loan Document: (a) the Liensgranted to the Collateral Agent in favor of the Secured Parties pursuant to the Loan Documents and the exercise of any right relatedto any Collateral shall be subject, in each case, to the terms of the Customary Intercreditor Agreements, (b) in the event of-177- any conflict between the express terms and provisions of this Agreement or any other Loan Document, on the one hand, and of theCustomary Intercreditor Agreements, on the other hand, the terms and provisions of the relevant Customary IntercreditorAgreements shall control, and (c) each Lender authorizes the Term Administrative Agent and/or the Term Collateral Agent toexecute any such Customary Intercreditor Agreement on behalf of such Lender, and such Lender agrees to be bound by the termsthereof.(b) Each Secured Party hereby agrees that the Term Administrative Agent and/or Term Collateral Agent mayenter into any intercreditor agreement and/or subordination agreement pursuant to, or contemplated by, the terms of this Agreement(including with respect to Indebtedness permitted pursuant to Section 6.01 and defined terms referenced therein) on its behalf andagrees to be bound by the terms thereof and, in each case, consents and agrees to the appointment of DBNY (or its affiliateddesignee, representative or agent) on its behalf as collateral agent, respectively, thereunder.SECTION 9.18 Effect of Amendment and Restatement of the Existing Credit Agreement.As of the Second Amendment Effective Date, this Agreement shall amend, and restate the Existing CreditAgreement, but shall not constitute a novation thereof or in any way impair or otherwise affect the rights or obligations of the partiesthereunder (including with respect to Loans and representations and warranties made thereunder) except as such rights or obligationsare amended or modified hereby. The Existing Credit Agreement as amended and restated hereby shall be deemed to be a continuingagreement among the parties, and all documents, instruments and agreements delivered pursuant to or in connection with theExisting Credit Agreement not amended and restated in connection with the entry of the parties into this Agreement shall remain infull force and effect, each in accordance with its terms, as of the date of delivery or such other date as contemplated by suchdocument, instrument or agreement to the same extent as if the modifications to the Existing Credit Agreement contained hereinwere set forth in an amendment to the Existing Credit Agreement in a customary form, unless such document, instrument oragreement has otherwise been terminated or has expired in accordance with or pursuant to the terms of this Agreement, the ExistingCredit Agreement or such document, instrument or agreement or as otherwise agreed by the required parties hereto or thereto.[ Remainder of Page Intentionally Left Blank. ] -178- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by theirrespective authorized officers as of the day and year first above written. BUildErS FirStSOUrCE, inC.,as Borrower By: Name: Title: Signature Page toBuilders FirstSource, Inc.Term Loan Credit Agreement dEUtSCHE BAnK Ag nEW yOrK BrAnCH , in its capacities asTerm Administrative Agent and a Lender By: Name: Title: By: Name: Title: Signature Page toBuilders FirstSource, Inc.Term Loan Credit Agreement Exhibit 10.29 BUildErS FirStSOUrCE, inC. AmEndEd And rEStAtEd dirECtOr COmPEnSAtiOn POliCy (as amended effective January 1, 2016) The Board of Directors (the “Board”) of Builders FirstSource, Inc. (the “Company”) has adopted the following amended and restatedcompensation policy for purposes of compensating those directors of the Company who meet the eligibility requirements described herein (the “EligibleDirectors”). This compensation policy has been developed to compensate the Eligible Directors of the Company for their time, commitment and contributions tothe Board. In order to qualify as an Eligible Director for purposes of receiving compensation under this policy (i) the director cannot concurrently be employedin any capacity by the Company or any of its subsidiaries; and (ii) unless otherwise determined by the Nominating Committee of the Board, the director cannotconcurrently be employed by or affiliated with (a) JLL Partners, JLL Associates G.P. V, L.L.C, or JLL Building Holdings, LLC or any of their affiliates, or (b)Warburg Pincus & Co., Warburg Pincus LLC, or Warburg Pincus Private Equity IX, L.P. or any of their affiliates. For purposes of this policy, the term “affiliate”shall have the meaning ascribed to it in Rule 12b-2 promulgated under the Securities Exchange Act of 1934.CASH COmPEnSAtiOnretainers for Serving on the BoardEligible Directors shall be paid an annual retainer of $ 80,000, payable in quarterly installments, for each year of his or her service on the Board (eacha “Service Year”). Service Years will commence on August 1 st and end on July 31 st of each calendar year.retainers for Serving as Chairpersons or members of a Board CommitteeAn Eligible Director who serve as a chairperson or as a member of the Audit Committee, the Compensation Committee or the Nominating Committeeof the Board shall be paid additional annual retainers for service in such roles in the following amounts: Name of Committee Chairman MemberAudit Committee $30,000 $5,000Compensation Committee $20,000 $5,000Nominating Committee $10,000 $5,000 Such retainers shall be payable in quarterly installments for each Service Year in which such Eligible Director serves as the chairperson or as amember of the foregoing Board committees. A chairperson of a committee shall not be paid an additional retainer for also serving as a member of thatcommittee. Eligible Directors shall not be paid any additional retainers for attendance at meetings of the Board or its committees. EQUity-BASEd COmPEnSAtiOnAt the