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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________________________________________________________________________
FORM 10-K
___________________________________________________________________________________________________
(Mark One)
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 31, 2022
OR
For the transition period from to
Commission File Number: 001-38933
___________________________________________________________________________________________________
CROWDSTRIKE HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
___________________________________________________________________________________________________
Delaware
(State or other jurisdiction of
incorporation or organization)
45-3788918
(I.R.S. Employer
Identification Number)
206 E. 9th Street, Suite 1400, Austin, Texas 78701
(Address of principal executive offices)
Registrant’s telephone number, including area code: (888) 512-8906
Securities registered pursuant to Section 12(b) of the Act:
Title of each class of securities
Class A common stock, par value $0.0005 per share
Trading symbol(s)
CRWD
Name of each exchange on which registered
The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933, as amended. 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 ☑
Securities registered pursuant to Section 12(g) of the Act:
None.
___________________________________________________________________________________________________
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 every interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files) Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Non-accelerated Filer
(Do not check if a smaller reporting company)
☑
☐
Accelerated Filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The aggregate market value of the common stock held by non-affiliates of the registrant, based on the closing price of a share of the registrant’s common stock on July 31, 2021 (the last business
day of the registrant’s most recently completed second fiscal quarter) as reported by the Nasdaq Global Select Market on such date was approximately $51.5 billion.
As of February 28, 2022, the number of shares of the registrant’s Class A common stock outstanding was 210,058,133, and the number of shares of the registrant’s Class B common stock
outstanding was 20,709,727.
Portions of the registrant’s definitive Proxy Statement relating to its 2022 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K where indicated. Such
Proxy Statement will be filed with the United States Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Annual Report on Form 10-K relates.
DOCUMENTS INCORPORATED BY REFERENCE
Table of Contents
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
CROWDSTRIKE HOLDINGS, INC.
TABLE OF CONTENTS
Part I
Part II
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities and Issuer Purchases of Equity Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 6.
Item 7.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Item 8.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9.
Controls and Procedures
Item 9A.
Other Information
Item 9B.
Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
Item 9C.
Part III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions and Director Independence
Principal Accountant Fees and Services
Exhibits, Financial Statement Schedules
Form 10-K Summary
Signatures
Power of Attorney
Part IV
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
All statements contained in this Annual Report on Form 10-K other than statements of historical fact, including statements regarding our future operating
results and financial position, our business strategy and plans and our objectives for future operations, are forward-looking statements. The words
“believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect” and similar
expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements.
These forward-looking statements include, but are not limited to, statements concerning the following:
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our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin,
operating expenses (including changes in sales and marketing, research and development, and general and administrative expenses), and
our ability to achieve, and maintain, future profitability;
the impact of the COVID-19 pandemic on our operations, financial results, and liquidity and capital resources, including on customers,
sales, expenses, and employees;
• market acceptance of our cloud platform;
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the effects of increased competition in our markets and our ability to compete effectively;
our ability to maintain the security and availability of our cloud platform;
our ability to maintain and expand our customer base, including by attracting new customers;
our ability to develop new solutions, or enhancements to our existing solutions, and bring them to market in a timely manner;
anticipated trends, growth rates and challenges in our business and in the markets in which we operate;
our business plan and our ability to effectively manage our growth and associated investments;
beliefs and objectives for future operations;
our relationships with third parties, including channel partners and technology alliance partners;
our ability to maintain, protect and enhance our intellectual property rights;
our ability to successfully defend litigation brought against us;
our ability to successfully expand in our existing markets and into new markets;
sufficiency of cash and cash equivalents to meet cash needs for at least the next 12 months;
our ability to expand internationally;
our ability to comply with laws and regulations that currently apply or become applicable to our business both in the United States and
internationally;
our ability to develop, maintain, and improve our internal control over financial reporting;
instability in the global credit and financial markets;
our ability to successfully close and integrate acquisitions to contribute to our growth objectives; and
the attraction and retention of qualified employees and key personnel.
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These statements are based on our current plans, estimates and projections in light of information currently available to us. These forward-looking
statements may be affected by risks, uncertainties and other factors discussed elsewhere in this Annual Report on Form 10-K, including under “Risk
Factors.” Furthermore, new risks and uncertainties emerge from time to time, and it is impossible for us to predict all risks and uncertainties or how they
may affect us. If any of these risks or uncertainties occurs, our business, revenue and financial results could be harmed, and the trading price of our Class A
common stock could decline. Forward-looking statements made in this Annual Report on Form 10-K speak only as of the date on which such statements
are made, and we undertake no obligation to update them in light of new information or future events, except as required by law.
We intend to announce material information to the public through the CrowdStrike Investor Relations website ir.crowdstrike.com, SEC filings, press
releases, public conference calls, and public webcasts. We use these channels, as well as social media and our blog, to communicate with our investors,
customers, and the public about our company, our offerings, and other issues. It is possible that the information we post on social media and our blog could
be deemed to be material information. As such, we encourage investors, the media, and others to follow the channels listed above, including the social
media channels listed on our investor relations website, and to review the information disclosed through such channels. Any updates to the list of disclosure
channels through which we will announce information will be posted on the investor relations page on our website.
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ITEM 1. BUSINESS
PART I
Overview
Founded in 2011, CrowdStrike reinvented cybersecurity for the cloud era and transformed the way cybersecurity is delivered and experienced by
customers. When we started CrowdStrike, cyberattackers had an asymmetric advantage over legacy cybersecurity products that could not keep pace with
the rapid changes in adversary tactics. We took a fundamentally different approach to solve this problem with the CrowdStrike Falcon platform – the first,
true cloud-native platform capable of harnessing vast amounts of security and enterprise data to deliver highly modular solutions through a single
lightweight agent. Our pioneering platform approach keeps customers ahead of attackers by automatically detecting and preventing threats to stop breaches.
We believe our approach has defined a new category called the Security Cloud, which has the power to transform the cybersecurity industry the same
way the cloud has transformed the customer relationship management, human resources, and service management industries. Using cloud-scale AI, our
Security Cloud enriches and correlates trillions of cybersecurity events per week with indicators of attack, threat intelligence and enterprise data (including
data from across endpoints, workloads, identities, DevOps, IT assets and configurations) to create actionable data, identify shifts in adversary tactics and
automatically prevent threats in real-time across our customer base. The more data that is fed into our Falcon platform, the more intelligent our Security
Cloud becomes, and the more our customers benefit, creating a powerful network effect that increases the overall value we provide.
CrowdStrike: The Architectural Purpose Behind the Platform
Our Falcon platform was purpose-built in the cloud to harness the power of our Security Cloud to deliver the next generation of automated protection
and provide threat hunters with the intelligence required to stop sophisticated attacks, including non-malware based attacks. This approach has made
CrowdStrike an industry leader in endpoint and cloud workload protection (capable of protecting workloads across on-premise, virtualized, and cloud-
based environments running on a variety of endpoints such as desktops, laptops, servers, virtual machines, cloud workloads, cloud containers, mobile, and
IoT devices) and enables us to rapidly scale this best in class protection across new and emerging areas of enterprise risk.
Today, we offer 22 cloud modules on our Falcon platform via a SaaS subscription-based model that spans multiple large markets, including corporate
workload security, security and vulnerability management, managed security services, IT operations management, threat intelligence services, identity
protection, and log management.
Our Falcon platform is composed of tightly integrated, proprietary technologies that enable us to deliver superior protection and performance, while
reducing customer complexity. Our Falcon platform consists of our easily deployed, intelligent lightweight agent, and our groundbreaking graph
technology.
Our single, lightweight-agent approach has changed how organizations experience cybersecurity, delivering protection without impacting the user,
resources or productivity. With the lightweight agent installed on each endpoint or cloud workload, our Falcon platform automates detection and prevention
capabilities in real time across our entire global customer base. This also enables our Falcon platform to intelligently ingest and stream high fidelity data
back into the Security Cloud to continuously improve our Falcon platform’s AI algorithms and make its real-time decision-making faster and smarter to
keep customers ahead of changing adversary tactics.
Our graph technology correlates and contextualizes the vast data of our Security Cloud so we can collect data once and reuse it repeatedly to deliver
solutions that solve our customers’ biggest problems. Our Threat Graph uses a combination of AI and behavioral pattern-matching techniques to correlate
and analyze trillions of cybersecurity events, enriched with threat intelligence, and third-party data to identify and link threat activity together to
automatically prevent threats in real time across CrowdStrike’s global customer base. This also provides customers with increased visibility of attacks for
proactive threat hunting and timely detection and remediation of novel threats.
The Falcon platform was purpose-built with the foresight that the future of cybersecurity would need to be cloud-native and AI-driven. While AI is
revolutionizing many technology fields, including cybersecurity solutions, to be truly effective,
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algorithms that enable AI depend on the quality and volume of data that trains them and the selection of the right differentiating features from that data.
This is why we believe our Security Cloud and our cloud-native architecture creates a fundamental differentiator from our competitors. The expansive
amount of high fidelity data crowdsourced and captured in our Security Cloud enables the continuous training of our algorithms. We call this cloud-scale
AI. Our technology is uniquely effective because we not only have a massive amount of high fidelity data to continuously train our AI models but also
because of our deep cybersecurity expertise, which supports our industry-leading efficacy and low false positives.
By analyzing and correlating information across our massive, crowdsourced dataset, we are able to deploy our AI algorithms at cloud-scale and build a
more intelligent, effective solution to detect threats and stop breaches that on-premise, cloud-hosted and hybrid products cannot match due to the inherent
architectural limitations those products have with respect to data storage and analysis. The more data that is fed into our Falcon platform, the more
intelligent the Security Cloud becomes, and the more our customers benefit, creating a powerful network effect that increases the overall value we provide.
Industry Background: The Trends Driving a Need for a New Approach to Security
We believe there are a number of important macro trends that drive the need for a new approach to security. These include:
• Cybersecurity Threats are More Sophisticated and More Damaging: The sophistication of adversaries continues to increase as militaries and
intelligence services of well-funded nation-states, technically advanced criminal organizations and hackers use advanced, easily obtained methods
of attack - including non-malware based attacks that exploit user identities and credentials. These attacks are pervasive, targeting a broad range of
industries including technology, transportation, healthcare, financial services, governments and political organizations, utility, retail, and public
infrastructure. The number and scale of attacks continue to increase. The typical attack cycle starts with attackers attempting to penetrate
endpoints to establish a beachhead. Once inside, adversaries steal and exploit legitimate credentials to escalate privileges, move laterally and
progress and attack, often downloading malware or ransomware. At this stage in the threat lifecycle, the adversary is able to encrypt, destroy, or
silently exfiltrate sensitive data. In 2021 alone, adversaries launched multiple, destructive attacks that disrupted business and resulted in significant
cumulative losses.
• Hybrid, Remote Workforces and the Proliferation of Workloads Expands the Attack Surface: Organizations everywhere are embracing
digital transformation and are becoming more distributed as they adopt the cloud, increase workforce mobility, and grow their number of
connected devices. They are adding more workloads to a myriad of different endpoints beyond the traditional cybersecurity perimeter, exposing an
increasingly broad attack surface to adversaries. This existing trend was accelerated significantly with the need to support an increasingly remote
workforce in 2020 due to the COVID-19 pandemic and we believe this trend continues today. In addition, technologies like Cloud and Containers
are being adopted quickly, but rather than becoming full-scale replacements, they are often being used as supplements to existing on-premise, bare
metal, and virtualized workloads.
• Growing Cyber Skills Gap: Trained cybersecurity professionals are in high demand, and organizations continue to face a dire shortage of talent
to fill much needed cybersecurity positions. As a result, existing cybersecurity teams are often overwhelmed by the velocity of cyberattacks.
Adversaries exploit this vacuum by continuing to accelerate their sophisticated attacks.
Competitive Market: Existing Security Solutions Are Limited and Exacerbate Ongoing Trends:
We believe the aforementioned trends are exacerbated by the architectural limitations of legacy cybersecurity products, which include:
• On-Premise Security and Bolt-On Cloud Products Lead to Constrained and Impacted Users: On-premise products are siloed, lack
integration, and have limited ability to collect, process, and analyze vast amounts of data—attributes that are required to be effective in today’s
increasingly dynamic threat landscape. Meanwhile, these solutions often require more agents on the endpoint as new capabilities are patchworked
together, which can have a dramatic negative impact on user performance.
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Many on-premise vendors have since tried to solve this problem by simply extending on-premise products to the cloud. Since their products were
not purpose built to run in the cloud, the traditional on-premise issues - complex to deploy, siloed nature, lack of integration, limited ability to
scale, costly to maintain - continue to manifest. We believe that any product that was originally designed for on-premise deployments and
migrated to the cloud cannot by definition be a cloud native solution.
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Legacy Signature-Based Products Are Not Effective Against Unknown Threats: Signature-based products are designed to detect attacks that
are already cataloged as previously identified threats. As a result, such products are fundamentally unable to prevent unknown threats resulting
from shifts in attacker tradecraft. It often only takes a slight modification on the part of the attacker to bypass signatures. Many significant
breaches seen in the last two decades have involved the failure of a legacy signature-based antivirus product to detect a previously unknown or
modified version of a previously known attack.
• Malware-Focused Machine Learning Products Miss Sophisticated Attacks: Traditionally, organizations have focused on protecting their
networks and endpoints against malware-based attacks. These attacks involve malware built for the specific purpose of performing malicious
activities, stealing data, or destroying systems. A malware-centric defensive approach will leave the organization vulnerable to attacks that do not
leverage malware.
• Application Whitelisting Products Are Ineffective: Application whitelisting products resort to an “always allow” or “always block” policy on
an endpoint in order to allow or prevent processes from executing. Whitelisting relies in part on manually creating and maintaining a complex list
of rules, burdening end users and IT organizations. This does not prevent fileless attacks from exploiting legitimate whitelisted applications,
compromising the integrity of the whitelisting product.
CrowdStrike: Built for This Moment and the Future
We believe that the cloud-native architecture of the Falcon platform and Security Cloud provides a sustainable advantage in addressing the needs of
our customers as their business and the threat landscape continues to evolve.
We offer our customers compelling business value that includes ease of adoption, rapid time-to-value, superior efficacy rates in detecting threats and
preventing breaches, and reduced total cost of ownership by consolidating legacy, siloed security products in a single solution. We also allow thinly-
stretched security organizations to automate previously manual tasks, freeing them to focus on their most important objectives. With the Falcon platform,
organizations can transform how they combat threats, transforming from slow, manual, and reactionary to fast, automated, and predictive, while gaining
visibility across the threat lifecycle.
Key benefits of our approach and the CrowdStrike Falcon platform include:
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The Power of the Crowd: Our crowdsourced data enables every customer to benefit from contributing to the Security Cloud. As more high
fidelity data is fed into our Security Cloud, our AI models continue to train and improve, increasing the overall efficacy of the Falcon platform.
This creates a powerful network effect that is a key differentiator in our efforts to gain more customers. The Threat Graph is able to contextualize
and turn this data into action, automatically delivering protection to every customer.
• High Efficacy, Low False Positives: The vast telemetry of the Security Cloud and the best practices employed in continually training our AI
models results in industry-leading efficacy rates and low false positives.
• Consolidation of Siloed Products: Integrating and maintaining numerous security products creates blind spots that attackers can exploit is costly
to maintain and negatively impacts user performance. Our cloud-native platform approach gives customers a unified approach to address their
most critical areas of risk seamlessly. We empower customers to rapidly deploy and scale cloud workload security, next-generation antivirus,
endpoint detection and response (“EDR”), device control, host firewall management, vulnerability management, forensic analysis, IT hygiene,
threat hunting, identity protection, log management, automated threat intelligence, and Extended Detection and Response (“XDR”) from a single
platform.
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• Reducing Agent Bloat: Our single intelligent lightweight agent enables frictionless deployment of our platform at scale, enabling customers to
rapidly adopt our technology across any type of workload running on a variety of endpoints. The agent is non-intrusive to the end user, requires no
reboots and continues to protect the endpoint and track activity even when offline. Through our single lightweight agent approach, customers can
adopt multiple platform modules to address their critical areas of risk without burdening the endpoint with multiple agents. Legacy approaches
often require multiple agents as they layer on new capabilities. This can severely impact user performance and create barriers to security.
• Rapid Time to Value: Our cloud-native platform was built to rapidly scale industry leading protection across the entire enterprise, eliminating the
lengthy implementation periods, and professional services engagements that next-gen and legacy competitors require. Our single agent approach
enables us to activate new modules in real time.
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Elite Security Teams as a Force Multiplier: As adversaries continue to employ sophisticated non-malware attacks that exploit user credentials
and identities, automation and autonomous security are no longer sufficient on their own. Stopping today’s sophisticated attacks requires a
combination of powerful automation and elite threat hunting. Our OverWatch threat hunting cloud module combines world-class human
intelligence from our elite security experts with the power of the Security Cloud. OverWatch is a force multiplier that extends the capabilities and
improves the productivity of our customers’ security teams. Because our world-class team can see attacks across our entire customer base, their
expertise is enhanced by their constant visibility into the threat landscape. Additionally, the insights of our OverWatch team can then be leveraged
by the Falcon platform to further enhance its autonomous capabilities, creating a positive feedback loop for our customers.
• Alleviating the Skills Shortage through Automation: CrowdStrike automates manual tasks to free security teams to focus on their most
important job - stopping the breach. Our Falcon Fusion module automates workflows to reduce the need to switch between different security tools
and tasks, while our Falcon XDR module provides a unified solution that enables security teams to rapidly and efficiently identify, hunt, and
eliminate threats across multiple security domains.
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Lower Total Cost of Ownership: Our cloud-native platform eliminates our customers’ need for initial or ongoing purchases of hardware and
does not require their personnel to configure, implement or integrate disparate point products. Additionally, our comprehensive platform reduces
overall personnel costs associated with ongoing maintenance, as well as the need for software patches and upgrades for separate products.
The CrowdStrike Falcon Platform: Built to Innovate and Scale
Our platform approach allows us to rapidly innovate, build, and deploy highly integrated modules that address critical customer problems and access
additional market opportunities. Our cloud modules integrate seamlessly with the Falcon platform that addresses use cases across corporate workload
security, security and vulnerability management, managed security services, IT operations management, threat intelligence services, identity protection, and
log management.
Our Falcon platform is composed of two tightly integrated proprietary technologies: our lightweight agent and our Security Cloud. The Falcon
platform offers a unified set of cloud-delivered technologies that power a wide range of modules including next-generation antivirus, EDR, device control,
host firewall management, managed threat hunting, IT hygiene, vulnerability management, and threat intelligence. The Falcon platform also encompasses
recently acquired technologies where integration may be ongoing. We can rapidly and cost effectively develop and deliver additional cloud modules on our
Falcon platform without the need for additional agents, and are expanding options for our new customers to test modules on a trial basis and in-application
trials for existing customers.
Our expanding set of open APIs allows customers and partners to build their own capabilities on top of the Falcon platform. With our Falcon platform,
we can crowdsource data and deliver a variety of cloud modules to detect and stop breaches. Our modules address the most critical areas of enterprise risk
and friction.
Our Cloud Modules
Our cloud modules integrate seamlessly with the Falcon platform to provide functionality in the endpoint security, security and IT operations
(including vulnerability management), and threat intelligence markets. Today, our cloud modules include:
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Cloud Security
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Falcon Cloud Workload Protection—Cloud Runtime Protection. Falcon Cloud Workload Protection provides comprehensive breach protection
at run-time for workloads and containers as well as detecting vulnerabilities before services and images are deployed. Falcon Cloud Workload
Protection reduces the attack surface by automatically detecting vulnerabilities, hidden malware, secrets, keys, and more, enabling customers to
build, run, and deploy secure applications with speed and confidence.
Falcon Horizon—Cloud Security Posture Management. Falcon Horizon delivers unified visibility, threat detection, and continuous monitoring
and compliance for multi-cloud environments. Falcon Horizon automates the process to detect cloud related misconfigurations, vulnerabilities,
and identity-based risks, providing step-by-step remediation and giving developers guardrails to avoid costly mistakes.
• Discover for Cloud and Containers—Cloud Service Discovery. Discover for Cloud and Containers delivers comprehensive visibility of cloud
assets, security configurations, workloads and containers across multi-cloud environments so customers can mitigate risks and reduce the attack
surface.
Endpoint Security
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Falcon Prevent—Next-Generation Antivirus. Falcon Prevent provides next-generation antivirus capabilities to customers, delivering
comprehensive protection to defend customers against both malware and fileless attacks.
Falcon Insight—Endpoint Detection and Response. Falcon Insight provides EDR capabilities to customers, allowing for continuous and
comprehensive visibility to notify our customers what is happening on their endpoints in real time.
Falcon Device Control—Device Control. Falcon Device Control provides administrators with a high degree of visibility and granular control of
USB peripheral devices.
Falcon Firewall Management—Host Firewall Management. Falcon Firewall Management provides centralized management of the firewall
capabilities native to the host operating system, allowing customers to create, enforce, and maintain host firewall policies.
Extended Detection and Response
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Falcon XDR - Extended Detection and Response. Falcon XDR extends our industry leading detection, investigation, and response capabilities by
incorporating relevant third-party security data. We correlate signals from multiple disparate technologies to deliver XDR detections across the
attack surface. We allow customers to investigate these detections and to search and hunt using data from CrowdStrike, as well as third party
security sources such as email, cloud access security broker (“CASB”) network threat detection, and identity and firewall data. The CrowdXDR
Alliance offers a first-of-its-kind technology ecosystem to enable unified, threat-centric detection and response across an organization’s security
and technology ecosystem. We believe the CrowdXDR Alliance is differentiating - bringing together industry leaders and cutting-edge solutions to
establish an open-source, common XDR ontology for data sharing. Falcon XDR is designed to enhance threat correlation and speeds response
times against sophisticated attacks.
Security and IT Operations
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Falcon Discover—IT Hygiene. Falcon Discover identifies rogue systems and applications in our customers’ networks, and monitors the use of
privileged user accounts anywhere in a customer’s environments. The module also enables use cases outside of security, such as application
license management, AWS spend analysis, and asset inventory.
Falcon Spotlight—Vulnerability Management. Falcon Spotlight identifies vulnerabilities in real time that exist across our customer endpoints.
The module does not depend on scanning systems for vulnerabilities, a process that can often take days or weeks for an enterprise, and instead
leverages data already collected by our agent to provide instant and accurate real-time visibility into an enterprise’s vulnerability exposure.
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Falcon Forensics—Forensic Data for Analysis of Cybersecurity Incidents. Falcon Forensics streamlines the collection of point-in-time and
historic forensic triage data for robust analysis of cybersecurity incidents, enabling responders to quickly identify relevant data with preset
dashboards and rapidly investigate.
Falcon FileVantage—File Integrity Monitoring. Falcon FileVantage reduces compliance complexity by building in the services an additional
agent would normally provide, including being able to monitor all files on the protected systems. This in turn provides alerts and reports to help
meet various compliance requirements imposed by PCI, CIS Controls, and Sarbanes-Oxley.
Managed Services
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Falcon Complete—Turnkey Security Solution. Falcon Complete provides comprehensive monitoring, management, response, and remediation
solution to our customers and is designed to bring enterprise level security to companies that may lack enterprise level resources. It is backed by
an underwritten limited warranty policy for breaches. We also offer Falcon Cloud Workload Protection Complete and Falcon Identity Threat
Protection Complete as add-ons to our Falcon Complete solution to extend its capabilities to include our cloud workload protection and identity
protection modules.
Falcon OverWatch—Threat Hunting. Falcon OverWatch is a threat hunting solution that consists of an elite team of dedicated security experts
who work with the power of Threat Graph to proactively identify threats for our customers.
Threat Intelligence
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Falcon X—Threat Intelligence. Falcon X integrates threat intelligence into endpoint protection and provides automated analysis of detected
threats to provide insight into the capabilities, motivation and attribution of attacks. In addition to the standard Falcon X offering, we also offer
premium options that include global threat research and reporting from our team of intelligence analysts.
Falcon Search Engine—Malware Search. Falcon Search Engine enables customers to search in real time across approximately 5.0 petabytes of
malware collected in our Falcon platform and indexed by our proprietary binary data indexing technology.
Falcon Sandbox—Malware Analysis. Falcon Sandbox allows our customers to analyze unknown files for malicious behavior by detonating them
safely in virtual machines.
Falcon X Recon—Situational Awareness. Falcon X Recon allows our customers to identify and mitigate digital risks on the hidden areas of the
clear, deep and dark web. These risks include, but are not limited to, digital fraud, data theft exposure, social media impersonations.
Identity Protection
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Falcon Zero Trust—Zero Trust Security. Frictionless Zero Trust security with real-time threat prevention and IT policy enforcement using
identity, behavioral and risk analytics.
Falcon Identity Threat Detection—Identity Threat Detection. Visibility for identity-based attacks and anomalies, comparing live traffic against
behavior baselines and rules to detect attacks and lateral movement.
Log Management
• Humio—Log Management. Humio is a high-performance, index-free cloud log management solution that allows customers to collect logs from
any data source and to search and query streaming data in real-time.
Recently Acquired Technologies
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SecureCircle – Data Protection. SecureCircle is a recently acquired technology that extends Zero Trust security to data on the endpoint. As data
security drives business value for our customers, end users operate without obstacles,
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while data is continuously secured against breaches and insider threats. Instead of relying on complex reactive measures, we believe integrating
SecureCircle will help us simply secure data persistently in transit, at rest, and even in use.
Bringing CrowdStrike to the Market
We primarily sell the Falcon platform through our direct sales team that leverages our network of channel partners to maximize effectiveness and scale.
We have a low friction land-and-expand sales strategy. Key elements of our growth strategy include:
• Growing Our Customer Base by Replacing Legacy and Other Endpoint Security Products. Given the limitations of existing legacy and other
endpoint security products, many organizations are replacing their existing legacy and other endpoint security products with our Falcon platform.
We grew our subscription customer base by 6,429 customers from 9,896 at January 31, 2021, to 16,325 at January 31, 2022, representing a 65%
increase. We will continue to invest in customer acquisition programs, including our channel partnerships and new programs, like our free trial
program of Falcon Prevent that is easily downloaded from our website and AWS Marketplace.
•
•
•
•
•
Further Penetrating Existing Customers. Our growth will depend in part on our ability to continue to expand our relationships with our
customers by deploying on additional endpoints in their environment and cross selling more cloud modules. When customers deploy our
lightweight agent, they can easily add additional cloud modules. We also offer in-application trial usage of additional modules to cross-sell to
existing customers. While some new customers initially deploy our Falcon platform broadly across the organization, others elect to deploy only in
selected business units and later deploy on additional endpoints and subscribe to additional modules. Over time, we seek to deploy our solution
enterprise wide for all customers. The power of our land-and-expand strategy is evidenced by our 123.9% dollar-based net retention rate as of
January 31, 2022.
Leveraging Our Falcon Platform to Enter New Markets. Because we leverage a single data model and open cloud architecture, we are
uniquely positioned to continue innovating and rapidly deploying new cloud modules on our platform. For example, Falcon Discover includes use
cases outside of security, such as application license management, AWS spend analysis, and asset inventory. Because our lightweight agent
collects diverse endpoint data once for repeated use, we can expand our addressable market by rapidly adding new cloud modules that leverage
this data. We intend to continue to develop new cloud modules for broader endpoint use cases.
Broadening Our Reach into New Customer Segments. While we initially targeted large sophisticated enterprises, we have expanded our go-to-
market efforts to include customers of all sizes with a dedicated inside sales team focused on smaller organizations. We also released Falcon
Complete in 2018, our turnkey solution that combines the most popular cloud modules of our Falcon platform with our remediation and response
capabilities, to create a solution for customers with limited or no internal security expertise. As a result, we can sell our Falcon platform to the
largest enterprises or smallest businesses with any level of security sophistication and budget. We continue to look for new ways to broaden our
reach into new customer segments.
Extending Our Falcon Platform and Ecosystem. We designed our architecture to be open, interoperable, and highly extensible. We launched the
CrowdStrike Store, the first open cloud-based application PaaS for cybersecurity, which allows customers to purchase CrowdStrike products and
provides an ecosystem of trusted partners and applications for our customers to choose from. In the future we plan to continue investing in the
CrowdStrike Store to empower our partners by making it easier to build applications and to enable our customers to more easily discover, try, and
purchase additional cloud modules from both trusted partners and us.
Broadening Our Reach into the U.S. Federal Government Vertical. We are investing in the acquisition of customers in the U.S. federal
government vertical. Our platform is authorized by several federal agencies via the Federal Risk and Authorization Management Program
(“FedRAMP”). To further meet the compliance demands of the federal government, customers can elect to deploy the Falcon platform in the AWS
GovCloud. We have also successfully been embedded into several strategic government-wide cybersecurity programs and contracts, such as the
Department of Homeland Security’s Continuous Diagnostics and Mitigation Approved Products List, which serves to provide federal agencies
with innovative security tools.
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•
Expanding Our International Footprint. We are expanding our international operations and intend to invest globally to broaden our
international footprint. We grew our international revenue from $247.0 million for fiscal 2021, to $405.1 million for fiscal 2022, representing an
increase of 64%. We intend to grow our international customer base by increasing our investments in our overseas operations, including adding
headcount in Europe, the Middle East, Asia-Pacific, including Japan and expanding current data centers overseas.
We have experienced significant growth, with revenue increasing from $874.4 million in fiscal 2021 to $1.5 billion in fiscal 2022, representing year-
over-year growth of 66%, and from $481.4 million in fiscal 2020 to $874.4 million in fiscal 2021, representing year-over-year growth of 82%. Subscription
revenue grew from $804.7 million in fiscal 2021 to $1.4 billion in fiscal 2022, a 69% increase, and from $436.3 million in fiscal 2020 to $804.7 million in
fiscal 2021, an 84% increase. Our Annual Recurring Revenue (“ARR”), has grown from a $1.1 billion as of January 31, 2021 to $1.7 billion as of
January 31, 2022, a 65% increase, and from $600.5 million as of January 31, 2020 to $1.1 billion as of January 31, 2021, a 75% increase. We had net losses
of $234.8 million, $92.6 million, and $141.8 million in fiscal 2022, fiscal 2021, and fiscal 2020, respectively. We expect to continue to incur net losses for
the foreseeable future as we continue to invest in our business, and in particular, our sales and research and development capabilities, to address our large
market opportunity.
Technology
We have designed an innovative architecture from the ground up to overcome the limitations of existing security products and deliver cloud-based
solutions. The key design principles of our Falcon platform include:
Cloud Native Architecture. We built the Falcon platform entirely in and for the cloud, enabling collection and analysis of a massive, crowdsourced
dataset from all of our customers to stop breaches. Our platform is designed to be redundant, resilient, and high performing. Delivering security from the
cloud enables agility, ease of use, and protection for workloads on a variety of endpoints wherever they are located. As customer adoption grows, the
network effect of each additional endpoint added to the Falcon platform will amplify the breadth and depth of our dataset and intelligence.
Falcon Agent. We designed an intelligent lightweight agent that is installed on each endpoint or cloud workload. This agent incorporates identification
and prevention of known malware, machine learning for unknown malware, exploit blocking and advanced behavioral techniques, to protect workloads
across all endpoints while capturing and recording high fidelity endpoint data. Our agent continues to protect workloads running on endpoints even when
offline. The agent recommences transmitting data to our Falcon platform when the connection to the cloud has been re-established. Our lightweight agent is
built to support Windows, Mac, and Linux operating systems. The agent is hardened against attacks and uses a combination of kernel and user-mode
modules to collect high fidelity endpoint events as they take place on a system. It correlates these events with a local situational model on the endpoint,
analyzes via agent-based machine learning models and is capable of taking a variety of preventative and responsive actions on the endpoint, either
automatically or via human control. Events are streamed by the agent to the cloud in real time in order to be further analyzed in the Threat Graph, where
additional correlation and AI algorithms can be applied. The agent is also capable of being remotely reconfigured in real time based on analytics in our
cloud platform in order to collect and analyze different events or take other actions.
Threat Graph. Threat Graph is a proprietary, powerful, and dynamic graph database. Threat Graph continually looks for malicious activity by
combining AI with behavioral pattern-matching techniques to look beyond file features and track the behaviors of every software program executed on an
endpoint in a customer’s network environment. By applying powerful graph analytics and AI algorithms to cybersecurity, we enrich the data collected with
our proprietary and third-party threat intelligence, such as adversary capabilities, motivations, attributions, and threat indicators. The graph data model
allows the AI algorithms to identify relationships between events that are not directly related but which could indicate an attack that would otherwise
remain undetected. We believe that our AI algorithms are advantaged by the rich proprietary dataset that we use to train them. Threat Graph provides
customers with complete real time and historical visibility and insight into events occurring on their endpoints for hunting and searching.
Threat Graph also provides query and hunting capability over the full set of high fidelity events collected in the graph. This correlated data, natively
represented in a graph structure, enables new products and cloud modules to be created rapidly since the platform provides the visibility, collection,
correlation, and actions over data as reusable building blocks. This collect-once, use repeatedly approach is the reason why we have been able to deliver
new cloud modules covering IT hygiene and vulnerability management quickly and enables us to continue expanding the Falcon platform rapidly in the
future.
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High Fidelity Data and Smart Filtering. Absent an intelligent agent, a typical endpoint generates approximately 100 gigabytes of unfiltered system
event data per day. After this data is compressed, or data shaped, a typical enterprise organization with 100,000 endpoints would generate over one petabyte
of endpoint events daily. The presence of a local graph model in our agent enables it to track the state of the machine in real time, perform rapid machine
learning and behavioral analysis, and provide efficient event streaming to the cloud. We call this “smart filtering.” This allows us to keep performance
overhead on the endpoint to a minimum, dramatically reduce the bandwidth required for agent-cloud communication, efficiently process large volumes of
data, and separate the signal from the noise. The Falcon agent collects and analyzes unfiltered data with local machine learning and behavioral algorithms
on the endpoint but only streams high fidelity endpoint events to the cloud to only send what is necessary for detection, prevention and investigation of
attacks. This smart filtering architecture allows us to reduce network load for customers to approximately five megabytes per endpoint per day. The Falcon
platform collects an array of high fidelity endpoint events, such as code execution, network, file system and user activity. This information can be used for
a variety of use cases beyond security, such as IT operations and vulnerability management.
Management Interface. The Falcon platform management interface gives customers an intuitive and informative view of their complete environment,
with timely alerts and detailed search capabilities. We provide real-time endpoint and cloud workload visibility to allow customers to review details and
respond to threats instantly and effectively, from anywhere, and maintain an index of these events for future use.
APIs and Integrations. Our Falcon platform and architecture is built around a rich set of APIs that efficiently and effectively complement and expand
a customer’s existing security infrastructure, such as security information event management, or SIEMs, and intrusion prevention systems and intrusion
detection systems. The platform includes streaming, query and batch APIs allowing customers and partners to integrate a variety of solutions seamlessly. It
also includes rich management and control APIs. The platform allows third parties to develop additional cloud modules and features, furthering the power
of the Falcon platform. By connecting existing security systems to the Falcon platform, we allow our customers to further leverage their security
investments.
Data Center Operations
We have data center co-location facilities throughout the United States and in Europe, and we also utilize AWS data centers located in the United
States and Europe. Our technology infrastructure, combined with select use of AWS resources, provides us with a distributed and scalable architecture on a
global scale.
Professional Services
In addition to our Falcon platform and cloud modules, we also offer incident response and forensic investigatory services, technical assessment and
strategic advisory services, as well as training to assist organizations that have experienced a breach or are assessing their security posture and ability to
respond to breaches.
•
•
Incident Response and Forensics Services. Our incident response services typically begin by deploying our lightweight agent to a customer’s
endpoints to provide comprehensive visibility in order to determine if an attacker is currently in the environment, what assets have been
compromised, and how much damage has been done. The Falcon platform’s next-gen prevention capabilities, cloud posture management and
identity protection offerings can also be leveraged to enrich the response team’s visibility and understanding of the attack as well as help to slow
down and prevent an active attacker from moving at-will throughout a compromised customer’s environment, increasing the risk and potential
damage to the customer. We also provide customized remediation planning by providing a strategy to eject attackers out of the network, lock down
credentials from further use, and ensure adversaries stay out. In addition to providing valuable breach remediation to our customers, our incident
response services also act as a strong lead generation engine for our Falcon platform and cloud modules. After experiencing the benefits of our
platform firsthand, many of our incident response customers become subscription customers. Among organizations who first became a customer
after February 1, 2020, for each $1.00 spent by those customers on their initial engagement for our incident response or proactive services, as of
January 31, 2022, we derived an average of $5.71 in ARR from those subscription contracts.
Technical Assessment and Strategic Advisory Services. Our proactive security services include technical assessment services designed to help
organizations understand their cyber maturity levels. These services include compromise assessments, cybersecurity maturity assessments,
security program in-depth assessments, service
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organization control assessments, cloud security assessments, IT hygiene assessments, and active directory security assessments. We also advise
customers on readiness and preparation through the execution of table-top exercises, live fire exercises, red team/blue team assessments, and
advanced adversary emulation exercises. These services are designed to evaluate our customers’ security profile so they can identify areas of
vulnerability, secure their network, and improve their response if their defenses are breached.
•
Training. We offer training and certification services to customers and partners on CrowdStrike technologies and cybersecurity topics to facilitate
the adoption of CrowdStrike and to broaden and deepen their skills. CrowdStrike University is an online learning management system that
organizes all CrowdStrike e-learning, instructor-led training and certification preparation courses in one place, providing a personalized learning
experience for individuals who have an active training subscription. CrowdStrike currently offers proctored exam certifications through industry
leading training partner Pearson Vue for its CrowdStrike Certified Falcon Administrator (“CCFA”), CrowdStrike Certified Falcon Responder
(“CCFR”), and CrowdStrike Certified Falcon Hunter (“CCFH”) programs.
Customers
Some of the world’s largest enterprises, government organizations, and high profile brands trust us to protect their business. As of January 31, 2022,
we had 16,325 subscription customers worldwide. Historically, we and our channel partners have primarily sold to large organizations, but have
increasingly focused on selling to small and medium-sized businesses, particularly through our trial-to-pay model. We engage our customers through our
global customer and technical advisory boards in which we solicit feedback from our customers on a regular basis allowing us to understand their evolving
needs. We have used this feedback to develop new cloud modules, such as Falcon Insight, and we intend to continue to develop new cloud modules based
on our customer’s feedback. Our business is not dependent on any particular end customer.
Our sales and marketing organizations work together closely to drive market awareness, build a strong sales pipeline and cultivate customer
Sales and Marketing
relationships to drive revenue growth.
Sales
We primarily sell subscriptions to our Falcon platform and cloud modules through our direct sales team, which is comprised of field sales and inside
sales professionals who are segmented by a customer’s number of endpoints. Our sales team also leverages our network of channel partners. We also use
our sales team to identify current customers who may be interested in free trials of additional cloud modules, which serves as a powerful driver of our land
and expand model. By segmenting our sales teams, we can deploy a low-touch sales model that efficiently identifies prospective customers.
Marketing
Our marketing organization is focused on building our brand reputation, increasing the awareness and reputation of our platform, and driving customer
demand. As part of these efforts, we deliver targeted content to demonstrate thought leadership in the security industry, including speaking engagements
with the security industry’s foremost organizations to provide expert advice, issuing regular reports on the state of the industry, educating the public about
the cybersecurity threats, and identifying and naming adversary groups. We also engage in paid media, web marketing, industry and trade conferences
(including our annual Fal.Con conference), analyst engagements, whitepaper development, demand generation via digital and web, and targeted
displacement campaigns. We employ a wide range of digital programs, including search engine marketing, online and social media initiatives, and content
syndication to increase traffic to our website and encourage prospective customers to sign up for a free trial of the Falcon platform. Additionally, we engage
in joint marketing activities with our channel and technology alliance partners.