start of each Service Year, Eligible Directors (“Grantees”) shall receive equity-based compensation awards with a value at the time of issuance ofapproximately $120,000. Such awards shall be made in the form of restricted stock units related to the Company’s common stock and shall be granted by theBoard pursuant to a form of restricted stock unit award agreement under the Company’s 2007 Incentive Plan, or the 2014 Incentive Plan (or any successor plans),as amended from time to time. The restricted stock units shall vest on the first anniversary of the grant date, with any unvested units being forfeited to theCompany. initial grants for new Eligible directors Following (i) the initial appointment or election of each new Eligible Director to the Board, or (ii) a change in status which causes an ineligibledirector to qualify as an Eligible Director under this policy, a grant of restricted stock units related to the Company’s common stock will be made tosuch Eligible Director for that initial partial Service Year with a value at the time of issuance of approximately $120,000, prorated for that portion ofthe Service Year in which such Eligible Director will serve on the Board. Such grants shall be made as of (i) the date of commencement of Boardservice for a new Eligible Director, or (ii) the date a serving director becomes an Eligible Director, or (iii) such other date as the Board shall determine.The restricted stock units will vest on the first anniversary of the grant date, with any unvested restricted stock units being forfeited to the Company. vesting Upon departure of a director If a Grantee shall cease to be a Director of the Company due to death, disability or retirement during the one-year vesting period applicable to anyrestricted stock units granted hereunder, all restricted stock units shall immediately vest and the stock certificates representing the shares underlyingsuch restricted stock units shall be promptly delivered to the Grantee by the Company. If the Grantee shall cease to be a Director of the Company forany other reason during such one-year vesting period, any unvested restricted stock units shall be forfeited by the Grantee and such restricted stockunits shall be cancelled. trAvEl ExPEnSE rEimBUrSEmEntEach of the Eligible Directors shall be entitled to receive reimbursement for reasonable travel expenses which they properly incur in connection withtheir functions and duties as a director.AmEndmEntS, rEviSiOn And tErminAtiOnThis policy may be amended, revised or terminated by the Board of Directors at any time and from time-to-time. Exhibit 10.39EmPlOymEnt AgrEEmEntAGREEMENT made as of November 14, 2016, by and between Builders FirstSource, Inc., a Delaware corporation (the“Company”), and Peter M. Jackson (the “Executive”).WHEREAS , the Company desires that Executive serve as the Senior Vice President and Chief Financial Officer of theCompany, and Executive desires to hold such positions under the terms and conditions of this Agreement; andWHEREAS , the Board of Directors of the Company (the “Company Board”) has approved and authorized the Company toenter into this Agreement with Executive.NOW, THEREFORE , in consideration of the mutual covenants and agreements set forth herein, and intending to be legallybound hereby, the parties agree as follows:1. Employment . The Company hereby employs Executive, and Executive hereby accepts employment with theCompany, upon the terms and subject to the conditions set forth herein.2. Term .(a) Subject to Section 2(b) hereof, the term of employment by the Company of Executive pursuant to thisAgreement (as the same may be extended, the “Term”) shall commence on November 14, 2016 (the “Effective Date”), and terminateon the first anniversary thereof.(b) Commencing on the first anniversary of the Effective Date and on each subsequent anniversarythereof, the Term shall automatically be extended for one (1) additional year unless, not later than ninety days (90) prior to any suchanniversary date, either party hereto shall have notified the other party hereto in writing that such extension shall not take effect.3. Position . During the Term, Executive shall serve as the Senior Vice President and Chief Financial Officer of theCompany, supervising the financial operations and affairs of the Company and performing such other duties as the Company Boardshall determine.4. Duties . During the Term, Executive shall devote his full time and attention during normal business hours to thebusiness and affairs of the Company, except vacations in accordance with the Company’s policies and for illness or incapacity, inaccordance with Section 8 hereof.5. Salary and Bonus .(a) During the Term, the Company shall pay to Executive a base salary at the rate of $425,000 per year(the “Base Salary”), subject to adjustments pursuant to the terms of Section 5(b) hereof. (b) O n or prior to each anniversary hereof during the Term (assuming the Term of the Agreement isextended pursuant to Section 2(b) hereof) , the Company Board or the Com pensation Committee of the Company Board (the “Compensation Committee ” ) shall review the Base Salary and may, in its sole discretion, increase the Base Salary based uponperformance and merit. Executive’s Base Salary shall not be decreased below the amount set forth in Section 5(a) hereof. TheBase Salary shall be payable to Executive in substantially equal installments in accordance with the Company ’ s normal payrollpractices, but in no event less often than semi-monthly.