We work with a number of technology alliance partners to design go-to-market strategies that combine our platform with products or services provided
by our technology alliance partners. These partner integrations deliver more secure solutions and an improved end user experience to their customers. Our
technology alliance partnerships focus on security analytics, network and infrastructure security, threat platforms and orchestration, and automation. We
launched the CrowdStrike Store, the first
Partnership Ecosystem
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open cloud-based application PaaS for cybersecurity and the industry’s first unified security cloud ecosystem of trusted third-party applications. In addition,
Falcon for Amazon Web Services (“AWS”), available in the AWS Marketplace, allows customers to easily purchase and take advantage of the metered
billing (pay-as-you-go) pricing option to scale their consumption as their business needs change.
Research and Development
Our research and development organization is responsible for the design, architecture, operation and quality of our cloud native Falcon platform. In
addition, the research and development organization works closely with our customer success teams to ensure customer satisfaction is the top priority.
Our success is a result of our continuous drive for innovation. Our internal team of security experts, researchers, intelligence analysts, and threat
hunters continuously analyzes the evolving global threat landscape to develop products that defend against today’s most sophisticated and stealthy attacks
and reports on emerging security issues. We invest substantial resources in research and development to enhance our Falcon platform, and develop new
cloud modules, features and functionality. We believe timely development of new, and enhancement of our existing products, services, and features is
essential to maintaining our competitive position. We work closely with our customers and channel partners to gain valuable insight into their security
management practices to assist us in designing new cloud modules and features that extend the capability of our platform. Our technical staff monitors and
tests our software on a regular basis, and we also make our Falcon platform available for third-party validation. We also maintain a regular release process
to update and enhance our existing solutions. In addition, we engage security consulting firms to perform periodic vulnerability analysis of our solutions.
Our research and development leadership team is located in Seattle, Washington and Sunnyvale, California. We also maintain research and
development centers in Irvine, California, and Israel. We employ subject matter experts in a number of jurisdictions around the world. We plan to continue
to dedicate significant resources to research and development.
Competition
We primarily compete with established and emerging security product vendors. While the market for traditional endpoint and IT operations solutions
has historically been intensely competitive, we believe that the architecture of our cloud-native, single agent platform fundamentally differentiates us
compared to both next-gen and legacy competitors in the security industry. Additionally, as we look to enter into adjacent markets and expand our total
addressable market, we may face new competitors. However, we do not believe any of our competitors currently have a true platform offering equivalent to
the Falcon platform, which can be leveraged to win in legacy markets and define new categories.
Our competitors currently include the following by general category:
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legacy antivirus product providers, such as Trellix (formerly McAfee Enterprise), Broadcom Inc.’s Symantec Enterprise division, and Microsoft
Corporation, who offer a broad range of approaches and solutions including traditional signature-based antivirus protection;
alternative endpoint security providers, such as Blackberry Cylance, VMware Carbon Black and SentinelOne, who generally offer a mix of on-
premises and cloud-hosted products that rely heavily on malware-only or application whitelisting techniques;
network security vendors, such as Palo Alto Networks, Inc., who are supplementing their core perimeter-based offerings with endpoint security
solutions; and
professional service providers, such as Mandiant and Microsoft Corporation, who offer cybersecurity response services.
We compete on the basis of a number of factors, including but not limited to our:
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ability to offer a unified and modular platform that enables rapid innovation, scaling, and deployment;
ability to identify security threats and prevent security breaches;
ability to integrate with other participants in the security ecosystem;
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time to value, price, and total cost of ownership;
brand awareness, reputation, and trust in the provider’s services;
strength of sales, marketing, and channel partner relationships; and
customer support, incident response, and proactive services.
Although certain of our competitors enjoy greater resources, recognition, deeper customer relationships, larger existing customer bases, or more
mature intellectual property portfolios, we believe that we compete favorably with respect to these factors and that we are well positioned as a leading
provider of endpoint and workload security solutions.
Intellectual Property
We believe that our intellectual property rights are valuable and important to our business. We rely on trademarks, patents, copyrights, trade secrets,
license agreements, intellectual property assignment agreements, confidentiality procedures, non-disclosure agreements, and employee non-disclosure and
invention assignment agreements to establish and protect our proprietary rights. Though we rely in part upon these legal and contractual protections, we
believe that factors such as the skills and ingenuity of our employees and the functionality and frequent enhancements to our solutions are larger
contributors to our success in the marketplace.
As of January 31, 2022, we had 132 issued patents and 90 pending patent applications in the United States and other countries. These patents and
patent applications seek to protect our proprietary inventions relevant to our business. We intend to pursue additional intellectual property protection to the
extent we believe it would be beneficial and cost-effective. Despite our efforts to protect our intellectual property rights, they may not be respected in the
future or may be invalidated, circumvented, or challenged. Our industry is characterized by the existence of a large number of patents and frequent claims
and related litigation based on allegations of patent infringement or other violations of intellectual property rights. We believe that competitors will try to
develop products that are similar to ours and that may infringe our intellectual property rights. Our competitors or other third-parties may also claim that
our security platform and other solutions infringe their intellectual property rights. In particular, some companies in our industry have extensive patent
portfolios. From time to time, third parties have in the past and may in the future assert claims of infringement, misappropriation and other violations of
intellectual property rights against us or our customers, with whom our agreements may obligate us to indemnify against these claims. Successful claims of
infringement by a third party could prevent us from offering certain products or features, require us to develop alternate, non-infringing technology, which
could require significant time and during which we could be unable to continue to offer our affected products or solutions, require us to obtain a license,
which may not be available on reasonable terms or at all, or force us to pay substantial damages, royalties, or other fees. For additional information, see the
section titled “Risk Factors—Risks Related to Intellectual Property, Legal, and Regulatory Matters—The success of our business depends in part on our
ability to protect and enforce our intellectual property rights.”
Backlog
We enter into both single and multi-year subscription contracts for our solutions. We generally invoice our customers at contract signing prior to
commencement of subscription period. Until such time as these amounts are invoiced, they are not recorded in deferred revenue or elsewhere in our
consolidated financial statements, and are considered by us to be backlog. As of January 31, 2022, we had backlog of approximately $735.8 million. We
expect backlog will change from period to period for several reasons, including the timing and duration of customer agreements, varying billing cycles of
subscription agreements, and the timing and duration of customer renewals. Because revenue for any period is a function of revenue recognized from
deferred revenue under contracts in existence at the beginning of the period, as well as contract renewals and new customer contracts during the period,
backlog at the beginning of any period is not necessarily indicative of future revenue performance. We do not utilize backlog as a key management metric
internally.
Seasonality
Given the annual budget approval process of many of our customers, we see seasonal patterns in our business. We expect these seasonal variations to
become more pronounced in future periods, with net new ARR generation being greater in the second half of the year, particularly in the fourth quarter, as
compared to the first half of the year. In addition, we also
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experience seasonality in our operating margin, with a lower margin in the first half of our fiscal year due to a step up in costs for payroll taxes, new hires,
and annual sales and marketing events. This also impacts the timing of operating cash flow.
Human Capital Resources
As of January 31, 2022, we had 4,965 full-time employees. We also engage temporary employees and consultants as needed to support our operations.
None of our employees in the United States are represented by a labor union or subject to a collective bargaining agreement. In certain countries in which
we operate, we are subject to local labor law requirements which may automatically make our employees subject to industry-wide collective bargaining
agreements. We have not experienced any work stoppages, and we consider our relations with our employees to be good.
Attraction, Retention, and Talent Development
Supporting our people is a foundational value for CrowdStrike. We believe the company’s success depends on our ability to attract, develop and retain
key personnel. The skills, experience and industry knowledge of key employees significantly benefit our operations and performance.
Our talent sourcing is aligned to our organizational strategy to provide the expertise and skills needed to move our mission forward. We have created a
high performance talent model that pinpoints the top traits and qualities we look for in talent and that may already exist within the organization, then
consistently use that model to develop interview questions, screen candidates, and make hiring decisions.
We continue to market to and recruit technical talent in diverse communities by engaging as a high-level sponsor or partner of professional conferences
and organizations such as Grace Hopper, Society of Women Engineers, Afrotech - Blavity World, Hire Military, Black Girls Code, Thurgood Marshall
College Foundation, and others.
To attract high performers, we have a team dedicated to building and promoting our employer brand focused on creating a strong employer value
proposition:
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Competitive pay and benefits
Flexible working arrangements
Role and task diversity
Professional development opportunities
• Organizational reputation and culture
We provide robust compensation and benefits programs to help meet the needs of our employees. In addition to base salary, these programs (which
vary by country/region) include annual bonuses or commission plans, equity awards, an employee stock purchase plan, a 401(k) plan, healthcare and
insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, adoption and
infertility assistance, and employee assistance programs.
We invest resources to develop the talent needed to remain a leader in cybersecurity. We deliver numerous training opportunities, provide rotational
assignment opportunities, have expanded our focus on continuous learning and development, and implemented new methodologies to manage
performance, provide feedback, and develop talent.
Remote-First Distributed Workforce
For CrowdStrike, the ability to work remotely is a deliberate strategy that we believe fuels rapid innovation and attracts the best and brightest around
the world, regardless of their specific location. Our culture is purpose-built around a remote-first way of working, creating a competitive advantage for both
the company and its customers and minimizing disruption from localized issues such as natural disasters, political events, or health emergencies, such as
the COVID-19 pandemic.
CrowdStrike has had a distributed workforce since its inception. Even prior to the COVID-19 pandemic, roughly 70% of our workforce, including
engineering and technology teams, worked on a remote basis. During the pandemic, we quickly went
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to 100% of our workforce working remotely. We have recently started to open offices again following the local guidelines, but have continued to encourage
employees to follow local guidance on COVID-19 protocols to protect the health and safety of themselves and of those around them.
Since the beginning, we recognized that creating high-functioning, effective remote-first teams would require careful planning and system design to
not only establish the culture but help it grow and evolve organically. We have designed our processes, systems, and teams so that people can perform their
jobs without needing to be physically present in the same room or even in the same time zone. Part of supporting our remote-first culture also involves
actively encouraging personal well-being through initiatives, including wellness programs, engagement programs (speaker series, employee resource
groups, gift exchanges, mentorship opportunities, virtual events, etc.), community outreach activities, recognition programs, and groups to connect people,
no matter where they are geographically, with similar interests, life circumstances or backgrounds.
Diversity, Equity, and Inclusion
A diverse, equitable, and inclusive culture fuels creative excellence and innovation, helping people achieve their best work. We continue to strive to
advance our efforts to build an equitable workplace and formally establish it as part of CrowdStrike’s mission and organization.
We strive to create an environment where everyone feels seen, heard, and empowered to succeed. Through employee resource groups, internal training
and development programs, allyship training, speaker series, and networking opportunities, we are empowered to come together to create a workplace that
reflects the diverse communities around us.
Setting a diverse workforce up for success requires a commitment to the practices of inclusion in everything we do. What a practice of inclusion means
to us is that we are creating an environment and providing tools that help our people understand how to actively involve every employee’s ideas,
knowledge, perspectives, approaches, and styles and how to engage all of our people via a mindful approach to organizational design and experiences that
feels accessible and relevant to everyone.
Employee Resource Groups
Employee Resource Groups are an integral component of our commitment to foster community, promote a sense of belonging, facilitate organizational
change, and drive a greater understanding of the diversity of perspectives we have across CrowdStrike. In addition to the Embracing Equity majority ally
group, we have five official Employee Resource Groups and we are anticipate additional groups in the future:
• Women of CrowdStrike
• Veterans of CrowdStrike
•
Pride Team (LGBTQ)
• Green Team (Sustainability)
•
Team BELIEVE (Black employees)
Our Employee Resource Groups are employee led, self-directed, voluntary groups that align with our organizational mission, values, and goals that
offer opportunities for groups to network, recommend business initiatives and process improvements, increase organizational awareness and allyship, and
create opportunities for talent development. Employees who join an Employee Resource Group can:
• Network and build community with people with similar interests, life circumstances or backgrounds.
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•
Serve as champions for inclusion and belonging at CrowdStrike and help identify opportunities for us to become more inclusive.
Identify initiatives and best practices throughout the organization and make recommendations to the business to help spark and facilitate change.
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Executive Officers
The following table sets forth certain information with respect to our current executive officers as of March 16, 2022:
Name:
George Kurtz
Burt W. Podbere
Shawn Henry
Age:
51
56
59
Position:
President, Chief Executive Officer and Director
Chief Financial Officer
President, CrowdStrike Services and Chief Security Officer
There is no family relationship between any of our directors or executive officers and any other director or executive officer.
George Kurtz - President, Chief Executive Officer, and Director
Mr. Kurtz is one of our co-founders and has served as our President, Chief Executive Officer, and a member of our board of directors since November
2011. From October 2004 to October 2011, Mr. Kurtz served in executive roles at McAfee, Inc., a security technology company, including as Executive
Vice President and Worldwide Chief Technology Officer from October 2009 to October 2011. In October 1999, Mr. Kurtz founded Foundstone, Inc., a
security technology company, where he served as its Chief Executive Officer until it was acquired by McAfee, Inc. in October 2004. Since November
2017, he has also served as Chairman as a board member, and as President for the CrowdStrike Foundation, a nonprofit established to support the next
generation of talent and research in cybersecurity and artificial intelligence through scholarships, grants, and other activities. He has also served on the
board of directors of Hewlett Packard Enterprise, an enterprise information technology company, since June 2019. Mr. Kurtz holds a B.S. in Accounting
from Seton Hall University. Mr. Kurtz also holds a CPA license from the State of New Jersey with an inactive status.
Burt W. Podbere - Chief Financial Officer
Mr. Podbere has served as our Chief Financial Officer since September 2015. From May 2014 to August 2015, Mr. Podbere served as Chief Financial
Officer for OpenDNS, Inc. (acquired by Cisco in 2015), a cloud-delivered network security company, where he oversaw the finance function. From
October 2011 to April 2014, he served as Chief Financial Officer for Net Optics, Inc. (acquired by Ixia in 2013), a manufacturer of network monitoring and
intelligent access solutions for physical and virtual networks. Since November 2017, he has also served as Treasurer and as a board member for the
CrowdStrike Foundation, a nonprofit established to support the next generation of talent and research in cybersecurity and artificial intelligence through
scholarships, grants, and other activities. Mr. Podbere is a Chartered Accountant and holds a B.A. from McGill University.
Shawn Henry - President, CrowdStrike Services and Chief Security Officer
Mr. Henry has served as President of CrowdStrike Services and our Chief Security Officer since March 2012. Mr. Henry previously worked for the
FBI from 1987 through March 2012, including most recently as Executive Assistant Director of the FBI’s Criminal, Cyber, Response and Services Branch.
Since June 2016, Mr. Henry has served as a faculty member specializing in cybersecurity for the National Association of Corporate Directors, an
organization providing training and education for private and public company directors. Mr. Henry previously served as a cybersecurity and national
security analyst for NBC News. Since November 2021, Mr. Henry has served as a director of ShoulderUp Technology Acquisition Corp., a blank check
company that completed its initial public offering in November 2021. Mr. Henry also serves on the board of directors of the Global Cyber Alliance, a
nonprofit organization dedicated to making the Internet a safer place by reducing cyber risk, and on the advisory board of several organizations, including
Hofstra University’s School of Engineering and Applied Science. Mr. Henry holds a B.B.A. from Hofstra University and an M.S. in Criminal Justice from
Virginia Commonwealth University.
Corporate Information
Our principal executive offices are located at 206 E. 9th Street, Suite 1400, Austin, Texas 78701 and our telephone number is (888) 512-8906. Our
website address is www.crowdstrike.com. Information contained on, or that can be accessed through, our website does not constitute part of this Annual
Report on Form 10-K.
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Available Information
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports are filed with the
SEC pursuant to Sections 13(a) and 15(d) of the Exchange Act. Such reports and other information filed or furnished by us with the SEC are available free
of charge on our website at https://ir.crowdstrike.com/financial-information/sec-filings, as soon as reasonably practicable after we file such material with,
or furnish it to, the SEC. The SEC maintains a website that contains the materials we file with or furnish to the SEC at www.sec.gov.
ITEM 1A. RISK FACTORS
A description of the risks and uncertainties associated with our business is set forth below. You should carefully consider the risks and uncertainties
described below, as well as the other information in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes
and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The occurrence of any of the events or developments
described below, or of additional risks and uncertainties not presently known to us or that we currently deem immaterial, could materially and adversely
affect our business, results of operations, financial condition and growth prospects. In such an event, the market price of our Class A common stock could
decline, and you could lose all or part of your investment.
Summary of Risk Factors
Our business is subject to numerous risks and uncertainties, any one of which could materially adversely affect our business, results of operations,
financial condition and growth prospects. Below is a summary of some of these risks. This summary is not complete, and should be read together with the
entire section titled “Risk Factors” in this Annual Report on Form 10-K, as well as the other information in this Annual Report on Form 10-K and the other
filings that we make with the SEC.
• We have experienced rapid growth in recent periods, and if we do not manage our future growth, our business and results of operations will be
adversely affected.
• We have a history of losses and may not be able to achieve or sustain profitability in the future.
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The COVID-19 pandemic could adversely affect global economic conditions and our business, operating results and future revenue.
If organizations do not adopt cloud-based SaaS-delivered endpoint security solutions, our ability to grow our business and results of operations
may be adversely affected.
If we are unable to successfully enhance our existing products and services and introduce new products and services in response to rapid
technological changes and market developments as well as evolving security threats, our competitive position and prospects will be harmed.
If we are unable to attract new customers, our future results of operations could be harmed.
If our customers do not renew their subscriptions for our products and add additional cloud modules to their subscriptions, our future results of
operations could be harmed.
• We face intense competition and could lose market share to our competitors, which could adversely affect our business, financial condition, and
results of operations.
•
If our solutions fail or are perceived to fail to detect or prevent incidents or have or are perceived to have defects, errors, or vulnerabilities, our
brand and reputation would be harmed, which would adversely affect our business and results of operations.
• As a cybersecurity provider, we have been, and expect to continue to be, a target of cyberattacks. If our internal networks, systems, or data are or
are perceived to have been breached, our reputation may be damaged and our financial results may be negatively affected.
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• We rely on third-party data centers, such as Amazon Web Services, and our own colocation data centers, to host and operate our Falcon platform,
and any disruption of or interference with our use of these facilities may negatively affect our ability to maintain the performance and reliability of
our Falcon platform, which could cause our business to suffer.
• We rely on our key technical, sales and management personnel to grow our business, and the loss of one or more key employees could harm our
business.
•
If we are unable to attract and retain qualified personnel, our business could be harmed.
• Our results of operations may fluctuate significantly, which could make our future results difficult to predict and could cause our results of
operations to fall below expectations.
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Claims by others that we infringe their proprietary technology or other intellectual property rights could result in significant costs and substantially
harm our business, financial condition, results of operations, and prospects.
If we are not able to comply with applicable data protection, security, privacy, and other government- and industry-specific laws, regulations,
standards or requirements, our business, results of operations, and financial condition could be harmed.
Future acquisitions, strategic investments, partnerships, or alliances could be difficult to identify and integrate, divert the attention of key
management personnel, disrupt our business, dilute stockholder value and adversely affect our results of operations and financial condition.
Risks Related to Our Business and Industry
We have experienced rapid growth in recent periods, and if we do not manage our future growth, our business and results of operations will be
adversely affected.
We have experienced rapid revenue growth in recent periods and we expect to continue to invest broadly across our organization to support our
growth. For example, our headcount grew from 2,309 employees as of January 31, 2020, to 4,965 employees as of January 31, 2022. Although we have
experienced rapid growth historically, we may not sustain our current growth rates and our investments to support our growth may not be successful. The
growth and expansion of our business will require us to invest significant financial and operational resources and the continuous dedication of our
management team. Our future success will depend in part on our ability to manage our growth effectively, which will require us to, among other things:
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effectively attract, integrate, and retain a large number of new employees, particularly members of our sales and marketing and research and
development teams;
further improve our Falcon platform, including our cloud modules, and IT infrastructure, including expanding and optimizing our data
centers, to support our business needs;
enhance our information and communication systems to ensure that our employees and offices around the world are well coordinated and can
effectively communicate with each other and our growing base of channel partners and customers; and
improve our financial, management, and compliance systems and controls.
If we fail to achieve these objectives effectively, our ability to manage our expected growth, ensure uninterrupted operation of our Falcon platform and
key business systems, and comply with the rules and regulations applicable to our business could be impaired. Additionally, the quality of our platform and
services could suffer and we may not be able to adequately address competitive challenges. Any of the foregoing could adversely affect our business,
results of operations, and financial condition.
We have a history of losses and may not be able to achieve or sustain profitability in the future.
We have incurred net losses in all periods since our inception, and we may not achieve or maintain profitability in the future. We experienced net losses
of $234.8 million, $92.6 million, and $141.8 million for fiscal 2022, fiscal 2021, and fiscal 2020, respectively. As of January 31, 2022, we had an
accumulated deficit of $964.9 million. While we have experienced
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significant growth in revenue in recent periods, we cannot assure you when or whether we will reach or maintain profitability. We also expect our operating
expenses to increase in the future as we continue to invest for our future growth, which will negatively affect our results of operations if our total revenue
does not increase. We cannot assure you that these investments will result in substantial increases in our total revenue or improvements in our results of
operations. We also have incurred and expect to continue to incur significant additional legal, accounting, and other expenses as a public company. Any
failure to increase our revenue as we invest in our business or to manage our costs could prevent us from achieving or maintaining profitability or positive
cash flow.
The COVID-19 pandemic could adversely affect our business, operating results and future revenue.
The COVID-19 pandemic continues to impact worldwide economic activity and financial markets. In light of the uncertain and rapidly evolving
situation relating to the spread of COVID-19, we have taken precautionary measures intended to mitigate the spread of the virus and minimize the risk to
our employees, customers, partners, and the communities in which we operate. These precautionary measures could negatively affect our customer success
efforts, delay and lengthen our sales cycles, impact our sales and marketing efforts, reduce employee efficiency and productivity, increase employee
attrition, slow our international expansion efforts, increase cybersecurity risks, and create operational or other challenges, any of which could harm our
business and results of operations. As we monitor the situation, taking into account uncertainties with respect to vaccination progress, disease variants and
the efficacy of vaccines and treatments relating to such variants, infection rates and evolving public health guidance at local, state and country levels,
planning and risk management relating to our work policies and office operations will require time from management and other employees, which may
reduce the amount of time available for other initiatives. Moreover, due to our subscription-based business model, the effect of the COVID-19 pandemic
may not be fully reflected in our results of operations until future periods, if at all.
In addition, the COVID-19 pandemic may disrupt the operations of our customers and partners for an indefinite period of time. Some of our customers
have been negatively impacted by the COVID-19 pandemic which could result in delays in accounts receivable collection, or result in decreased
technology spending which could negatively affect our revenues. More generally, the COVID-19 pandemic has adversely affected economies and financial
markets globally, and continued uncertainty could lead to a prolonged economic downturn, which could result in a larger customer churn than we currently
anticipate and reduced demand for our products and services, in which case our revenues could be significantly impacted. The impact of the COVID-19
pandemic may also exacerbate other risks discussed in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K. It is not possible at
this time to estimate the impact that the COVID-19 pandemic could have on our business, as the impact will depend on future developments, which are
highly uncertain and cannot be predicted.
If organizations do not adopt cloud-based SaaS-delivered endpoint security solutions, our ability to grow our business and results of operations may be
adversely affected.
We believe our future success will depend in large part on the growth, if any, in the market for cloud-based SaaS-delivered endpoint security solutions.
The use of SaaS solutions to manage and automate security and IT operations is at an early stage and rapidly evolving. As such, it is difficult to predict its
potential growth, if any, customer adoption and retention rates, customer demand for our solutions, or the success of existing competitive products. Any
expansion in our market depends on a number of factors, including the cost, performance, and perceived value associated with our solutions and those of
our competitors. If our solutions do not achieve widespread adoption or there is a reduction in demand for our solutions due to a lack of customer
acceptance, technological challenges, competing products, privacy concerns, decreases in corporate spending, weakening economic conditions or
otherwise, it could result in early terminations, reduced customer retention rates, or decreased revenue, any of which would adversely affect our business,
results of operations, and financial results. We do not know whether the trend in adoption of cloud-based SaaS-delivered endpoint security solutions we
have experienced in the past will continue in the future. Furthermore, if we or other SaaS security providers experience security incidents, loss or disclosure
of customer data, disruptions in delivery, or other problems, the market for SaaS solutions as a whole, including our security solutions, could be negatively
affected. You should consider our business and prospects in light of the risks and difficulties we encounter in this new and evolving market.
If we are unable to successfully enhance our existing products and services and introduce new products and services in response to rapid technological
changes and market developments as well as evolving security threats, our competitive position and prospects will be harmed.
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Our ability to increase revenue from existing customers and attract new customers will depend in significant part on our ability to anticipate and
respond effectively to rapid technological changes and market developments as well as evolving security threats. The success of our Falcon platform
depends on our ability to take such changes into account and invest effectively in our research and development organization to increase the reliability,
availability and scalability of our existing solutions and introduce new solutions. If we fail to effectively anticipate, identify or respond to such changes in a
timely manner, or at all, our business could be harmed. Even if we adequately fund our research and development efforts there is no guarantee that we will
realize a return on such efforts.
Success in delivering enhancements and new solutions depends on several factors, including the timely completion, introduction and market
acceptance of the enhancement or new solution, the risk that such enhancement or new solution may have quality or other defects or deficiencies,
especially in the early stages of introduction, as well as our ability to seamlessly integrate all of our product and service offerings and develop adequate
sales capabilities in new markets. Failure in this regard may erode our competitive position, significantly impair our revenue growth, and negatively impact
our operating results.
If we are unable to attract new customers, our future results of operations could be harmed.
To expand our customer base, we need to convince potential customers to allocate a portion of their discretionary budgets to purchase our Falcon
platform. Our sales efforts often involve educating our prospective customers about the uses and benefits of our Falcon platform. Enterprises and
governments that use legacy security products, such as signature-based or malware-based products, firewalls, intrusion prevention systems, and antivirus,
for their IT security may be hesitant to purchase our Falcon platform if they believe that these products are more cost effective, provide substantially the
same functionality as our Falcon platform or provide a level of IT security that is sufficient to meet their needs. We may have difficulty convincing
prospective customers of the value of adopting our solution. Even if we are successful in convincing prospective customers that a cloud native platform like
ours is critical to protect against cyberattacks, they may not decide to purchase our Falcon platform for a variety of reasons, some of which are out of our
control. For example, any deterioration in general economic conditions, including a downturn due to the outbreak of diseases such as COVID-19, may
cause our current and prospective customers to cut their overall security and IT operations spending, and such cuts may fall disproportionately on cloud-
based security solutions like ours. Economic weakness, customer financial difficulties, and constrained spending on security and IT operations may result
in decreased revenue, reduced sales, lengthened sales cycles, increased churn, lower demand for our products, and adversely affect our results of operations
and financial conditions. Additionally, if the incidence of cyberattacks were to decline, or be perceived to decline, or if organizations adopt endpoints that
use operating systems we do not adequately support, our ability to attract new customers and expand sales of our solutions to existing customers could be
adversely affected. If organizations do not continue to adopt our Falcon platform, our sales will not grow as quickly as anticipated, or at all, and our
business, results of operations, and financial condition would be harmed.
If our customers do not renew their subscriptions for our products and add additional cloud modules to their subscriptions, our future results of
operations could be harmed.
In order for us to maintain or improve our results of operations, it is important that our customers renew their subscriptions for our Falcon platform
when existing contract terms expire, and that we expand our commercial relationships with our existing customers by selling additional cloud modules and
by deploying to more endpoints in their environments. Our customers have no obligation to renew their subscription for our Falcon platform after the
expiration of their contractual subscription period, which is generally one year, and in the normal course of business, some customers have elected not to
renew. In addition, our customers may renew for shorter contract subscription lengths or cease using certain cloud modules. Our customer retention and
expansion may decline or fluctuate as a result of a number of factors, including our customers’ satisfaction with our services, our pricing, customer security
and networking issues and requirements, our customers’ spending levels, decreases in the number of endpoints to which our customers deploy our
solutions, mergers and acquisitions involving our customers, industry developments, competition and general economic conditions. If our efforts to
maintain and expand our relationships with our existing customers are not successful, our business, results of operations, and financial condition may
materially suffer.
We face intense competition and could lose market share to our competitors, which could adversely affect our business, financial condition, and results
of operations.
The market for security and IT operations solutions is intensely competitive, fragmented, and characterized by rapid changes in technology, customer
requirements, industry standards, increasingly sophisticated attackers, and by frequent
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introductions of new or improved products to combat security threats. We expect to continue to face intense competition from current competitors, as well
as from new entrants into the market. If we are unable to anticipate or react to these challenges, our competitive position could weaken, and we could
experience a decline in revenue or reduced revenue growth, and loss of market share that would adversely affect our business, financial condition, and
results of operations. Our ability to compete effectively depends upon numerous factors, many of which are beyond our control, including, but not limited
to:
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product capabilities, including performance and reliability, of our Falcon platform, including our cloud modules, services, and features
compared to those of our competitors;
our ability, and the ability of our competitors, to improve existing products, services, and features, or to develop new ones to address evolving
customer needs;
our ability to attract, retain, and motivate talented employees;
our ability to establish and maintain relationships with channel partners;
the strength of our sales and marketing efforts; and
acquisitions or consolidation within our industry, which may result in more formidable competitors.
Our competitors include the following by general category:
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legacy antivirus product providers, such as Trellix (formerly McAfee Enterprise), Broadcom Inc.’s Symantec Enterprise division, and
Microsoft Corporation, who offer a broad range of approaches and solutions including traditional signature-based anti-virus protection;
alternative endpoint security providers, such as Blackberry Cylance, VMware Carbon Black and SentinelOne, who generally offer a mix of
on-premise and cloud-hosted products that rely heavily on malware-only or application whitelisting techniques;
network security vendors, such as Palo Alto Networks, Inc., who are supplementing their core perimeter-based offerings with endpoint
security solutions; and
professional service providers, such as Mandiant and Microsoft Corporation, who offer cybersecurity response services.
Many of our competitors have greater financial, technical, marketing, sales, and other resources, greater name recognition, longer operating histories,
and a larger base of customers than we do. They may be able to devote greater resources to the development, promotion, and sale of services than we can,
and they may offer lower pricing than we do. Further, they may have greater resources for research and development of new technologies, the provision of
customer support, and the pursuit of acquisitions. Our larger competitors have substantially broader and more diverse product and services offerings as well
as routes to market, which allows them to leverage their relationships based on other products or incorporate functionality into existing products to gain
business in a manner that discourages users from purchasing our platform, including our cloud modules. Conditions in our market could change rapidly and
significantly as a result of technological advancements, partnering or acquisitions by our competitors or continuing market consolidation. Some of our
competitors have recently made acquisitions of businesses or have established cooperative relationships that may allow them to offer more directly
competitive and comprehensive solutions than were previously offered and adapt more quickly to new technologies and customer needs. These competitive
pressures in our market or our failure to compete effectively may result in price reductions, fewer orders, reduced revenue and gross margins, increased net
losses and loss of market share. Further, competitors that specialize in providing protection from a single type of security threat may be able to deliver these
targeted security products to the market quicker than we can or convince organizations that these limited products meet their needs. Even if there is
significant demand for cloud-based security solutions like ours, if our competitors include functionality that is, or is perceived to be, equivalent to or better
than ours in legacy products that are already generally accepted as necessary components of an organization’s IT security architecture, we may have
difficulty increasing the market penetration of our platform. Furthermore, even if the functionality offered by other security and IT operations providers is
more limited than the functionality of our platform, organizations may elect to accept such limited functionality in lieu of adding products from additional
vendors like us. If we are unable to compete successfully, or if competing successfully requires us to take aggressive pricing or other actions, our business,
financial condition, and results of operations would be adversely affected.
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Competitive pricing pressure may reduce our gross profits and adversely affect our financial results.
If we are unable to maintain our pricing due to competitive pressures or other factors, our margins will be reduced and our gross profits, business,
results of operations, and financial condition would be adversely affected. The subscription prices for our Falcon platform, cloud modules, and professional
services may decline for a variety of reasons, including competitive pricing pressures, discounts, anticipation of the introduction of new solutions by our
competitors, or promotional programs offered by us or our competitors. The cybersecurity market remains very competitive, and competition may further
increase in the future. Competitors may reduce the price of products or subscriptions that compete with ours or may bundle them with other products and
subscriptions.
If our solutions fail or are perceived to fail to detect or prevent incidents or have or are perceived to have defects, errors, or vulnerabilities, our brand
and reputation would be harmed, which would adversely affect our business and results of operations.
Real or perceived defects, errors or vulnerabilities in our Falcon platform and cloud modules, the failure of our platform to detect or prevent incidents,
including advanced and newly developed attacks, misconfiguration of our solutions, or the failure of customers to take action on attacks identified by our
platform could harm our reputation and adversely affect our business, financial position and results of operations. Because our cloud native security
platform is complex, it may contain defects or errors that are not detected until after deployment. We cannot assure you that our products will detect all
cyberattacks, especially in light of the rapidly changing security threat landscape that our solution seeks to address. Due to a variety of both internal and
external factors, including, without limitation, defects or misconfigurations of our solutions, our solutions could be or become vulnerable to security
incidents (both from intentional attacks and accidental causes) that cause them to fail to secure endpoints and detect and block attacks. In addition, because
the techniques used by computer hackers to access or sabotage networks and endpoints change frequently and generally are not recognized until launched
against a target, there is a risk that an advanced attack could emerge that our cloud native security platform is unable to detect or prevent until after some of
our customers are affected. Additionally, our Falcon platform may falsely indicate a cyberattack or threat that does not actually exist, which may lessen
customers’ trust in our solutions.
Moreover, as our cloud native security platform is adopted by an increasing number of enterprises and governments, individuals and organizations
behind advanced cyberattacks may intensify their efforts to defeat our security platform. If this happens, our systems and subscription customers could be
specifically targeted by attackers and could result in vulnerabilities in our platform or undermine the market acceptance of our Falcon platform and could
adversely affect our reputation as a provider of security solutions. Because we host customer data on our cloud platform, which in some cases may contain
personally-identifiable information or potentially confidential information, a security compromise, or an accidental or intentional misconfiguration or
malfunction of our platform could result in personally-identifiable information and other customer data being accessible such as to attackers or to other
customers. Further, if a high profile security breach occurs with respect to another next-generation or cloud-based security system, our customers and
potential customers may lose trust in cloud solutions generally, and cloud-based security solutions such as ours in particular.
Organizations are increasingly subject to a wide variety of attacks on their networks, systems, and endpoints. No security solution, including our
Falcon platform, can address all possible security threats or block all methods of penetrating a network or otherwise perpetrating a security incident. If any
of our customers experiences a successful cyberattack while using our solutions or services, such customer could be disappointed with our Falcon platform,
regardless of whether our solutions or services blocked the theft of any of such customer’s data, or if the attack would have otherwise been mitigated or
prevented if the customer had fully deployed aspects of our Falcon platform. Similarly, if our solutions detect attacks against a customer but the customer
does not address the vulnerability, customers and the public may erroneously believe that our solutions were not effective. Security breaches against
customers that use our solutions may result in customers and the public believing that our solutions failed. Our Falcon platform may fail to detect or
prevent malware, viruses, worms or similar threats for any number of reasons, including our failure to enhance and expand our Falcon platform to reflect
the increasing sophistication of malware, viruses and other threats. Real or perceived security breaches of our customers’ networks could cause disruption
or damage to their networks or other negative consequences and could result in negative publicity to us, damage to our reputation, and other customer
relations issues, and may adversely affect our revenue and results of operations.
As a cybersecurity provider, we have been, and expect to continue to be, a target of cyberattacks. If our internal networks, systems, or data are or are
perceived to have been compromised, our reputation may be damaged and our financial results may be negatively affected.
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As a provider of security solutions, we have in the past been, and may in the future be, specifically targeted by bad actors for attacks intended to
circumvent our security capabilities or to exploit our Falcon platform as an entry point into customers’ endpoints, networks, or systems. In particular,
because we have been involved in the identification of organized cybercriminals and nation-state actors, we have been the subject of intense efforts by
sophisticated cyber adversaries who seek to compromise our systems. Such efforts may also intensify if geopolitical tensions increase. We are also
susceptible to inadvertent compromises of our systems and data, including those arising from process, coding, or human errors. We also utilize third-party
service providers to host, transmit, or otherwise process electronic data in connection with our business activities, including our supply chain, operations,
and communications. Our third-party service providers and other vendors have faced and may continue to face cyberattacks, compromises, interruptions in
service, or other security incidents from a variety of sources. A successful attack or other incident that compromises our or our customers’ data or results in
an interruption of service could have a significant negative effect on our operations, reputation, financial resources, and the value of our intellectual
property. We cannot assure you that any of our efforts to manage this risk, including adoption of a comprehensive incident response plan and process for
detecting, mitigating, and investigating security incidents that we regularly test through table-top exercises, testing of our security protocols through
additional techniques, such as penetration testing, debriefing after security incidents, to improve our security and responses, and regular briefing of our
directors and officers on our cybersecurity risks, preparedness, and management, will be effective in protecting us from such attacks.
It is virtually impossible for us to entirely eliminate the risk of such attacks, compromises, interruptions in service, or other security incidents affecting
our internal systems or data, or that of our third-party service providers and vendors. Organizations are subject to a wide variety of attacks on their supply
chain, networks, systems, and endpoints, and techniques used to sabotage or to obtain unauthorized access to networks in which data is stored or through
which data is transmitted change frequently. Furthermore, employee error or malicious activity could compromise our systems. As a result, we may be
unable to anticipate these techniques or implement adequate measures to prevent an intrusion into our networks, which could result in unauthorized access
to customer data, intellectual property including access to our source code, and information about vulnerabilities in our product, which in turn, could reduce
the effectiveness of our solutions, or lead to cyberattacks or other intrusions of our customers’ networks, litigation, governmental audits and investigations
and significant legal fees, any or all of which could damage our relationships with our existing customers and could have a negative effect on our ability to
attract and retain new customers. We have expended, and anticipate continuing to expend, significant resources in an effort to prevent security breaches and
other security incidents impacting our systems and data. Since our business is focused on providing reliable security services to our customers, we believe
that an actual or perceived security incident affecting our internal systems or data or data of our customers would be especially detrimental to our
reputation, customer confidence in our solution, and our business.
In addition, while we maintain insurance policies that may cover certain liabilities in connection with a cybersecurity incident, we cannot be certain
that our insurance coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on commercially reasonable
terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed
available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or
co-insurance requirements, could have a material adverse effect on our business, including our financial condition, results of operations and reputation.
We rely on third-party data centers, such as Amazon Web Services, and our own colocation data centers to host and operate our Falcon platform, and
any disruption of or interference with our use of these facilities may negatively affect our ability to maintain the performance and reliability of our
Falcon platform which could cause our business to suffer.
Our customers depend on the continuous availability of our Falcon platform. We currently host our Falcon platform and serve our customers using a
mix of third-party data centers, primarily Amazon Web Services, Inc., or AWS, and our data centers, hosted in colocation facilities. Consequently, we may
be subject to service disruptions as well as failures to provide adequate support for reasons that are outside of our direct control. We have experienced, and
expect that in the future we may experience interruptions, delays and outages in service and availability from time to time due to a variety of factors,
including infrastructure changes, human or software errors, website hosting disruptions and capacity constraints.
The following factors, many of which are beyond our control, can affect the delivery, availability, and the performance of our Falcon platform:
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the development and maintenance of the infrastructure of the internet;
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the performance and availability of third-party providers of cloud infrastructure services, such as AWS, with the necessary speed, data
capacity and security for providing reliable internet access and services;
decisions by the owners and operators of the data centers where our cloud infrastructure is deployed to terminate our contracts, discontinue
services to us, shut down operations or facilities, increase prices, change service levels, limit bandwidth, declare bankruptcy or prioritize the
traffic of other parties;
physical or electronic break-ins, acts of war or terrorism, human error or interference (including by disgruntled employees, former employees
or contractors) and other catastrophic events;
cyberattacks, including denial of service attacks, targeted at us, our data centers, or the infrastructure of the internet;
failure by us to maintain and update our cloud infrastructure to meet our data capacity requirements;
errors, defects or performance problems in our software, including third-party software incorporated in our software;
improper deployment or configuration of our solutions;
the failure of our redundancy systems, in the event of a service disruption at one of our data centers, to provide failover to other data centers
in our data center network; and
the failure of our disaster recovery and business continuity arrangements.
The adverse effects of any service interruptions on our reputation, results of operations, and financial condition may be disproportionately heightened
due to the nature of our business and the fact that our customers have a low tolerance for interruptions of any duration. Interruptions or failures in our
service delivery could result in a cyberattack or other security threat to one of our customers during such periods of interruption or failure. Additionally,
interruptions or failures in our service could cause customers to terminate their subscriptions with us, adversely affect our renewal rates, and harm our
ability to attract new customers. Our business would also be harmed if our customers believe that a cloud-based SaaS-delivered endpoint security solution
is unreliable. While we do not consider them to have been material, we have experienced, and may in the future experience, service interruptions and other
performance problems due to a variety of factors. The occurrence of any of these factors, or if we are unable to rapidly and cost-effectively fix such errors
or other problems that may be identified, could damage our reputation, negatively affect our relationship with our customers or otherwise harm our
business, results of operations and financial condition.
We rely on our key technical, sales and management personnel to grow our business, and the loss of one or more key employees could harm our
business.
Our future success is substantially dependent on our ability to attract, retain, and motivate the members of our management team and other key
employees throughout our organization. In particular, we are highly dependent on the services of George Kurtz, our President and Chief Executive Officer,
who is critical to our future vision and strategic direction. We rely on our leadership team in the areas of operations, security, research and development,
marketing, sales, support and general and administrative functions. Although we have entered into employment agreements with our key personnel, our
employees, including our executive officers, work for us on an “at-will” basis, which means they may terminate their employment with us at any time.
Leadership transitions can be inherently difficult to manage. In particular, they can cause operational and administrative inefficiencies, and could impact
relationships with key customers and vendors. If Mr. Kurtz, or one or more of our key employees, or members of our management team resigns or
otherwise ceases to provide us with their service, our business could be harmed.
If we are unable to attract and retain qualified personnel, our business could be harmed.
There is also significant competition for personnel with the skills and technical knowledge that we require across our technology, cyber, sales,
professional services, and administrative support functions. Competition for these personnel is intense, especially for experienced sales professionals and
for engineers experienced in designing and developing cloud applications and security software. We have from time to time experienced, and we expect to
continue to experience, difficulty in hiring and retaining employees with appropriate qualifications. For example, in recent years, recruiting, hiring and
retaining employees
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with expertise in the cybersecurity industry has become increasingly difficult as the demand for cybersecurity professionals has increased as a result of the
recent cybersecurity attacks on global corporations and governments. Additionally, our incident response and proactive services team is small and
comprised of personnel with highly technical skills and experience, who are in high demand, and who would be difficult to replace. More generally, the
technology industry is subject to substantial and continuous competition for engineers with high levels of experience in designing, developing and
managing software and Internet-related services. Many of the companies with which we compete for experienced personnel have greater resources than we
have. Our competitors also may be successful in recruiting and hiring members of our management team or other key employees, and it may be difficult for
us to find suitable replacements on a timely basis, on competitive terms, or at all. We have in the past, and may in the future, be subject to allegations that
employees we hire have been improperly solicited, or that they have divulged proprietary or other confidential information or that their former employers
own such employees’ inventions or other work product, or that they have been hired in violation of non-compete provisions or non-solicitation provisions.
In addition, job candidates and existing employees often consider the value of the equity awards they receive in connection with their employment.
Volatility or lack of performance in our stock price may also affect our ability to attract and retain our key employees. Also, many of our employees have
become, or will soon become, vested in a substantial amount of equity awards, which may give them a substantial amount of personal wealth. This may
make it more difficult for us to retain and motivate these employees, and this wealth could affect their decision about whether or not they continue to work
for us. Any failure to successfully attract, integrate or retain qualified personnel to fulfill our current or future needs could adversely affect our business,
results of operations and financial condition.
If we do not effectively expand and train our direct sales force, we may be unable to add new customers or increase sales to our existing customers, and
our business will be adversely affected.
We depend on our direct sales force to obtain new customers and increase sales with existing customers. Our ability to achieve significant revenue
growth will depend, in large part, on our success in recruiting, training and retaining sufficient numbers of sales personnel, particularly in international
markets. We have expanded our sales organization significantly in recent periods and expect to continue to add additional sales capabilities in the near term.
There is significant competition for sales personnel with the skills and technical knowledge that we require. New hires require significant training and may
take significant time before they achieve full productivity, and this delay is accentuated by our long sales cycles. Our recent hires and planned hires may
not become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we
do business or plan to do business. In addition, a large percentage of our sales force is new to our company and selling our solutions, and therefore this
team may be less effective than our more seasoned sales personnel. Furthermore, hiring sales personnel in new countries, or expanding our existing
presence, requires upfront and ongoing expenditures that we may not recover if the sales personnel fail to achieve full productivity. We cannot predict
whether, or to what extent, our sales will increase as we expand our sales force or how long it will take for sales personnel to become productive. If we are
unable to hire and train a sufficient number of effective sales personnel, or the sales personnel we hire are not successful in obtaining new customers or
increasing sales to our existing customer base, our business and results of operations will be adversely affected.
Because we recognize revenue from subscriptions to our platform over the term of the subscription, downturns or upturns in new business will not be
immediately reflected in our results of operations.
We generally recognize revenue from customers ratably over the terms of their subscription, which is generally one year. As a result, a substantial
portion of the revenue we report in each period is attributable to the recognition of deferred revenue relating to agreements that we entered into during
previous periods. Consequently, any increase or decline in new sales or renewals in any one period will not be immediately reflected in our revenue for that
period. Any such change, however, would affect our revenue in future periods. Accordingly, the effect of downturns or upturns in new sales and potential
changes in our rate of renewals may not be fully reflected in our results of operations until future periods. We may also be unable to timely reduce our cost
structure in line with a significant deterioration in sales or renewals that would adversely affect our results of operations and financial condition.
Our results of operations may fluctuate significantly, which could make our future results difficult to predict and could cause our results of operations
to fall below expectations.
Our results of operations may vary significantly from period to period, which could adversely affect our business, financial condition and results of
operations. Our results of operations have varied significantly from period to period, and we expect that
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our results of operations will continue to vary as a result of a number of factors, many of which are outside of our control and may be difficult to predict,
including:
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the impact of the COVID-19 pandemic on our operations, financial results, and liquidity and capital resources, including on customers, sales,
expenses, and employees;
our ability to attract new and retain existing customers;
the budgeting cycles, seasonal buying patterns, and purchasing practices of customers;
the timing and length of our sales cycles;
changes in customer or channel partner requirements or market needs;
changes in the growth rate of the cloud-based SaaS-delivered endpoint security solutions market;
the timing and success of new product and service introductions by us or our competitors or any other competitive developments, including
consolidation among our customers or competitors;
the level of awareness of cybersecurity threats, particularly advanced cyberattacks, and the market adoption of our Falcon platform;
our ability to successfully expand our business domestically and internationally;
decisions by organizations to purchase security solutions from larger, more established security vendors or from their primary IT equipment
vendors;
changes in our pricing policies or those of our competitors;
any disruption in our relationship with channel partners;
insolvency or credit difficulties confronting our customers, affecting their ability to purchase or pay for our solutions;
significant security breaches of, technical difficulties with or interruptions to, the use of our Falcon platform;
extraordinary expenses such as litigation or other dispute-related settlement payments or outcomes;
general economic conditions, both domestic and in our foreign markets;
future accounting pronouncements or changes in our accounting policies or practices;
negative media coverage or publicity;
political events;
the amount and timing of operating costs and capital expenditures related to the expansion of our business; and
increases or decreases in our expenses caused by fluctuations in foreign currency exchange rates.
In addition, we experience seasonal fluctuations in our financial results as we typically receive a higher percentage of our annual orders from new
customers, as well as renewal orders from existing customers, in the second half of the fiscal year as compared to the first half of the year due to the annual
budget approval process of many of our customers. In addition, we also experience seasonality in our operating margin, with a lower margin in the first half
of our fiscal year. Any of the above factors, individually or in the aggregate, may result in significant fluctuations in our financial and other results of
operations from period to period. As a result of this variability, our historical results of operations should not be relied upon as an indication of future
performance. Moreover, this variability and unpredictability could result in our failure to meet our operating plan or the expectations of investors or
analysts for any period. If we fail to meet such expectations for these or other reasons, our stock price could fall substantially, and we could face costly
lawsuits, including securities class action suits.
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Our sales cycles can be long and unpredictable, and our sales efforts require considerable time and expense.
Our revenue recognition is difficult to predict because of the length and unpredictability of the sales cycle for our Falcon platform, particularly with
respect to large organizations and government entities. Customers often view the subscription to our Falcon platform as a significant strategic decision and,
as a result, frequently require considerable time to evaluate, test and qualify our Falcon platform prior to entering into or expanding a relationship with us.
Large enterprises and government entities in particular often undertake a significant evaluation process that further lengthens our sales cycle.
Our direct sales team develops relationships with our customers, and works with our channel partners on account penetration, account coordination,
sales and overall market development. We spend substantial time and resources on our sales efforts without any assurance that our efforts will produce a
sale. Security solution purchases are frequently subject to budget constraints, multiple approvals and unanticipated administrative, processing and other
delays. As a result, it is difficult to predict whether and when a sale will be completed. The failure of our efforts to secure sales after investing resources in
a lengthy sales process could adversely affect our business and results of operations.
If we are not able to maintain and enhance our CrowdStrike and Falcon brand and our reputation as a provider of high-efficacy security solutions, our
business and results of operations may be adversely affected.
We believe that maintaining and enhancing our CrowdStrike and Falcon brand and our reputation as a provider of high-efficacy security solutions is
critical to our relationship with our existing customers, channel partners, and technology alliance partners and our ability to attract new customers and
partners. The successful promotion of our CrowdStrike and Falcon brand will depend on a number of factors, including our marketing efforts, our ability to
continue to develop additional cloud modules and features for our Falcon platform, our ability to successfully differentiate our Falcon platform from
competitive cloud-based or legacy security solutions and, ultimately, our ability to detect and stop breaches. Although we believe it is important for our
growth, our brand promotion activities may not be successful or yield increased revenue.
In addition, independent industry or financial analysts and research firms often test our solutions and provide reviews of our Falcon platform, as well
as the products of our competitors, and perception of our Falcon platform in the marketplace may be significantly influenced by these reviews. If these
reviews are negative, or less positive as compared to those of our competitors’ products, our brand may be adversely affected. Our solutions may fail to
detect or prevent threats in any particular test for a number of reasons that may or may not be related to the efficacy of our solutions in real world
environments. To the extent potential customers, industry analysts or testing firms believe that the occurrence of a failure to detect or prevent any particular
threat is a flaw or indicates that our solutions or services do not provide significant value, we may lose customers, and our reputation, financial condition
and business would be harmed. Additionally, the performance of our channel partners and technology alliance partners may affect our brand and reputation
if customers do not have a positive experience with these partners. In addition, we have in the past worked, and continue to work, with high profile private
and public customers as well as assist in analyzing and remediating high profile cyberattacks, which sometimes involve nation-state actors. Our work with
such customers has exposed us to publicity and media coverage. Changing political environments in the United States and abroad may amplify the media
and political scrutiny we face. Negative publicity about us, including about our management, the efficacy and reliability of our Falcon platform, our
products offerings, our professional services, and the customers we work with, even if inaccurate, could adversely affect our reputation and brand.
If we are unable to maintain successful relationships with our channel partners and technology alliance partners, or if our channel partners or
technology alliance partners fail to perform, our ability to market, sell and distribute our Falcon platform will be limited, and our business, financial
position and results of operations will be harmed.
In addition to our direct sales force, we rely on our channel partners to sell and support our Falcon platform. A vast majority of sales of our Falcon
platform flow through our channel partners, and we expect this to continue for the foreseeable future. Additionally, we have entered, and intend to continue
to enter, into technology alliance partnerships with third parties to support our future growth plans. The loss of a substantial number of our channel partners
or technology alliance partners, or the failure to recruit additional partners, could adversely affect our results of operations. Our ability to achieve revenue
growth in the future will depend in part on our success in maintaining successful relationships with our channel partners and in training our channel
partners to independently sell and deploy our Falcon platform. If we fail to effectively manage our existing sales channels, or if our channel partners are
unsuccessful in fulfilling the orders for our solutions, or if we are unable to enter into arrangements with, and retain a sufficient number of, high quality
channel partners in each of the regions in which we sell solutions and keep them motivated to sell our products, our ability to sell our products and results
of operations will be harmed.
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Our international operations and plans for future international expansion expose us to significant risks, and failure to manage those risks could
adversely impact our business.
We derived approximately 28%, 28%, and 26% of our total revenue from our international customers for fiscal 2022, fiscal 2021, fiscal 2020,
respectively. We are continuing to adapt to and develop strategies to address international markets and our growth strategy includes expansion into target
geographies, but there is no guarantee that such efforts will be successful. We expect that our international activities will continue to grow in the future, as
we continue to pursue opportunities in international markets. These international operations will require significant management attention and financial
resources and are subject to substantial risks, including:
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greater difficulty in negotiating contracts with standard terms, enforcing contracts and managing collections, and longer collection periods;
higher costs of doing business internationally, including costs incurred in establishing and maintaining office space and equipment for our
international operations;
• management communication and integration problems resulting from cultural and geographic dispersion;
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risks associated with trade restrictions and foreign legal requirements, including any importation, certification, and localization of our Falcon
platform that may be required in foreign countries;
greater risk of unexpected changes in regulatory practices, tariffs, and tax laws and treaties;
compliance with anti-bribery laws, including, without limitation, compliance with the U.S. Foreign Corrupt Practices Act of 1977, as amended, or
FCPA, the U.S. Travel Act and the UK Bribery Act 2010, or Bribery Act, violations of which could lead to significant fines, penalties, and
collateral consequences for our company;
heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact
financial results and result in restatements of, or irregularities in, financial statements;
the uncertainty of protection for intellectual property rights in some countries;
general economic and political conditions in these foreign markets;
foreign exchange controls or tax regulations that might prevent us from repatriating cash earned outside the United States;
political and economic instability in some countries;
double taxation of our international earnings and potentially adverse tax consequences due to changes in the tax laws of the United States or the
foreign jurisdictions in which we operate;
unexpected costs for the localization of our services, including translation into foreign languages and adaptation for local practices and regulatory
requirements;
requirements to comply with foreign privacy, data protection, and information security laws and regulations and the risks and costs of
noncompliance;
greater difficulty in identifying, attracting and retaining local qualified personnel, and the costs and expenses associated with such activities;
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greater difficulty identifying qualified channel partners and maintaining successful relationships with such partners;
differing employment practices and labor relations issues; and
difficulties in managing and staffing international offices and increased travel, infrastructure, and legal compliance costs associated with multiple
international locations.
Additionally, nearly all of our sales contracts are currently denominated in U.S. dollars. However, a strengthening of the U.S. dollar could increase the
cost of our solutions to our international customers, which could adversely affect our business and results of operations. In addition, an increasing portion
of our operating expenses is incurred outside the United States, is denominated in foreign currencies, such as the Australian Dollar, British Pound,
Canadian Dollar, Euro, and Indian Rupee, is subject to fluctuations due to changes in foreign currency exchange rates. If we become more exposed to
currency fluctuations and are not able to successfully hedge against the risks associated with currency fluctuations, our results of operations could be
adversely affected.
As we continue to develop and grow our business globally, our success will depend in large part on our ability to anticipate and effectively manage
these risks. The expansion of our existing international operations and entry into additional international markets will require significant management
attention and financial resources. Our failure to successfully manage our international operations and the associated risks could limit the future growth of
our business.
Our business depends, in part, on sales to government organizations, and significant changes in the contracting or fiscal policies of such government
organizations could have an adverse effect on our business and results of operations.
Our future growth depends, in part, on increasing sales to government organizations. Demand from government organizations is often unpredictable,
subject to budgetary uncertainty and typically involves long sales cycles. We have made significant investment to address the government sector, but we
cannot assure you that these investments will be successful, or that we will be able to maintain or grow our revenue from the government sector. U.S.
federal, state and local government sales as well as foreign government sales are subject to a number of challenges and risks that may adversely impact our
business.
Sales to such government entities include, but are not limited to, the following risks:
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selling to governmental agencies can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense
without any assurance that such efforts will generate a sale;
• we may be required to obtain personnel security clearances and facility clearances to perform on classified contracts for government agencies, and
there is no guarantee that we will be able to obtain or maintain such clearances;
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government certification, software supply chain, or source code transparency requirements applicable to us or our products are constantly evolving
and, in doing so, restrict our ability to sell to certain government customers until we have attained the new or revised certification or meet other
applicable requirements, which we are not guaranteed to do. For example, although we are currently certified under the U.S. Federal Risk and
Authorization Management Program, or FedRAMP, such certification is costly to maintain and if we lose our certification it would restrict our
ability to sell to government customers;
government product requirements are often technically complex and assessors may require us to make costly changes to our products to meet such
requirements without any assurance that such changes will generate a sale;
government demand and payment for our Falcon platform may be impacted by public sector budgetary cycles and funding authorizations, with
funding reductions or delays in the government appropriations or procurement processes adversely affecting public sector demand for our Falcon
platform, including as a result of abrupt events such as war, incidents of terrorism, natural disasters, and public health concerns or epidemics;
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government attitudes towards us as a company, our platform or the capabilities that we offer as a viable software solution may change, and reduce
interest in our products and services as acceptable solutions;
changes in the political environment, including before or after a change to the leadership within the government administration, can create
uncertainty or changes in policy or priorities and reduce available funding for our products and services;
third parties may compete intensely with us on pending, new or existing contracts with government products, which can also lead to appeals,
disputes, or litigation relating to government procurement, including but not limited to bid protests by unsuccessful bidders on potential or actual
awards of contracts to us or our partners by the government;
even if we are awarded a sale, the terms of such contracts may be unusually burdensome;
governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the
government refusing to continue buying our Falcon platform, which would adversely impact our revenue and results of operations, or institute
fines or civil or criminal liability if the audit were to uncover improper or illegal activities; and
governments may require certain products to be manufactured, hosted, or accessed solely in their country or in other relatively high-cost
manufacturing locations, and we may not manufacture all products in locations that meet these requirements, affecting our ability to sell these
products to governmental agencies.
The occurrence of any of the foregoing risks could cause governments and governmental agencies to delay or refrain from purchasing our solutions in
the future or otherwise have an adverse effect on our business and results of operations.
We may not timely and cost-effectively scale and adapt our existing technology to meet our customers’ performance and other requirements.
Our future growth is dependent upon our ability to continue to meet the needs of new customers and the expanding needs of our existing customers as
their use of our solutions grow. As our customers gain more experience with our solutions, the number of endpoints and events, the amount of data
transferred, processed and stored by us, the number of locations where our platform and services are being accessed, have in the past, and may in the future,
expand rapidly. In order to meet the performance and other requirements of our customers, we intend to continue to make significant investments to
increase capacity and to develop and implement new technologies in our service and cloud infrastructure operations. These technologies, which include
databases, applications and server optimizations, network and hosting strategies, and automation, are often advanced, complex, new and untested. We may
not be successful in developing or implementing these technologies. In addition, it takes a significant amount of time to plan, develop and test
improvements to our technologies and infrastructure, and we may not be able to accurately forecast demand or predict the results we will realize from such
improvements. To the extent that we do not effectively scale our operations to meet the needs of our growing customer base and to maintain performance as
our customers expand their use of our solutions, we may not be able to grow as quickly as we anticipate, our customers may reduce or cancel use of our
solutions and we may be unable to compete as effectively and our business and results of operations may be harmed.
Additionally, we have and will continue to make substantial investments to support growth at our data centers and improve the profitability of our
cloud platform. For example, because of the importance of AWS’ services to our business and AWS’ position in the cloud-based server industry, any
renegotiation or renewal of our agreement with AWS may be on terms that are significantly less favorable to us than our current agreement. If our cloud-
based server costs were to increase, our business, results of operations and financial condition may be adversely affected. Although we expect that we could
receive similar services from other third parties, if any of our arrangements with AWS are terminated, we could experience interruptions on our Falcon
platform and in our ability to make our solutions available to customers, as well as delays and additional expenses in arranging alternative cloud
infrastructure services. Ongoing improvements to cloud infrastructure may be more expensive than we anticipate, and may not yield the expected savings
in operating costs or the expected performance benefits. In addition, we may be required to re-invest any cost savings achieved from prior cloud
infrastructure improvements in future infrastructure
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projects to maintain the levels of service required by our customers. We may not be able to maintain or achieve cost savings from our investments, which
could harm our financial results.
Our ability to maintain customer satisfaction depends in part on the quality of our customer support.
Once our Falcon platform is deployed within our customers’ networks, our customers depend on our customer support services to resolve any issues
relating to the implementation and maintenance of our Falcon platform. If we do not provide effective ongoing support, customer renewals and our ability
to sell additional modules as part of our Falcon platform to existing customers could be adversely affected and our reputation with potential customers
could be damaged. Many larger organizations have more complex networks and require higher levels of support than smaller customers and we offer
premium services for these customers. Failure to maintain high-quality customer support could have a material adverse effect on our business, results of
operations, and financial condition.
We may need to raise additional capital to expand our operations and invest in new solutions, which capital may not be available on terms acceptable to
us, or at all, and which could reduce our ability to compete and could harm our business.
We expect that our existing cash and cash equivalents will be sufficient to meet our anticipated cash needs for working capital and capital expenditures
for at least the next 12 months. Retaining or expanding our current levels of personnel and products offerings may require additional funds to respond to
business challenges, including the need to develop new products and enhancements to our Falcon platform, improve our operating infrastructure, or acquire
complementary businesses and technologies. Our failure to raise additional capital or generate the significant capital necessary to expand our operations
and invest in new products could reduce our ability to compete and could harm our business. Accordingly, we may need to engage in additional equity or
debt financings to secure additional funds. If we raise additional equity financing, our stockholders may experience significant dilution of their ownership
interests and the market price of our Class A common stock could decline. If we engage in additional debt financing, the holders of such debt would have
priority over the holders of our Class A common stock, and we may be required to accept terms that further restrict our operations or our ability to incur
additional indebtedness or to take other actions that would otherwise be in the interests of the debt holders. Any of the above could harm our business,
results of operations, and financial condition.
If we cannot maintain our company culture as we grow, we could lose the innovation, teamwork, passion, and focus on execution that we believe
contribute to our success and our business may be harmed.
We believe that our corporate culture has been a contributor to our success, which we believe fosters innovation, teamwork, passion and focus on
building and marketing our Falcon platform. As we grow, we may find it difficult to maintain our corporate culture. Any failure to preserve our culture
could harm our future success, including our ability to retain and recruit personnel, innovate and operate effectively and execute on our business strategy.
Additionally, our productivity and the quality of our solutions may be adversely affected if we do not integrate and train our new employees quickly and
effectively. If we experience any of these effects in connection with future growth, it could impair our ability to attract new customers, retain existing
customers and expand their use of our Falcon platform, all of which would adversely affect our business, financial condition and results of operations.
We rely on a limited number of suppliers for certain components of the equipment we use to operate our cloud platform. Supply chain disruptions could
delay our ability to expand or increase the capacity of our global data center network, replace defective equipment in our existing data centers and
impact our operating costs.
We rely on a limited number of suppliers for several components of the equipment we use to operate our cloud platform and provide services to our
customers. We generally purchase these components on a purchase order basis, and do not have long-term contracts guaranteeing supply. Our reliance on
these suppliers exposes us to risks, including reduced control over production costs and constraints based on the then current availability, terms and pricing
of these components. If we experience disruption or delay from our suppliers, we may not be able to obtain supplies or components from alternative
suppliers on a timely basis or on terms that are favorable to us, if at all. The technology industry has recently experienced widespread component shortages
and delivery delays, including as a result of the COVID-19 pandemic and natural disasters. While we have taken steps to mitigate our supply chain risk,
supply chain disruptions and delays could nevertheless adversely impact our operations by, among other things, causing us to delay opening new data
centers, delay increasing capacity or replacing defective equipment at existing data centers, and experience increased operating costs.
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Risks Related to Intellectual Property, Legal, and Regulatory Matters
The success of our business depends in part on our ability to protect and enforce our intellectual property rights.
We believe our intellectual property is an essential asset of our business, and our success and ability to compete depend in part upon protection of our
intellectual property rights. We rely on a combination of patent, copyright, trademark and trade secret laws, as well as confidentiality procedures and
contractual provisions, to establish and protect our intellectual property rights in the United States and abroad, all of which provide only limited protection.
The efforts we have taken to protect our intellectual property may not be sufficient or effective, and our trademarks, copyrights and patents may be held
invalid or unenforceable. Moreover, we cannot assure you that any patents will be issued with respect to our currently pending patent applications in a
manner that gives us adequate defensive protection or competitive advantages, or that any patents issued to us will not be challenged, invalidated or
circumvented. We have filed for patents in the United States and in certain non-U.S. jurisdictions, but such protections may not be available in all countries
in which we operate or in which we seek to enforce our intellectual property rights, or may be difficult to enforce in practice. For example, many foreign
countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the
enforceability of patents against certain third parties, including government agencies or government contractors. In these countries, patents may provide
limited or no benefit. Moreover, we may need to expend additional resources to defend our intellectual property rights in these countries, and our inability
to do so could impair our business or adversely affect our international expansion. Our currently issued patents and any patents that may be issued in the
future with respect to pending or future patent applications may not provide sufficiently broad protection or they may not prove to be enforceable in actions
against alleged infringers.
We may not be effective in policing unauthorized use of our intellectual property, and even if we do detect violations, litigation or technical changes to
our products may be necessary to enforce our intellectual property rights. Protecting against the unauthorized use of our intellectual property rights,
technology and other proprietary rights is expensive and difficult, particularly outside of the United States. Any enforcement efforts we undertake,
including litigation, could be time-consuming and expensive and could divert management’s attention, which could harm our business and results of
operations. Further, attempts to enforce our rights against third parties could also provoke these third parties to assert their own intellectual property or
other rights against us, or result in a holding that invalidates or narrows the scope of our rights, in whole or in part. The inability to adequately protect and
enforce our intellectual property and other proprietary rights could seriously harm our business, results of operations and financial condition. Even if we are
able to secure our intellectual property rights, we cannot assure you that such rights will provide us with competitive advantages or distinguish our services
from those of our competitors or that our competitors will not independently develop similar technology, duplicate any of our technology, or design around
our patents.
Claims by others that we infringe their proprietary technology or other intellectual property rights could result in significant costs and substantially
harm our business, financial condition, results of operations, and prospects.
Claims by others that we infringe their proprietary technology or other intellectual property rights could harm our business. A number of companies in
our industry hold a large number of patents and also protect their copyright, trade secret and other intellectual property rights, and companies in the
networking and security industry frequently enter into litigation based on allegations of patent infringement or other violations of intellectual property
rights. As we face increasing competition and grow, the possibility of intellectual property rights claims against us also grows. In addition, to the extent we
hire personnel from competitors, we may be subject to allegations that such personnel have divulged proprietary or other confidential information to us.
From time to time, third parties have in the past and may in the future assert claims of infringement of intellectual property rights against us. For example,
we are currently involved in proceedings before the Trademark Trial and Appeal Board at the U.S. Patent and Trademark Office regarding our U.S.
trademark registrations for CrowdStrike Falcon and our U.S. application to register our Falcon OverWatch trademark. Fair Isaac Corporation, or FICO,
petitioned to cancel our trademark registrations and opposed our application. If the appeal board were to find against us, it would cancel our trademark
registrations for CrowdStrike Falcon and reject our application to register Falcon OverWatch. If FICO were to file an infringement action in court and if we
do not prevail in that action, we could ultimately be required to change the names of our solutions, which would force us to incur significant marketing
expense in establishing an alternative brand to our existing Falcon brand. We cannot assure you that we will be successful in these rebranding efforts.
Third parties may in the future also assert claims against our customers or channel partners, whom our standard license and other agreements obligate
us to indemnify against claims that our solutions infringe the intellectual property rights of third
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parties. As the number of products and competitors in the security and IT operations market increases and overlaps occur, claims of infringement,
misappropriation, and other violations of intellectual property rights may increase. While we intend to increase the size of our patent portfolio, many of our
competitors and others may now and in the future have significantly larger and more mature patent portfolios than we have. In addition, future litigation
may involve non-practicing entities, companies or other patent owners who have no relevant product offerings or revenue and against whom our own
patents may therefore provide little or no deterrence or protection. Any claim of intellectual property infringement by a third party, even a claim without
merit, could cause us to incur substantial costs defending against such claim, could distract our management from our business and could require us to
cease use of such intellectual property.
Additionally, our insurance may not cover intellectual property rights infringement claims that may be made. In the event that we fail to successfully
defend ourselves against an infringement claim, a successful claimant could secure a judgment or otherwise require payment of legal fees, settlement
payments, ongoing royalties or other costs or damages; or we may agree to a settlement that prevents us from offering certain services or features; or we
may be required to obtain a license, which may not be available on reasonable terms, or at all, to use the relevant technology. If we are prevented from
using certain technology or intellectual property, we may be required to develop alternative, non-infringing technology, which could require significant
time, during which we could be unable to continue to offer our affected services or features, effort and expense and may ultimately not be successful.
Although third parties may offer a license to their technology or other intellectual property, the terms of any offered license may not be acceptable, and
the failure to obtain a license or the costs associated with any license could cause our business, financial condition and results of operations to be adversely
affected. In addition, some licenses may be nonexclusive, and therefore our competitors may have access to the same technology licensed to us. If a third
party does not offer us a license to its technology or other intellectual property on reasonable terms, or at all, we could be enjoined from continued use of
such intellectual property. As a result, we may be required to develop alternative, non-infringing technology, which could require significant time, during
which we could be unable to continue to offer our affected products, subscriptions or services, effort, and expense and may ultimately not be successful.
Furthermore, a successful claimant could secure a judgment or we may agree to a settlement that prevents us from distributing certain products, providing
certain subscriptions or performing certain services or that requires us to pay substantial damages, royalties or other fees. Any of these events could harm
our business, financial condition and results of operations.
We license technology from third parties, and our inability to maintain those licenses could harm our business.
We currently incorporate, and will in the future incorporate, technology that we license from third parties, including software, into our solutions. We
cannot be certain that our licensors do not or will not infringe on the intellectual property rights of third parties or that our licensors have or will have
sufficient rights to the licensed intellectual property in all jurisdictions in which we may sell our Falcon platform. Some of our agreements with our
licensors may be terminated by them for convenience, or otherwise provide for a limited term. If we are unable to continue to license technology because of
intellectual property infringement claims brought by third parties against our licensors or against us, or if we are unable to continue our license agreements
or enter into new licenses on commercially reasonable terms, our ability to develop and sell solutions and services containing or dependent on that
technology would be limited, and our business could be harmed. Additionally, if we are unable to license technology from third parties, we may be forced
to acquire or develop alternative technology, which we may be unable to do in a commercially feasible manner or at all, and may require us to use
alternative technology of lower quality or performance standards. This could limit or delay our ability to offer new or competitive solutions and increase
our costs. As a result, our margins, market share, and results of operations could be significantly harmed.
We are required to comply with stringent, complex and evolving laws, rules, regulations and standards in many jurisdictions, as well as contractual
obligations, relating to data privacy and security. Any actual or perceived failure to comply with these requirements could have a material adverse
effect on our business.
We are required to comply with stringent, complex and evolving laws, rules, regulations and standards in many jurisdictions, as well as contractual
obligations, relating to data privacy and security. Ensuring that our collection, use, transfer, storage and other processing of personal information complies
with such requirements can increase operating costs, impact the development of new products or services, and reduce operational efficiency.
In the United States, there are numerous federal, state and local data privacy and security laws, rules, and regulations governing the collection, sharing,
use, retention, disclosure, security, transfer, storage and other processing of personal
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information, including federal and state data privacy laws, data breach notification laws, and data disposal laws. For example, at the federal level, we are
subject to, among other laws and regulations, the rules and regulations promulgated under the authority of the Federal Trade Commission (which has the
authority to regulate and enforce against unfair or deceptive acts or practices in or affecting commerce, including acts and practices with respect to data
privacy and security), as well as the Electronic Communication Privacy Act, the Computer Fraud and Abuse Act, the Health Insurance Portability and
Accountability Act, and the Gramm Leach Bliley Act. The United States Congress also has considered, and may in the future consider, various proposals
from time to time for comprehensive federal data privacy legislation to which we may become subject if passed. If we are found to have violated applicable
laws or regulations, we may also be subject to penalties, fines, damages, injunctions or other outcomes that may adversely affect our operations and
financial results.
At the state level, we are subject to laws and regulations such as the California Consumer Privacy Act (“CCPA”), which became effective on January
1, 2020. The CCPA broadly defines personal information and gives California residents expanded privacy rights and protections, such as affording them the
right to access and request deletion of their information and to opt out of certain sharing and sales of personal information. The CCPA also prohibits
covered businesses from discriminating against California residents for exercising any of their CCPA rights. The CCPA provides for severe civil penalties
and statutory damages for violations and a private right of action for certain data breaches that result in the loss of unencrypted personal information. This
private right of action is expected to increase the likelihood of, and risks associated with, data breach litigation. Additionally, in November 2020, California
voters passed the California Privacy Rights Act of 2020 (“CPRA”). Effective in most material respects starting on January 1, 2023, the CPRA imposes
additional obligations on companies covered by the legislation and will significantly modify the CCPA, including by expanding the CCPA with additional
data privacy compliance requirements that may impact our business. The CPRA also establishes a regulatory agency dedicated to enforcing the CCPA and
the CPRA. Numerous other states, including Virginia and Colorado, have also enacted or are in the process of enacting or considering comprehensive state-
level data privacy and security laws, rules and regulations. Moreover, laws in all 50 U.S. states require businesses to provide notice under certain
circumstances to consumers whose personal information has been disclosed as a result of a data breach. These state statutes, and other similar state or
federal laws that may be enacted in the future, may require us to modify our data processing practices and policies, incur substantial compliance-related
costs and expenses, and otherwise suffer adverse impacts on our business.
Internationally, virtually every jurisdiction in which we operate has established its own data privacy and security legal framework with which we must
comply. For example, we are required to comply with the European Union (“EU”) General Data Protection Regulation (“GDPR”), which became effective
on May 25, 2018 and imposes stringent obligations regarding the collection, control, use, sharing, disclosure and other processing of personal data.
Additionally, following the United Kingdom’s withdrawal from the EU, we also are subject to the U.K. General Data Protection Regulation (“U.K.
GDPR”), a version of the GDPR as implemented into the laws of the United Kingdom (“U.K.”). Failure to comply with the GDPR or the U.K. GDPR can
result in significant fines and other liability, including, under the GDPR, fines of up to EUR 20 million (or GBP 17.5 million under the U.K. GDPR) or four
percent (4%) of global revenue, whichever is greater. The cost of compliance, and the potential for fines and penalties for non-compliance, with GDPR and
U.K. GDPR may have a significant adverse effect on our business and operations.
Recent legal developments in the European Economic Area (“EEA”), including recent rulings from the Court of Justice of the European Union and
from various EU member state data protection authorities, have created complexity and uncertainty regarding transfers of personal data from the EEA to
the United States and other so-called third countries outside the EEA. Similar complexities and uncertainties also apply to transfers from the U.K. to third
countries. While we have taken steps to mitigate the impact on us, such as implementing the European Commission’s standard contractual clauses
(“SCCs”), the efficacy and longevity of these mechanisms remains uncertain. Moreover, on June 4, 2021, the European Commission adopted new SCCs,
which impose on companies additional obligations relating to personal data transfers out of the EEA, including the obligation to update internal privacy
practices, conduct transfer impact assessments and, as required, to implement additional security measures. The new SCCs may increase the legal risks and
liabilities under EU laws associated with cross-border data transfers, and result in material increased compliance and operational costs. If we are otherwise
unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our
services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results. While we have
implemented new controls and procedures to comply with the requirements of the GDPR, U.K. GDPR and the data privacy and security laws of other
jurisdictions in which we operate, such procedures and controls may not be effective in ensuring compliance or preventing unauthorized transfers of
personal data.
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Moreover, while we strive to publish and prominently display privacy policies that are accurate, comprehensive, and compliant with applicable laws,
rules regulations and industry standards, we cannot ensure that our privacy policies and other statements regarding our practices will be sufficient to protect
us from claims, proceedings, liability or adverse publicity relating to data privacy and security. Although we endeavor to comply with our privacy policies,
we may at times fail to do so or be alleged to have failed to do so. If our public statements about our use, collection, disclosure and other processing of
personal information, whether made through our privacy policies, information provided on our website, press statements or otherwise, are alleged to be
deceptive, unfair or misrepresentative of our actual practices, we may be subject to potential government or legal investigation or action, including by the
Federal Trade Commission or applicable state attorneys general.
Our compliance efforts are further complicated by the fact that data privacy and security laws, rules, regulations and standards around the world are
rapidly evolving, may be subject to uncertain or inconsistent interpretations and enforcement, and may conflict among various jurisdictions. Any failure or
perceived failure by us to comply with our privacy policies, or applicable data privacy and security laws, rules, regulations, standards or contractual
obligations, or any compromise of security that results in unauthorized access to, or unauthorized loss, destruction, use, modification, acquisition,
disclosure, release or transfer of personal information, may result in requirements to modify or cease certain operations or practices, the expenditure of
substantial costs, time and other resources, proceedings or actions against us, legal liability, governmental investigations, enforcement actions, claims,
fines, judgments, awards, penalties, sanctions and costly litigation (including class actions). Any of the foregoing could harm our reputation, distract our
management and technical personnel, increase our costs of doing business, adversely affect the demand for our products and services, and ultimately result
in the imposition of liability, any of which could have a material adverse effect on our business, financial condition and results of operations.
Failure to comply with laws and regulations applicable to our business could subject us to fines and penalties and could also cause us to lose customers
or negatively impact our ability to contract with customers, including those in the public sector.
Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring
and enforcing data protection, data privacy and data security laws and regulations, employment and labor laws, workplace safety, product safety,
environmental laws, consumer protection laws, anti-bribery laws, import and export controls, federal securities laws and tax laws and regulations. In certain
jurisdictions, these regulatory requirements may be more stringent than in the United States. Noncompliance by us, our employees, representatives,
contractors, channel partners, agents, intermediaries, or other third parties with applicable regulations or requirements could subject us to:
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disgorgement of profits, fines and damages;
civil and criminal penalties or injunctions;
claims for damages by our customers or channel partners;
termination of contracts;
loss of intellectual property rights;
loss of our license to do business in the jurisdictions in which we operate; and
temporary or permanent debarment from sales to government organizations.