(c) For each fiscal year during the Term hereof, Executive shall be eligible to receive an annual cashbonus equal to the amount provided for in the Company’s Annual Cash Incentive Plan (“Annual Incentive Plan”) (which generallyprovides for a target bonus percentage of 75% of Executive’s Base Salary), which Annual Incentive Plan is approved by theCompany Board or the Compensation Committee thereof. Executive’s target bonus percentage under the Annual Incentive Planshall not be reduced below 75% of his Base Salary. Annual cash bonuses shall be paid in the calendar year following the year towhich the bonus relates, and not later than March 15 of such year. The 2016 annual cash bonus shall be prorated based onExecutive’s start date.6. Sign-On Bonus . The Company agrees to pay Executive a one-time, conditional sign-on bonus in the amount of$350,000, subject to required withholdings (the “Sign-On Bonus”), as follows: $200,000 shall be paid within 30 days of theEffective Date, and $150,000 shall be paid six months following the Effective Date, subject to Executive’s continued employmentwith the Company through such date. In the event that Executive’s employment with the Company is terminated by Executive forany reason or by the Company for Cause (as hereafter defined) prior to the one-year anniversary of the Effective Date, Executiveshall be required to reimburse the Company for the full amount of the Sign-On Bonus received.7. Equity Compensation . For each fiscal year during the Term hereof, beginning in 2017, Executive shall begranted an annual equity compensation award under the Company’s long-term incentive plan or plans having a grant date fair valueof approximately $425,000.8. Vacation, Holidays and Sick Leave . During the Term, Executive shall be entitled to paid vacation, paidholidays and sick leave in accordance with the Company’s standard policies for its senior executive officers.9. Business Expenses . During the Term, Executive shall be reimbursed for all reasonable and necessary businessexpenses incurred by him in connection with his employment, including, without limitation, expenses for travel and entertainmentincurred in conducting or promoting business for the Company upon timely submission by Executive of receipts and otherdocumentation as required by the Internal Revenue Code of 1986, as amended (the “Code”), and in accordance with the Company’snormal expense reimbursement policies. With respect to Executive’s rights under this Section 9, (i) the amount reimbursable in anyone calendar year shall not affect the amount reimbursable in any other calendar year, (ii) the reimbursement of an eligible businessexpense must be made no later than December 31 of the year after the year in which the business expense was incurred, and (iii) suchrights shall not be subject to liquidation or exchange for another benefit.2 10. Health, Welfare and Re lated Benefits . During the Term, Executive and eligible members of his family shallbe eligible to participate fully in all (a) health and dental benefits and insurance programs; (b) life and short- and long-term disabilitybenefits and insurance programs; and (c) defined contribution and equity compensation programs , all as available to senior executiveofficers of the Company generally.11. Confidentiality, Non-Competition .(a) Executive acknowledges that: (i) the Executive has, and his employment hereunder will require thatExecutive continue to have, access to and knowledge of Confidential Information (as hereinafter defined); (ii) the direct and indirectdisclosure of any such Confidential Information to existing or potential competitors of the Company or its subsidiaries would placethe Company at a competitive disadvantage and would do damage, monetary or otherwise, to the Company’s businesses; and (iii) theengaging by Executive in any of the activities prohibited by this Section 11 may constitute improper appropriation and/or use of suchConfidential Information. Executive expressly acknowledges that the Confidential Information constitutes a protectable businessinterest of the Company. As used herein, the term “Confidential Information” shall mean information of any kind, nature or descriptionwhich is disclosed to or otherwise known to the Executive as a direct or indirect consequence of his association with the Companyand its subsidiaries, which information is not generally known to the public or in the businesses in which such entities are engaged orwhich information relates to specific investment opportunities within the scope of their business which were considered by theCompany or its subsidiaries during the Term. Assuming the foregoing criteria are met, Confidential Information includes, but is notlimited to, information (including without limitation compilations) concerning the Company’s and its subsidiaries’ financial plansand performance, potential acquisitions, business plans and strategies, personnel information, information technology processes,research, development, and manufacturing of Company or its subsidiaries’ products, existing or prospective customers, proposalsmade to existing or prospective customers or other information contained in bids or offers to such customers, the terms of anyarrangements or agreements with customers, including the amounts paid for services or how pricing was developed by the Companyor its subsidiaries, the layout, design and implementation of customer specific projects, the identity of suppliers or subcontractors,information regarding supplier or subcontractor pricing or contract terms, the composition or description of future services that are ormay be provided by the Company or any of its subsidiaries, the Company’s or any of its subsidiaries’ financial, marketing and salesinformation, and technical expertise, formulas, source codes and know how developed by the Company or any of its subsidiaries,including the unique manner in which the Company or any if its subsidiaries conducts its business. Confidential Information alsoincludes information disclosed to the Company or any of its subsidiaries by a third party that the Company or such subsidiary isrequired to treat as confidential. Notwithstanding the