If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations and
financial condition could be adversely affected. In addition, responding to any action will likely result in a significant diversion of management’s attention
and resources and an increase in professional fees. Enforcement actions and sanctions could harm our business, results of operations and financial
condition.
We endeavor to properly classify employees as exempt versus non-exempt under applicable law. Although there are no pending or threatened material
claims or investigations against us asserting that some employees are improperly classified as exempt, the possibility exists that some of our current or
former employees could have been incorrectly classified as exempt employees.
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These laws and regulations impose added costs on our business, and failure by us, our employees, representatives, contractors, channel partners,
agents, intermediaries, or other third parties to comply with these or other applicable regulations and requirements could lead to claims for damages,
penalties, termination of contracts, loss of exclusive rights in our intellectual property and temporary suspension or permanent debarment from government
contracting. Any such damages, penalties, disruptions or limitations in our ability to do business with customers, including those in the public sector, and
could result in reduced sales of our products, substantial product inventory write-offs, reputational damage, penalties, and other sanctions, any of which
could harm our business, reputation, and results of operations.
We are subject to laws and regulations, including governmental export and import controls, sanctions, and anti-corruption laws, that could impair our
ability to compete in our markets and subject us to liability if we are not in full compliance with applicable laws.
We are subject to laws and regulations, including governmental export controls, that could subject us to liability or impair our ability to compete in our
markets. Our products are subject to U.S. export controls, including the U.S. Department of Commerce’s Export Administration Regulations, and we and
our employees, representatives, contractors, agents, intermediaries, and other third parties are also subject to various economic and trade sanctions
regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control. We incorporate standard encryption algorithms into our
products, which, along with the underlying technology, may be exported outside of the U.S. only with the required export authorizations, including by
license, license exception or other appropriate government authorizations, which may require the filing of an encryption registration and classification
request. Furthermore, U.S. export control laws and economic sanctions prohibit the shipment of certain cloud-based solutions to countries, governments,
and persons targeted by U.S. sanctions. We also collect information about cyber threats from open sources, intermediaries, and third parties that we make
available to our customers in our threat industry publications. While we have implemented certain procedures to facilitate compliance with applicable laws
and regulations in connection with the collection of this information, we cannot assure you that these procedures have been effective or that we, or third
parties, many of whom we do not control, have complied with all laws or regulations in this regard. Failure by our employees, representatives, contractors,
channel partners, agents, intermediaries, or other third parties to comply with applicable laws and regulations in the collection of this information also
could have negative consequences to us, including reputational harm, government investigations and penalties.
Although we take precautions to prevent our information collection practices and services from being provided in violation of such laws, our
information collection practices and services may have been in the past, and could in the future be, provided in violation of such laws. If we or our
employees, representatives, contractors, channel partners, agents, intermediaries, or other third parties fail to comply with these laws and regulations, we
could be subject to civil or criminal penalties, including the possible loss of export privileges and fines. We may also be adversely affected through
reputational harm, loss of access to certain markets, or otherwise. Obtaining the necessary authorizations, including any required license, for a particular
transaction may be time-consuming, is not guaranteed and may result in the delay or loss of sales opportunities.
Various countries regulate the import of certain encryption technology, including through import permit and license requirements, and have enacted
laws that could limit our ability to distribute our products or could limit our customers’ ability to implement our products in those countries. Changes in our
products or changes in export and import regulations may create delays in the introduction of our products into international markets, prevent our
customers with international operations from deploying our products globally or, in some cases, prevent the export or import of our products to certain
countries, governments or persons altogether. Any change in export or import regulations, economic sanctions or related legislation, shift in the
enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies targeted by such regulations, could result in
decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations.
Any decreased use of our products or limitation on our ability to export or sell our products would likely adversely affect our business, results of
operations, and financial condition.
We are also subject to the FCPA, the Bribery Act, and other anti-corruption, sanctions, anti-bribery, anti-money laundering and similar laws in the
United States and other countries in which we conduct activities. Anti-corruption and anti-bribery laws, which have been enforced aggressively and are
interpreted broadly, prohibit companies and their employees, agents, intermediaries, and other third parties from promising, authorizing, making or offering
improper payments or other benefits to government officials and others in the private sector. We leverage third parties, including intermediaries, agents, and
channel partners, to conduct our business in the U.S. and abroad, to sell subscriptions to our Falcon platform and to collect information about cyber threats.
We and these third-parties may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities
and we may be held liable for the corrupt or other illegal activities of
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these third-party business partners and intermediaries, our employees, representatives, contractors, channel partners, agents, intermediaries, and other third
parties, even if we do not explicitly authorize such activities. While we have policies and procedures to address compliance with the FCPA, the Bribery Act
and other anti-corruption, sanctions, anti-bribery, anti-money laundering and similar laws, we cannot assure you that they will be effective, or that all of our
employees, representatives, contractors, channel partners, agents, intermediaries, or other third parties have taken, or will not take actions, in violation of
our policies and applicable law, for which we may be ultimately held responsible. As we increase our international sales and business, our risks under these
laws may increase. Noncompliance with these laws could subject us to investigations, severe criminal or civil sanctions, settlements, prosecution, loss of
export privileges, suspension or debarment from U.S. government contracts, other enforcement actions, disgorgement of profits, significant fines, damages,
other civil and criminal penalties or injunctions, whistleblower complaints, adverse media coverage and other consequences. Any investigations, actions or
sanctions could harm our reputation, business, results of operations and financial condition.
Some of our technology incorporates “open source” software, which could negatively affect our ability to sell our Falcon platform and subject us to
possible litigation.
Our products and subscriptions contain third-party open source software components, and failure to comply with the terms of the underlying open
source software licenses could restrict our ability to sell our products and subscriptions. The use and distribution of open source software may entail greater
risks than the use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections
regarding infringement claims or the quality of the code and they can change the license terms on which they offer the open source software. Many of the
risks associated with use of open source software cannot be eliminated and could negatively affect our business. In addition, the wide availability of source
code used in our solutions could expose us to security vulnerabilities.
Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the
type of open source software we use. If we combine our proprietary software with open source software in a certain manner, we could, under certain open
source licenses, be required to release the source code of our proprietary software to the public, including authorizing further modification and
redistribution, or otherwise be limited in the licensing of our services, each of which could provide an advantage to our competitors or other entrants to the
market, create security vulnerabilities in our solutions, require us to re-engineer all or a portion of our Falcon platform, and could reduce or eliminate the
value of our services. This would allow our competitors to create similar products with lower development effort and time and ultimately could result in a
loss of sales for us.
The terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that these licenses could be construed in ways that
could impose unanticipated conditions or restrictions on our ability to commercialize products and subscriptions incorporating such software. Moreover, we
cannot assure you that our processes for controlling our use of open source software in our products and subscriptions will be effective. From time to time,
we may face claims from third parties asserting ownership of, or demanding release of, the open source software or derivative works that we developed
using such software (which could include our proprietary source code), or otherwise seeking to enforce the terms of the applicable open source license.
These claims could result in litigation. Litigation could be costly for us to defend, have a negative effect on our results of operations and financial condition
or require us to devote additional research and development resources to change our solutions. Responding to any infringement or noncompliance claim by
an open source vendor, regardless of its validity, discovering certain open source software code in our Falcon platform, or a finding that we have breached
the terms of an open source software license, could harm our business, results of operations and financial condition, by, among other things:
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resulting in time-consuming and costly litigation;
diverting management’s time and attention from developing our business;
requiring us to pay monetary damages or enter into royalty and licensing agreements that we would not normally find acceptable;
causing delays in the deployment of our Falcon platform or service offerings to our customers;
requiring us to stop offering certain services or features of our Falcon platform;
requiring us to redesign certain components of our Falcon platform using alternative non-infringing or non-open source technology, which
could require significant effort and expense;
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requiring us to disclose our software source code and the detailed program commands for our software; and
requiring us to satisfy indemnification obligations to our customers.
We provide service level commitments under some of our customer contracts. If we fail to meet these contractual commitments, we could be obligated to
provide credits for future service and our business could suffer.
Certain of our customer agreements contain service level commitments, which contain specifications regarding the availability and performance of our
Falcon platform. Any failure of or disruption to our infrastructure could impact the performance of our Falcon platform and the availability of services to
customers. If we are unable to meet our stated service level commitments or if we suffer extended periods of poor performance or unavailability of our
Falcon platform, we may be contractually obligated to provide affected customers with service credits for future subscriptions, and, in certain cases,
refunds. To date, there has not been a material failure to meet our service level commitments, and we do not currently have any material liabilities accrued
on our balance sheets for such commitments. Our revenue, other results of operations and financial condition could be harmed if we suffer performance
issues or downtime that exceeds the service level commitments under our agreements with our customers.
We may become involved in litigation that may adversely affect us.
We are regularly subject to claims, suits, and government investigations and other proceedings including patent, product liability, class action,
whistleblower, personal injury, property damage, labor and employment (including allegations of wage and hour violations), commercial disputes,
compliance with laws and regulatory requirements and other matters, and we may become subject to additional types of claims, suits, investigations and
proceedings as our business develops. Such claims, suits, and government investigations and proceedings are inherently uncertain and their results cannot
be predicted with certainty. Regardless of the outcome, any of these types of legal proceedings can have an adverse impact on us because of legal costs and
diversion of management attention and resources, and could cause us to incur significant expenses or liability, adversely affect our brand recognition,
and/or require us to change our business practices. The expense of litigation and the timing of this expense from period to period are difficult to estimate,
subject to change and could adversely affect our results of operations. It is possible that a resolution of one or more such proceedings could result in
substantial damages, settlement costs, fines and penalties that could adversely affect our business, consolidated financial position, results of operations, or
cash flows in a particular period. These proceedings could also result in reputational harm, sanctions, consent decrees, or orders requiring a change in our
business practices. Because of the potential risks, expenses and uncertainties of litigation, we may, from time to time, settle disputes, even where we have
meritorious claims or defenses, by agreeing to settlement agreements. Because litigation is inherently unpredictable, we cannot assure you that the results
of any of these actions will not have a material adverse effect on our business, financial condition, results of operations, and prospects. Any of these
consequences could adversely affect our business and results of operations.
Our business is subject to the risks of warranty claims, product returns, product liability, and product defects from real or perceived defects in our
solutions or their misuse by our customers or third parties and indemnity provisions in various agreements potentially expose us to substantial liability
for intellectual property infringement and other losses.
We may be subject to liability claims for damages related to errors or defects in our solutions. A material liability claim or other occurrence that harms
our reputation or decreases market acceptance of our products may harm our business and results of operations. Although we generally have limitation of
liability provisions in our terms and conditions of sale, these provisions do not cover our indemnification obligations as described in the section titled
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Indemnification” and they may not fully or effectively protect
us from claims as a result of federal, state, or local laws or ordinances, or unfavorable judicial decisions in the United States or other countries. The sale
and support of our products also entails the risk of product liability claims.
Additionally, our agreements with customers and other third parties typically include indemnification or other provisions under which we agree to
indemnify or otherwise be liable to them for losses suffered or incurred as a result of claims regarding intellectual property infringement, breach of
agreement, including confidentiality, privacy and security obligations, violation of applicable laws, damages caused by failures of our solutions or to
property or persons, or other liabilities relating to or arising from our products and services, or other acts or omissions. These contractual provisions often
survive termination or expiration of the applicable agreement. We have not to date received any indemnification claims from third parties. However, as we
continue to grow, the possibility of these claims against us will increase.
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If our customers or other third parties we do business with make intellectual property rights or other indemnification claims against us, we will incur
significant legal expenses and may have to pay damages, license fees, and/or stop using technology found to be in violation of the third party’s rights. We
may also have to seek a license for the technology. Such license may not be available on reasonable terms, if at all, and may significantly increase our
operating expenses or may require us to restrict our business activities and limit our ability to deliver certain solutions or features. We may also be required
to develop alternative non-infringing technology, which could require significant effort and expense and/or cause us to alter our products and services,
which could harm our business. Large indemnity obligations, whether for intellectual property or other claims, could harm our business, results of
operations, and financial condition.
Additionally, our Falcon platform may be used by our customers and other third parties who obtain access to our solutions for purposes other than for
which our platform was intended. For example, our Falcon platform might be misused by a customer to monitor its employee’s activities in a manner that
violates the employee’s privacy rights under applicable law.
During the course of performing certain solution-related services and our professional services, our teams may have significant access to our
customers’ networks. We cannot be sure that an employee may not take advantage of such access which may make our customers vulnerable to malicious
activity by such employee. Any such misuse of our Falcon platform could result in negative press coverage and negatively affect our reputation, which
could result in harm to our business, reputation, and results of operations.
We maintain insurance to protect against certain claims associated with the use of our products, but our insurance coverage may not adequately cover
any claim asserted against us. In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation, divert
management’s time and other resources, and harm our business and reputation. We offer our Falcon Complete customers a limited warranty, subject to
certain conditions. While we maintain insurance relating to our warranty, we cannot be certain that our insurance coverage will be adequate to cover such
claims, that such insurance will continue to be available to us on commercially reasonable terms, or at all, or that any insurer will not deny coverage as to
any claim. Any failure or refusal of our insurance providers to provide the expected insurance benefits to us after we have paid the warranty claims would
cause us to incur significant expense or cause us to cease offering this warranty which could damage our reputation, cause us to lose customers, expose us
to liability claims by our customers, negatively impact our sales and marketing efforts, and have an adverse effect on our business, financial condition and
results of operations.
Risks Related to Ownership of Our Class A Common Stock
The market price of our Class A common stock may be volatile regardless of our operating performance, and you could lose all or part of your
investment.
We cannot predict the prices at which our Class A common stock will trade. The market price of our Class A common stock depends on a number of
factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating
performance. These fluctuations could cause you to lose all or part of your investment in our Class A common stock. Factors that could cause fluctuations
in the market price of our Class A common stock include the following:
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actual or anticipated changes or fluctuations in our results of operations;
the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
announcements by us or our competitors of new products or new or terminated significant contracts, commercial relationships or capital
commitments;
industry or financial analyst or investor reaction to our press releases, other public announcements and filings with the SEC;
rumors and market speculation involving us or other companies in our industry;
price and volume fluctuations in the overall stock market from time to time;
changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;
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failure of industry or financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our company, or
our failure to meet these estimates or the expectations of investors;
actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;
litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;
developments or disputes concerning our intellectual property rights or our solutions, or third-party proprietary rights;
announced or completed acquisitions of businesses or technologies by us or our competitors;
new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
any major changes in our management or our board of directors, particularly with respect to Mr. Kurtz;
effects of public health crises, pandemics and epidemics, such as COVID-19;
general economic conditions and slow or negative growth of our markets; and
other events or factors, including those resulting from war, incidents of terrorism or responses to these events.
In addition, the stock market in general, and the market for technology companies in particular, has experienced extreme price and volume fluctuations
that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may seriously affect
the market price of our Class A common stock, regardless of our actual operating performance. In addition, in the past, following periods of volatility in the
overall market and the market prices of a particular company’s securities, securities class action litigation has often been instituted against that company.
Securities litigation, if instituted against us, could result in substantial costs and divert our management’s attention and resources from our business. This
could have an adverse effect on our business, results of operations and financial condition.
Sales of substantial amounts of our Class A common stock in the public markets, or the perception that they might occur, could reduce the price that
our Class A common stock might otherwise attain and may dilute your voting power and your ownership interest in us.
Sales of a substantial number of shares of our Class A common stock in the public market, including shares of Class A stock that have been converted
from shares of Class B common stock, and particularly sales by our directors, executive officers and significant stockholders, or the perception that these
sales could occur, could adversely affect the market price of our Class A common stock. As of February 28, 2022, we had 210,058,133 shares of Class A
common stock outstanding and 20,709,727 shares of Class B common stock outstanding.
In addition, certain holders of our Class B common stock are entitled to rights with respect to registration of these shares under the Securities Act
pursuant to our amended and restated registration rights agreement. If these holders of our Class B common stock, by exercising their registration rights,
sell a large number of shares, they could adversely affect the market price for our Class A common stock.
We may also issue our shares of Class A common stock or securities convertible into shares of our Class A common stock from time to time in
connection with a financing, acquisition, investments or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and
cause the market price of our Class A common stock to decline.
If industry or financial analysts do not publish research or reports about our business, or if they issue inaccurate or unfavorable research regarding
our Class A common stock, our stock price and trading volume could decline.
The trading market for our Class A common stock will be influenced by the research and reports that industry or financial analysts publish about us or
our business. We do not control these analysts or the content and opinions included in their reports. If any of the analysts who cover us issues an inaccurate
or unfavorable opinion regarding our stock price, our stock price would likely decline. In addition, the stock prices of many companies in the technology
industry have declined significantly after those
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companies have failed to meet, or significantly exceed, the financial guidance publicly announced by the companies or the expectations of analysts. If our
financial results fail to meet, or significantly exceed, our announced guidance or the expectations of analysts or public investors, analysts could downgrade
our Class A common stock or publish unfavorable research about us. If one or more of these analysts cease coverage of our company or fail to publish
reports on us regularly, our visibility in the financial markets could decrease, which in turn could cause our stock price or trading volume to decline.
The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock (or
options or other securities convertible into or exercisable for our capital stock) prior to the completion of our initial public offering, including our
executive officers, employees, directors, principal stockholders, and their affiliates, which will limit your ability to influence the outcome of matters
submitted to our stockholders for approval.
Our Class B common stock has 10 votes per share, and our Class A common stock has one vote per share. The dual class structure of our common
stock has the effect of concentrating voting control with those stockholders who held our capital stock (or options or other securities convertible into or
exercisable for our capital stock) prior to our initial public offering, including our executive officers, employees, directors, principal stockholders, and their
affiliates, which will limit your ability to influence the outcome of matters submitted to our stockholders for approval, including the election of our
directors and the approval of any change in control transaction. Future transfers by holders of Class B common stock will generally result in those shares
converting to Class A common stock, which will have the effect, over time, of increasing the relative voting power of those holders of Class B common
stock who retain their shares in the long term.
As of January 31, 2022, our executive officers, directors, one of our current stockholders and its respective affiliates held, in aggregate, 49% of the
voting power of our outstanding capital stock. As a result, these stockholders, acting together, have control over most matters that require approval by our
stockholders, including the election of directors and approval of significant corporate transactions. They may also have interests that differ from yours and
may vote in a way with which you disagree and which may be adverse to your interests. This concentration of ownership may have the effect of delaying,
preventing or deterring a change of control or other liquidity event of our company, could deprive our stockholders of an opportunity to receive a premium
for their shares of common stock as part of a sale or other liquidity event and might ultimately affect the market price of our common stock.
Further, our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, the doctrine of “corporate
opportunity” does not apply to Accel, or its respective affiliates, in a manner that would prohibit them from investing in competing businesses or doing
business with our partners or customers.
We do not intend to pay dividends in the foreseeable future. As a result, your ability to achieve a return on your investment will depend on appreciation
in the price of our Class A common stock.
We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings for
use in the operation of our business and do not anticipate paying any dividends in the foreseeable future. Any determination to pay dividends in the future
will be at the discretion of our board of directors. Additionally, our ability to pay dividends is limited by restrictions on our ability to pay dividends or make
distributions under the terms of our credit facility. Accordingly, investors must rely on sales of their Class A common stock after price appreciation, which
may never occur, as the only way to realize any future gains on their investments.
Certain provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our
stockholders to replace or remove members of our board of directors or current management, and may adversely affect the market price of our Class A
common stock.
Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could delay or prevent a change in
control of our company. These provisions could also make it difficult for stockholders to elect directors that are not nominated by the current members of
our board of directors or take other corporate actions, including effecting changes in our management. These provisions include:
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our dual class common stock structure, which provides our holders of Class B common stock with the ability to significantly influence the
outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding Class
A and Class B common stock;
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a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a
majority of our board of directors;
the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including
preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the
resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our
stockholders, which prohibition will take effect on the first date on which the number of outstanding shares of our Class B common stock
represents less than 10% of the aggregate number of outstanding shares of our Class A common stock and our Class B common stock, taken
together as a single class;
the requirement that a special meeting of stockholders may be called only by the chairperson of our board of directors, chief executive officer
or by the board of directors acting pursuant to a resolution adopted by a majority of our board of directors, which could delay the ability of
our stockholders to force consideration of a proposal or to take action, including the removal of directors;
certain amendments to our amended and restated certificate of incorporation require the approval of two-thirds of the then-outstanding voting
power of our capital stock; and
advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be
acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect
the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining
with us for a certain period of time.
Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware, and to the extent enforceable, the federal district courts
of the United States, will be the exclusive forum for certain disputes between us and our stockholders, which could limit our stockholders’ ability to
obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware is the exclusive forum for:
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any derivative action or proceeding brought on our behalf;
any action asserting a breach of fiduciary duty;
any action asserting a claim against us arising under the Delaware General Corporation Law, our amended and restated certificate of
incorporation or our amended and restated bylaws;
any action to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or our amended and
restated bylaws; and
any action asserting a claim against us that is governed by the internal-affairs doctrine.
However, this exclusive forum provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act. In addition, our
amended and restated bylaws provide that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a
cause of action arising under the Securities Act, subject to and contingent upon a final adjudication in the State of Delaware of the enforceability of such
exclusive forum provision.
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These exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or
our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees.
Risks Related to our Indebtedness
Our indebtedness could adversely affect our financial condition.
As of January 31, 2022, we had $750.0 million of indebtedness outstanding (excluding intercompany indebtedness) and there is additional availability
under our revolving facility of up to $750.0 million (excluding issued but undrawn letters of credit). Our indebtedness could have important consequences,
including:
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limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate
requirements;
requiring a portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash
flows available for working capital, capital expenditures, acquisitions and other general corporate purposes;
increasing our vulnerability to adverse changes in general economic, industry and competitive conditions;
exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under our revolving facility, are at
variable rates of interest; and increasing our cost of borrowing.
We may not be able to generate sufficient cash to service all of our indebtedness, including the notes, and may be forced to take other actions to satisfy
our obligations under our indebtedness, which may not be successful.
Our ability to make scheduled payments on or to refinance our debt obligations, including the Senior Notes, depends on our financial condition and
results of operations, which in turn are subject to prevailing economic and competitive conditions and to certain financial, business and other factors
beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if
any, and interest on our indebtedness, including the notes.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and may be
forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness,
including the Senior Notes. Our ability to restructure or refinance our debt will depend on, among other things, the condition of the capital markets and our
financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants,
which could further restrict our business operations. The terms of existing or future debt instruments and the indenture that governs the Senior Notes may
restrict us from adopting some of these alternatives. In addition, any failure to make payments of interest and principal on our outstanding indebtedness on
a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. In the absence of such
cash flows and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt
service and other obligations.
Further, our credit agreement contains provisions that restrict our ability to dispose of assets and use the proceeds from any such disposition. We may
not be able to consummate those dispositions or to obtain the proceeds that we could realize from them and these proceeds may not be adequate to meet
any debt service obligations then due. These alternative measures may not be successful and may not permit us to meet our scheduled debt service
obligations.
If we cannot make scheduled payments on our indebtedness, we will be in default and holders of our Senior Notes could declare all outstanding
principal and interest to be due and payable, the lenders under our revolving facility could terminate their commitments to loan money, our secured lenders
could foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation. If we breach the covenants under our
debt instruments, we would be in default under such instruments. The holders of such indebtedness could exercise their rights, as described above, and we
could be forced into bankruptcy or liquidation.
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Our revolving facility and the indenture that governs our Senior Notes contain terms which restrict our current and future operations, particularly our
ability to respond to changes or to take certain actions.
Our revolving facility and the indenture that governs our Senior Notes contain a number of restrictive covenants that impose significant operating and
financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest, including, among other things, restrictions
on our ability to:
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incur additional indebtedness and guarantee indebtedness;
prepay, redeem or repurchase certain indebtedness;
sell or otherwise dispose of assets;
incur liens;
enter into transactions with affiliates;
alter the businesses we conduct;
enter into agreements restricting our subsidiaries’ ability to pay dividends; and
consolidate, merge with, or sell all or substantially all of our assets to, another person.
The covenants in the indenture and supplemental indenture that govern the Senior Notes are subject to exceptions and qualifications.
In addition, the restrictive covenants in the credit agreement governing our revolving facility require us to maintain specified financial ratios and
satisfy other financial condition tests. Our ability to meet those financial ratios and tests can be affected by events beyond our control, and we may not be
able to meet them. These restrictive covenants could adversely affect our ability to:
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finance our operations;
• make needed capital expenditures;
• make strategic acquisitions or investments or enter into joint ventures;
• withstand a future downturn in our business, the industry or the economy in general;
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engage in business activities, including future opportunities, that may be in our best interest; and
plan for or react to market conditions or otherwise execute our business strategies.
These restrictions may affect our ability to expand our business, which could have a material adverse effect on our business, financial condition and
results of operations.
As a result of these restrictions, we will be limited as to how we conduct our business and we may be unable to raise additional debt or equity
financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur could include
more restrictive covenants. We cannot assure you that we will be able to maintain compliance with these covenants in the future and, if we fail to do so,
that we will be able to obtain waivers from the lenders and/or amend the covenants.
Our failure to comply with the restrictive covenants described above and/or the terms of any future indebtedness from time to time could result in an
event of default, which, if not cured or waived, could result in our being required to repay these borrowings before their due date. If we are forced to
refinance these borrowings on less favorable terms or cannot refinance these borrowings, our business, financial condition and results of operations could
be adversely affected.
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Our revolving facility and the indenture that governs our Senior Notes contain cross-default provisions that could result in the acceleration of all of
our indebtedness.
A breach of the covenants under our revolving facility or the indenture that governs our Senior Notes could result in an event of default under the
applicable indebtedness. Such a default may allow the creditors to accelerate the related indebtedness and may result in the acceleration of any other
indebtedness to which a cross-acceleration or cross-default provision applies. In addition, an event of default under the credit agreement governing our
revolving facility would permit the lenders under our revolving facility to terminate all commitments to extend further credit under that facility.
Furthermore, if we were unable to repay amounts due and payable under our revolving facility, those lenders could proceed against the collateral granted to
them to secure that indebtedness. In the event our lenders or noteholders accelerate the repayment of our borrowings, we and our guarantors may not have
sufficient assets to repay that indebtedness. Additionally, we may not be able to borrow money from other lenders to enable us to refinance our
indebtedness.
General Risk Factors
If we fail to maintain an effective system of internal controls, our ability to produce timely and accurate financial statements or comply with applicable
regulations could be impaired.
We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), the rules and regulations
of Nasdaq, and other securities rules and regulations that impose various requirements on public companies. Our management and other personnel devote
substantial time and resources to comply with these rules and regulations. Such compliance has increased, and will continue to increase our legal,
accounting and financial compliance costs; make some activities more difficult, time-consuming and costly, and place significant strain on our personnel,
systems and resources. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal
control over financial reporting. We are continuing to develop and refine our disclosure controls, internal control over financial reporting and other
procedures that are designed to ensure information required to be disclosed by us in our financial statements and in the reports that we file with the SEC is
recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and information required to be disclosed in reports
under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
Our current controls and any new controls we develop may become inadequate because of changes in conditions in our business. Additionally, to the
extent we acquire other businesses, the acquired company may not have a sufficiently robust system of internal controls and we may uncover new
deficiencies. Weaknesses in our internal controls may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties
encountered in their implementation or improvement, could harm our results of operations, may result in a restatement of our financial statements for prior
periods, cause us to fail to meet our reporting obligations, and could result in an adverse opinion regarding our internal control over financial reporting
from our independent registered public accounting firm, and lead to investigations or sanctions by regulatory authorities.
Section 404 of the Sarbanes-Oxley Act requires our management to certify financial and other information in our quarterly and annual reports and
provide an annual management report on the effectiveness of our internal control over financial reporting. We are also required to have our independent
registered public accounting firm attest to, and issue an opinion on, the effectiveness of our internal control over financial reporting. If we are unable to
assert that our internal control over financial reporting is effective, or if, when required, our independent registered public accounting firm is unable to
express an opinion on the effectiveness of our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness
of our financial reports, which would cause the price of our Class A common stock to decline.
Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our
business and results of operations and could cause a decline in the price of our stock.
Future acquisitions, strategic investments, partnerships, or alliances could be difficult to identify and integrate, divert the attention of key management
personnel, disrupt our business, dilute stockholder value and adversely affect our business, financial condition, and results of operations.
As part of our business strategy, we have in the past and expect to continue to make investments in and/or acquire complementary companies, services
or technologies. Our ability as an organization to acquire and integrate other companies,
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services or technologies in a successful manner in the future is not guaranteed. We may not be able to find suitable acquisition candidates, and we may not
be able to complete such acquisitions on favorable terms, if at all. If we do complete acquisitions, we may not ultimately strengthen our competitive
position or ability to achieve our business objectives, and any acquisitions we complete could be viewed negatively by our end-customers or investors. In
addition, our due diligence may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business, product or
technology, including issues related to intellectual property, product quality or product architecture, regulatory compliance practices, revenue recognition or
other accounting practices or issues with employees or customers. If we are unsuccessful at integrating such acquisitions, or the technologies associated
with such acquisitions, into our company, the revenue and results of operations of the combined company could be adversely affected. Any integration
process may require significant time and resources, and we may not be able to manage the process successfully. We may not successfully evaluate or utilize
the acquired technology or personnel, or accurately forecast the financial impact of an acquisition transaction, causing unanticipated write-offs or
accounting charges. We may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which could adversely affect our
financial condition and the market price of our Class A common stock. The sale of equity or issuance of debt to finance any such acquisitions could result
in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other
restrictions that would impede our ability to manage our operations.
Additional risks we may face in connection with acquisitions include:
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diversion of management time and focus from operating our business to addressing acquisition integration challenges;
coordination of research and development and sales and marketing functions;
integration of administrative systems, employee, product and service offerings;
retention of key employees from the acquired company;
changes in relationships with strategic partners as a result of product acquisitions or strategic positioning resulting from the acquisition;
the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked sufficiently
effective controls, procedures and policies;
additional legal, regulatory or compliance requirements;
financial reporting, revenue recognition or other financial or control deficiencies of the acquired company that we do not adequately address
and that cause our reported results to be incorrect;
liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violations of laws,
commercial disputes, tax liabilities and other known and unknown liabilities; and
litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former
stockholders or other third parties.
Our failure to address these risks or other problems encountered in connection with acquisitions and investments could cause us to fail to realize the
anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, and harm our business generally.
Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay
additional taxes, which would harm our results of operations.
We are expanding our international operations and staff to support our business in international markets. We generally conduct our international
operations through wholly-owned subsidiaries and are or may be required to report our taxable income in various jurisdictions worldwide based upon our
business operations in those jurisdictions. Our intercompany relationships are subject to complex transfer pricing regulations administered by taxing
authorities in various jurisdictions. The amount of taxes we pay in different jurisdictions may depend on the application of the tax laws of the various
jurisdictions, including the United States, to our international business activities, changes in tax rates, new or revised tax laws or
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interpretations of existing tax laws and policies, and our ability to operate our business in a manner consistent with our corporate structure and
intercompany arrangements. The relevant taxing authorities may disagree with our determinations as to the income and expenses attributable to specific
jurisdictions. If such a disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties,
which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations.
We are subject to federal, state, and local income, sales, and other taxes in the United States and income, withholding, transaction, and other taxes in
numerous foreign jurisdictions. Significant judgment is required in evaluating our tax positions and our worldwide provision for taxes. During the ordinary
course of business, there are many activities and transactions for which the ultimate tax determination may be uncertain. In addition, our tax obligations and
effective tax rates could be adversely affected, among other things, by (i) changes in the relevant tax, accounting and other laws, regulations, principles and
interpretations, including increases in corporate tax rates and greater taxation of international income and changes relating to income tax nexus, (ii)
recognizing tax losses or lower than anticipated earnings in jurisdictions where we have lower statutory rates and higher than anticipated earnings in
jurisdictions where we have higher statutory rates, (iii) changes in foreign currency exchange rates, or (iv) changes in the valuation of our deferred tax
assets and liabilities. We may be audited in various jurisdictions, and such jurisdictions may assess additional taxes, sales taxes and value added taxes
against us. Although we believe our tax estimates are reasonable, the final determination of any tax audits or litigation could be materially different from
our historical tax provisions and accruals, which could have an adverse effect on our results of operations or cash flows in the period or periods for which a
determination is made.
In addition, the Organization for Economic Cooperation and Development (“OECD”) has published proposals covering a number of issues, including
country-by-country reporting, permanent establishment rules, transfer pricing rules, tax treaties and taxation of the digital economy. A significant majority
of countries in the OECD’s Inclusive Framework have agreed in principle to a proposed solution to address the tax challenges arising from the
digitalization of the economy. Most recently, 137 jurisdictions joined a two-pillar plan to reform international taxation rules and ensure that multinational
enterprises pay a fair share of tax wherever they operate. The first pillar is focused on the allocation of taxing rights between countries for in-scope
multinational enterprises that sell goods and services into countries with little or no local physical presence and is intended to apply to multinational
enterprises with global turnover above 20 billion euros. The second pillar is focused on developing a global minimum tax rate of at least 15 percent
applicable to in-scope multinational enterprises and is intended to apply to multinational enterprises with annual consolidated group revenue in excess of
750 million euro. While substantial work remains to be completed by the OECD and national governments on the implementation of these proposals, future
tax reform resulting from these developments may result in changes to long-standing tax principles, which could adversely affect our effective tax rate or
result in higher cash tax liabilities. The OECD’s proposed solution envisages new international tax rules and the removal of all Digital Services Taxes
(“DST”). Notwithstanding this, some countries, in the European Union and beyond, continue to operate a DST regime to capture tax revenue on digital
services more immediately. Such laws may increase our tax obligations in those countries or change the manner in which we operate our business.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
As of January 31, 2022, we had aggregate U.S. federal and California net operating loss carryforwards of $1.6 billion and $168.9 million, respectively,
which may be available to offset future taxable income for income tax purposes. If not utilized, the federal and California net operating loss carryforwards
will begin to expire in fiscal 2031. As of January 31, 2022, we had net operating loss carryforwards for other states of $868.0 million that will begin to
expire in fiscal 2023. As of January 31, 2022, we had federal and California research and development credit carryforwards of $65.6 million and $13.7
million, respectively. The federal research and development credit carryforwards will begin to expire in 2035, and the California carryforwards are carried
forward indefinitely. As of January 31, 2022, we had aggregate United Kingdom net operating loss carryforwards of $81.1 million, which are carried
forward indefinitely. Realization of these net operating loss and research and development credit carryforwards depends on future income, and there is a
risk that our existing carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect our results
of operations.
In addition, under Sections 382 and 383 of the Internal Revenue Code, if a corporation undergoes an “ownership change,” generally defined as a
greater than 50% change (by value) in ownership by “5 percent shareholders” over a rolling three-year period, the corporation’s ability to use its pre-change
net operating loss carryovers and other pre-change tax attributes, such as research and development credits, to offset its post-change income or taxes may
be limited. We may experience ownership changes in the future as a result of shifts in our stock ownership. As a result, if we earn net taxable income, our
ability to use
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our pre-change net operating loss carryforwards to offset U.S. federal taxable income may be subject to limitations, which could potentially result in
increased future tax liability to us.
Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added or similar taxes, and
we could be subject to liability with respect to past or future sales, which could adversely affect our results of operations.
We do not collect sales and use, value added or similar taxes in all jurisdictions in which we have sales because we have been advised that such taxes
are not applicable to our services in certain jurisdictions. Sales and use, value added, and similar tax laws and rates vary greatly by jurisdiction. Certain
jurisdictions in which we do not collect such taxes may assert that such taxes are applicable, which could result in tax assessments, penalties and interest, to
us or our customers for the past amounts, and we may be required to collect such taxes in the future. If we are unsuccessful in collecting such taxes from
our customers, we could be held liable for such costs, which may adversely affect our results of operations.
If our estimates or judgments relating to our critical accounting policies prove to be incorrect or financial reporting standards or interpretations
change, our results of operations could be adversely affected.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
amounts reported in our consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other
assumptions that we believe to be reasonable under the circumstances, as discussed in the section titled “Management’s Discussion and Analysis of
Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the carrying values of assets,
liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant assumptions and estimates used
in preparing our consolidated financial statements include those related to revenue recognition; allowance for credit losses; valuation of common stock and
redeemable convertible preferred stock warrants; carrying value and useful lives of long-lived assets; loss contingencies; and the provision for income taxes
and related deferred taxes. Additionally, as a result of the global COVID-19 pandemic, many of management’s estimates and assumptions require increased
judgment and carry a higher degree of variability and volatility. Our results of operations may be adversely affected if our assumptions change or if actual
circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of industry or financial
analysts and investors, resulting in a decline in the market price of our Class A common stock.
Additionally, we regularly monitor our compliance with applicable financial reporting standards and review new pronouncements and drafts thereof
that are relevant to us. As a result of new standards, changes to existing standards and changes in their interpretation, we might be required to change our
accounting policies, alter our operational policies and implement new or enhance existing systems so that they reflect new or amended financial reporting
standards, or we may be required to restate our published financial statements. Such changes to existing standards or changes in their interpretation may
have an adverse effect on our reputation, business, financial position and profit, or cause an adverse deviation from our revenue and operating profit target,
which may negatively impact our financial results.
We are subject to risks associated with our equity investments, including partial or complete loss of invested capital, and significant changes in the fair
value of this portfolio could adversely impact our financial results.
Through our Falcon Funds, we invest in early to late stage private companies, and we may not realize a return on our equity investments. Many such
companies generate net losses and the market for their products, services, or technologies may be slow to develop or never materialize. These companies
are often dependent on the availability of later rounds of financing from banks or investors on favorable terms to continue their operations. The financial
success of our investment in any company is typically dependent on a liquidity event, such as a public offering, acquisition, or other favorable market event
reflecting appreciation to the cost of our initial investment. The capital markets for public offerings and acquisitions are dynamic and the likelihood of
liquidity events for the companies in which we have invested could deteriorate, which could result in a loss of all or a substantial part of our investment in
these companies. In addition, our ability to realize gains on investments may be impacted by our contractual obligations to hold securities for a set period of
time. For example, to the extent a company we have invested in undergoes an initial public offering, we may be subject to a lock-up agreement that restricts
our ability to sell our securities for a period of time after the public offering or otherwise impedes our ability to mitigate market volatility in such securities.
Further, valuations of non-marketable equity investments are inherently complex due to the lack of readily available market data. In addition, we may
experience additional volatility to our statements of operations due to changes in market prices of our
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marketable equity investments, the valuation and timing of observable price changes or impairments of our non-marketable equity investments, and
changes in the proportionate share of earnings and losses or impairment of our equity investments accounted for under the equity method. This volatility
could be material to our results in any given quarter and may cause our stock price to decline.
Our business is subject to the risks of earthquakes, fire, floods, outbreak of diseases and other natural catastrophic events, and to interruption by man-
made problems such as power disruptions, computer viruses, data security breaches or terrorism.
Our principal executive offices are located in Austin, Texas, and we also maintain other office locations around the world, including in California and
India, that are prone to natural disasters including severe weather and seismic activity. A significant natural disaster, such as an earthquake, a fire, a flood,
or significant power outage and other catastrophic events, including the occurrence of a contagious disease or illness, such as COVID-19, could have a
material adverse impact on our business, results of operations, and financial condition. The outbreak of a contagious disease like COVID-19 has, among
other things, prompted responses such as government-imposed travel restrictions, the grounding of flights, and the shutdown of workplaces. It is not
possible at this time to estimate the impact that the COVID-19 pandemic could have on our business, as the impact will depend on future developments,
which are highly uncertain and cannot be predicted. Natural disasters and other catastrophic events such as COVID-19, could affect our personnel, recovery
of our assets, data centers, supply chain, manufacturing vendors, or logistics providers’ ability to provide materials and perform services such as
manufacturing products or assisting with shipments on a timely basis. In addition, climate change could result in an increase in the frequency or severity of
natural disasters. In the event that our or our service providers’ information technology systems or manufacturing or logistics abilities are hindered by any
of the events discussed above, shipments could be delayed, resulting in missed financial targets, such as revenue and shipment targets, for a particular
quarter. In addition, computer malware, viruses and computer hacking, fraudulent use attempts, and phishing attacks have become more prevalent in our
industry, and our internal systems may be victimized by such attacks. Although we maintain incident management and disaster response plans, in the event
of a major disruption caused by a natural disaster or man-made problem, we may be unable to continue our operations and may endure system
interruptions, reputational harm, delays in our development activities, lengthy interruptions in service, breaches of data security and loss of critical data,
and our insurance may not cover such events or may be insufficient to compensate us for the potentially significant losses we may incur. Acts of terrorism
and other geopolitical unrest could also cause disruptions in our business or the business of our supply chain, manufacturers, logistics providers, partners,
or customers or the economy as a whole. Any disruption in the business of our supply chain, manufacturers, logistics providers, partners or end-customers
could have a significant adverse impact on our financial results. All of the aforementioned risks may be further increased if the disaster recovery plans for
us and our suppliers prove to be inadequate. To the extent that any of the above should result in delays or cancellations of customer orders, or the delay in
the manufacture, deployment or shipment of our products, our business, financial condition and results of operations would be adversely affected.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Our principal executive offices occupy approximately 36,385 square feet in Austin, Texas under a lease that expires in 2024. We also lease office space
for our operations in various locations throughout the United States as well as office space in a number of countries in Europe, the Middle East, and the
Asia-Pacific region.
We believe that our existing facilities are sufficient for our current needs. In the future, we may need to add new facilities and expand our existing
facilities as we add employees, grow our infrastructure and evolve our business, and we believe that suitable additional or substitute space will be available
on commercially reasonable terms to meet our future needs.
ITEM 3. LEGAL PROCEEDINGS
We are currently a party to, and may from time to time in the future be involved in, various litigation matters and subject to claims that arise in the
ordinary course of business, including claims asserted by third parties in the form of letters and other communications. For information regarding legal
proceedings and other claims in which we are involved, see Note 11, Commitments and Contingencies, in Part II, Item 8 of this Annual Report on Form 10-
K.
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For any claims for which we believe a liability is both probable and reasonably estimable, we record a liability in the period for which it makes this
determination. There is no pending or threatened legal proceeding to which we are a party that, in our opinion, is likely to have a material adverse effect on
our business and our consolidated financial statements; however, the results of litigation and claims are inherently unpredictable. Regardless of the
outcome, litigation can have an adverse impact on our business because of defense and settlement costs, diversion of management resources, and other
factors. In addition, the expense of litigation and the timing of this expense from period to period are difficult to estimate, subject to change and could
adversely affect our consolidated financial statements.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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Part II
ITEM 5. MARKETS REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
Market Information for Common Stock
Our Class A common stock has been listed and traded on the Nasdaq Global Select Market under the symbol “CRWD” since June 12, 2019. Prior to
that date, there was no public market for our Class A common stock. There is no public market for our Class B common stock.
Holders of Record
As of January 31, 2022, we had 34 holders of record of our Class A common stock and 84 holders of record of our Class B common stock. The actual
number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in
street name by brokers and other nominees.
Dividend Policy
We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings for
use in the operation of our business and do not expect to pay any dividends on our capital stock in the foreseeable future. Additionally, our ability to pay
dividends is limited by restrictions on our ability to pay dividends or make distributions under the terms of our credit facility. Any future determination to
declare dividends will be made at the discretion of our board of directors, subject to applicable laws, and will depend on a number of factors, including our
financial condition, results of operations, capital requirements, contractual restrictions, general business conditions, and other factors that our board of
directors may deem relevant.
Securities Authorized for Issuance under Equity Compensation Plans
The information required by this item with respect to our equity compensation plans is incorporated by reference to our Proxy Statement for the 2022
Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days of the fiscal year ended January 31, 2022.
Recent Sales of Unregistered Equity Securities and Use of Proceeds
(a) Sale of Unregistered Equity Securities
On November 29, 2021, we agreed to issue $10.7 million of shares of our Class A common stock, subject to service-based vesting and other
conditions, to certain individual interest holders of Secure Circle LLC (“SecureCircle”) in connection with our acquisition of SecureCircle. The transaction
was exempt from registration under Section 4(a)(2) of the Securities Act.
(b) Use of Proceeds from Public Offering of Common Stock
None.
Issuer Purchases of Equity Securities
None.
Stock Performance Graph
This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by
reference into any filing of CrowdStrike Holdings, Inc. under the Securities Act or the Exchange Act.
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We have presented below the cumulative total return to our stockholders between June 12, 2019 (the date our common stock commenced trading on
the Nasdaq) through January 31, 2022 in comparison to the Standard & Poor’s 500 Index, Standard & Poor Information Technology Index, and the Nasdaq
100 Index. All values assume a $100 initial investment and data for the Standard & Poor’s 500 Index, Standard & Poor Information Technology Index and
the Nasdaq 100 Index assume reinvestment of dividends. The comparisons are based on historical data and are not indicative of, nor intended to forecast,
the future performance of our common stock.
Company/ Index
CrowdStrike Holdings, Inc.
S&P 500
S&P Information Technology
Nasdaq 100
ITEM 6. [RESERVED]
Base period
6/12/19
7/31/19
10/31/19
1/31/20
4/30/20
7/31/20
10/31/20
1/31/21
4/30/21
7/31/21
10/31/21
1/31/22
$
$
$
$
100.00
100.00
100.00
100.00
$
$
$
$
153.57 $
108.59 $
112.77 $
110.24 $
86.05 $
111.22 $
117.16 $
113.85 $
105.33 $
118.69 $
134.13 $
126.96 $
116.66 $
107.71 $
129.30 $
127.41 $
195.17 $
121.57 $
156.64 $
154.74 $
213.52 $
122.02 $
157.56 $
157.13 $
372.07 $
139.17 $
183.94 $
184.09 $
359.50
157.23
199.27
197.77
$
$
$
$
437.26 $
165.88 $
219.35 $
213.84 $
485.86 $
174.39 $
231.50 $
226.94 $
311.45
171.58
232.55
214.11
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated
financial statements and related notes thereto included in Item 8 “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
This section of this Form 10-K generally discusses fiscal 2022 and 2021 items and year-over-year comparisons between fiscal 2022 and 2021. Discussions
of fiscal 2020 items and year-over-year comparisons between fiscal 2021 and 2020 are not included in this Form 10-K, and can be found in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the
fiscal year ended January 31, 2021. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on
Form 10-K, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and
uncertainties, including those described under the heading “Special Note Regarding Forward-Looking Statements.” You should review the disclosure
under Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ
materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our fiscal years
ended January 31, 2022, January 31, 2021, and January 31, 2020, are referred to herein as fiscal 2022, fiscal 2021, and fiscal 2020, respectively.
Overview
Founded in 2011, CrowdStrike reinvented cybersecurity for the cloud era and transformed the way cybersecurity is delivered and experienced by
customers. When we started CrowdStrike, cyberattackers had an asymmetric advantage over legacy cybersecurity products that could not keep pace with
the rapid changes in adversary tactics. We took a fundamentally different approach to solve this problem with the CrowdStrike Falcon platform – the first,
true cloud-native platform capable of harnessing vast amounts of security and enterprise data to deliver highly modular solutions through a single
lightweight agent. Our pioneering platform approach keeps customers ahead of attackers by automatically detecting and preventing threats to stop breaches.
We believe our approach has defined a new category called the Security Cloud, which has the power to transform the cybersecurity industry the same
way the cloud has transformed the customer relationship management, human resources, and service management industries. Using cloud-scale AI, our
Security Cloud enriches and correlates trillions of cybersecurity events per week with indicators of attack, threat intelligence and enterprise data (including
data from across endpoints, workloads, identities, DevOps, IT assets and configurations) to create actionable data, identify shifts in adversary tactics and
automatically prevent threats in real-time across our customer base. The more data that is fed into our Falcon platform, the more intelligent our Security
Cloud becomes, and the more our customers benefit, creating a powerful network effect that increases the overall value we provide.
In March 2020, the World Health Organization declared the COVID-19 outbreak to be a pandemic. Since then, the COVID-19 pandemic has rapidly
spread across the globe and has already resulted in significant volatility, uncertainty, and economic disruption. Since the pandemic commenced, we have
implemented several measures to help protect the health and safety of our employees around the globe. In addition, in response to the uncertain
macroeconomic environment, we converted all of our marketable securities to cash and cash equivalents during the three months ended April 30, 2020 and
all of our investments were classified as cash and cash equivalents as of January 31, 2022. Thus far, the impact of the pandemic has been modest. Our gross
retention rate for fiscal 2022 remained consistently high and our dollar-based net retention rate was above 120 percent throughout fiscal year 2022 as we
continued to expand the number of endpoints and modules within existing customers.
We continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state, or
local authorities, or that we determine are in the best interests of our employees, customers, partners, suppliers, and stockholders. The extent to which the
COVID-19 pandemic may impact our longer-term operational and financial performance remains uncertain. Furthermore, due to our subscription-based
business model, the effect of the COVID-19 pandemic may not be fully reflected in our results of operations until future periods, if at all. The extent of the
impact of the COVID-19 pandemic will depend on several factors, including the pace of reopening the economy around the world; the possible resurgence
in the spread of the virus; the development cycle of therapeutics and vaccines; the impact on our
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customers and our sales cycles; the impact on our customer, employee, and industry events; and the effect on our vendors. Please see Part I, Item IA, “Risk
Factors” for a further description of the material risks we currently face, including risks related to the COVID-19 pandemic.
On March 5, 2021, we acquired Humio Limited (“Humio”), a privately-held company that is a leading provider of high-performance cloud log
management and observability technology. The acquisition was accounted for as a business combination. The total consideration transferred was $370.3
million which consisted of $353.8 million in cash, net of $12.5 million cash acquired, and $4.0 million representing the fair value of replacement equity
awards attributable to pre-acquisition service. The purchase price was allocated to identified intangible assets, which include developed technology,
customer relationships and trade names, of $75.6 million, net tangible assets acquired of $3.4 million and goodwill of $291.3 million, representing the
excess of the purchase price over the fair value of net tangible and intangible assets acquired.
On November 29, 2021, we acquired Secure Circle, LLC (“SecureCircle”), a SaaS-based cybersecurity service that extends Zero Trust security to data
on, from and to the endpoint. The acquisition was accounted for as a business combination. The total consideration transferred was $60.8 million, which
consisted solely of cash.. The purchase price was allocated, on a preliminary basis, to identified intangible assets, which include developed technology and
customer relationships of $18.3 million, net tangible assets acquired of $(0.5) million and goodwill of $43.0 million, representing the excess of the
purchase price over the fair value of net tangible and intangible assets acquired.
Our Go-To-Market Strategy
We sell subscriptions to our Falcon platform and cloud modules to organizations across multiple industries. We primarily sell subscriptions to our
Falcon platform and cloud modules through our direct sales team that leverages our network of channel partners. Our direct sales team is comprised of field
sales and inside sales professionals who are segmented by a customer’s number of endpoints.
We have a low friction land-and-expand sales strategy. When customers deploy our Falcon platform, they can start with any number of cloud modules
and easily add additional cloud modules. Once customers experience the benefits of our Falcon platform, they often expand their adoption over time by
adding more endpoints or purchasing additional modules. We also use our sales team to identify current customers who may be interested in free trials of
additional cloud modules, which serves as a powerful driver of our land-and-expand model. By segmenting our sales teams, we can deploy a low-touch
sales model that efficiently identifies prospective customers.
We began as a solution for large enterprises, but the flexibility and scalability of our Falcon platform has enabled us to seamlessly offer our solution to
customers of any size. We have expanded our sales focus to include any sized organization without the need to modify our Falcon platform for small and
medium sized businesses.
A substantial majority of our customers purchase subscriptions with a term of one year. Our subscriptions are generally priced on a per-endpoint and
per-module basis. We recognize revenue from our subscriptions ratably over the term of the subscription. We also generate revenue from our incident
response and proactive professional services, which are generally priced on a time and materials basis. We view our professional services business
primarily as an opportunity to cross-sell subscriptions to our Falcon platform and cloud modules.
Certain Factors Affecting Our Performance
Adoption of Our Solutions. We believe our future success depends in large part on the growth in the market for cloud-based SaaS-delivered endpoint
security solutions. Many organizations have not yet abandoned the on-premise legacy products in which they have invested substantial personnel and
financial resources to design and maintain. As a result, it is difficult to predict customer adoption rates and demand for our cloud-based solutions.
New Customer Acquisition. Our future growth depends in large part on our ability to acquire new customers. If our efforts to attract new customers are
not successful, our revenue and rate of revenue growth may decline. We believe that our go-to-market strategy and the flexibility and scalability of our
Falcon platform allow us to rapidly expand our customer base. Our incident response and proactive services also help drive new customer acquisitions, as
many of these professional services customers subsequently purchase subscriptions to our Falcon platform. Many organizations have not yet adopted cloud-
based
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security solutions, and since our Falcon platform has offerings for organizations of all sizes, worldwide, and across industries, we believe this presents a
significant opportunity for growth.
Maintain Customer Retention and Increase Sales. Our ability to increase revenue depends in large part on our ability to retain our existing customers
and increase the ARR of their subscriptions. We focus on increasing sales to our existing customers by expanding their deployments to more endpoints and
selling additional cloud modules for increased functionality. Over time we have transitioned our platform from a single offering into highly-integrated
offerings of multiple SKU cloud modules.
Invest in Growth. We believe that our market opportunity is large and requires us to continue to invest significantly in sales and marketing efforts to
further grow our customer base, both domestically and internationally. Our open cloud architecture and single data model have allowed us to rapidly build
and deploy new cloud modules, and we expect to continue investing in those efforts to further enhance our technology platform and product functionality.
In addition to our ongoing investment in research and development, we may also pursue acquisitions of businesses, technologies, and assets that
complement and expand the functionality of our Falcon platform, add to our technology or security expertise, or bolster our leadership position by gaining
access to new customers or markets. Furthermore, we expect our general and administrative expenses to increase in dollar amount for the foreseeable future
given the additional expenses for accounting, compliance, and investor relations as we grow as a public company.
We monitor the following key metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make
Key Metrics
strategic decisions.
Subscription Customers
We define a subscription customer as a separate legal entity that has entered into a distinct subscription agreement for access to Falcon platform for
which the term has not ended or with which we are negotiating a renewal contract. We do not consider our channel partners as customers, and we treat
managed service security providers, who may purchase our products on behalf of multiple companies, as a single customer. While initially we focused our
sales and marketing efforts on large enterprises, in recent years we have also increased our sales and marketing to small and medium sized businesses.
The following table sets forth the number of our subscription customers as of the dates presented:
Subscription customers
Year-over-year growth
2022
16,325
65
%
As of January 31,
2021
9,896
82
%
2020
5,431
116
%
We added 6,429 net new subscription customers during fiscal 2022, including 145 from the acquisitions of Humio and SecureCircle, for a total of
16,325 subscription customers as of January 31, 2022, representing 65% growth year-over-year.
Annual Recurring Revenue (“ARR”)
ARR is calculated as the annualized value of our customer subscription contracts as of the measurement date, assuming any contract that expires
during the next 12 months is renewed on its existing terms. To the extent that we are negotiating a renewal with a customer after the expiration of the
subscription, we continue to include that revenue in ARR if we are actively in discussion with such an organization for a new subscription or renewal, or
until such organization notifies us that it is not renewing its subscription.
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The following table sets forth our ARR as of the dates presented (dollars in thousands):
Annual recurring revenue
Year-over-year growth
2022
As of January 31,
2021
$
1,731,342
65
%
$
1,050,051
75
%
$
2020
600,456
92
%
ARR increased 65% year-over-year and grew to $1.7 billion as of January 31, 2022, of which $681.3 million was net new ARR added during fiscal
2022, including $4.5 million from the acquisition of Humio and SecureCircle.
Dollar-Based Net Retention Rate
Our dollar-based net retention rate compares our ARR from a set of subscription customers against the same metric for those subscription customers
from the prior year. Our dollar-based net retention rate reflects customer renewals, expansion, contraction, and churn, and excludes revenue from our
incident response and proactive services. We calculate our dollar-based net retention rate as of period end by starting with the ARR from all subscription
customers as of 12 months prior to such period end, or Prior Period ARR. We then calculate the ARR from these same subscription customers as of the
current period end, or Current Period ARR. Current Period ARR includes any expansion and is net of contraction or churn over the trailing 12 months but
excludes revenue from new subscription customers in the current period. We then divide the Current Period ARR by the Prior Period ARR to arrive at our
dollar-based net retention rate.
Our dollar-based net retention rate was above 120% throughout fiscal years 2022, 2021 and 2020. Our dollar-based net retention rate can fluctuate
from period to period due to large customer contracts in a given period, which may reduce our dollar-based net retention rate in subsequent periods if the
customer makes a larger upfront purchase and does not continue to increase purchases.
Dollar-based net retention rate
2022
As of January 31,
2021
2020
123.9 %
124.8 %
123.5 %
Our dollar-based net retention rate has varied from quarter to quarter due to a number of factors and we expect that trend to continue. In addition, we
have seen strong success with our strategy to land bigger deals with more modules, and we are also seeing an acceleration in our acquisition of new
customers. While we view these two trends as positive developments, they have a natural trade off on our ability to expand business with existing
customers in the near term.
Revenue
Components of Our Results of Operations
Subscription Revenue. Subscription revenue primarily consists of subscription fees for our Falcon platform and additional cloud modules that are
supported by our cloud-based platform. Subscription revenue is driven primarily by the number of subscription customers, the number of endpoints per
customer, and the number of cloud modules included in the subscription. We recognize subscription revenue ratably over the term of the agreement, which
is generally one to three years. Because the majority of our subscription customers are billed upfront, we have recorded significant deferred revenue.
Consequently, a substantial portion of the revenue that we report in each period is attributable to the recognition of deferred revenue relating to
subscriptions that we entered into during previous periods. The majority of our customers are invoiced annually in advance or multi-year in advance.
Professional Services Revenue. Professional services revenue includes incident response and proactive services, forensic and malware analysis, and
attribution analysis. Professional services are generally sold separately from subscriptions to our Falcon platform, although customers frequently enter into
a separate arrangement to purchase subscriptions to our Falcon platform at the conclusion of a professional services arrangement. Professional services are
available through hourly rate and fixed fee contracts, one-time and ongoing engagements, and retainer-based agreements. For time and materials and
retainer-
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based arrangements, revenue is recognized as services are performed. Fixed fee contracts account for an immaterial portion of our revenue.
Cost of Revenue
Subscription Cost of Revenue. Subscription cost of revenue consists primarily of costs related to hosting our cloud-based Falcon platform in data
centers, amortization of our capitalized internal-use software, employee-related costs such as salaries and bonuses, stock-based compensation expense,
benefits costs associated with our operations and support personnel, software license fees, property and equipment depreciation, amortization of acquired
intangibles, and an allocated portion of facilities and administrative costs.
As new customers subscribe to our platform and existing subscription customers increase the number of endpoints on our Falcon platform, our cost of
revenue will increase due to greater cloud hosting costs related to powering new cloud modules and the incremental costs for storing additional data
collected for such cloud modules and employee-related costs. We intend to continue to invest additional resources in our cloud platform and our customer
support organizations as we grow our business. The level and timing of investment in these areas could affect our cost of revenue in the future.
Professional Services Cost of Revenue. Professional services cost of revenue consists primarily of employee-related costs, such as salaries and bonuses,
stock-based compensation expense, technology, property and equipment depreciation, and an allocated portion of facilities and administrative costs.
Gross Profit and Gross Margin
Gross profit and gross margin have been and will continue to be affected by various factors, including the timing of our acquisition of new subscription
customers, renewals from existing subscription customers, sales of additional modules to existing subscription customers, the data center and bandwidth
costs associated with operating our cloud platform, the extent to which we expand our customer support and cloud operations organizations, and the extent
to which we can increase the efficiency of our technology, infrastructure, and data centers through technological improvements. We expect our gross profit
to increase in dollar amount and our gross margin to increase modestly over the long term, although our gross margin could fluctuate from period to period
depending on the interplay of these factors. Demand for our incident response services is driven by the number of breaches experienced by non-customers.
Also, we view our professional services solutions in the context of our larger business and as a significant lead generator for new subscriptions. Because of
these factors, our services revenue and gross margin may fluctuate over time.
Operating Expenses
Our operating expenses consist of sales and marketing, research and development and general administrative expenses. For each of these categories of
expense, employee-related expenses are the most significant component, which include salaries, employee bonuses, sales commissions, and employer
payroll tax. Operating expenses also include an allocated portion of overhead costs for facilities and IT.
Sales and Marketing. Sales and marketing expenses primarily consist of employee-related expenses such as salaries, commissions, and bonuses. Sales
and marketing expenses also include stock-based compensation; expenses related to our Fal.Con customer conference and other marketing events; an
allocated portion of facilities and administrative expenses; amortization of acquired intangibles, and cloud hosting and related services costs related to
proof of value efforts. We capitalize and amortize sales commissions and any other incremental payments made upon the initial acquisition of a
subscription or upsells to existing customers to sales and marketing expense over the estimated customer life, and capitalize and amortize any such
expenses paid for the renewal of a subscription to sales and marketing expense over the term of the renewal.
We expect sales and marketing expenses to increase in dollar amount as we continue to make significant investments in our sales and marketing
organization to drive additional revenue, further penetrate the market, and expand our global customer base. However, we anticipate sales and marketing
expenses to decrease as a percentage of our total revenue over time, although our sales and marketing expenses may fluctuate as a percentage of our total
revenue from period-to-period depending on the timing of these expenses.
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Research and Development. Research and development expenses primarily consist of employee-related expenses such as salaries and bonuses; stock-
based compensation; consulting expenses related to the design, development, testing, and enhancements of our subscription services; and an allocated
portion of facilities and administrative expenses. Our cloud platform is software-driven, and our research and development teams employ software
engineers in the design, and the related development, testing, certification, and support of these solutions.
We expect research and development expenses to increase in dollar amount as we continue to increase investments in our technology architecture and
software platform. However, we anticipate research and development expenses to decrease as a percentage of our total revenue over time, although our
research and development expenses may fluctuate as a percentage of our total revenue from period-to-period depending on the timing of these expenses.
General and Administrative. General and administrative expenses consist of employee-related expenses such as salaries and bonuses; stock-based
compensation; and related expenses for our executive, finance, human resources, and legal organizations. In addition, general and administrative expenses
include outside legal, accounting, and other professional fees; and an allocated portion of facilities and administrative expenses.
We expect general and administrative expenses to increase in dollar amount over time. However, we anticipate general and administrative expenses to
decrease as a percentage of our total revenue over time although our general and administrative expenses may fluctuate as a percentage of our total revenue
from period-to-period depending on the timing of these expenses.
Interest Expense. Interest Expense consists primarily of interest expense from amortization of debt issuance costs, contractual interest expense for our
Senior Notes issued in January 2021, and amortization of debt issuance costs on our secured revolving credit facility.
Other Income, Net. Other income, net, consists primarily of income earned on our cash and cash equivalents, if any; gain on strategic investments and
foreign currency transaction gains and losses.
Provision for Income Taxes. Provision for income taxes consists of state income taxes in the United States, foreign income taxes including taxes related
to the intercompany sale of intellectual property from Humio and withholding taxes related to customer payments in certain foreign jurisdictions in which
we conduct business. We maintain a full valuation allowance on our U.S. federal and state and UK deferred tax assets that we have determined are not
realizable on a more likely than not basis.
Net Income Attributable to Non-controlling Interest. Net income attributable to non-controlling interest consists of the Falcon Funds’ non-controlling
interest share of mark-to-market gains and interest income from our strategic investments.
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The following tables set forth our consolidated statements of operations for each period presented (in thousands, except percentages):
Results of Operations
Revenue
Subscription
Professional services
Total revenue
Cost of revenue
Subscription
Professional services
Total cost of revenue
Gross profit
Operating expenses
Sales and marketing
Research and development
General and administrative
Total operating expenses
Loss from operations
Interest expense
Other income, net
Loss before provision for income taxes
Provision for income taxes
Net loss
Net income attributable to noncontrolling interest
Net loss attributable to CrowdStrike
2022
Year Ended January 31,
2021
2020
$
$
1,359,537
92,057
1,451,594
321,904
61,317
383,221
1,068,373
616,546
371,283
223,092
1,210,921
(142,548)
(25,231)
7,756
(160,023)
72,355
(232,378)
2,424
(234,802)
$
$
804,670
69,768
874,438
185,212
44,333
229,545
644,893
401,316
214,670
121,436
737,422
(92,529)
(1,559)
6,219
(87,869)
4,760
(92,629)
—
(92,629)
$
$
436,323
45,090
481,413
112,474
29,153
141,627
339,786
266,595
130,188
89,068
485,851
(146,065)
(442)
6,725
(139,782)
1,997
(141,779)
—
(141,779)
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The following table presents the components of our consolidated statements of operations as a percentage of total revenue for the periods presented:
Revenue
Subscription
Professional services
Total revenue
Cost of revenue
Subscription
Professional services
Total cost of revenue
Gross profit
Operating expenses
Sales and marketing
Research and development
General and administrative
Total operating expenses
Loss from operations
Interest expense
Other income, net
Loss before provision for income taxes
Provision for income taxes
Net loss
Net income (loss) attributable to noncontrolling interest
Net loss attributable to CrowdStrike
Comparison of Fiscal 2022 and Fiscal 2021
Revenue
2022
%
94
6
100
22
4
26
74
42
26
15
83
(10)
(2)
1
(11)
5
(16)
—
(16)
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
Year Ended January 31,
2021
%
92
8
100
21
5
26
74
46
25
14
84
(11)
—
1
(10)
1
(11)
—
(11)
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
2020
%
91
9
100
23
6
29
71
55
27
19
101
(30)
—
1
(29)
—
(29)
—
(29)
The following shows total revenue from subscriptions and professional services for fiscal 2022, as compared to fiscal 2021 (in thousands, except
percentages):
Subscription
Professional services
Total revenue
Year Ended January 31,
Change
2022
1,359,537
92,057
1,451,594
$
$
2021
804,670
69,768
874,438
$
$
$
$
$
554,867
22,289
577,156
%
69
32
66
Total revenue increased by $577.2 million, or 66%, in fiscal 2022, compared to fiscal 2021. Subscription revenue accounted for 94% of our total
revenue in fiscal 2022, and 92% in fiscal 2021. Professional services revenue accounted for 6% of our total revenue in fiscal 2022 and 8% in fiscal 2021.
Subscription revenue increased by $554.9 million, or 69%, in fiscal 2022, compared to fiscal 2021. This increase was primarily attributable to the
addition of new subscription customers, as we increased our customer base by 65%, from 9,896 subscription customers in fiscal 2021 to 16,325
subscription customers in fiscal 2022. Subscription revenue from new customers, subscription revenue from the renewal of existing customers, and
subscription revenue from the sale of additional endpoints and additional modules to existing customers accounted for 34%, 42%, and 24% of total
subscription revenue in
62
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
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fiscal 2022, respectively. Subscription revenue from new customers, subscription revenue from the renewal of existing customers, and subscription revenue
from the sale of additional endpoints and additional modules to existing customers accounted for 33%, 36%, and 31% of total subscription revenue in fiscal
2021, respectively.
Professional services revenue increased by $22.3 million, or 32%, in fiscal 2022, compared to fiscal 2021, which was primarily attributable to an
increase in the number of professional service hours performed and increase in services offerings that are not based on billable hours.
The following shows cost of revenue related to subscriptions and professional services for fiscal 2022, as compared to fiscal 2021 (in thousands,
except percentages):
Subscription
Professional services
Total cost of revenue
Year Ended January 31,
2022
2021
$
$
321,904
61,317
383,221
$
$
185,212
44,333
229,545
$
$
Change
$
136,692
16,984
153,676
%
74
38
67
%
%
%
Total cost of revenue increased by $153.7 million, or 67%, in fiscal 2022, compared to fiscal 2021. Subscription cost of revenue increased by $136.7
million, or 74%, in fiscal 2022, compared to fiscal 2021. The increase in subscription cost of revenue was primarily due to an increase in cloud hosting and
related services cost of $58.7 million driven by increased customer activity, an increase in employee-related expenses of $37.7 million driven by a 55%
increase in average headcount, an increase in stock-based compensation expense of $10.3 million, an increase in amortization of intangible assets of $9.7
million, an increase in depreciation of data center equipment of $7.7 million, an increase in allocated overhead costs of $4.9 million, an increase in
depreciation of internal-use software of $4.3 million, and an increase in employee health insurance costs of $1.8 million.
Professional services cost of revenue increased by $17.0 million, or 38%, in fiscal 2022, compared to fiscal 2021. The increase in professional services
cost of revenue was primarily due to an increase in employee-related expenses of $10.0 million driven by an increase in average headcount of 43%, an
increase in stock-based compensation expense of $4.0 million, an increase in allocated overhead costs of $0.8 million, and an increase in employee health
insurance costs of $0.6 million.
The following shows gross profit and gross margin for subscriptions and professional services for fiscal 2022, as compared to fiscal 2021 (in
thousands, except percentages):
Subscription gross profit
Professional services gross profit
Total gross profit
Subscription gross margin
Professional services gross margin
Total gross margin
Year Ended January 31,
Change
2022
1,037,633
30,740
1,068,373
$
$
2021
619,458
25,435
644,893
$
$
$
$
$
418,175
5,305
423,480
%
68
21
66
%
%
%
Year Ended January 31,
2021
2022
76 %
33 %
74 %
77 %
36 %
74 %
Change
(1)%
(3)%
— %
Subscription gross margin slightly decreased by 1%, in fiscal 2022, compared to fiscal 2021. The decrease in subscription gross margin was primarily
due to higher intangibles amortization resulting from acquisitions, higher stock-based compensation expense, and higher cloud services costs per sensor,
partially offset by continued expansion of module adoption during fiscal 2022, compared to fiscal 2021. As of January 31, 2022, 69% of our customer base
had adopted four or more modules, 57% of our customer base had adopted five or more modules, and 34% of our customer base had adopted six or more
modules. As of January 31, 2021, 63% of our customer base had adopted four or more modules, 47% of our customer base had adopted five or more
modules, and 24% of our customer base had adopted six or more modules.
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Professional services gross margin decreased by 3% in fiscal 2022, compared to fiscal 2021. The decrease in professional services gross margin was
primarily due to higher employee-related expenses and higher stock-based compensation, partially offset with an increase in the number of professional
service hours performed and increase in services offerings that are not based on billable hours during fiscal 2022 compared to fiscal 2021.
Operating Expenses
Sales and Marketing
The following shows sales and marketing expenses for fiscal 2022, as compared to fiscal 2021 (in thousands, except percentages):
Year Ended January 31,
2022
2021
Change
$
Sales and marketing expenses
$
616,546
$
401,316
$
215,230
%
54
%
Sales and marketing expenses increased by $215.2 million, or 54%, in fiscal 2022, compared to fiscal 2021. The increase in sales and marketing
expenses was primarily due to an increase in employee-related expenses of $109.3 million driven by an increase in sales and marketing average headcount
of 35%, an increase in marketing programs of $42.0 million, an increase in stock-based compensation of $39.1 million, an increase in allocated overhead
costs of $8.2 million, and an increase in employee health insurance costs of $3.2 million during fiscal 2022.
Research and Development
The following shows research and development expenses for fiscal 2022, as compared to fiscal 2021 (in thousands, except percentages):
Year Ended January 31,
2022
2021
Change
$
Research and development expenses
$
371,283
$
214,670
$
156,613
%
73
%
Research and development expenses increased by $156.6 million, or 73% in fiscal 2022, compared to fiscal 2021. This increase was primarily due to
an increase in employee-related expenses of $81.2 million driven by an increase in research and development average headcount of 58%, an increase in
stock-based compensation of $61.8 million, an increase in allocated overhead costs of $9.3 million, an increase in cloud hosting and related costs of $4.4
million, and an increase in employee health insurance costs of $2.6 million, partially offset by an increase of $9.6 million in software capitalization.
General and Administrative
The following shows general and administrative expenses for fiscal 2022, as compared to fiscal 2021 (in thousands, except percentages):
Year Ended January 31,
2022
2021
Change
$
General and administrative expenses
$
223,092
$
121,436
$
101,656
%
84
%
General and administrative expenses increased by $101.7 million, or 84%, in fiscal 2022, compared to fiscal 2021. The increase in general and
administrative expenses was primarily due to an increase in stock-based compensation expense of $45.1 million, an increase in employee-related expenses
of $18.5 million driven by an increase in general and administrative average headcount of 47%, an increase in legal expense of $14.1 million, an increase in
consulting expense of $4.7 million, an increase in allocated overhead costs of $2.4 million, an increase in tax and licenses of $2.4 million, an increase in
term-based software licenses of $2.3 million, an increase in corporate insurance costs of $2.0 million, and an increase in employee health insurance costs of
$1.3 million during fiscal 2022.
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Interest Expense and Other Income, Net
The following shows interest and other expense, net, for fiscal 2022, as compared to fiscal 2021 (in thousands, except percentages):
Interest expense
Other income, net
Year Ended January 31,
2022
2021
$
$
(25,231)
7,756
$
$
(1,559)
6,219
$
$
Change
$
(23,672)
1,537
%
1,518
25
%
%
Interest expense consists primarily of interest expense from the amortization of debt issuance costs, contractual interest expense and accretion of debt
discount for our Senior Notes issued in January 2021.
The change in other income, net, during fiscal 2022 compared to fiscal 2021, was primarily due an increase in fair value adjustments for our strategic
investments, partially offset by the lower interest income earned on cash, cash equivalents and investments and fluctuations in foreign currency transaction
gains and losses.
Provision for Income Taxes
The following shows the provision for income taxes for fiscal 2022, as compared to fiscal 2021 (in thousands, except percentages):
Year Ended January 31,
2021
2022
Change
$
%
Provision for income taxes
$
72,355
$
4,760
$
67,595
1,420
%
The increase in the provision for income taxes of $67.6 million during fiscal 2022 compared to fiscal 2021 was primarily driven by the intercompany
sale of intellectual property from Humio of $57.2 million and an increase in pre-tax foreign earnings.
Liquidity and Capital Resources
Our primary sources of liquidity as of January 31, 2022, consisted of: (i) $2.0 billion in cash and cash equivalents, (ii) cash we expect to generate from
operations, and (iii) available capacity under our $750.0 million senior secured revolving credit facility (the “A&R Credit Agreement”). We expect that the
combination of our existing cash and cash equivalents, cash flows from operations, and the A&R Credit Agreement will be sufficient to meet our
anticipated cash needs for working capital and capital expenditures for at least the next 12 months.
Our short-term and long-term liquidity requirements primarily arise from: (i) business acquisitions and investments we may make from time to time,
(ii) working capital requirements, (iii) interest and principal payments related to our outstanding indebtedness, (iv) research and development and capital
expenditure needs, and (vi) license and service arrangements integral to our business operations. Our ability to fund these requirements will depend, in part,
on our future cash flows, which are determined by our future operating performance and, therefore, subject to prevailing global macroeconomic conditions
and financial, business and other factors, some of which are beyond our control.
Since our inception, we have generated operating losses, as reflected in our accumulated deficit of $964.9 million as of January 31, 2022. We expect to
continue to incur operating losses for the foreseeable future due to the investments we intend to continue to make, particularly in sales and marketing and
research and development. As a result, we may require additional capital resources in the future to execute strategic initiatives to grow our business.
We typically invoice our subscription customers annually in advance. Therefore, a substantial source of our cash is from such prepayments, which are
included on our consolidated balance sheets as deferred revenue. Deferred revenue primarily consists of billed fees for our subscriptions, prior to satisfying
the criteria for revenue recognition, which are subsequently recognized as revenue in accordance with our revenue recognition policy. As of January 31,
2022, we had deferred revenue of
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$1.5 billion, of which $1.1 billion was recorded as a current liability and is expected to be recorded as revenue in the next 12 months, provided all other
revenue recognition criteria have been met.
In January 2021, we issued and sold an aggregate principal amount of $750.0 million of 3.000% Senior Notes due 2029. The net proceeds from the
debt offering were $738.0 million after deducting the underwriting commissions of $9.4 million and $2.6 million of issuance costs.
In January 2021, we amended and restated our existing senior secured revolving credit facility (the “A&R Credit Agreement”) and increased the size
of the credit facility from $150.0 million to $750.0 million, including a letter of credit sub-facility in the aggregate amount of $100.0 million, and a
swingline sub-facility in the aggregate amount of $50.0 million. In January 2022, we modified the A&R Credit Agreement (the “Amended A&R Credit
Agreement”) to replace LIBOR with the Secured Overnight Finance Rate (“SOFR”) as the Eurodollar rate. There were no changes to the borrowing
amounts or maturity date. No amounts were outstanding under the Amended A&R Credit Agreement as of January 31, 2022.
We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or
special purpose entities. We do not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or
foreign currency forward contracts.
Cash Flows
The following table summarizes our cash flows for the periods presented (in thousands):
Net cash provided by operating activities
Net cash (used in) provided by investing activities
Net cash provided by financing activities
Operating Activities
2022
574,784
(564,516)
72,531
$
$
$
Year Ended January 31,
2021
$
$
$
356,566
495,427
800,135
$
$
$
2020
99,943
(629,631)
706,144
Net cash provided by operating activities during fiscal 2022 was $574.8 million, which resulted from a net loss of $232.4 million, adjusted for non-
cash charges of $485.4 million and net cash inflow of $321.7 million from changes in operating assets and liabilities. Non-cash charges primarily consisted
of $310.0 million in stock-based compensation expense, $113.9 million of amortization of deferred contract acquisition costs, $55.9 million of depreciation
and amortization, $12.9 million of amortization for intangibles assets, $9.1 million of non-cash operating lease costs and $2.5 million of non-cash interest
expense, partially offset by a $14.0 million change in deferred income taxes and a $4.8 million change in the fair value of strategic investments. The net
cash inflow from changes in operating assets and liabilities was primarily due to a $616.4 million increase in deferred revenue, a $38.5 million increase in
accrued expenses and other liabilities, a $33.2 million increase in accounts payable, and a $32.7 million increase in accrued payroll and benefits, partially
offset by a $234.3 million increase in deferred contract acquisition costs, a $125.4 million increase in accounts receivable, net, a $29.5 million increase in
prepaid expenses and other assets, and a $9.9 million decrease in operating lease liabilities.
Net cash provided by operating activities during fiscal 2021 was $356.6 million, which resulted from a net loss of $92.6 million, adjusted for non-cash
charges of $262.7 million and net cash inflow of $186.5 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of
$149.7 million in stock-based compensation expense, $66.4 million of amortization of deferred contract acquisition costs, $38.7 million of depreciation and
amortization, and $7.8 million of non-cash operating lease costs. The net cash inflow from changes in operating assets and liabilities was primarily due to a
$338.8 million increase in deferred revenue, a $33.2 million increase in accrued payroll and benefits, a $33.1 million increase in accrued expenses and
other liabilities and a $11.3 million increase in accounts payable, partially offset by $151.0 million increase in deferred contract acquisition costs and a
$73.0 million increase in accounts receivable, net.