foregoing, “Confidential Information” shall not be deemed to includeinformation which (i) is or becomes generally available to the public other than as a result of a disclosure by the Executive, (ii)becomes available to the Executive on a non-confidential basis from a source other than the Company or any of its subsidiaries,provided that such source is not bound by any contractual, legal or fiduciary obligation with respect to such information or (iii) wasin the Executive’s possession prior to being furnished by the Company or any of its subsidiaries.3 (b) During the Term of this Agreement and for a period of one year after the termination of Executive ’ semployment hereunder (upon expiration of the Term or otherwise), Executive shall not, directly or indirectly, whether individually,as a director, stockholder, owner, manager, member, partner, employee, consultant, principal or agent of any business, or in any othercapacity, use for his own account, utilize or make known, disclose, furnish or make available to any person, firm or corporation anyof the Confidential Information, other than to authorized officers, directors and employees of the Company or its subsidiaries in theproper performance of the duties contemplated herein, or as required by a court of competent jurisdiction or other administrative orlegislative body; provided that , prior to disclosing any of the Confidential Information to a court or other administrative orlegislative body, Executive shall promptly notify the Company so that the Company may seek a protective order or other appropriateremedy. Executive agrees to return all Confidential Information, including all photocopies, extracts and summaries thereof, and anysuch information stored electronically on tapes, computer disks or in any other manner to the Company at any time upon request bythe Company and upon the termination of his employment for any reason.(c) During the Term of this Agreement and for a period of one year after termination of Executive’semployment hereunder (upon expiration of the Term or otherwise), Executive shall not engage in competition (or assist any otherPerson in engaging in competition) with the Company or any of its subsidiaries, directly or indirectly (either individually, by anyform of ownership, or as a director, manager, member, officer, principal, agent, employee, employer, advisor, consultant, lender,member, shareholder, partner, or other representative in a Competing Business), in the Business of the Company in a ProhibitedLocation by performing services that are the same as or substantially similar to those services Executive performed for the Companyor its subsidiaries at any time during the last two years of Executive’s employment with the Company or its subsidiaries. “Person”means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust,unincorporated organization or other entity. “Competing Business” means any business, regardless of form, that is directly engaged,in whole or in relevant part, in any business or enterprise that is the same as, or substantially the same as, the Business of theCompany. The “Business of the Company” means the business of supplying, manufacturing, designing, constructing or installingstructural and related building products, including without limitation roof and floor trusses, wall panels, stairs, windows, doors,engineered wood products, lumber and lumber sheet goods, millwork, kitchen cabinets, gypsum, siding, roofing, insulation,hardware and other building products. A “Prohibited Location” means any location within fifty (50) miles of any of the Company’sor any of its subsidiaries’ physical locations. For the purposes of this Agreement, the parties agree that homebuilders and anyvendors supplying building products or services to the Company shall be deemed to be Competing Businesses.4 (d) During the Term of this Agreement and for a period of two years after termination of Executive ’ semployment hereunder (upon expiration of the Term or otherwise), Executive shall not directly or indirectly solicit or divert, orattempt to solicit or divert, (either on behalf of the Executive or any other Person) any person employed by the Company or any of itssubsidiaries with whom Executive had contact in the course of his employment with the Company or its subsidiaries (each, a“Company Employee“) to leave or reduce their employment with the Company or any of its subsidiaries or to work for Executive orany other Person, including, without lim itation, a Competing Business . During the Term of this Agreement and for a period of twoyears after termination of Executive’s employment hereunder (upon expiration of the Term or otherwise), Executive shall notdirectly or indirectly (either on behalf of the Executive or any other Person) hire any Company Employee or respond to inquiriesseeking employment from any Company Employee. This paragraph only applies to persons who are actively employed as CompanyEmployees or were Company Employees within one (1) year of the time of any such actual or attempted solicitation, hiring orinquiry. .(e) Executive acknowledges that (A) in connection with rendering the services to be rendered byExecutive hereunder, Executive will have access to and knowledge of Confidential Information, the disclosure of which would placethe Company or its subsidiaries at a competitive disadvantage, causing irreparable injury, and (B) the services to be rendered byExecutive hereunder are of a special and unique character, which gives this Agreement a peculiar value to the Company, the loss ofwhich may not be reasonably or adequately compensated for by damages in an action at law, and that a material breach or threatenedbreach by Executive of any of the provisions contained in this Section 11 will cause the Company irreparable injury. Executive,therefore, agrees that the Company shall be entitled, in addition to any other right or remedy, to a temporary, preliminary andpermanent injunction, without the necessity of proving the inadequacy of monetary damages or the posting of any bond or security,enjoining or restraining Executive from any such violation or threatened violations.(f) Executive further acknowledges and agrees that due to the uniqueness of his services and confidentialnature of the information he will possess, the covenants set forth herein are reasonable and necessary for the protection of thebusiness and goodwill of the Company; and it is the intent of the parties hereto that if, in the opinion of any court of competentjurisdiction, any provision set forth in this Section 11 is not reasonable in any respect, such court shall have the right, power andauthority to modify any and all such provisions in such a manner as to such court shall appear not unreasonable and to enforce theremainder of this Section 11 as so modified.12. Termination of Agreement . The employment by the Company of Executive pursuant to this Agreement shallnot be terminated prior to the end of the Term, except as set forth in this Section 12.(a) By Mutual Consent .(i) The employment by the Company of Executive pursuant to this Agreement maybe terminated at any time by the mutual written agreement of the Company and Executive.5 (ii) In the event that (i) Executive’s employment is terminated by mutual consentpursuant to this Section 1 2 (a), and (ii) Executive and the Company determine at that time that it is in theirmutual best interest for Executive to continue to be bound after his termination by the provisions of Section 11of this Agreement for the period s set forth therein , then the parties may enter into an a greement to that effect,in exchange for which Executive would be entitled to the compens ation provided for in Section 12 (e) hereof.(b) Death . The employment by the Company of Executive pursuant to this Agreement shall beterminated upon the death of Executive, in which event Executive’s spouse or heirs shall receive the following: (i) Executive’s BaseSalary and benefits to be paid or provided to Executive under this Agreement through the Date of Termination (“AccruedObligations”), payable no later than thirty (30) days after the Date of Termination, (ii) continuation of Executive’s Base Salary for aperiod of one (1) year after the Date of Termination, and (iii) continuation of the health benefits provided for pursuant to Section10(a) hereof (“Health Benefits”) and welfare benefits provided for pursuant to Section 10(b) hereof (“Welfare Benefits”) for a periodof one (1) year after the Date of Termination.(c) Disability . The employment by the Company of Executive pursuant to this Agreement may beterminated by written notice to Executive at the option of the Company in the event that as a result of the Executive’s incapacity dueto physical or mental illness (which physical or mental illness shall be confirmed in writing by a physician or other medical expertacceptable to both parties), the Executive is unable to perform his duties, services and responsibilities hereunder or shall have beenabsent from his duties hereunder on a full-time basis for ninety (90) consecutive days or for an aggregate of ninety (90) days or morein any six (6) month period, and within thirty (30) days after notice is given by the Company (which notice may be delivered noearlier than thirty days prior to the expiration of such ninety (90) consecutive days or six month period, as the case may be), theExecutive shall not have returned to the performance of his duties hereunder on a full-time basis. In the event the employment by theCompany of Executive is terminated pursuant to this Section 12(c), Executive shall be entitled to receive the following: (i) theAccrued Obligations, payable no later than thirty (30) days after the Date of Termination, (ii) subject to Section 26 hereof,continuation of his Base Salary for a period of one (1) year after the Date of Termination, (iii) continuation of Health Benefits for aperiod of one (1) year after the Date of Termination, and (iv) subject to Section 26 hereof, continuation of Welfare Benefits for aperiod of one (1) year after the Date of Termination; provided, however, that amounts payable to Executive under this Section 12(c)shall be reduced by the proceeds of any short- and/or long-term disability payments under the Company plans referred to in Section10 hereof to which Executive may be entitled during such period.(d) By the Company for Cause . The employment of Executive pursuant to this Agreement may beterminated by the Company by written notice to Executive (“Notice of Termination”) for Cause (as hereafter defined). In the eventthe employment by the Company of Executive is terminated pursuant to this Section 12(d), Executive shall be entitled to receive allBase Salary and benefits to be paid or provided to Executive under this Agreement through the Date of Termination and no more.6 (e) By the Company Without Cause . The employment by the Company of Executive pursuant to thisAgreement may be terminated by the Company at any time without Cause by delivery of a Notice of Termination to Executive. Inthe event the employment by the Company of Executive is termin ated pursuant to this Section 12 (e), Executive shall be entitled toreceive the following: (i) the Accrued Obligations, payable no later than thirty (30) days after the Date of Termina tion, (ii) subject toSection 26 hereof, continuation of his Base Salary for a period of one (1) year after the Date of Termination, (iii) continuation ofHealth Benefits for a period of one (1) year after the Date of Termina tion, (iv) subject to Section 26 hereof, continuation of WelfareBenefits for a period of one (1) year after the Date of Terminatio n, and (v) subject to Section 26 hereof, an amount equal to hisAverage Bonus Compensation (as hereafter defined), payab le in accordance with Section 12 (j) .