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Investing Activities
Net cash used in investing activities during fiscal 2022 of $564.5 million was primarily due to the acquisitions of Humio and SecureCircle, net of cash
acquired, of $414.5 million, purchases of property and equipment of $112.1 million, capitalized internal-use software and website development costs of
$20.9 million, and purchase of strategic investments of $16.3 million.
Net cash provided by investing activities during fiscal 2021 of $495.4 million was primarily due to the sale of marketable securities of $639.6 million
and the maturities of marketable securities of $91.6 million, partially offset by our acquisition of Preempt Security, net of cash acquired, of $85.5 million,
purchases of marketable securities of $84.9 million, purchases of property and equipment of $52.8 million, and capitalized internal-use software of $10.9
million.
Financing Activities
Net cash provided by financing activities of $72.5 million during fiscal 2022 was primarily due to our proceeds from employee stock purchase plan of
$50.3 million, proceeds from the exercise of stock options of $15.9 million, and $8.2 million capital contributions from non-controlling interest.
Net cash provided by financing activities of $800.1 million during fiscal 2021 was primarily due to $739.6 million related to the issuance of our Senior
Notes, after deducting the underwriting commissions and issuance costs paid as of January 31, 2021, proceeds from our employee stock purchase plan of
$34.3 million, and proceeds from the exercise of stock options of $28.8 million, partially offset by $3.3 million debt issuance costs related to the revolving
credit facility.
Supplemental Guarantor Financial Information
Our Senior Notes are guaranteed on a senior, unsecured basis by CrowdStrike, Inc., a wholly owned subsidiary of CrowdStrike Holdings, Inc. (the
“subsidiary guarantor,” and together with CrowdStrike Holdings, Inc., the “Obligor Group”). The guarantee is full and unconditional, and is subject to
certain conditions for release. See Note 5, Debt, in Part II, Item 8 of this Annual Report on Form 10-K, for a brief description of the Senior Notes.
We conduct our operations almost entirely through our subsidiaries. Accordingly, the Obligor Group’s cash flow and ability to service the notes will
depend on the earnings of our subsidiaries and the distribution of those earnings to the Obligor Group, whether by dividends, loans or otherwise. Holders of
the guaranteed registered debt securities will have a direct claim only against the Obligor Group.
Summarized financial information is presented below for the Obligor Group on a combined basis after elimination of intercompany transactions and
balances within the Obligor Group and equity in the earnings from and investments in any non-guarantor subsidiary. The revenue amounts presented in the
summarized financial information include substantially all of our consolidated revenue, and there are no intercompany revenue from the non-guarantor
subsidiaries. This summarized financial information has been prepared and presented pursuant to Regulation S-X Rule 13-01, “Financial Disclosures about
Guarantors and Issuers of Guaranteed Securities” and is not intended to present the financial position or results of operations of the Obligor Group in
accordance with U.S. GAAP.
Statement of Operations
Revenue
Cost of revenue
Operating expenses
Loss from operations
Net loss
Net loss attributable to CrowdStrike
67
$
Year Ended
January 31, 2022
(in thousands)
1,450,908
402,022
1,223,452
(174,565)
(207,274)
(207,274)
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Balance Sheets
Current assets (excluding intercompany receivables from non-Guarantors)
Intercompany receivables from non-Guarantors
Noncurrent assets
Current liabilities
Noncurrent liabilities (excluding intercompany payable to non-Guarantors)
Intercompany payable to non-Guarantors
Strategic Investments
$
January 31, 2022
(in thousands)
2,499,941
11,900
1,201,620
1,363,873
1,165,807
276,919
In July 2019, we agreed to commit up to $10.0 million to a newly formed entity, CrowdStrike Falcon Fund LLC (the “Original Falcon Fund”) in
exchange for 50% of the sharing percentage of any distribution by the Original Falcon Fund. In December 2021, we agreed to commit an additional $50.0
million to a newly formed entity, CrowdStrike Falcon Fund II LLC (“Falcon Fund II”) in exchange for 50% of the sharing percentage of any distribution by
the Falcon Fund II. Further, entities associated with Accel also agreed to commit up to $10.0 million and $50.0 million, respectively, to the Original Falcon
Fund and the Falcon Fund II (collectively, the “Falcon Funds”), and collectively own the remaining 50% of the sharing percentage of the Falcon Funds.
Both Falcon Funds are in the business of purchasing, selling and investing in minority equity and convertible debt securities of privately-held companies
that develop applications that have potential for substantial contribution to us and our platform. We are the manager of the Falcon Funds and control the
investment decisions and day-to-day operations and accordingly have consolidated each of the Falcon Funds. Each Falcon Fund has a duration of ten years
and may be extended for three additional years. At dissolution, the Falcon Funds will be liquidated and the remaining assets will be distributed to the
investors based on their respective sharing percentage.
Contractual Obligations
Contractual Obligations and Commitments
Our commitments consist of obligations under non-cancellable real estate arrangements on an undiscounted basis, of which $10.5 million is due in the
next 12 months and $27.9 million is due thereafter. In addition, we have debt obligations related to $750.0 million aggregate principal amount of Senior
Notes due in fiscal 2030 and the interest payments associated with the Senior Notes of $22.5 million due in the next 12 months and $146.3 million due
thereafter. As of January 31, 2022, we have non-cancellable data center commitments payments of $20.8 million due in the next 12 months and
$33.0 million due thereafter. Also, as of January 31, 2022, we have non-cancelable purchase commitments with various parties to purchase products and
services entered in the normal course of business payments of $62.7 million due in the next 12 months and $77.7 million due thereafter. We expect to fund
these obligations with cash flows from operations and cash on our balance sheet.
The contractual commitment amounts above are associated with agreements that are enforceable and legally binding. Obligations under contracts,
including purchase orders, that we can cancel without a significant penalty are excluded. Purchase orders issued in the ordinary course of business are not
included above, as such purchase orders represent authorizations to purchase rather than binding agreements.
Other Obligations
In October 2021, we entered into a new private pricing addendum with Amazon Web Services (“AWS”), which provides us with cloud computing
infrastructure. Under the new pricing addendum, we committed to purchase a minimum of $600.0 million of cloud services from AWS through September
2026. As of January 31, 2022, we have utilized $53.2 million of this commitment. We expect to meet our remaining commitment with AWS.
As of January 31, 2022, our unrecognized tax benefits included $1.9 million which were classified as long-term liabilities due to the inherent
uncertainty with respect to the timing of future cash outflows associated with our unrecognized tax benefits.
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Indemnification
Our subscription agreements contain standard indemnification obligations. Pursuant to these agreements, we will indemnify, defend, and hold the other
party harmless with respect to a claim, suit, or proceeding brought against the other party by a third party alleging that our intellectual property infringes
upon the intellectual property of the third party, or results from a breach of our representations and warranties or covenants, or that results from any acts of
negligence or willful misconduct. The term of these indemnification agreements is generally perpetual any time after the execution of the agreement.
Typically, these indemnification provisions do not provide for a maximum potential amount of future payments we could be required to make. However, in
the past we have not been obligated to make significant payments for these obligations and no liabilities have been recorded for these obligations on our
consolidated balance sheets as of January 31, 2022 or January 31, 2021.
We also agreed to indemnify our directors and certain executive officers for certain events or occurrences, subject to certain limits, while the officer is
or was serving at our request in such capacity. The maximum amount of potential future indemnification is unlimited. However, our director and officer
insurance policy limits our exposure and enables us to recover a portion of any future amounts paid. Historically, we have not been obligated to make any
payments for these obligations and no liabilities have been recorded for these obligations on our consolidated balance sheets as of January 31, 2022 or
January 31, 2021.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of financial condition and results of operations is based upon our financial statements and notes to our
financial statements, which were prepared in accordance with GAAP. The preparation of the financial statements requires our management to make
estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. See Note 2, Summary of Significant
Accounting Policies to our consolidated financial statements included in Item 8, Financial Statements and Supplementary Data of this Annual Report on
Form 10-K. We base our estimates and judgments on our historical experience, knowledge of factors affecting our business and our belief as to what could
occur in the future considering available information and assumptions that are believed to be reasonable under the circumstances.
The accounting estimates we use in the preparation of our financial statements will change as new events occur, more experience is acquired,
additional information is obtained and our operating environment changes. Changes in estimates are made when circumstances warrant. Such changes in
estimates and refinements in estimation methodologies are reflected in our reported results of operations and, if material, the effects of changes in estimates
are disclosed in the notes to our financial statements. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and
actual results could differ materially from the amounts reported based on these estimates.
The critical accounting estimates, assumptions and judgments that we believe have the most significant impact on our consolidated financial
statements are described below.
Revenue Recognition
We derive our revenue predominately from subscription revenue which is primarily based on the solutions subscribed for by the customer. We
recognize subscription revenue ratably over the contract term. Our professional services are available through time and material and fixed fee agreements.
Revenue from professional services is recognized as services are performed.
We enter into revenue contracts with multiple performance obligations in which a customer may purchase combinations of subscriptions, support,
training and consulting service. Judgment is required when considering the terms and conditions of these contracts. The transaction price for these contracts
is allocated to the separate performance obligations on a relative standalone selling price (“SSP”) basis. The SSP is the price at which we would sell
promised subscription or professional services separately to a customer.
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Business Combinations
We allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair
values at the acquisition date. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is
recorded as goodwill. The purchase price allocation process requires management to make significant estimates and assumptions with respect to intangible
assets. Although we believe the assumptions and estimates we have made are reasonable, they are based in part on historical experience, market conditions
and information obtained from management of the acquired companies and are inherently uncertain. Examples of judgments used to estimate the fair value
of intangibles assets include, but are not limited to, future expected cash flows, expected customer attrition rates, estimated obsolescence rates, and discount
rates. These estimates are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
Income Taxes
We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on
differences between the financial statement and tax basis of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in
effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the
amounts expected to be realized.
We account for unrecognized tax benefits using a more-likely-than-not threshold for financial statement recognition and measurement of tax positions
taken or expected to be taken in a tax return. We establish a liability for tax-related uncertainties based on estimates of whether, and the extent to which,
additional taxes will be due. Our assumptions, judgments and estimates relative to the current provision for income taxes take into account current tax laws,
our interpretation of current tax laws and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. We have
established reserves for income taxes to address potential exposures involving tax positions that could be challenged by tax authorities. In addition, we are
subject to the continual examination of our income tax returns by the U.S. Internal Revenue Service (“IRS”) and other domestic and foreign tax authorities.
We regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have
reserved for potential adjustments that may result from such examinations. We believe such estimates to be reasonable; however, the final determination of
any of these examinations could significantly impact the amounts provided for income taxes in our consolidated financial statements.
See Note 2, Summary of Significant Accounting Policies, included in Part II, Item 8 of this Annual Report on Form 10-K for more information about
the impact of certain recent accounting pronouncements on our consolidated financial statements.
Recently Issued Accounting Pronouncements
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have operations in the United States and internationally, and we are exposed to market risk in the ordinary course of business.
Interest Rate Risk
Our cash and cash equivalents primarily consist of cash on hand and highly liquid investments in bank deposits and money market funds. Our
investments are exposed to market risk due to fluctuations in interest rates, which may affect our interest income and the fair value of our investments. As
of January 31, 2022, we had cash and cash equivalents of $2.0 billion and no marketable securities. The carrying amount of our cash equivalents reasonably
approximates fair value due to the short maturities of these instruments. The primary objectives of our investment activities are the preservation of capital,
the fulfillment of liquidity needs, and the fiduciary control of cash and investments. We do not enter into investments for trading or speculative purposes.
Due to the short-term nature of our investment portfolio, the effect of a hypothetical 100 basis point change in interest rates would not have had a material
effect on the fair market value of our portfolio as of January 31, 2022. We therefore do not expect our results of operations or cash flows to be materially
affected by a sudden change in market interest rates.
Our debt obligations consist of a variety of financial instruments that expose us to interest rate risk, including, but not limited to our revolving credit
facility and the Senior Notes. The interest on the revolving credit facility is tied to short term interest rate benchmarks including the Term SOFR. The
interest rate on the Senior Notes is fixed.
Foreign Currency Risk
To date, nearly all of our sales contracts have been denominated in U.S. dollars. A portion of our operating expenses are incurred outside the United
States, denominated in foreign currencies and subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the British
Pound, Australian Dollar, and Euro. The functional currency of our foreign subsidiaries is that country’s local currency. Foreign currency transaction gains
and losses are recorded to Other income (expense), net. A hypothetical 10% adverse change in the U.S. dollar against other currencies would have resulted
in an increase in operating loss of approximately $36.3 million and $17.2 million for the fiscal years ended January 31, 2022 and January 31, 2021,
respectively. We have not entered into derivative or hedging transactions, but we may do so in the future if our exposure to foreign currency becomes more
significant.
Inflation Rate Risk
We do not believe that inflation had a material effect on our business, financial conditions or results of operations during the fiscal year ended
January 31, 2022. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through
price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Financial Statements
Consolidated Balance Sheets as of January 31, 2022 and 2021
Consolidated Statements of Operations for the years ended January 31, 2022, 2021 and 2020
Consolidated Statements of Comprehensive Loss for the years ended January 31, 2022, 2021 and 2020
Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the years ended January 31, 2022,
2021 and 2020
Consolidated Statements of Cash Flows for the years ended January 31, 2022, 2021 and 2020
Notes to Consolidated Financial Statements
Page
73
75
76
77
78
79
80
72
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of CrowdStrike Holdings, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of CrowdStrike Holdings, Inc. and its subsidiaries (the “Company”) as of January 31, 2022
and 2021, and the related consolidated statements of operations, of comprehensive loss, of redeemable convertible preferred stock and stockholders’ equity
(deficit) and of cash flows for each of the three years in the period ended January 31, 2022, including the related notes (collectively referred to as the
“consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of January 31, 2022, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of
January 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2022 in
conformity 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 January 31, 2022, based on criteria established in Internal Control - Integrated Framework
(2013) issued by the COSO.
Changes in Accounting Principles
As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2021 and the manner in
which it accounts for revenues from contracts with customers in 2020.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting,
and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial
Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s
internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective
internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing
such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures
73
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that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized 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 of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was
communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated
financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not
alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition – Identification and Evaluation for Terms and Conditions in Contracts
As described in Note 2 to the consolidated financial statements, the Company generates its revenue from contracts with customers for subscriptions and
professional services. Management considers the terms and conditions of contracts with customers and the Company’s customary business practices in
identifying contracts. Management determines the Company has a contract with a customer when the contract is approved, each party’s rights regarding the
services to be transferred can be identified, payment terms for the services can be identified, it has been determined that the customer has the ability and
intent to pay, and the contract has commercial substance. Revenue is recognized when control of the promised services is transferred to the customer, in an
amount that reflects the consideration expected to be received in exchange for those services. The Company’s consolidated revenue for the year ended
January 31, 2022 was $1,452 million.
The principal considerations for our determination that performing procedures relating to revenue recognition, specifically the identification and evaluation
of terms and conditions in contracts, is a critical audit matter are the high degree of auditor subjectivity and effort in performing procedures and evaluating
evidence relating to the identification and evaluation of terms and conditions in contracts.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated
financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the
identification and evaluation of terms and conditions in contracts. These procedures also included, among others, (i) testing management’s process for
identifying and evaluating terms and conditions in contracts, including evaluating management’s determination of the impact of those terms and conditions
on revenue recognition, and (ii) testing the completeness and accuracy of management’s identification and evaluation of terms and conditions in contracts
by examining revenue transactions on a test basis.
/s/ PricewaterhouseCoopers LLP
San Jose, California
March 16, 2022
We have served as the Company’s auditor since 2016.
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CrowdStrike Holdings, Inc.
Consolidated Balance Sheets
(in thousands, except per share data)
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, net of allowance for credit losses of $1.6 million and
$1.2 million as of January 31, 2022 and January 31, 2021, respectively
Deferred contract acquisition costs, current
Prepaid expenses and other current assets
Total current assets
Strategic investments
Property and equipment, net
Operating lease right-of-use assets
Deferred contract acquisition costs, noncurrent
Goodwill
Intangible assets, net
Other long-term assets
Total assets
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
Accrued expenses
Accrued payroll and benefits
Operating lease liabilities, current
Deferred revenue
Other current liabilities
Total current liabilities
Long-term debt
Deferred revenue, noncurrent
Operating lease liabilities, noncurrent
Other liabilities, noncurrent
Total liabilities
Commitments and contingencies (Note 11)
Stockholders’ Equity
Preferred stock, $0.0005 par value; 100,000 shares authorized as of January 31, 2022 and January 31, 2021; no shares issued and outstanding as of
January 31, 2022 and January 31, 2021
Class A common stock, $0.0005 par value; 2,000,000 shares authorized as of January 31, 2022 and January 31, 2021; 209,996 shares, and
195,039 shares issued and outstanding as of January 31, 2022 and January 31, 2021, respectively; Class B common stock, $0.0005 par value;
300,000 shares authorized as of January 31, 2022 and January 31, 2021; 20,710 shares, and 28,685 shares issued and outstanding as of January 31,
2022 and January 31, 2021, respectively
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive (loss) income
Total CrowdStrike Holdings, Inc. stockholders’ equity
Non-controlling interest
Total stockholders’ equity
Total liabilities and stockholders’ equity
The accompanying notes are an integral part of these consolidated financial statements.
75
January 31,
2022
2021
$
1,996,633
$
1,918,608
368,145
126,822
79,352
2,570,952
23,632
260,577
31,735
192,358
416,445
97,336
25,346
3,618,381
47,634
83,382
104,563
9,820
1,136,502
24,929
1,406,830
739,517
392,819
25,379
16,193
2,580,738
$
$
239,199
80,850
53,617
2,292,274
2,500
167,014
36,484
117,906
83,566
15,677
17,112
2,732,533
12,065
51,117
71,907
8,977
701,988
17,499
863,553
738,029
209,907
31,986
17,184
1,860,659
—
—
115
1,991,807
(964,918)
(1,240)
1,025,764
11,879
1,037,643
3,618,381
$
112
1,598,259
(730,116)
2,319
870,574
1,300
871,874
2,732,533
$
$
$
Table of Contents
Revenue
Subscription
Professional services
Total revenue
Cost of revenue
Subscription
Professional services
Total cost of revenue
Gross profit
Operating expenses
Sales and marketing
Research and development
General and administrative
Total operating expenses
Loss from operations
Interest expense
Other income, net
CrowdStrike Holdings, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
Year Ended January 31,
2021
2022
2020
$
1,359,537 $
92,057
1,451,594
804,670 $
69,768
874,438
321,904
61,317
383,221
185,212
44,333
229,545
436,323
45,090
481,413
112,474
29,153
141,627
1,068,373
644,893
339,786
616,546
371,283
223,092
1,210,921
(142,548)
(25,231)
7,756
401,316
214,670
121,436
737,422
(92,529)
(1,559)
6,219
266,595
130,188
89,068
485,851
(146,065)
(442)
6,725
Loss before provision for income taxes
(160,023)
(87,869)
(139,782)
Provision for income taxes
72,355
4,760
1,997
Net Loss
Net income attributable to noncontrolling interest
Net loss attributable to CrowdStrike
Net loss per share attributable to CrowdStrike common stockholders, basic and diluted
(232,378)
2,424
(234,802) $
(92,629)
—
(92,629) $
(141,779)
—
(141,779)
(1.03) $
(0.43) $
(0.96)
$
$
Weighted-average shares used in computing net loss per share attributable to CrowdStrike
common stockholders, basic and diluted
227,142
217,756
148,062
The accompanying notes are an integral part of these consolidated financial statements.
76
Table of Contents
CrowdStrike Holdings, Inc.
Consolidated Statements of Comprehensive Loss
(in thousands)
Net loss
Other comprehensive income (loss):
Foreign currency translation adjustments
Reversal of unrealized gain upon sale of debt securities, net of tax
Unrealized gain on available-for-sale securities, net of tax
Other comprehensive income (loss)
Less: Comprehensive income attributable to noncontrolling interest
Total comprehensive loss attributable to CrowdStrike
2022
Year Ended January 31,
2021
2020
$
(232,378) $
(92,629) $
(141,779)
(3,559)
—
—
(3,559)
2,424
(238,361) $
$
2,630
(1,320)
—
1,310
—
(91,319) $
(410)
—
1,321
911
—
(140,868)
The accompanying notes are an integral part of these consolidated financial statements.
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Table of Contents
CrowdStrike Holdings, Inc.
Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(in thousands)
Balances at January 31, 2019
Cumulative effect of accounting change- ASC 606
Issuance of common stock upon initial public offering, net of
underwriting discounts and issuance costs
Conversion of redeemable convertible preferred stock to
common stock upon initial public offering
Reclassification of redeemable convertible preferred stock
warrant liability to additional paid-in capital upon initial
public offering
Net exercise of common stock warrants
Issuance of common stock upon exercise of options
Issuance of common stock under RSU release
Issuance of common stock under employee stock purchase
plan
Issuance of common stock related to early exercised options
Vesting of early exercised options
Stock-based compensation expense
Capitalized stock-based compensation
Settlement related to stockholders short-swing trade profit
Net loss
Non-controlling interest
Unrealized net gain on available-for-sale-securities, net of tax
Foreign currency translation adjustments
Balances at January 31, 2020
Issuance of common stock upon exercise of options
Issuance of common stock under RSU release
Issuance of common stock under employee stock purchase
plan
Vesting of early exercised options
Stock-based compensation expense
Capitalized stock-based compensation
Fair value of replacement equity awards attributable to pre-
acquisition service
Net loss
Non-controlling interest
Other comprehensive loss
Balances at January 31, 2021
Issuance of common stock upon exercise of options
Issuance of common stock under RSU and PSU release
Issuance of common stock under employee stock purchase
plan
Issuance of common stock related to early exercised options
Vesting of early exercised options
Issuance of common stock for founders holdbacks related to
acquisitions
Stock-based compensation expense
Capitalized stock-based compensation
Fair value of replacement equity awards attributable to pre-
acquisition service
Net income (loss)
Non-controlling interest
Other comprehensive loss
Balances at January 31, 2022
Redeemable
Convertible
Preferred Stock
Common Stock
Shares
Amount
Shares
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Non-controlling
Interest
Total
Stockholders’
Equity (Deficit)
131,268
—
$
—
557,912
—
—
$
47,421
—
20,700
(131,268)
(557,912)
131,268
$
24
—
11
66
—
—
5
—
—
—
—
—
—
—
—
—
—
—
31,211
—
659,207
557,846
10,559
—
21,507
—
12,365
—
2,704
79,940
857
2,283
—
—
—
—
Accumulated
Deficit
$
(519,126)
23,418
$
—
—
—
—
—
—
—
—
—
—
—
—
(141,779)
—
—
—
$
98
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,321
(410)
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
500
—
—
—
322
10,645
1,127
428
1,037
—
—
—
—
—
—
—
—
212,948
$
106
$
1,378,479
$
(637,487)
$
1,009
$
500
$
7,752
1,994
1,030
—
—
—
—
—
—
—
6
—
—
—
—
—
—
—
—
—
28,825
—
34,263
3,318
149,375
3,686
313
—
—
—
—
—
—
—
—
—
—
(92,629)
—
—
—
—
—
—
—
—
—
—
—
1,310
—
—
—
—
—
—
—
—
800
—
223,724
$
112
$
1,598,259
$
(730,116)
$
2,319
$
1,300
$
2,598
3,408
904
57
—
15
—
—
—
—
—
—
1
2
—
—
—
—
—
—
—
—
—
—
15,898
(2)
50,277
—
3,165
3,528
305,792
10,879
4,011
—
—
—
—
—
—
—
—
—
—
—
—
(234,802)
—
—
—
—
—
—
—
—
—
—
—
—
(3,559)
—
—
—
—
—
—
—
—
—
2,424
8,155
—
(487,793)
23,418
659,218
557,912
10,559
—
21,512
—
12,365
—
2,704
79,940
857
2,283
(141,779)
500
1,321
(410)
742,607
28,831
—
34,263
3,318
149,375
3,686
313
(92,629)
800
1,310
871,874
15,899
—
50,277
—
3,165
3,528
305,792
10,879
4,011
(232,378)
8,155
(3,559)
230,706
$
115
$
1,991,807
$
(964,918)
$
(1,240)
$
11,879
$
1,037,643
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
The accompanying notes are an integral part of these consolidated financial statements.
78
Table of Contents
CrowdStrike Holdings, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Operating activities
Net loss
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
Amortization of intangible assets
Amortization of deferred contract acquisition costs
Non-cash operating lease cost
Change in fair value of redeemable convertible preferred stock warrant liability
Stock-based compensation expense
Deferred income taxes
Gain on sale of debt securities, net
Amortization (accretion) of marketable securities purchased at a premium (discount)
Non-cash interest expense
Other non-cash charges
Change in fair value of strategic investments
Changes in operating assets and liabilities, net of impact of acquisitions
Accounts receivable, net
Deferred contract acquisition costs
Prepaid expenses and other assets
Accounts payable
Accrued expenses and other liabilities
Accrued payroll and benefits
Operating lease liabilities
Deferred revenue
Net cash provided by operating activities
Investing activities
Purchases of property and equipment
Capitalized internal-use software and website development costs
Purchases of strategic investments
Business acquisitions, net of cash acquired
Purchases of intangible assets
Purchases of marketable securities
Proceeds from sales of marketable securities
Maturities of marketable securities
Net cash (used in) provided by investing activities
Financing activities
Proceeds from the issuance of common stock upon initial public offering, net of underwriting discounts
Payments of debt issuance costs related to revolving line of credit
Payments of debt issuance costs related to Senior Notes
Proceeds from issuance of Senior Notes, net of debt financing costs
Payments of deferred offering costs
Proceeds from issuance of common stock upon exercise of stock options
Proceeds from the issuance of common stock upon exercise of early exercisable stock options
Proceeds from issuance of common stock under the employee stock purchase plan
Settlement related to stockholder short-swing trade profit
Capital contributions from non-controlling interest holders
Net cash provided by financing activities
Effect of foreign exchange rates on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Supplemental disclosure of cash flow information:
Interest paid
Income taxes paid, net of refunds received
Supplemental disclosure of non-cash investing and financing activities:
Conversion of redeemable convertible preferred stock to common stock
Conversion of redeemable convertible preferred stock warrant liabilities reclassified to additional paid-in capital
Net decrease in deferred offering costs, accrued but not paid
Net increase (decrease) in property and equipment included in accounts payable and accrued expenses
Vesting of early exercised stock options
Equity consideration for acquisitions
Debt financing costs, accrued but not paid
Operating lease liabilities arising from obtaining operating right of-use assets
$
$
$
$
$
$
$
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
79
2022
Year Ended January 31,
2021
2020
$
(232,378)
$
(92,629)
$
(141,779)
55,908
12,902
113,884
9,103
—
309,952
(13,956)
—
—
2,469
—
(4,823)
(125,354)
(234,308)
(29,535)
33,248
38,483
32,681
(9,900)
616,408
574,784
(112,143)
(20,866)
(16,309)
(414,518)
(680)
—
—
—
(564,516)
—
(219)
(1,581)
—
—
15,899
—
50,277
—
8,155
72,531
(4,774)
78,025
1,918,608
1,996,633
275
74,677
—
—
—
6,522
3,165
4,011
—
4,867
$
$
$
$
$
$
$
$
$
$
$
38,710
1,448
66,425
7,786
—
149,675
(1,452)
(1,347)
578
853
—
—
(73,022)
(150,975)
2,198
11,325
33,083
33,212
(8,105)
338,803
356,566
(52,799)
(10,864)
(1,500)
(85,517)
(180)
(84,904)
639,586
91,605
495,427
—
(3,328)
—
739,569
—
28,831
—
34,263
—
800
800,135
1,682
1,653,810
264,798
1,918,608
18
1,732
—
—
—
1,042
3,318
3,842
1,581
6,249
$
$
$
$
$
$
$
$
$
$
$
23,026
487
35,459
—
6,022
79,940
(681)
—
(1,247)
435
(427)
—
(72,511)
(86,594)
(44,008)
(6,570)
10,097
17,526
—
280,768
99,943
(80,198)
(7,289)
(1,000)
—
—
(779,701)
9,581
228,976
(629,631)
665,092
—
—
—
(5,872)
21,512
10,264
12,365
2,283
500
706,144
(66)
176,390
88,408
264,798
7
1,862
557,912
10,559
(2,858)
(3,193)
2,704
—
—
—
Table of Contents
CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
1. Description of Business and Basis of Presentation
Business
CrowdStrike Holdings, Inc. (the “Company”) was formed on November 7, 2011. The Company provides a leading cloud-delivered solution for next-
generation endpoint and cloud workload protection via a software as a service (“SaaS”) subscription-based model that spans multiple security markets,
including corporate workload security, security and vulnerability management, managed security services, IT operations management, threat intelligence
services, identity protection and log management. The Company’s principal executive offices are in Austin, Texas. The Company conducts its business in
the United States, as well as locations internationally, including in Australia, Germany, India, Israel, Romania, and the United Kingdom.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S.
GAAP”). Certain prior year amounts in the consolidated statements of cash flows were reclassified to conform to the current period presentation. These
reclassifications had no effect on net cash provided by (used in) operating, investing, and financing activities and cash and cash equivalent amounts.
Effective February 1, 2020, the Company adopted the Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). Prior periods were not
retrospectively recast, and accordingly, the consolidated statements of operations for the fiscal year ended January 31, 2020 was prepared using the prior
lease accounting standard referred to as Accounting Standard Codification (“ASC”) Topic 840. Upon adoption, the Company recorded operating lease
ROU assets of $37.4 million and corresponding operating lease liabilities of $37.4 million on its consolidated balance sheet.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
amounts reported and disclosed in the Company’s consolidated financial statements and accompanying notes. These estimates are based on information
available as of the date of the consolidated financial statements. On a regular basis, management evaluates these estimates and assumptions. Actual results
may differ from these estimates and such difference could be material to the Company’s consolidated financial statements.
Estimates and assumptions used by management include, but are not limited to, revenue recognition, the allowance for credit losses, the useful lives of
long-lived assets, the fair values of strategic investments, the period of benefit for deferred contract acquisition costs, the discount rate used for operating
leases, the recognition and disclosure of contingent liabilities, income taxes, stock-based compensation, and the fair value of assets acquired and liabilities
assumed for business combinations.
Due to the Coronavirus (“COVID-19”) pandemic, there has been uncertainty and disruption in the global economy and financial markets. The
Company is not aware of any specific event or circumstance that would require a material update to its estimates or judgments or an adjustment of the
carrying value of its assets or liabilities as of January 31, 2022. While there was not a material impact to the Company’s consolidated financial statements
as of and for the year ended January 31, 2022, these estimates may change, as new events occur and additional information is obtained, as well as other
factors related to COVID-19 that could result in material impacts to the Company’s consolidated financial statements in future reporting periods.
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Notes to Consolidated Financial Statements
Concentration of Credit Risk and Geographic Information
The Company generates revenue from the sale of subscriptions to access its cloud platform and professional services. The Company’s sales team,
along with its channel partner network of system integrators and value-added resellers (collectively, “channel partners”), sells the Company’s services
worldwide to organizations of all sizes.
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents, accounts receivable, and
strategic investments. The Company’s cash is placed with high-credit-quality financial institutions and issuers, and at times exceed federally insured limits.
The Company has not experienced any credit loss relating to its cash equivalents and strategic investments. The Company performs periodic credit
evaluations of its customers and generally does not require collateral.
Channel partners or direct customers who represented 10% or more of the Company’s accounts receivable were as follows:
Channel partner A
Customer A
(1)
(1)
January 31,
2022
9
10
%
%
2021
10
17
%
%
_______________________________
(1) Channel Partner A and Customer A are controlled by the same company.
Channel partners who represented 10% or more of the Company’s total revenue were as follows:
Channel partner B
2022
Year Ended January 31,
2021
2020
7 %
8 %
10 %
There were no direct customers who represented 10% or more of the Company’s total revenue during the fiscal years ended January 31, 2022,
January 31, 2021, and January 31, 2020.
Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less at date of purchase to be cash equivalents. As of
January 31, 2022, the Company had $950.6 million of cash equivalents. As of January 31, 2021, the Company did not have any cash equivalents.
Strategic Investments
In July 2019, the Company agreed to commit up to $10.0 million to a newly formed entity, CrowdStrike Falcon Fund LLC (the “Original Falcon
Fund”) in exchange for 50% of the sharing percentage of any distribution by the Original Falcon Fund. In December 2021, the Company agreed to commit
an additional $50.0 million to a newly formed entity, CrowdStrike Falcon Fund II LLC (“Falcon Fund II”) in exchange for 50% of the sharing percentage
of any distribution by the Falcon Fund II. Further, entities associated with Accel also agreed to commit up to $10.0 million and $50.0 million, respectively,
to the Original Falcon Fund and the Falcon Fund II (collectively, the “Falcon Funds”), and collectively own the remaining 50% of the sharing percentage of
the Falcon Funds. Both Falcon Funds are in the business of purchasing, selling and investing in minority equity and convertible debt securities of privately-
held companies that develop applications that have potential for substantial contribution to CrowdStrike and its platform. The Company is the manager of
the Falcon Funds and controls the investment decisions and day-to-day operations and accordingly has consolidated each of the Falcon Funds. Each Falcon
Fund has a duration of ten years and may be extended for three additional years. At dissolution, the Falcon Funds will be liquidated and the remaining
assets will be distributed to the investors based on their respective sharing percentage.
The Company elected the measurement alternative for the non-marketable equity investments of the Falcon Funds where eligible. Under the
measurement alternative, the non-marketable equity investments are measured at cost, less any impairment, plus or minus adjustments resulting from price
changes from observable transactions of identical or similar securities of the
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
same issuer. All gains and losses on strategic investments, realized and unrealized, are recognized in Other income (expense), net. Strategic investments are
classified within Level 3 in the fair value hierarchy as only an impairment of observable adjustment is recognized based on price changes from observable
transactions of identical or similar securities of the same issuer and other unobservable inputs including volatility, rights, and obligations of the
investments. The Company classifies the investments in the Falcon Funds as a non-current asset called Strategic Investments on the consolidated balance
sheets as of January 31, 2022. The Company has recognized an unrealized gain for its portion of ownership of the strategic investments in the amount of
$2.4 million, net of gain attributable to non-controlling interest of $2.4 million, during the fiscal year ended January 31, 2022.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash equivalents, strategic investments, accounts receivable, accounts payable, accrued expenses, the
redeemable convertible preferred stock warrant liability, and the Senior Notes. The carrying values of cash equivalents, accounts receivable, accounts
payable, and accrued expenses approximate fair value due to their short-term nature. The Senior Notes are carried at the initially allocated liability value
less unamortized debt discount and issuance costs on the Company’s consolidated balance sheet. The Company discloses the fair value of the Senior Notes
at each reporting period for disclosure purposes only. Refer to Note 3, Investments and Fair Value Measurements, regarding the fair value of the Company’s
non-marketable securities and Note 5, Debt, for the fair value of the Company’s Senior Notes.
The Company reports the redeemable convertible preferred stock warrant liability at fair value (see Note 3, Investments and Fair Value
Measurements). The warrants issued by the Company for redeemable convertible preferred stock in January 2015, December 2016, and March 2017 have
been recorded as a liability based on “Level 3” inputs, which consist of unobservable inputs and reflect management’s estimates of assumptions that market
participants would use in pricing the liability. The fair value of the warrants was determined using the Black-Scholes option-pricing model, which is
affected by changes in inputs to that model including the Company’s stock price, expected stock price volatility, risk-free rate, and contractual term.
Immediately prior to the closing of the IPO on June 14, 2019, the redeemable convertible preferred stock warrants converted into 336,386 warrants to
purchase Class B common stock on a one-to-one basis. The redeemable convertible preferred stock warrant liability was reclassified to additional paid-in
capital upon the closing of the IPO.
Accounts Receivable
Accounts receivable are recorded at the invoiced amount and are non-interest bearing. Accounts receivable are stated at their net realizable value, net
of the allowance for credit losses. The Company has a well-established collections history from its customers. Credit is extended to customers based on an
evaluation of their financial condition and other factors. The Company generally does not require collateral from its customers; however, the Company may
require payment prior to commencing service in certain instances to limit credit risk. The Company regularly reviews the adequacy of the allowance for
credit loss by considering various factors including the age of each outstanding invoice, each customer’s expected ability to pay, historical loss rates and
expectations of forward-looking loss estimates to determine whether the allowance is appropriate. Amounts deemed uncollectible are written off against the
allowance for credit loss. As of January 31, 2022 and January 31, 2021, the allowance for credit loss was $1.6 million and $1.2 million, respectively.
Software Implementation Costs
The Company contracts with third party information technology providers for various service arrangements including software, platform, and
information technology infrastructure. The Company capitalizes the implementation cost incurred to develop or obtain internal-use software in such
arrangements which are recorded as part of property and equipment, net in the consolidated balance sheets. All capitalized implementation costs are
amortized over the term of the arrangement which includes reasonably certain renewals. Costs incurred during the preliminary project and post implement
stage are expensed as the activities are performed.
Deferred Offering Costs
Deferred offering costs consisted of fees and expenses incurred in connection with the sale of the Company’s common stock in an IPO, including legal,
accounting, printing and other IPO-related costs. Upon the close of the IPO on June 14, 2019, total deferred offering costs of $5.9 million were reclassified
to stockholders’ equity and recorded against the proceeds from the offering.
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Notes to Consolidated Financial Statements
Property and Equipment, Net
Property and equipment, net, is stated at historical cost less accumulated depreciation and amortization. Depreciation and amortization are calculated
using the straight-line method over the estimated useful lives of the assets as follows:
Data center and other computer equipment
Furniture and equipment
Purchased software
Capitalized internal-use software and website development
Leasehold improvements
3 – 5 years
5 years
3 – 5 years
3 years
Estimated useful life or term of the lease, whichever is shorter
Expenditures for routine maintenance and repairs are charged to operating expense as incurred. Major renewals and improvements are capitalized and
depreciated over their estimated useful lives. Upon retirement or other disposition of property and equipment, the cost and accumulated depreciation are
removed from the accounts, and any gain or loss is recorded in operating expenses in the consolidated statement of operations.
The Company reviews for impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the asset
(or asset group) may not be recoverable. Events and changes in circumstances considered by the Company in determining whether the carrying value of
long-lived assets may not be recoverable, include, but are not limited to: significant changes in performance relative to expected operating results,
significant changes in the use of the assets, significant negative industry or economic trends, and changes in the Company’s business strategy. Impairment
testing is performed at an asset level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other
assets and liabilities (an “asset group”). An impairment loss would be recognized when estimated future cash flows expected to result from the use of the
asset (or asset group) and its eventual disposition is less than its carrying amount. No impairment indicators were identified by the Company and no
impairment losses were recorded by the Company during the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020.
Capitalized Internal-Use Software and Website Development Costs
The Company capitalizes certain development costs incurred in connection with its internal-use software and website development. These capitalized
costs are primarily related to the Company’s cloud-delivered solution for next-generation endpoint protection as well as redefining, redesigning, and
rebuilding crowdstrike.com. Costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the
development stage, internal and external costs, if direct, are capitalized until the software and website are substantially complete and ready for its intended
use.
Capitalization ceases upon completion of all substantial testing. The Company also capitalizes costs related to specific upgrades and enhancements
when it is probable the expenditures will result in additional functionality. Capitalized costs are recorded as property and equipment, net. Maintenance and
training costs are expensed as incurred. Internal-use software and website development costs are amortized to cost of revenue on a straight-line basis over
its estimated useful life of three years. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events
or changes in circumstances occur that could impact the recoverability of these assets.