(f) By Executive . The employment of Executive by the Company pursuant to this Agreement may beterminated by Executive by written notice to the Company of his resignation (a “Notice of Resignation”) at any time. In the eventthe employment by the Company of Executive is terminated pursuant to this Section 12(f), Executive shall be entitled to receive allBase Salary and benefits to be paid or provided to Executive under this Agreement through the Date of Termination and no more;provided, however, that if Executive terminates his employment due to (i) a material adverse diminution of Executive’s job title orresponsibilities from those currently in effect; or (ii) a relocation of Executive’s principal place of employment more than 100 milesfrom its current location without his consent, then Executive shall instead be entitled to the compensation provided for inSection 12(e) hereof.(g) Non-Renewal . In the event that at any time during the Term (as it may be extended) the Companynotifies Executive of its intent not to renew this Agreement pursuant to Section 2(b) hereof, and Executive then delivers a Notice ofResignation to the Company within ninety (90) days of receipt of such notice of non-renewal, Executive shall be entitled to receivethe following: (i) the Accrued Obligations, payable no later than thirty (30) days after the Date of Termination, (ii) subject to Section26 hereof, continuation of his Base Salary for a period of one (1) year after the Date of Termination, (iii) continuation of HealthBenefits for a period of one (1) year after the Date of Termination, (iv) subject to Section 26 hereof, continuation of Welfare Benefitsfor a period of one (1) year after the Date of Termination, and (iv) subject to Section 26 hereof, an amount equal to his AverageBonus Compensation (as hereafter defined), payable in accordance with Section 12(j).(h) Previously Earned Bonus . Notwithstanding any other provision of this Section 12, in the event thatExecutive’s employment pursuant to this Agreement is terminated at a time when Executive shall have earned a bonus under theAnnual Incentive Plan for performance during the prior fiscal year which has not yet been paid, Executive shall be paid such bonusin addition to the amounts otherwise provided for in this Section 12. Such bonus shall be paid in the fiscal year following the fiscalyear for which it is earned, and not later than March 15 of such year, in accordance with the Company’s normal practices.7 (i) Date of Termination . Executive ’ s Date of Termination shall be: (i) if the parties hereto mutuall yagree to terminate this Agreement pursuant to Section 1 2 (a) hereof, the date designated by the parties in such agreement; (ii) ifExecutive ’ s employment by the Company is terminated pursuant to Section 1 2 (b), the date of Executive ’ s death; (iii) ifExecutive ’ s employment by the Company is terminated pursuant to Section 1 2 (c), the last day of the applicable period referred toin Section 1 2 (c) hereof; (iv) if Executive ’ s employment by the Company is terminated pursuant to Section 1 2 (d), the date onwhich a Notice of Termination is given; and (v) if Executive ’ s employment by the Company is terminated pursuant to Section s 12 (e) , 1 2 (f) or 12 (g) , the date the Notice of Termination or Notice of Resignation, as the case may be, is given .(j) Payment of Post-Termination Compensation . After Executive’s Date of Termination, all payments ofBase Salary and Average Bonus Compensation to Executive pursuant to this Section 12 shall be paid in accordance with theCompany’s normal payroll practices, but in no event less often than semi-monthly. In the event of a breach by Executive ofSection 11 of this Agreement during the applicable period following his Date of Termination, Executive agrees (i) that the Companyshall have no further obligation to make any payments to Executive under Section 12 of the Agreement and (ii) that any payments ofBase Salary or Average Bonus Compensation previously made to Executive after his Date of Termination shall be returned to theCompany.(k) Continuation of Welfare Benefits . With respect to Executive’s rights to continuation of WelfareBenefits provided for in Sections 12(b), (c), (e) and (g), (i) the benefits provided in any one calendar year shall not affect the benefitsprovided in any other calendar year, (ii) the reimbursement of an eligible expense must be made no later than December 31 of theyear after the year in which the business expense was incurred, and (iii) such rights shall not be subject to liquidation or exchange foranother benefit.13. Representations .(a) The Company represents and warrants that this Agreement has been authorized by all necessarycorporate action of the Company and is a valid and binding agreement of the Company enforceable against the Company inaccordance with its terms.(b) Executive represents and warrants that he is not a party to any agreement or instrument which wouldprevent him from entering into or performing his duties in any way under this Agreement and that this Agreement is a valid andbinding agreement of Executive enforceable against Executive in accordance with its terms.8 14. Successors . This Agreement is a personal contract and the rights and interests of Executive hereunder may notbe sold, transferred, assigned, pledged, encumbered, or hypothecated by him, except as otherwise expressly permitted by theprovisions of this Agreement. This Agreement shall inure to the benefit of and be enforceable by Executive and his personal or legalrepresentatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Executive should die while anyamount would still be payable to him hereunder had Executive continued to live, all such amounts, unless