Deferred Contract Acquisition Costs
Under ASC 340-40, Other Assets and Deferred Costs - Contracts with Customers, the Company capitalizes contract acquisition costs that are
incremental to the acquisition of customer contracts. Contract acquisition costs are accrued and capitalized upon execution of the sales contract by the
customer. Sales commissions for renewal of a contract are not considered commensurate with the commissions paid for the acquisition of the initial
contract or follow-on upsell given the substantive difference in commission rates in proportion to their respective contract values. Commissions, including
referral fees paid to referral partners, earned upon the initial acquisition of a contract or subsequent upsell are amortized over an estimated period of benefit
of four years while commissions earned for renewal contracts are amortized over the contractual term of the renewals. Sales commissions associated with
professional service contracts are amortized ratably over an estimated period of benefit of six months.
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Deferred Revenue
CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
The deferred revenue balance consists of subscription and professional services which have been invoiced upfront and are recognized as revenue only
when the revenue recognition criteria are met. The Company’s subscription contracts are typically invoiced to its customers at the beginning of the term, or
in some instances, such as in multi-year arrangements, in installments. Professional services are either invoiced upfront, invoiced in installments, or
invoiced as the services are performed. Accordingly, the Company’s deferred revenue balance does not include revenue for future years of multi-year non-
cancellable contracts that have not yet been billed.
The Company recognizes subscription revenue ratably over the contract term beginning on the commencement date of each contract, the date that
services are made available to customers. The Company recognizes professional services revenue as services are delivered. Once services are available to
customers, the Company records amounts due in accounts receivable and in deferred revenue. To the extent the Company bills customers in advance of the
contract commencement date, the accounts receivable and corresponding deferred revenue amounts are netted to zero on the consolidated balance sheets,
unless such amounts have been paid as of the balance sheet date.
Redeemable Convertible Preferred Stock Warrants
Warrants related to the Company’s redeemable convertible preferred stock are classified as liabilities on the Company’s consolidated balance sheets.
The warrants are subject to reassessment at each balance sheet date, and any change in fair value is recognized as a component of Other income (expense),
net, in the consolidated statements of operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the
expiration or exercise of the warrants, or upon their automatic conversion into warrants to purchase common stock in connection with a qualified initial
public offering such that they qualify for equity classification and no further remeasurement is required.
Immediately prior to the closing of the IPO on June 14, 2019, the redeemable convertible preferred stock warrants converted into 336,386 warrants to
purchase Class B common stock on a one-to-one basis. The redeemable convertible preferred stock warrant liability was reclassified to additional paid-in
capital. Within the same month, the Company received notice from the holders of 336,386 warrants as to their intentions to exercise the warrants for shares
of common stock of the Company. Such shares were settled via net settlement method, which was elected by the holders to reduce the number of shares
issued upon exercise to reflect net settlement of the exercise price, resulting in the issuance of 322,278 shares of the Company’s common stock.
Revenue Recognition
In accordance with ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”), revenue is recognized when a customer obtains control of
promised services. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to receive in exchange for these
services. To achieve the core principle of this standard, the Company applies the following five steps:
(1) Identify the contract with a customer
The Company considers the terms and conditions of contracts with customers and its customary business practices in identifying contracts under ASC
606. The Company determines it has a contract with a customer when the contract is approved, each party’s rights regarding the services to be transferred
can be identified, payment terms for the services can be identified, it has been determined that the customer has the ability and intent to pay, and the
contract has commercial substance. The Company applies judgment in determining the customer’s ability and intent to pay, which is based on a variety of
factors, including the customer’s historical payment experience or, in the case of a new customer, credit and financial information pertaining to the
customer.
(2) Identify the performance obligations in the contract
Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of
being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from the
Company or from third parties, and are distinct in the context of the contract,
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Notes to Consolidated Financial Statements
whereby the transfer of the services is separately identifiable from other promises in the contract. The Company’s performance obligations consist of
(i) subscriptions and (ii) professional services.
(3) Determine the transaction price
The transaction price is determined based on the consideration which the Company is expected to be entitled to in exchange for transferring services to
the customer. Variable consideration is included in the transaction price if it is probable that a significant future reversal of cumulative revenue under the
contract will not occur. None of the Company’s contracts contain a significant financing component.
(4) Allocate the transaction price to performance obligations in the contract
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that
contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling
price (“SSP”).
(5) Recognize revenue when or as performance obligations are satisfied
Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised service to the customer. Revenue is
recognized when control of the services is transferred to the customer, in an amount that reflects the consideration expected to be received in exchange for
those services. The Company generates all its revenue from contracts with customers.
Subscription Revenue
The Company’s Falcon Platform technology solutions are subscription, SaaS offerings designed to continuously monitor, share, and mitigate risks
from determined attackers. Customers do not have the right to take possession of the cloud-based software platform. Fees are based on several factors,
including the solutions subscribed for by the customer and the number of endpoints purchased by the customer. The subscription fees are typically payable
within 30 to 60 days after the execution of the arrangement, and thereafter upon renewal or subsequent installment. The Company initially records the
subscription fees as deferred revenue and recognizes revenue on a straight-line basis over the term of the agreement.
The typical subscription term is one to three years. The Company’s contracts with customers typically include a fixed amount of consideration and are
generally non-cancellable and without any refund-type provisions. Customers typically have the right to terminate their contracts for cause if the Company
fails to perform in accordance with the contractual terms. Some customers have the option to purchase additional subscription at a stated price. These
options generally do not provide a material right as they are priced at the Company’s SSP.
Professional Services Revenue
The Company offers several types of professional services including incident response and forensic services, surge forensic and malware analysis, and
attribution analysis, which are focused on responding to imminent and direct threats, assessing vulnerabilities, and recommending solutions. These services
are distinct from subscription services. Professional services do not result in significant customization of the subscription service. The Company’s
professional services are available through time and material and fixed fee agreements. Revenue for time and material agreements is recognized as services
are performed. Fixed fee contracts account for an immaterial portion of the Company’s revenue.
Contracts with Multiple Performance Obligations
Some contracts with customers contain multiple promised services consisting of subscription and professional services that are distinct and accounted
for separately. The transaction price is allocated to the separate performance obligations on a relative SSP basis. The SSP is the price at which the Company
would sell promised subscription or professional services separately to a customer. Judgment is required to determine the SSP for each distinct performance
obligation. The Company determines SSP based on its overall pricing objectives, taking into consideration the type of subscription or professional service
and the number of endpoints.
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Variable Consideration
CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
Revenue from sales is recorded at the net sales price, which is the transaction price, and may include estimates of variable consideration. The amount
of variable consideration that is included in the transaction price is constrained and is included in the net sales price only to the extent that it is probable that
a significant reversal in the amount of the cumulative revenue will not occur when the uncertainty is resolved.
If subscriptions do not meet certain service level commitments, the Company’s customers are entitled to receive service credits, and in certain cases,
refunds, each representing a form of variable consideration. The Company has historically not experienced any significant incidents affecting the defined
levels of reliability and performance as required by its subscription contracts. Accordingly, any estimated refunds related to these agreements in the
consolidated financial statements is not material during the periods presented.
The Company provides rebates and other credits within its contracts with certain resellers, which are estimated based on the expected value to be
earned or claimed on the related sales transaction. Overall, the transaction price is reduced to reflect the Company’s estimate of the amount of consideration
to which it is entitled based on the terms of the contract. Estimated rebates and other credits were not material during the periods presented.
Research and Development Expense
Research and development costs are expensed when incurred, except for certain internal-use software development costs, which may be capitalized as
noted above. Research and development expenses consist primarily of personnel and related headcount costs, costs of professional services associated with
the ongoing development of the Company’s technology, and allocated overhead.
Advertising
All advertising costs are expensed as incurred and are included in sales and marketing expense in the consolidated statements of operations. The
Company incurred $50.5 million, $27.9 million, and $8.0 million of advertising costs during the fiscal years ended January 31, 2022, January 31, 2021, and
January 31, 2020, respectively.
Stock-Based Compensation
Compensation related to stock-based awards to employees and directors are measured and recognized in the Company’s consolidated statements of
operations based on the fair value of the awards granted. The Company estimates the fair value of its stock options using the Black-Scholes option-pricing
model. The stock-based compensation expense relating to stock options are recognized on a straight-line basis over the period during which the employee
or director is required to provide service in exchange for the award, usually the vesting period, which is generally four years.
Restricted stock units (“RSUs”) are generally subject to a service-based vesting condition. The service-based vesting condition is generally with a
vesting term of four years. The valuation of such RSUs is based solely on the fair value of the Company’s stock price on the date of grant and the
corresponding compensation expense are being amortized on a straight-line basis.
Performance-based stock units (“PSUs”) are generally subject to both a service-based vesting condition and a performance-based vesting condition.
The fair value of the award is equal to the grant date fair market value of the Company’s stock price. PSUs generally vest over a four-year period and
subject to continued service through the applicable vesting dates. The stock-based compensation expense relating to PSUs are recognized using the
accelerated attribution method over the requisite service period when it is probable that the performance condition will be satisfied.
The Special PSU Awards are subject to the Company’s achievement of specified stock price hurdles and a service-based vesting condition. The
Company measured the fair value of the Special PSU Awards using a Monte Carlo simulation valuation model. The stock-based compensation expense
relating to the Special PSU Awards are recognized using the accelerated attribution method over the requisite service period.
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Notes to Consolidated Financial Statements
Employee Stock Purchase Plan (“ESPP”) grants are measured based on grant date at fair value using the Black-Scholes option-pricing model. The
resulting fair value is recognized using the accelerated attribution method over a two-year offering period and accounted for as having four separate
tranches starting on the same initial enrollment date. The requisite service periods for the four tranches are approximately 6, 12, 18, and 24 months.
The Company accounts for forfeitures as they occur for all stock-based awards.
Business Combinations
The Company allocates the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based on their
estimated fair values at the acquisition date. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and
liabilities is recorded as goodwill. The purchase price allocation process requires management to make significant estimates and assumptions with respect
to intangible assets. Although the Company believes the assumptions and estimates it has made are reasonable, they are based in part on historical
experience, market conditions and information obtained from management of the acquired companies and are inherently uncertain. Examples of judgments
used to estimate the fair value of intangibles assets include, but are not limited to, future expected cash flows, expected customer attrition rates, estimated
obsolescence rates, and discount rates. These estimates are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
During the measurement period, which is one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities
assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the
consolidated statement of operations.
Goodwill and Intangible Assets
The Company evaluates and tests the recoverability of goodwill for impairment at least annually, on January 31, or more frequently if circumstances
indicate that goodwill may not be recoverable. A qualitative assessment is performed to determine whether the existence of events or circumstances leads
to a determination that it is more likely than not that the fair value of its one reporting unit is less than its carrying value. In assessing the qualitative factors,
the Company considers the impact of certain key factors including macroeconomic conditions, industry and market considerations, management turnover,
changes in regulation, litigation matters, changes in enterprise value, and overall financial performance. If the Company determines it is more likely than
not that the fair value of its one reporting unit is less than its carrying value, a quantitative test is performed by estimating the fair value of its reporting unit,
including goodwill, and comparing it to its carrying value. If the fair value is lower than the carrying value, the excess is recognized as an impairment loss.
No impairment was recorded during the fiscal years ended January 31, 2022, January 31, 2021, or January 31, 2020. The change in the goodwill balance
during the fiscal year ended January 31, 2022 was due to the acquisitions of Humio Limited (“Humio”) and Secure Circle, LLC (“SecureCircle”) and
changes in foreign currency exchange rates. The change in the goodwill balance during the fiscal year ended January 31, 2021 was due to the acquisition of
Preempt Security, Inc. (“Preempt Security”) and changes in foreign currency exchange rates. See Note 4, Balance Sheet Components, and Note 14,
Acquisitions, to the consolidated financial statements for more information.
Intangible assets, net, consisting of developed technology, customer relationships, and other acquired intangibles, are stated at cost less accumulated
amortization on the consolidated balance sheets. All intangible assets have been determined to have definite lives and are amortized on a straight-line basis
over their estimated economic lives, which are generally one to 20 years. Amortization expense related to developed technology is included in cost of
revenue, amortization expense related to customer relationships is included in sales and marketing expenses, and amortization expense related to other
acquired intangibles is included in cost of revenue, research and development expense and general and administrative expense. The Company reviews the
carrying amounts of intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not
be recoverable. The Company measures the recoverability of intangible assets by comparing the carrying amount of each asset to the future undiscounted
cash flows it expects the asset to generate. If the Company considers any of these assets to be impaired, the impairment to be recognized equals the amount
by which the carrying value of the asset exceeds its fair value.
Operating Leases
The Company enters into operating lease arrangements for real estate assets related to office space. The Company determines if an arrangement is or
contains a lease at inception by evaluating various factors, including whether a vendor’s right to substitute an identified asset is substantive. Lease
classification is determined at the lease commencement date, which is the
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
date the leased assets are made available for use. Operating leases are included in “Operating lease right-of-use assets”, “Operating lease liabilities,
current”, and “Operating lease liabilities, noncurrent” in the consolidated balance sheets. The Company did not have any financing leases in any of the
periods presented.
Operating lease right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments
over the lease term. Lease payments consist of the fixed payments under the arrangement, less any lease incentives, such as tenant improvement
allowances. Variable costs, such as maintenance and utilities based on actual usage, are not included in the measurement of right-to-use assets and lease
liabilities but are expensed when the event determining the amount of variable consideration to be paid occurs. As the implicit rate of the leases is not
determinable, the Company uses an incremental borrowing rate (“IBR”) based on the information available at the lease commencement date in determining
the present value of lease payments. Lease expenses are recognized on a straight-line basis over the lease term.
The Company uses the non-cancelable lease term when recognizing the right-of-use (“ROU”) assets and lease liabilities, unless it is reasonably certain
that a renewal or termination option will be exercised. The Company accounts for lease components and non-lease components as a single lease
component.
Leases with a term of twelve months or less are not recognized on the consolidated balance sheets but are recognized as expense on a straight-line
basis over the term of the lease.
Debt Issuance Costs
Debt issuance costs incurred in connection with securing the Company’s financing arrangements are generally presented in the consolidated balance
sheets as a direct deduction from the carrying amount of the outstanding borrowings, consistent with debt discounts. However, the Company has chosen to
present debt issuance costs under “other long-term assets” for its revolving credit facility on the consolidated balance sheets regardless of whether the
Company has any outstanding borrowings on the revolving credit facility. Debt issuance costs, net of accumulated amortization, were $4.6 million and
$4.4 million as of January 31, 2022 and January 31, 2021, respectively. Debt issuance cost associated with the Senior Notes are recorded as a reduction to
the carrying value of the Senior Notes on the consolidated balance sheets. The unamortized issuance costs relating to the Senior Notes were $2.3 million as
of January 31, 2022.
All deferred financing costs are being amortized to interest expense. The effective interest method is used for debt issuance cost related to the Senior
Notes. Debt issuance costs related to the revolving credit facility are being amortized over the term of the financing arrangement under the straight-line
method. The Company’s amortization of these costs were $1.0 million, $0.8 million and $0.4 million for the fiscal years ended January 31, 2022, 2021 and
2020, respectively.
Foreign Currency Translation and Transactions
The functional currencies of the Company’s foreign subsidiaries are each country’s local currency. Assets and liabilities of the subsidiaries are
translated into U.S. Dollars at exchange rates in effect at the reporting date. Amounts classified in stockholders’ equity (deficit) are translated at historical
exchange rates. Revenue and expenses are translated at the average exchange rates during the period. The resulting translation adjustments are recorded in
accumulated other comprehensive income (loss). Foreign currency transaction gains or losses, whether realized or unrealized, are reflected in the
consolidated statements of operations within Other income (expense), net, and have not been material for all periods presented.
Income Taxes
The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined
based on differences between the financial statement and tax basis of assets and liabilities and net operating loss and credit carryforwards using enacted tax
rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax
assets to the amounts expected to be realized.
The Company accounts for unrecognized tax benefits using a more-likely-than-not threshold for financial statement recognition and measurement of
tax positions taken or expected to be taken in a tax return. The Company establishes a liability for tax-related uncertainties based on estimates of whether,
and the extent to which, additional taxes will be due. The Company’s assumptions, judgments and estimates relative to the current provision for income
taxes take into account current
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Notes to Consolidated Financial Statements
tax laws, the Company’s interpretation of current tax laws and possible outcomes of current and future audits conducted by foreign and domestic tax
authorities. The Company has established reserves for income taxes to address potential exposures involving tax positions that could be challenged by tax
authorities. In addition, the Company is subject to the continual examination of its income tax returns by the U.S. Internal Revenue Service (“IRS”) and
other domestic and foreign tax authorities. The Company regularly assess the likelihood of outcomes resulting from these examinations to determine the
adequacy of its provision for income taxes and have reserved for potential adjustments that may result from such examinations. The Company believes
such estimates to be reasonable; however, the final determination of any of these examinations could significantly impact the amounts provided for income
taxes in the Company’s consolidated financial statements.
Segment Information
The Company’s chief operating decision maker (“CODM”) is its chief executive officer. The CODM reviews financial information presented on a
consolidated basis for the purposes of allocating resources and evaluating financial performance. Accordingly, management has determined that the
Company operates as one operating and reportable segment.
Net Loss per Share
The Company computes basic and diluted net loss per share attributable to common stockholders for Class A and Class B common stock using the
two-class method required for participating securities. Under the two-class method, basic net loss per share attributable to common stockholders is
computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the
period.
Diluted earnings per share attributable to common stockholders adjusts basic earnings per share for the potentially dilutive impact of outstanding stock
options, RSUs, PSUs, ESPP obligations, and founder holdbacks. As the Company has reported losses for all periods presented, all potentially dilutive
securities are antidilutive and accordingly, basic net loss per share equals diluted net loss per share.
Recently Adopted Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes
(Topic 740): Simplifying the Accounting for Income Taxes, which enhances and simplifies various aspects of the income tax accounting guidance,
including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in
investments, and interim-period accounting for enacted changes in tax law. The Company adopted this guidance on February 1, 2021, which did not have a
material effect on its consolidated financial statements.
Recently Issued Accounting Pronouncements
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from
Contracts with Customers, which requires that an entity recognize and measure contract assets and contract liabilities acquired in a business combination in
accordance with Topic 606 as if it had originated the contracts. For public business entities, this ASU is effective for fiscal years beginning after December
15, 2022, and interim periods within those fiscal years. The Company is currently evaluating the impact of the adoption of this ASU on its consolidated
financial statements.
3. Investments and Fair Value Measurements
The Company follows ASC 820, Fair Value Measurements, with respect to cash equivalents that are measured at fair value on a recurring basis. Under
the standard, fair value is defined as the exit price, or the amount that would be received to sell an asset or a liability in an orderly transaction between
market participants as of the measurement date. The standard also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of
observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are
inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company.
Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability
developed based upon the best information available in the circumstances.
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
The hierarchy is broken down into three levels as follows:
Level 1 Assets and liabilities whose values are based on unadjusted quoted market prices for identical assets and liabilities in active markets
Level 2 Assets and liabilities whose values are based on quoted prices in markets that are not active or inputs that are observable for
substantially the full term of the asset or liability
Level 3 Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and
significant to the overall fair value measurement
Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The Company’s fair value hierarchy for its financial assets and liabilities that are measured at fair value on a recurring basis are as follows (in
thousands):
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
January 31, 2022
January 31, 2021
Assets
Cash
equivalents
(1)
Money
market funds
Total
assets
$
$
300,027
300,027
$
$
—
—
$
$
—
—
$
$
300,027
300,027
$
$
—
—
$
$
—
—
$
$
—
—
$
$
—
—
______________________________
(1)
Included in “Cash and cash equivalents” on the consolidated balance sheets.
There were no transfers between the levels of the fair value hierarchy during the periods presented.
The following summarizes the changes in strategic investments, which are Level 3 within the fair value hierarchy (in thousands):
Total initial cost
Unrealized gains due to changes in fair value
Carrying value
Year Ended January 31
2022
2021
$
$
18,809
4,823
23,632
$
$
2,500
—
2,500
The following summarizes the changes in the redeemable convertible preferred stock warrant liability, which is classified as a Level 3 instrument:
Balance at beginning of period
Adjustment resulting from change in fair value recognized in the consolidated statement of
operations
Reclassification of redeemable convertible preferred stock warrant liability to additional
paid-in capital upon IPO
Balance at end of period
$
$
2022
Year Ended January 31
2021
2020
— $
—
—
— $
— $
—
—
— $
4,537
6,022
(10,559)
—
The fair value of the redeemable convertible preferred stock warrant liability was estimated using the Black-Scholes option-pricing model and was
based on significant inputs not observable in the market, and therefore was classified as a Level 3 instrument. The inputs include the Company’s preferred
stock price, expected stock price volatility, risk-free interest rate, and
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
contractual term. A loss of $6.0 million was recorded as a component of Other income (expense), net, because of the remeasurement of the redeemable
convertible preferred stock warrant liability during the fiscal year ended January 31, 2020.
4. Balance Sheet Components
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
Prepaid software licenses
Prepaid expenses
Prepaid marketing
Other current assets
Prepaid hosting services
Prepaid expenses and other current assets
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
Data center and other computer equipment
Capitalized internal-use software and website development costs
Leasehold improvements
Purchased software
Furniture and equipment
Construction in process
Less: Accumulated depreciation and amortization
Property and equipment, net
January 31,
2022
2021
26,085
18,829
17,629
12,783
4,026
79,352
$
$
20,596
12,220
10,852
4,566
5,383
53,617
January 31,
2022
2021
198,297
70,476
22,029
5,232
7,291
99,030
402,355
(141,778)
260,577
$
$
146,220
44,358
19,733
3,211
6,498
35,528
255,548
(88,534)
167,014
$
$
$
$
Construction in process mainly includes data center equipment purchased that has not yet been placed in service. Data center equipment that was
purchased but not yet been placed into service was $89.8 million and $30.0 million as of January 31, 2022 and January 31, 2021, respectively.
Depreciation and amortization expense of property and equipment was $54.4 million, $38.7 million, and $23.0 million, during the fiscal years ended
January 31, 2022, January 31, 2021, and January 31, 2020, respectively.
There were no impairments for property and equipment during the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020. The
Company capitalized $30.7 million, $14.0 million, and $8.1 million in internal-use software and website development costs during the fiscal years ended
January 31, 2022, January 31, 2021, and January 31, 2020, respectively. Amortization expense associated with internal-use software and website
development costs totaled $12.4 million, $7.9 million and $6.2 million during the fiscal years ended January 31, 2022, January 31, 2021, and January 31,
2020, respectively. The net book value of capitalized internal-use software and website development costs was $38.6 million and $19.5 million as of
January 31, 2022 and January 31, 2021, respectively.
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
Intangible Assets, Net
Total intangible assets, net consisted of the following (dollars in thousands):
January 31, 2022
Gross Carrying
Amount
Accumulated
Amortization
Net Amount
Developed technology
Customer relationships
Other acquired intangible assets
Total
$
$
97,668
12,045
2,397
112,110
$
$
12,000
1,973
801
14,774
$
$
85,668
10,072
1,596
97,336
Developed technology
Customer relationships
Other acquired intangible assets
Total
January 31, 2021
Gross Carrying
Amount
Accumulated
Amortization
Net Amount
$
$
14,513 $
3,769
399
18,681 $
2,193 $
649
162
3,004 $
12,320
3,120
237
15,677
Weighted-
Average
Remaining Useful
Life
(in months)
79
72
89
Weighted-Average
Remaining Useful
Life
(in months)
56
54
185
Amortization expense of intangible assets was $12.9 million, $1.4 million, and $0.5 million, during the fiscal years ended January 31, 2022,
January 31, 2021, and January 31, 2020, respectively. Amortization expense of other acquired intangible assets is recorded within cost of revenue, research
and development expense and general and administrative expense in the consolidated statements of operations.
The estimated aggregate future amortization expense of intangible assets as of January 31, 2022 is as follows (in thousands):
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal 2026
Fiscal 2027
Thereafter
Total amortization expense
Total
16,300
15,608
15,524
14,437
12,261
23,206
97,336
$
$
The developed technology, customer relationships, and other acquired intangible assets are amortized over their estimated useful lives, generally on a
straight-line basis for periods ranging from 2 to 20 years.
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Goodwill
CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
The changes in goodwill during the fiscal year ended January 31, 2022 consisted of the following (in thousands):
Goodwill as of January 31, 2021
Goodwill acquired
Foreign currency translation
(1)
Goodwill as of January 31, 2022
__________________________________
(1) Goodwill acquired resulted from the acquisition of Humio and SecureCircle. Refer to Note 14, Acquisitions, for additional information.
Other Assets, Noncurrent
Other assets, noncurrent consisted of the following (in thousands):
Amounts
83,566
334,294
(1,415)
416,445
$
$
Other assets
Deferred income tax asset
Deferred finance cost
Deposits
Other assets, noncurrent
Accrued Expenses
Accrued expenses consisted of the following (in thousands):
Web hosting services
Other accrued expenses
Accrued legal and accounting
Accrued purchases of property and equipment
Accrued interest expense
Accrued marketing
Accrued expenses
Accrued Payroll and Benefits
Accrued payroll and benefits consisted of the following (in thousands):
Accrued commissions
Accrued payroll and related expenses
Accrued bonuses
Employee Stock Purchase Plan
Accrued payroll and benefits
93
January 31,
2022
2021
$
$
13,348 $
4,802
4,620
2,576
25,346 $
8,627
1,328
4,355
2,802
17,112
January 31,
2022
2021
23,711
14,451
14,166
10,878
10,375
9,801
83,382
$
$
14,187
11,372
5,709
4,570
687
14,592
51,117
January 31,
2022
2021
47,298
24,910
17,591
14,764
104,563
$
$
32,300
16,528
12,110
10,969
71,907
$
$
$
$
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
In April 2020, the Company began deferring payment on its share of payroll taxes owed, as permitted by the CARES Act, through December 31, 2020.
As of January 31, 2022, the Company had deferred $5.1 million of payroll taxes in other current liabilities.
Other Current Liabilities
Other current liabilities consisted of the following (in thousands):
Other current liabilities
Income tax payable
Accrued taxes
Customer deposits
Other current liabilities
5. Debt
Secured Revolving Credit Facility
January 31,
2022
2021
$
$
12,820 $
5,781
4,914
1,414
24,929 $
9,652
2,639
2,837
2,371
17,499
In April 2019, the Company entered into a Credit Agreement with Silicon Valley Bank and other lenders, to provide a revolving line of credit of up to
$150.0 million, including a letter of credit sub-facility in the aggregate amount of $10.0 million, and a swingline sub-facility in the aggregate amount of
$10.0 million.
On January 4, 2021, the Company amended and restated its existing credit agreement (the “A&R Credit Agreement” and the facility thereunder the
“Revolving Facility”) among CrowdStrike, Inc., as borrower, CrowdStrike Holdings, Inc., as guarantor, and Silicon Valley Bank and the other lenders party
thereto, providing the Company with a revolving line of credit of up to $750.0 million, including a letter of credit sub-facility in the aggregate amount of
$100.0 million, and a swingline sub-facility in the aggregate amount of $50.0 million. The Company also has the option to request an incremental facility
of up to an additional $250.0 million from one or more of the lenders under the A&R Credit Agreement. The A&R Credit Agreement is guaranteed by all
of the Company’s material domestic subsidiaries. The A&R Credit Agreement extended the maturity date of April 19, 2022 to January 2, 2026.
On January 6, 2022, the Company modified the A&R Credit Agreement (the “Amended A&R Credit Agreement”) among CrowdStrike, Inc., as
borrower, CrowdStrike Holdings, Inc., as guarantor, and Silicon Valley Bank and the other lenders party thereto. There were no changes to the borrowing
amounts or maturity date. Under the Amended A&R Credit Agreement, revolving loans are Alternate Base Rate (“ABR”) Loans. Outstanding ABR Loans
incur interest at the highest of (a) the Prime Rate, as published by the Wall Street Journal, (b) the federal funds rate in effect on such day plus 0.50%, and
(c) the Term Secured Overnight Finance Rate (the “Term SOFR”) for a one-month tenor in effect on such day plus 1.00%, in each case plus a margin
between (0.25)% and 0.25%, depending on the senior secured leverage ratio. The Company will be charged a commitment fee of 0.15% to 0.25% per year
for committed but unused amounts, depending on the senior secured leverage ratio. The financial covenants require the Company to maintain a minimum
consolidated interest coverage ratio of 3.00:1.00, a maximum senior secured leverage ratio of 3.00:1.00 (through January 31, 2023), and a maximum total
leverage ratio of 5.50:1.00 stepping down to 3.50:1.00 over time. The Company was in compliance with the financial covenants as of January 31, 2022.
The Amended A&R Credit Agreement is secured by substantially all of the Company’s current and future consolidated assets, property and rights,
including, but not limited to, intellectual property, cash, goods, equipment, contractual rights, financial assets, and intangible assets of the Company and
certain of its subsidiaries. The Amended A&R Credit Agreement contains customary covenants limiting the Company’s ability and the ability of its
subsidiaries to, among other things, dispose of assets, undergo a change in control, merge or consolidate, make acquisitions, incur debt, incur liens, pay
dividends, repurchase stock, and make investments, in each case subject to certain exceptions.
No amounts were outstanding under the Amended A&R Credit Agreement as of January 31, 2022.
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Senior Notes
CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
On January 20, 2021, the Company issued $750.0 million in aggregate principal amount of 3.00% Senior Notes maturing in February 2029. The Senior
Notes are guaranteed by the Company’s subsidiary, CrowdStrike, Inc. and will be guaranteed by each of the Company’s existing and future domestic
subsidiaries that becomes a borrower or guarantor under the A&R Credit Agreement. The Senior Notes were issued at par and bear interest at a rate of
3.00% per annum. Interest payments are payable semiannually on February 15 and August 15 of each year, commencing on August 15, 2021. The
Company may voluntarily redeem the Senior Notes, in whole or in part, 1) at any time prior to February 15, 2024 at (a) 100.00% of their principal amount,
plus a “make whole” premium or (b) with the net cash proceeds received from an equity offering at a redemption price equal to 103.00% of the principal
amount, provided the aggregate principal amount of all such redemptions does not to exceed 40% of the original aggregate principal amount of the Senior
Notes; 2) at any time on or after February 15, 2024 at a prepayment price equal to 101.50% of the principal amount; 3) at any time on or after February 15,
2025 at a prepayment price equal to 100.75% of the principal amount; and 4) at any time on or after February 15, 2026 at a prepayment price equal to
100.00% of the principal amount; in each case, plus accrued and unpaid interest, if any, to but excluding, the date of redemption.
The net proceeds from the debt offering were $738.0 million after deducting the underwriting commissions of $9.4 million and $2.6 million of
issuance costs. The debt issuance costs are being amortized to interest expense using the effective interest method over the term of the Senior Notes.
Interest expense related to contractual interest expense, amortization of debt issuance
costs and accretion of debt discount was $24.0 million and $0.8 million, respectively, during the fiscal year ended January 31, 2022 and January 31, 2021,
respectively.
In certain circumstances involving a change of control event, the Company will be required to make an offer to repurchase all or, at the holder’s option,
any part, of each holder’s notes of that series at 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding,
the repurchase date.
The indenture governing the Senior Notes (the “Indenture”) contain covenants limiting the Company’s ability and the ability of its subsidiaries to
create liens on certain assets to secure debt; grant a subsidiary guarantee of certain debt without also providing a guarantee of the Senior Notes; declare
dividends; and consolidate or merge with or into, or sell or otherwise dispose of all or substantially all of its assets to, another person. These covenants are
subject to a number of limitations and exceptions. Certain of these covenants will not apply during any period in which the notes are rated investment grade
by Fitch Ratings, Inc. (“Fitch”), Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s Ratings Services (“S&P”).
As of January 31, 2022, the Company was in compliance with all of its financial covenants under the Indenture associated with the Senior Notes.
Based on the trading prices of the Senior Notes, the fair value of the Senior Notes as of January 31, 2022 was approximately $708.7 million. While the
Senior Notes are recorded at cost, the fair value of the Senior Notes was determined based on quoted prices in markets that are not active; accordingly, the
Senior Notes is categorized as Level 2 for purposes of the fair value measurement hierarchy.
6. Income Taxes
The Company’s geographical breakdown of its loss before provision for income taxes for the fiscal years ended January 31, 2022, January 31, 2021,
and January 31, 2020 is as follows (in thousands):
Domestic
International
Loss before provision for income taxes
2022
(179,334)
19,311
(160,023)
$
$
Year Ended January 31,
2021
$
$
(94,713)
6,844
(87,869)
$
$
2020
(149,807)
10,025
(139,782)
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
The components of the provision for income taxes during the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020 are as
follows (in thousands):
Current
Federal
State
Foreign
Total current
Deferred
Federal
State
Foreign
Total deferred
Provision for income taxes
2022
Year Ended January 31,
2021
2020
$
$
—
611
85,700
86,311
(363)
(63)
(13,530)
(13,956)
72,355
$
$
—
401
5,811
6,212
(136)
(317)
(999)
(1,452)
4,760
$
$
—
104
2,574
2,678
(362)
(57)
(262)
(681)
1,997
The following table provides a reconciliation between income taxes computed at the federal statutory rate and the provision for income taxes during
the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020 (in thousands):
Provision for income taxes at statutory rate
State income taxes, net of federal benefits
Foreign tax rate differential
Research and other credits
Stock-based compensation
Non-deductible expenses
Change in unrecognized tax benefits
Change in valuation allowance
Tax impact of restructuring
Other
Provision for income taxes
2022
As of January 31,
2021
2020
$
$
(33,605)
673
574
(19,113)
(145,964)
2,783
—
210,680
57,236
(909)
72,355
$
$
(18,453)
—
1,994
(9,373)
(140,489)
2,212
—
168,869
—
—
4,760
$
$
(29,354)
25
207
(1,534)
(43,477)
1,773
(2,659)
77,016
—
—
1,997
The Company recognized an income tax expense of $72.4 million, $4.8 million, and $2.0 million for the fiscal years January 31, 2022, January 31,
2021 and January 31, 2020, respectively. The tax expense for the fiscal years ended January 31, 2021 and January 31, 2020 was primarily attributable to
pre-tax foreign earnings and withholding taxes related to customer payments in certain foreign jurisdictions in which the Company conducts business. The
tax expense for the fiscal year ended January 31, 2022 was primarily attributable to pre-tax foreign earnings and the intercompany sale of intellectual
property from Humio. The Company transferred acquired intellectual property from the foreign subsidiary to the U.S. Although the transfer of the
intellectual property between consolidated entities did not result in any gain in the consolidated statement of operations, the Company generated a taxable
gain in the foreign jurisdiction resulting in an additional tax expense of $57.2 million.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
Significant components of the Company’s deferred tax assets and liabilities as of January 31, 2022 and January 31, 2021 are as follows (in thousands):
Deferred tax assets
Net operating loss carryforwards
Research and other credit carryforwards
Intangible assets
Stock-based compensation
Deferred revenue
Accrued expenses
Operating lease liabilities
Capitalized research and development
Other, net
Gross deferred assets
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Property and equipment, net
Capitalized Commissions
Intangible assets
Operating right-of-use assets
Other, net
Total deferred tax liabilities
Net deferred tax assets (liabilities)
As of January 31,
2022
2021
$
$
428,238
56,539
61,008
33,202
34,425
12,550
10,144
154,625
4,514
795,245
(770,861)
24,384
(8,769)
(1,632)
—
(9,256)
—
(19,657)
4,727
$
$
289,889
22,778
—
20,154
21,595
7,791
10,718
63,158
—
436,083
(413,828)
22,255
(4,446)
(2,960)
(3,697)
(9,610)
(302)
(21,015)
1,240
At each reporting date, the Company has established a valuation allowance against its U.S. net deferred tax assets due to the uncertainty surrounding
the realization of those assets. During the fiscal year ended January 31, 2020, the Company has established a valuation allowance against its net U.K.
deferred tax assets due to uncertainty surrounding the realization of those assets. The Company periodically evaluates the recoverability of the deferred tax
assets and, when it is determined to be more-likely-than-not that the deferred tax assets are realizable, the valuation allowance is reduced. During the fiscal
years ended January 31, 2022, January 31, 2021, and January 31, 2020, the valuation allowance increased by $357.0 million, $206.2 million, and $87.2
million, respectively. The increase in the valuation allowance during the fiscal years ended January 31, 2022, January 31, 2021 and January 31, 2020 was
primarily driven by losses generated in the United States and United Kingdom. As of January 31, 2022, January 31, 2021, and January 31, 2020 the
valuation allowance for deferred taxes balance was $770.9 million, $413.8 million, and $207.6 million, respectively.
As of January 31, 2022, the Company had aggregate federal and California net operating loss carryforwards of $1.6 billion and $168.9 million,
respectively, which may be available to offset future taxable income for income tax purposes. The federal and California net operating loss carryforwards
begin to expire in fiscal 2031 through fiscal 2042. In addition, for federal losses generated after December 31, 2017, the Tax Cuts and Jobs Act of 2017
(“Tax Act”) modified the maximum deduction of net operating loss, eliminated carryback, and provided an indefinite carryforward. As of January 31, 2022,
net operating loss carryforwards for other states total $868.0 million which begin to expire in fiscal 2023 through fiscal 2042. As of January 31, 2022, net
operating loss carryforwards for United Kingdom total $81.1 million which are carried forward indefinitely.
As of January 31, 2022, the Company had federal and California research and development credit (“R&D credit”) carryforwards of $65.6 million and
$13.7 million, respectively. The federal R&D credit carryforwards will begin to expire in fiscal 2035 though fiscal 2042. The California R&D credits are
carried forward indefinitely.
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
Realization of these net operating loss and research and development credit carryforwards depends on future income, and there is a risk that the
Company’s existing carryforwards could expire unused and be unavailable to offset future income tax liabilities.
The Internal Revenue Code imposes limitations on a corporation’s ability to utilize net operating loss (“NOLs”) and credit carryovers if it experiences
an ownership change as defined in Section 382. In general terms, an ownership change may result from transactions increasing the ownership of certain
stockholders in the stock of a corporation by more than 50% over a three-year period. If an ownership change has occurred, or were to occur, utilization of
the Company’s NOLs and credit carryovers could be restricted. The Company’s net operating losses and credit carryovers are not currently subject to a
limitation due to an ownership change.
The total gross unrecognized tax benefit as of January 31, 2022, January 31, 2021 and January 31, 2020 were $26.3 million, $24.4 million, and
$5.5 million, respectively. As of January 31, 2022, the Company had $1.9 million of unrecognized tax benefits, which, if recognized, would affect the
Company’s effective tax rate. The Company’s policy is to classify interest and penalties related to unrecognized tax benefits as part of the income tax
provision in the consolidated statements of operations. The Company had incurred insignificant amounts of interest and penalties related to unrecognized
tax benefits as of January 31, 2022 and did not accrue interest and penalties in prior periods. During the fiscal years ended January 31, 2022 and 2021, the
net increase in uncertain tax benefits was a result of research and development credits. During the fiscal year ended January 31, 2020, the uncertain tax
benefits balance decreased due to the application of IRS directive in determining the research credit. The potential change in unrecognized tax benefits
during the next 12 months is not expected to be material.