otherwise provided herein,shall be paid in accordance with the terms of this Agreement to his devisee, legatee or other designee or, if there is no such designee,to his estate.15. Entire Agreement . This Agreement contains all the understandings between the parties hereto pertaining to thematters referred to herein, and supersedes any other undertakings and agreements (other than any stock option, restricted stock unitagreement, or restricted stock agreement between Executive and the Company), whether oral or in writing, previously entered intoby them with respect thereto. Executive represents that, in executing this Agreement, he does not rely and has not relied upon anyrepresentation or statement made by the Company not set forth herein with regard to the subject matter or effect of this Agreement orotherwise.16. Termination; Amendment or Modification; Waiver .(a) This Agreement may be terminated at any time by mutual written consent of the Company andExecutive.(b) No provision of this Agreement may be amended or waived unless such amendment or waiver isagreed to in writing, signed by Executive and by a duly authorized officer of the Company. No waiver by any party hereto of anybreach by another party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemeda waiver of a similar or dissimilar condition or provision at the same time, any prior time or any subsequent time.9 17. Notices . All notices and other communications required or permitted to be given hereunder shall be in writingand shall be (i) delivered by hand, (ii) delivered by a nationally recognized commercial overnight delivery service, (iii) mailedpostage prepaid by first class mail or (iv) transmitted by facsimile transmitted to the party concerned at the address or telecopiernumber set forth below:To Executive at:Builders FirstSource, Inc.2001 Bryan Street, Suite 1600Dallas, Texas 75201Attention: Peter M. JacksonTo the Company at:Builders FirstSource, Inc.2001 Bryan Street, Suite 1600Dallas, Texas 75201Attention: General CounselSuch notices shall be effective: (i) in the case of hand deliveries when received; (ii) in the case of an overnight deliveryservice, on the next business day after being placed in the possession of such delivery service, with delivery charges prepaid; (iii) inthe case of mail, seven (7) days after deposit in the postal system, first class mail, postage prepaid; and (iv) in the case of facsimilenotices, when electronic confirmation of receipt is received by the sender. Any party may change its address and telecopy number bywritten notice to the other given in accordance with this Section 17; provided , however , that such change shall be effective whenreceived.18. Severability . If any provision or clause of this Agreement or the application of any such provision or clause toany party or circumstances shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent,the remainder of this Agreement or the application of such provision or clause to such person or circumstances other than those towhich it is so determined to be invalid and unenforceable, shall not be affected thereby, and each provision or clause hereof shall bevalidated and shall be enforced to the fullest extent permitted by law.19. Survivorship . The respective rights and obligations of the parties hereunder shall survive any termination ofthis Agreement to the extent necessary to the intended preservation of such rights and obligations.20. Governing Law . This Agreement will be governed by and construed in accordance with the laws of the Stateof Delaware, without regard to its conflicts of law principles.21. Headings . All descriptive headings of sections and paragraphs in this Agreement are intended solely forconvenience, and no provision of this Agreement is to be construed by reference to the heading of any section or paragraph.10 22. Withholding . All payments to Executive under this Agree ment shall be reduced by all applicable withholdingrequired by federal, state or local law.23. Specific Performance . Each party hereto acknowledges that money damages would be both incalculable andan insufficient remedy for any breach of this Agreement by such party and that any such breach would cause the other parties,irreparable harm. Accordingly, each party hereto also agrees that, in the event of any breach or threatened breach of the provisionsof this Agreement by such party, the other parties shall be entitled to equitable relief without the requirement of posting a bond orother security, including in the form of injunctions and orders for specific performance, in addition to all other remedies available tosuch other parties at law or in equity.24. Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original,but all of which together shall constitute one and the same instrument.25. Definitions .(a) “Cause” means the determination, in good faith, by the Company Board, after notice to Executive thatone or more of the following events has occurred: (i) any act of gross negligence, fraud, willful misconduct or moral turpitude byExecutive materially injuring the interest, business or reputation of the Company, or any of its parents, subsidiaries or affiliates;(ii) Executive’s conviction of any felony; (iii) Executive’s violation of the Company’s drug policy or material violation of theCompany’s Code of Conduct; (iv) any misappropriation or embezzlement of the property of the Company, or any of its parents,subsidiaries or affiliates; or (v) any material breach by Executive of this Agreement, including, without limitation, a material breachof Section 11 hereof, which breach, to the extent it is capable of being cured, remains uncorrected for a period of thirty (30) daysafter receipt by Executive of written notice from the Company setting forth such breach.(b) “ Average Bonus Compensation ” shall mean an amount equal to the average of the annual bonusamounts earned by Executive under the Company’s Annual Incentive Plan during the two most recent fiscal years ended prior toExecutive’s Date of Termination.11 26. Code Section 409A .(a) Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefitthat would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be payable ordistributable hereunder by reason of the occurrence of Executive’s separation from service, such amount or benefit will not bepayable or distributable to Executive by reason of such separation from service unless (i) the circumstances giving rise to suchseparation from service meet any description or definition of “separation from service” in Section 409A of the Code and applicableregulations (without giving effect to any elective provisions that may be available under such definition), or (ii) the payment ordistribution of such amount or benefit would be exempt from the application of Section 409A of the Code by reason of the short-termdeferral exemption or otherwise. This provision does not prohibit the vesting of any amount upon a separation from service,however defined. If this provision prevents the payment or distribution of any amount or benefit, such payment or distribution shallbe made on the date, if any, on which an event occurs that constitutes a Section 409A-compliant “separation from service.” (b) Notwithstanding anything in this Agreement to the contrary, if any amount or benefit specified hereinas “subject to Section 26 hereof,” or any other amount or benefit that would otherwise constitute non-exempt “deferredcompensation” for purposes of Section 409A of the Code would otherwise be payable or distributable under this Agreement byreason of the Executive’s separation from service during a period in which he is a Specified Employee (as defined below), then,subject to any permissible acceleration of payment by the Company under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relationsorder), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes):(i) if the payment or distribution is payable in a lump sum, Executive’s right toreceive payment or distribution of such non-exempt deferred compensation will be delayed until the earlier ofExecutive’s death or the first day of the seventh month following Executive’s separation from service (the“Delay Period”); and(ii) if the payment or distribution is payable over time, the amount of such non-exempt deferred compensation that would otherwise be payable during the six-month period immediatelyfollowing Executive’s separation from service will be accumulated and Executive’s right to receive payment ordistribution of such accumulated amount will be delayed until the earlier of Executive’s death or the end of theDelay Period, whereupon the accumulated amount will be paid or distributed to Executive and the normalpayment or distribution schedule for any remaining payments or distributions will resume; and(iii) to the extent that this Section 26(b) applies to the provision of Welfare Benefits,Executive shall be entitled to pay the full cost of premiums to maintain the Welfare Benefits during the DelayPeriod, and the Company shall pay to Executive an amount equal to the amount of such premiums promptlyfollowing the end of the Delay Period.12 For purposes of this Agreement, the term “Specified Employee” has the meaning given such term in Code Section 409Aand the final regulations thereunder.”[SIGNATURE PAGE FOLLOWS]13 IN WITNESS WHEREOF , the parties hereto have executed and delivered this Employment Agreement as of the date first abovewritten. BUildErS FirStSOUrCE, inC. By:/s/ Floyd Sherman Floyd Sherman Chief Executive Officer ExECUtivE /s/ Peter M. JacksonPeter M. Jackson 14 Exhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S 3 (333-199955, 333-192596) and Forms S-8 (Nos. 333-128430, 333-147107, 333-169001 and 333-196363) of Builders FirstSource, Inc. of our report dated March 1, 2017, relating to the financial statements and the effectiveness ofinternal control over financial reporting, which appears in this Form 10-K. We also consent to the references to us under the heading “Selected Financial Data” inthis Form 10-K. /s/ PricewaterhouseCoopers LLP Dallas, TexasMarch 1, 2017 Exhibit 31.1Certification of Chief Executive OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002I, Floyd F. Sherman, certify that: 1.I have reviewed this report on Form 10-K of Builders FirstSource, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. /s/ FLOYD F. SHERMANFloyd F. ShermanChief Executive OfficerDate: March 1, 2017 Exhibit 31.2Certification of Chief Financial OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002I, Peter M. Jackson, certify that: 1.I have reviewed this report on Form 10-K of Builders FirstSource, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. /s/ PETER M. JACKSONPeter M. JacksonSenior Vice President and Chief Financial OfficerDate: March 1, 2017 Exhibit 32.1Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350(Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)In connection with the annual report of Builders FirstSource, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2016 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), we, Floyd F. Sherman, as Chief Executive Officer of the Company, and Peter M. Jackson,as Senior Vice President and Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002, that, to the best of our knowledge: (1)The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ FLOYD F. SHERMANFloyd F. ShermanChief Executive Officer /s/ PETER M. JACKSONPeter M. JacksonSenior Vice President and Chief Financial OfficerDated: March 1, 2017A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished tothe Securities and Exchange Commission or its staff upon request.
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