The following is a rollforward of the total gross unrecognized tax benefits for the fiscal years ended January 31, 2022, January 31, 2021, and
January 31, 2020 (in thousands):
Balance as of February 1, 2019
Decreases in current period tax positions
Balance as of January 31, 2020
Increases in prior period tax positions
Increase in current period tax positions
Balance as of January 31, 2021
Increases in prior period tax positions
Decreases in prior period tax positions
Increase in current period tax positions
Balance as of January 31, 2022
$
$
8,128
(2,659)
5,469
6,926
12,052
24,447
186
(9,772)
11,463
26,324
The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. Tax years 2011 and onwards remain subject to
examination by U.S. taxing authorities due to the Company’s net operating losses and R&D credit carryforwards.
The Company does not provide for federal and state income taxes on the undistributed earnings of its foreign subsidiaries as such earnings are to be
reinvested offshore indefinitely. As a result of the Tax Act, if the Company repatriated these earnings, the tax impact of future distributions of foreign
earnings would generally be limited to withholding tax from local jurisdictions, and the resulting income tax liability would be insignificant.
7. Equity Transactions
Common Stock
In connection with the IPO, on June 14, 2019, the Company filed an Amended and Restated Certificate of Incorporation which authorizes the issuance
of 2,000,000,000 shares of Class A common stock with a par value of $0.0005 per share, 300,000,000 shares of Class B common stock with a par value of
$0.0005 per share, and 100,000,000 shares of undesignated preferred stock with a par value of $0.0005 per share. The rights of the holders of Class A
common stock and Class B common stock are identical, except with respect to voting and conversion rights. Each share of Class A common stock is
entitled to one vote per share. Each share of Class B common stock is entitled to ten votes per share and is convertible
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Notes to Consolidated Financial Statements
into one share of Class A common stock. Class A and Class B common stockholders are not entitled to receive dividends unless declared by the Company’s
board of directors.
Claims Settlement
In December 2019, a security holder paid the Company $2.3 million to settle a claim under Section 16(b) of the Securities Exchange Act of 1934.
Section 16(b) requires certain persons and entities whose securities trading activities result in “short swing” profits to repay such profits to the issuer of the
security. This payment was recorded as an increase to stockholders’ equity and as cash provided by financing activities in the consolidated statement of
cash flows for the fiscal year ended January 31, 2020.
8. Leases
Operating Leases
The Company has entered into non-cancelable operating lease agreements with various expiration dates through fiscal 2027. Certain lease agreements
include options to renew or terminate the lease, which are not reasonably certain to be exercised and therefore are not factored into the determination of
lease payments.
Cash paid for amounts included in the measurement of operating lease liabilities were $11.8 million and $11.0 million for the fiscal years ended
January 31, 2022 and January 31, 2021, respectively. Operating lease liabilities arising from obtaining operating right of-use assets were $4.9 million and
$6.2 million for the fiscal years ended January 31, 2022 and January 31, 2021, respectively.
The weighted-average remaining lease term are 3.0 years and 4.1 years as of January 31, 2022 and January 31, 2021, respectively. The weighted-
average discount rates are 5.4% and 5.9% as of January 31, 2022 and January 31, 2021, respectively.
The component of lease costs was as follows (in thousands):
Lease cost
Operating lease cost
Short-term lease cost
Variable lease cost
Total lease cost
Year Ended January 31,
2022
2021
$
$
11,262
1,918
4,874
18,054
$
$
10,308
1,957
3,007
15,272
Total rent expense recognized prior to the adoption of Topic 842 were $10.3 million for the year ended January 31, 2020. There was no sublease
income for the fiscal year ended January 31, 2022 or January 31, 2021. As of January 31, 2022, the Company has not entered into any non-cancelable
operating leases with a term greater than 12 months that have not yet commenced.
The maturities of the Company’s non-cancelable operating lease liabilities are as follows (in thousands):
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal 2026
Fiscal 2027
Total operating lease payments
Less: imputed interest
Present value of operating lease liabilities
99
January 31, 2022
10,539
11,861
10,728
4,791
558
38,477
(3,278)
35,199
$
$
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
9. Stock-Based Compensation
Stock Incentive Plan
In May 2019, the Company’s board of directors adopted, and the stockholders approved the CrowdStrike Holdings, Inc. 2019 Equity Incentive Plan
(the “2019 Plan”) with the purpose of granting stock-based awards to employees, directors, officers and consultants, including stock options, restricted
stock awards, restricted stock units and performance-based restricted stock units. A total of 8,750,000 shares of Class A common stock were initially
available for issuance under the 2019 Plan. The Company’s compensation committee administers the 2019 Plan. The number of shares of the Company’s
common stock available for issuance under the 2019 Plan is subject to an annual increase on the first day of each fiscal year beginning on February 1, 2020,
equal to the lesser of: (i) two percent (2.0%) of outstanding shares of the Company’s capital stock as of the last day of the immediately preceding fiscal year
or (ii) such other amount as the Company’s board of directors may determine.
The 2011 Plan was terminated on June 10, 2019, which was the business day prior to the effectiveness of the Company’s registration statement on
Form S-1 used in connection with the Company’s IPO, and stock-based awards are no longer granted under the 2011 Plan. Any shares underlying stock
options that expire or terminate or are forfeited or repurchased under the 2011 Plan will be automatically transferred to the 2019 Plan.
Stock Options
The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the
Black-Scholes option-pricing model with the assumptions included in the table below. The expected term represents the period that the Company’s share-
based awards are expected to be outstanding. The expected term assumptions were determined based on the vesting terms, exercise terms, and contractual
lives of the options. The expected stock price volatility is based upon comparable public company data. The risk-free rate is based on the U.S. Treasury
yield curve in effect at the time of grant for the estimated option life.
The fair value of each option was estimated on the date of grant using the following assumptions during the period:
Expected term (in years)
Risk-free interest rate
Expected stock price volatility
Dividend yield
2022
3.82 – 5.63
0.6% – 1.0%
36.1% – 37.1%
%
—
Year Ended January 31,
2021
3.17 – 6.05
0.2% – 0.4%
35.8% – 37.3%
%
—
2020
6.05
2.0% – 2.4%
37.7% – 37.9%
%
—
The following table is a summary of stock option activity for the fiscal year ended January 31, 2022:
Options outstanding at January 31, 2021
Granted
Exercised
Canceled
Options outstanding at January 31, 2022
Options vested and expected to vest at January 31, 2022
Options exercisable at January 31, 2022
Number of
Shares
(in thousands)
6,646
93
(2,598)
(203)
3,938
3,938
2,767
Weighted-
Average
Exercise Price
Per Share
$
$
$
$
$
$
$
8.24
3.19
6.12
28.42
8.48
8.48
6.99
Options outstanding include 362,406 options that were unvested as of January 31, 2022.
The aggregate intrinsic value of options vested and exercisable was $480.5 million, $711.4 million, and $469.6 million as of January 31, 2022,
January 31, 2021, and January 31, 2020, respectively. The weighted-average remaining contractual term of
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
options vested and exercisable was 5.7 years, 6.4 years, and 6.7 years as of January 31, 2022, January 31, 2021, and January 31, 2020, respectively.
The weighted-average grant date fair values of all options granted was $180.08, $66.31, and $9.51 per share during the fiscal years ended January 31,
2022, January 31, 2021, and January 31, 2020, respectively. The total intrinsic value of all options exercised was $570.9 million, $847.5 million, and
$407.9 million during the fiscal years ended January 31, 2022, January 31, 2021, and January 31, 2020, respectively.
The aggregate intrinsic value of stock options outstanding as of January 31, 2022, January 31, 2021, and January 31, 2020 was $678.0 million, $1.4
billion, and $816.3 million, respectively, which represents the excess of the fair value of the Company’s common stock over the exercise price of the
options multiplied by the number of options outstanding. The weighted-average remaining contractual term of stock options outstanding was 6.1 years, 7.0
years, and 7.4 years as of January 31, 2022, January 31, 2021, and January 31, 2020, respectively.
Total unrecognized stock-based compensation expense related to unvested options was $16.6 million as of January 31, 2022. This expense is expected
to be amortized on a straight-line basis over a weighted-average vesting period of 1.4 years. Total unrecognized stock-based compensation expense related
to unvested options was $24.3 million as of January 31, 2021. This expense is expected to be amortized on a straight-line basis over a weighted-average
vesting period of 1.7 years.
Early Exercise of Employee Options
The 2011 Stock Plan allows for the early exercise of stock options for certain individuals as determined by the Board of Directors. The consideration
received for an early exercise of an option is a deposit of the exercise price and the related dollar amount is recorded as a liability for early exercise of
unvested stock options in the consolidated balance sheets. This liability is reclassified to additional paid-in capital as the awards vest. If a stock option is
early exercised, the unvested shares may be repurchased by the Company in case of employment termination or for any reason, including death and
disability, at the price paid by the purchaser for such shares. There were no issued shares of common stock related to early exercised stock options during
the fiscal year ended January 31, 2022 or January 31, 2021. As of January 31, 2022, the number of shares of common stock related to early exercised stock
options subject to repurchase was 197,994 shares for $2.2 million. As of January 31, 2021, the number of shares of common stock related to early exercised
stock options subject to repurchase was 548,028 shares for $5.4 million. Common stock purchased pursuant to an early exercise of stock options is not
deemed to be outstanding for accounting purposes until those shares vest. The Company includes unvested shares subject to repurchase in the number of
shares outstanding in the consolidated balance sheet and statements of stockholders’ equity (deficit).
Restricted Stock Units
Restricted Stock Units (“RSUs”) granted under the 2019 Plan are generally subject to only service-based vesting condition. The service-based vesting
condition is generally satisfied based on one of four vesting schedules: (i) vesting of one-fourth of the RSUs on the first “Company vest date” (defined as
March 20, June 20, September 20, or December 20) on or following the one-year anniversary of the vesting commencement date with the remainder of the
RSUs vesting in twelve equal quarterly installments thereafter, subject to continued service, (ii) vesting in sixteen equal quarterly installments, subject to
continued service, (iii) vesting in eight equal quarterly installments, subject to continued service, or (iv) vesting sixteen quarterly installments with 10% in
the first year, 15% in the second year, 25% in the third year and 50% in the fourth year, subject to continued service. The valuation of such RSUs is based
solely on the fair value of the Company’s stock price on the date of grant.
Expense for RSUs are generally amortized on a straight-line basis. Total unrecognized stock-based compensation expense related to unvested RSUs
was $702.3 million as of January 31, 2022. This expense is expected to be amortized (subject to acceleration or straight-line basis) over a weighted-average
vesting period of 2.3 years. Total unrecognized stock-based compensation expense related to unvested RSUs was $393.9 million as of January 31, 2021.
This expense is expected to be amortized on an accelerated attribution method over a weighted-average vesting period of 2.6 years.
Performance-based Stock Units
Performance-based stock units (“PSUs”) granted under the 2019 Plan are generally subject to both a service-based vesting condition and a
performance-based vesting condition. PSUs will vest upon the achievement of specified performance targets
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Notes to Consolidated Financial Statements
and subject to continued service through the applicable vesting dates. The compensation cost is recognized over the requisite service period when it is
probable that the performance condition will be satisfied.
Expense for PSUs is being amortized under the accelerated attribution method and may be adjusted over the vesting period based on interim estimates
of performance against pre-set objectives.
Total unrecognized stock-based compensation expense related to unvested PSUs was $42.9 million as of January 31, 2022. This expense is expected to
be amortized over a weighted-average vesting period of 1.2 years. Total unrecognized stock-based compensation expense related to unvested PSUs was
$24.8 million as of January 31, 2021. This expense is expected to be amortized over a weighted-average vesting period of 1.3 years.
Special PSU Awards
In fiscal 2022 the Company’s Board of Directors granted 655,000 performance stock units (the “Special PSU Awards”) to certain executives under the
2019 Plan. The Special PSU Awards will vest upon the satisfaction of the Company’s achievement of specified stock price hurdles, which is based on the
average of the closing stock price per share of the Company’s Class A common stock during any 45 consecutive trading day period during the applicable
performance period, and a service-based vesting condition. The service condition applicable to each tranche of the Special PSU Awards will be satisfied in
installments as follows, subject to continued employment with the Company through each applicable vesting date: (i) 50% of the Special PSU Awards
underlying the applicable tranche will service vest on the first anniversary of the vesting commencement date applicable to such tranche of the Special PSU
Awards (i.e., February 1, 2022, February 1, 2023, February 1, 2024 and February 1, 2025) and (ii) the remaining PSUs with respect to such tranche will
thereafter service vest in four equal quarterly installments of 12.5%.
The Company measured the fair value of the Special PSU Awards using a Monte Carlo simulation valuation model. The risk-free interest rates used
were 0.85% - 1.51%, which was based on the zero-coupon-risk-free interest rate derived from the Treasury Constant Maturities yield curve for the expected
term of the award on the grant date. The expected volatility was a blended volatility rate of 54.89% - 55.36%, which includes 50% weight on the
Company’s historical volatility calculated from daily stock returns over a 2.21 - 2.58 year look-back from the grant date and 50% weight based on the
Company’s implied volatility as of the grant date.
Stock-based compensation expense relating to the Special PSU Awards are recognized using the accelerated attribution method over the longer of the
derived service period and the explicit service period.
Total unrecognized stock-based compensation expense related to the unvested portion of the Special PSU Awards was $118.4 million as of January 31,
2022. This expense is expected to be amortized over a weighted-average vesting period of 2.8 years.
The following table is a summary of RSUs, PSUs and the Special PSU Awards activities for the fiscal year ended January 31, 2022:
RSUs and PSUs outstanding at January 31, 2021
Granted
Released
Performance adjustment
Forfeited
(1)
RSUs and PSUs outstanding at January 31, 2022
RSUs and PSUs expected to vest at January 31, 2022
___________________________
102
Number of
Shares
(in thousands)
8,449
3,387
(3,408)
153
(695)
7,886
7,886
Weighted-Average
Grant Date
Fair Value
Per Share
$
$
$
$
$
$
$
59.27
224.19
62.62
58.15
99.78
125.04
125.04
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
(1) Performance adjustment represents adjustments in shares outstanding due to the actual achievement of performance-based awards, the achievement of which was
based upon predefined financial performance targets.
Employee Stock Purchase Plan
In May 2019, the board of directors adopted, and the stockholders approved the CrowdStrike Holdings, Inc. 2019 Employee Stock Purchase Plan
(“ESPP”), which became effective on June 10, 2019, which was the business day prior to the effectiveness of the Company’s registration statement on
Form S-1 used in connection with the Company’s IPO. A total of 3,500,000 shares of Class A common stock were initially reserved for issuance under the
ESPP. The Company’s compensation committee administers the ESPP. The number of shares of common stock available for issuance under the ESPP is
subject to an annual increase on the first day of each fiscal year beginning on February 1, 2020, equal to the lesser of: (i) one percent (1%) of outstanding
shares of the Company’s capital stock as of the last day of the immediately preceding fiscal year or (ii) such other amount as its board of directors may
determine. In May 2021, the Company’s compensation committee adopted an amendment and restatement of the ESPP, which was approved by the
Company’s stockholders in June 2021. The amended and restated ESPP clarified the original intent that the annual increase will in no event exceed
5,000,000 shares of the Company’s Class A common stock in any year.
The ESPP provides for consecutive offering periods that will typically have a duration of approximately 24 months in length and is comprised
of four purchase periods of approximately six months in length. The offering periods are scheduled to start on the first trading day on or after June 11 and
December 11 of each year. The first offering period commenced on June 11, 2019 and ended on June 10, 2021.
The ESPP provides eligible employees with an opportunity to purchase shares of the Company’s Class A common stock through payroll deductions of
up to 15% of their eligible compensation. A participant may purchase a maximum of 2,500 shares of common stock during a purchase period. Amounts
deducted and accumulated by the participant are used to purchase shares of common stock at the end of each six-month purchase period. The purchase
price of the shares shall be 85% of the lower of the fair market value of the Class A common stock on (i) the first trading day of the applicable offering
period and (ii) the last trading day of each purchase period in the related offering period. Participants may end their participation at any time during an
offering period and will be paid their accrued contributions that have not yet been used to purchase shares of common stock. Participation ends
automatically upon termination of employment. The ESPP allows for up to one increase in contribution during each purchase period. If an employee elects
to increase his or her contribution, the Company treats this as an accounting modification. The pre- and post-modification fair values are calculated on the
date of the modification, and the incremental expense is then amortized over the remaining purchase period. Incremental expense as a result of such
modification was $6.2 million and $3.5 million for the fiscal years ended January 31, 2022 and January 31, 2021, respectively.
The ESPP offers a two-year look-back feature as well as a rollover feature that provides for an offering period to be rolled over to a new lower-priced
offering if the offering price of the new offering period is less than that of the current offering period. An ESPP rollover occurred when the Company’s
closing stock price on December 10, 2021 was below the closing stock price on June 11, 2021, which triggered a new 24-month offering period through
December 10, 2023 and resulted in an immaterial modification charge during the fiscal year ended January 31, 2022.
Employee payroll contributions ultimately used to purchase shares are reclassified to stockholders’ equity on the purchase date. ESPP employee
payroll contributions accrued of $14.8 million and $11.0 million as of January 31, 2022 and January 31, 2021, respectively, and are included within accrued
payroll and benefits in the consolidated balance sheets.
The following table summarizes the assumptions used in the Black-Scholes option-pricing model to determine fair value of the Company’s common
shares to be issued under the ESPP for the offering periods beginning in June 2019:
Expected term (in years)
Risk-free interest rate
Expected stock price volatility
Dividend yield
2022
0.5 – 2.0
0.0% – 1.9%
33.0% – 55.9%
%
—
Year Ended January 31,
2021
0.5 – 2.0
0.1% – 2.0%
30.1% –
54.3%
—%
2020
0.5 – 2.0
1.6% – 2.2%
30.1% – 35.7%
%
—
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Notes to Consolidated Financial Statements
Stock-Based Compensation Expense
Stock-based compensation expense included in the consolidated statements of operations is as follows (in thousands):
Subscription cost of revenue
Professional services cost of revenue
Sales and marketing
Research and development
General and administrative
Total stock-based compensation expense
2022
Year Ended January 31,
2021
2020
$
$
22,044
10,050
89,634
102,027
86,197
309,952
$
$
11,705
6,005
50,557
40,274
41,134
149,675
$
$
5,226
2,486
23,919
15,403
32,906
79,940
10. Revenue, Deferred Revenue and Remaining Performance Obligations
The following table summarizes the revenue from contracts by type of customer (in thousands, except percentages):
2022
Year Ended January 31,
2021
2020
Amount
% Revenue
Amount
% Revenue
Amount
% Revenue
Channel
Partners
Direct
Customers
Total
revenue
$
$
1,093,336
358,258
1,451,594
75
25
100
%
%
%
$
$
655,031
219,407
874,438
75
25
100
%
%
%
$
$
331,279
150,134
481,413
69
31
100
%
%
%
The Company uses channel partners to complement direct sales and marketing efforts. The partners place an order with the Company after negotiating
the order directly with an end customer. The partners negotiate pricing with the end customer and in some rare instances are responsible for certain support
levels directly with the end customer. The Company’s contract is with the partner and payment to the Company is not contingent on the receipt of payment
from the end customer. The Company recognizes the contractual amount charged to the partners as revenue ratably over the term of the arrangement once
access to the Company’s solution has been provided to the end customer.
The Company also uses referral partners who refer customers in exchange for a referral fee. The Company negotiates pricing and contracts directly
with the end customer. The Company recognizes revenue from the sales to the end customers ratably over the term of the contract once access to the
Company’s solution has been provided to the end customer.
The following table summarizes the revenue by region based on the shipping address of customers who have contracted to use the Company’s platform
or service (in thousands, except percentages):
2022
Year Ended January 31,
2021
2020
Amount
% Revenue
Amount
% Revenue
Amount
% Revenue
$
1,046,474
72
%
$
627,402
72
%
$
356,513
74
%
200,198
142,686
62,236
$
1,451,594
14
10
4
100
%
%
%
%
123,900
80,185
42,951
$
874,438
14
9
5
100
%
%
%
%
67,428
37,672
19,800
$
481,413
14
8
4
100
%
%
%
%
United States
Europe,
Middle East, and
Africa
Asia Pacific
Other
Total
revenue
No single country other than the United States represented 10% or more of the Company’s total revenue during the fiscal years ended January 31,
2022, January 31, 2021 or January 31, 2020.
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Contract Balances
CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are
recognized as revenue over the contractual period. The Company recognized revenue of $696.7 million and $410.7 million for the fiscal years ended
January 31, 2022 and January 31, 2021, respectively, that were included in the corresponding contract liability balance at the beginning of the period.
The Company receives payments from customers based upon contractual billing schedules. Accounts receivable are recorded when the right to
consideration becomes unconditional. Payment terms on invoiced amounts are typically 30 – 60 days. Contract assets include amounts related to the
contractual right to consideration for both completed and partially completed performance obligations that may not have been invoiced.
Changes in deferred revenue were as follows (in thousands):
Beginning Balance
Additions to deferred revenue
Recognition of deferred revenue
Ending Balance
Remaining Performance Obligations
Year Ended January 31,
2022
911,895
2,069,020
(1,451,594)
1,529,321
2021
571,168
1,215,165
(874,438)
911,895
$
$
$
$
The Company’s subscription contracts with its customers have a typical term of one to three years and most subscription contracts are non-cancelable.
Customers typically have the right to terminate their contracts for cause as a result of the Company’s failure to perform. As of January 31, 2022, the
aggregate amount of the transaction price allocated to remaining performance obligations was $2.3 billion. The Company expects to recognize
approximately 65% of the remaining performance obligations in the 12 months following January 31, 2022 and 34% between 13 to 36 months, with the
remainder to be recognized thereafter.
Costs to Obtain and Fulfill a Contract
The Company capitalizes referral fees paid to partners and sales commission and associated payroll taxes paid to internal sales personnel, contractors
or sales agents that are incremental to the acquisition of channel partner and direct customer contracts and would not have occurred absent the customer
contract. These costs are recorded as deferred contract acquisition costs, current and deferred contract acquisition costs, noncurrent on the consolidated
balance sheets.
Sales commissions for renewal of a contract are not considered commensurate with the commissions paid for the acquisition of the initial contract or
follow-on upsell given the substantive difference in commission rates in proportion to their respective contract values. Commissions, including referral fees
paid to referral partners, earned upon the initial acquisition of a contract or subsequent upsell are amortized over an estimated period of benefit of 4 years
while commissions earned for renewal contracts are amortized over the contractual term of the renewals. Sales commissions associated with professional
service contracts are amortized ratably over an estimated period of benefit of six months and included in sales and marketing expense in the consolidated
statements of operations. In determining the period of benefit for commissions paid for the acquisition of the initial contract, the Company took into
consideration the expected subscription term and expected renewals of customer contracts, the historical duration of relationships with customers, customer
retention data, and the life of the developed technology. The Company periodically reviews the carrying amount of deferred contract acquisition costs to
determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred costs. The Company did not
recognize any material impairment losses of deferred contract acquisition costs during the year ended January 31, 2022.
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
The following table summarizes the activity of deferred contract acquisition costs (in thousands):
Beginning balance
Capitalization of contract acquisition costs
Amortization of deferred contract acquisition costs
Ending balance
Deferred contract acquisition costs, current
Deferred contract acquisition costs, noncurrent
Total deferred contract acquisition costs
11. Commitments and Contingencies
Purchase Obligations
Year Ended January 31,
2022
2021
$
$
$
$
198,756
234,308
(113,884)
319,180
126,822
192,358
319,180
$
$
$
$
114,206
150,975
(66,425)
198,756
80,850
117,906
198,756
The Company enters into long-term non-cancelable agreements with providers to purchase data center capacity, such as bandwidth and colocation
space, for the Company’s cloud platform. As of January 31, 2022, the Company is committed to spend $48.1 million on such agreements through fiscal
2028. These obligations are included in purchase obligations below.
In the normal course of business, the Company enters into non-cancelable purchase commitments with various parties to purchase products and
services such as technology, equipment, office renovations, corporate events, and consulting services. A summary of noncancellable purchase obligations in
excess of one year as of January 31, 2022 with expected date of payment is as follows (in thousands):
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal 2026
Fiscal 2027
Thereafter
Total purchase commitments
Total
Commitments
$
$
67,540
72,438
27,039
7,094
2,944
564
177,619
In October 2021, the Company entered into a new private pricing addendum with Amazon Web Services (“AWS”), which provides the Company with
cloud computing infrastructure. Under the new pricing addendum, the minimum commitment is $600.0 million of cloud services from AWS through
September 2026. As of January 31, 2022, the Company had utilized $53.2 million of this commitment. The remaining commitment is excluded from the
table above and the Company expects to meet its remaining commitment with AWS.
Letters of Credit
As of January 31, 2022 and January 31, 2021, the Company had an unused standby letter of credit for $0.4 million securing its facility in Sunnyvale,
California. As of January 31, 2022 and January 31, 2021, the Company had an unused standby letter of credit for $0.8 million and $1.0 million,
respectively, securing the facility housing its principal executive offices in Austin, Texas.
Litigation
In November 2016, Fair Isaac Corporation (“FICO”) filed a petition before the Trademark Trial and Appellate Board (“TTAB”) at the U.S. Patent and
Trademark Office, seeking cancellation of the Company’s registration of its “CrowdStrike
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
Falcon” trademark, and a notice of opposition of the Company’s trademark application for “Falcon OverWatch.” The Company denies that any of the relief
FICO seeks is appropriate, and has itself moved to cancel, or in the alternative amend, FICO’s “Falcon” trademark registrations before the TTAB. The
proceedings have been consolidated and are in the discovery phase. The Company is vigorously defending the case, but given the early stage, although a
loss may reasonably be possible, the Company is unable to predict the likelihood of success of FICO’s claims or estimate a loss or range of loss. As a
result, no material liability has been recorded as of January 31, 2022 or January 31, 2021.
In March 2022, Webroot, Inc. and Open Text, Inc. (collectively, “Webroot”) filed a lawsuit against the Company in federal court in the Western District
of Texas alleging that certain of the Company’s products infringe six patents held by them. In the complaint, Webroot sought unspecified damages,
attorneys’ fees and a permanent injunction. The Company is evaluating Webroot’s claims and intends to vigorously defend against them.
In addition, the Company is involved in various other legal proceedings and subject to claims that arise in the ordinary course of business. For any
claims for which the Company believes a liability is both probable and reasonably estimable, the Company records a liability in the period for which it
makes this determination. There is no pending or threatened legal proceeding to which the Company is a party that, in the Company’s opinion, is likely to
have a material adverse effect on its consolidated financial statements; however, the results of litigation and claims are inherently unpredictable. Regardless
of the outcome, litigation can have an adverse impact on the Company’s business because of defense and settlement costs, diversion of management
resources, and other factors. In addition, the expense of litigation and the timing of this expense from period to period are difficult to estimate, subject to
change and could adversely affect the Company’s consolidated financial statements.
Warranties and Indemnification
The Company’s cloud computing services are typically warranted to perform in a manner consistent with general industry standards that are reasonably
applicable and materially in accordance with the Company’s online help documentation under normal use and circumstances.
The Company’s arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe a
third party’s intellectual property rights. In addition, for its Falcon Complete customers, the Company offers a limited warranty, subject to certain
conditions, to cover certain costs incurred by the customer in case of a cybersecurity breach. The Company has entered into an insurance policy to reduce
its potential liability arising from this limited warranty arrangement. To date, the Company has not incurred any material costs because of such obligations
and has not accrued any liabilities related to such obligations in the consolidated financial statements.
The Company has also agreed to indemnify its directors and certain executive officers for costs associated with any fees, expenses, judgments, fines
and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party
by reason of the person’s service as a director or officer, including any action by the Company, arising out of that person’s services as the Company’s
director or officer or that person’s services provided to any other company or enterprise at the Company’s request. The Company maintains director and
officer insurance coverage that would generally enable the Company to recover a portion of any future amounts paid. The Company may also be subject to
indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions. No liabilities have
been accrued associated with this indemnification provision as of January 31, 2022 or January 31, 2021.
12. Geographic Information
The Company’s long-lived assets are composed of property and equipment, net, and operating lease right-of-use assets, are summarized by geographic
area as follows (in thousands):
United States
International
Total property and equipment, net and operating lease right-of-use assets
January 31,
2022
2021
$
$
256,282
36,030
292,312
$
$
174,889
28,609
203,498
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
No single country other than the United States represented 10% or more of the Company’s total long-lived assets as of January 31, 2022 and
January 31, 2021.
13. Related Party Transactions
Subscription and Professional Services Revenue from Related Parties
During the fiscal years ended January 31, 2022, January 31, 2021 and January 31, 2020, certain investors and companies with whom the Company’s
Board of Directors are affiliated with, purchased subscriptions and professional services. The Company recorded revenue from subscriptions and
professional services from related parties of $7.7 million, $4.3 million, and $9.0 million during the fiscal years ended January 31, 2022, January 31, 2021
and January 31, 2020, respectively. Accounts receivable associated with these related parties was $2.2 million, and $1.3 million as of January 31, 2022 and
January 31, 2021, respectively.
Accounts Payable to Related Parties
During the fiscal years ended January 31, 2022, January 31, 2021 and January 31, 2020, the Company purchased goods and services totaling $26.0
million, $8.8 million, and $3.2 million, respectively, from certain investors and companies with whom its Board of Directors are affiliated with. The
accounts payable to such vendors was $3.7 million and immaterial as of January 31, 2022 and January 31, 2021, respectively.
14. Acquisitions
Secure Circle, LLC
On November 29, 2021, the Company acquired 100% of the equity interest of Secure Circle, LLC (“SecureCircle”), a SaaS-based cybersecurity
service that extends Zero Trust security to data on, from and to the endpoint. The acquisition has been accounted for as a business combination. The total
consideration transferred was $60.8 million, which consisted solely of cash. The purchase price was allocated, on a preliminary basis, to identified
intangible assets, which include developed technology and customer relationships of $18.3 million, net tangible assets acquired of $(0.5) million and
goodwill of $43.0 million allocated to the Company’s one reporting unit, representing the excess of the purchase price over the fair value of net tangible
and intangible assets acquired. The goodwill was primarily attributable to the assembled workforce of SecureCircle, planned growth in new markets and
synergies expected to be achieved from the integration of SecureCircle. Goodwill was deductible for income tax purposes.
Subsequent to the closing of the acquisition, SecureCircle employees were granted RSUs and PSUs under the 2019 Plan. The awards which are subject
to continued service will be recognized ratably as stock-based compensation expense over the requisite service period. The awards which are based on
specified performance targets will be recognized under the accelerated attribution method.
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition
(dollars in thousands):
Developed technology
Customer relationships
Total intangible assets acquired
Fair Value
Useful Life
(in months)
$
$
15,300
3,000
18,300
72
72
The Company incurred acquisition expense of $1.2 million for the fiscal year ended January 31, 2022. The acquisition costs are recorded in general
and administrative expenses on the Company’s consolidated statement of operations.
108
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
The results of operations of SecureCircle have been included in the Company’s consolidated financial statements from the date of acquisition. The
acquisition of SecureCircle did not have a material impact on the Company’s consolidated financial statements, and therefore historical and pro forma
disclosures have not been presented.
Humio Limited
On March 5, 2021, the Company acquired 100% of the equity interest of Humio Limited (“Humio”), a privately-held company that is a leading
provider of high-performance cloud log management and observability technology. The total consideration transferred was $370.3 million which consisted
of $353.8 million in cash, net of $12.5 million cash acquired, and $4.0 million representing the fair value of replacement equity awards attributable to pre-
acquisition service. The purchase price was allocated, to identified intangible assets, which include developed technology, customer relationships, and trade
names, of $75.6 million, net tangible assets acquired of $3.4 million, and goodwill of $291.3 million allocated to the Company’s one reporting unit,
representing the excess of the purchase price over the fair value of net tangible and intangible assets acquired. The goodwill was primarily attributable to
the assembled workforce of Humio, planned growth in new markets, and synergies expected to be achieved from the integration of Humio. Goodwill is not
deductible for income tax purposes.
Per the terms of the share purchase agreement with Humio, certain unvested stock options held by Humio employees were canceled and exchanged for
replacement stock options under the 2019 Plan. Additionally, certain shares of stock issued pursuant to share-based compensation awards to entities
affiliated with certain Humio employees were exchanged for replacement RSAs of the Company, which are subject to future vesting. The portion of the fair
value of the replacement equity awards associated with pre-acquisition service of Humio’s employees represented a component of the total purchase
consideration. The remaining fair value of these issued awards is subject to the recipients’ continued service and thus were excluded from the purchase
price. In addition, Humio employees were granted RSUs and PSUs under the 2019 Plan. The awards which are subject to continued service will be
recognized ratably as stock-based compensation expense over the requisite service period. The awards which are based on specified performance targets
will be recognized under the accelerated attribution method.
The following table sets forth the preliminary fair value of the identifiable intangible assets acquired and their estimated useful lives as of the date of
acquisition (dollars in thousands):
Developed technology
Customer relationships
Trade names
Total intangible assets acquired
Fair Value
Useful Life
(in months)
$
$
68,800
5,400
1,400
75,600
96
96
24
The Company incurred acquisition expense of $5.0 million for the fiscal year ended January 31, 2022. The acquisition costs are recorded in general
and administrative expenses on the Company’s consolidated statement of operations.
The results of operations of Humio have been included in the Company’s consolidated financial statements from the date of acquisition. The
acquisition of Humio did not have a material impact on the Company’s consolidated financial statements, and therefore historical and pro forma disclosures
have not been presented.
Preempt Security, Inc.
On September 30, 2020, the Company acquired 100% of the equity interest of Preempt Security, Inc. (“Preempt Security”), a privately-held Delaware
corporation that developed real-time access control and threat prevention technology (the “Acquisition”). The Acquisition has been accounted for a
business combination. The total consideration transferred was $91.2 million which consisted of $87.4 million in cash and $3.8 million representing the fair
value of replacement equity awards attributable to pre-acquisition service. The purchase price was allocated to identified intangible assets, which include
developed technology, customer relationships and trade names, of $16.4 million, net tangible assets acquired of $(0.5) million and goodwill of $75.3
million allocated to the Company’s one reporting segment, representing the excess of the purchase price over the fair value of net tangible and intangible
assets acquired. The goodwill was primarily attributable to the assembled workforce
109
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
of Preempt Security, planned growth in new markets and synergies expected to be achieved from the integration of Preempt Security. Goodwill is not
deductible for income tax purposes.
Per the terms of the merger agreement with Preempt Security, certain unvested stock options held by Preempt Security employees were canceled and
exchanged for replacement stock options under the 2019 Plan. Additionally, certain shares of stock issued pursuant to share-based compensation awards to
key employees of Preempt Security were canceled and exchanged for replacement RSUs of the Company, which are subject to future vesting. The portion
of the fair value of the replacement equity awards associated with pre-acquisition service of Preempt Security’s employees represented a component of the
total purchase consideration. The remaining fair value of these issued awards is subject to the recipients’ continued service with the Company and the
achievement of specified performance targets, and thus were excluded from the purchase price. The awards which are subject to continued service will be
recognized ratably as stock-based compensation expense over the requisite service period. The awards which are based on specified performance targets
will be recognized under the accelerated attribution method.
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition
(dollars in thousands):
Developed technology
Customer relationships
Trade names
Total intangible assets acquired
Fair Value
Useful Life
(in months)
$
$
13,200
3,100
85
16,385
60
60
12
The Company incurred an immaterial amount of acquisition expense for the fiscal year ended January 31, 2022. The acquisition costs are recorded in
general and administrative expenses on the Company’s consolidated statement of operations.
The results of operations of Preempt Security have been included in the Company’s consolidated financial statements from the date of acquisition. The
acquisition of Preempt Security did not have a material impact on the Company’s consolidated financial statements, and therefore historical and pro forma
disclosures have not been presented.
15. Net Loss Per Share Attributable to Common Stockholders
Basic and diluted net loss per share attributable to CrowdStrike’s common stockholders is computed in conformity with the two-class method required
for participating securities. Basic net loss per share attributable to CrowdStrike common stockholders is computed by dividing the net loss attributable to
CrowdStrike by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is the same as basic net
loss per share because the effects of potentially dilutive items were antidilutive given the Company’s net loss position in the periods presented.
The rights of the holders of Class A and Class B common stock are identical, except with the respect to voting and conversion rights. As such, the
undistributed earnings are allocated equally to each share of common stock without class distinction and the resulting basic and diluted net loss per share
attributable to CrowdStrike common stockholders are the same for shares of Class A and Class B common stock.
The following table sets forth the computation of basic and diluted net loss per share attributable to CrowdStrike common stockholders (in thousands,
except per share data):
Numerator:
Net loss attributable to Class A and Class B CrowdStrike common
stockholders
Denominator:
Weighted-average shares used in computing net loss per share
attributable to Class A and Class B of CrowdStrike common stockholders,
basic and diluted
Net loss per share attributable to Class A and Class B CrowdStrike
common stockholders, basic and diluted
$
$
2022
Year Ended January 31,
2021
2020
(234,802)
$
(92,629)
$
(141,779)
227,142
217,756
(1.03)
$
(0.43)
$
148,062
(0.96)
The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for
the periods presented because including them would have been antidilutive are as follows (in thousands):
Shares of common stock subject to repurchase from outstanding stock options
RSUs and PSUs subject to future vesting
Shares of common stock issuable from stock options
Share purchase rights under the employee stock purchase plan
Potential common shares excluded from diluted net loss per share
2022
Year Ended January 31,
2021
2020
198
7,886
3,938
642
12,664
548
8,449
6,646
872
16,515
984
6,063
14,689
1,458
23,194
The above table excludes founder holdbacks related to business combinations. A variable number of shares will be issued upon vesting to settle a fixed
monetary amount of $18.5 million, which shares are contingent upon continued employment with the Company. The share price will be determined based
on the Company’s average stock price or the volume weighted average stock price 5 days prior to each vesting date. As of January 31, 2022, 14,667 shares
were issued to settle founder holdbacks at a weighted average price of $243.72 per share.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rule 13a–15(e) and Rule 15d–15(e) under the Exchange Act that are designed to
provide reasonable assurance that information required to be 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 in the SEC’s rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or
submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure
controls and procedures as of January 31, 2022. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as
of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
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CrowdStrike Holdings, Inc.
Notes to Consolidated Financial Statements
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate “internal control over financial reporting,” as defined in Rule 13a-15(f) and
Rule 15d-15(f) under the Exchange Act. Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of
January 31, 2022 based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
Based on the results of its evaluation, management concluded that our internal control over financial reporting was effective as of January 31, 2022.
The effectiveness of our internal control over financial reporting as of January 31, 2022 has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, as stated in its report which is included in Part II, Item 8 of this Annual Report on Form 10-K.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and Rule
15d-15(d) of the Exchange Act that occurred during the fiscal quarter ended January 31, 2022 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal
control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance
level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or
detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision
making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in
part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with
policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur
and not be detected.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
PART III
We have adopted a code of business conduct and ethics (the “Code of Conduct”) that applies to all of our employees, executive officers and directors.
The full text of the Code of Conduct is available on our website at ir.crowdstrike.com. The nominating and corporate governance committee of our board of
directors is responsible for overseeing the Code of Conduct and must approve any waivers of the Code of Conduct for employees, executive officers and
directors. We expect that any amendments to the Code of Conduct, or any waivers of its requirements, will be disclosed on our website, as required by
applicable law or the listing standards of The Nasdaq Global Select Market.
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Certain information required by this Item with respect to our executive officers is set forth under Item 1 of Part I of this Annual Report on Form 10-K
under the section entitled “Executive Officers.”
The information otherwise required by this Item will be included in our definitive proxy statement for our 2022 annual meeting of stockholders (the
“2022 Proxy Statement”), which will be filed with the SEC within 120 days after the end of our fiscal year ended January 31, 2022, and is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference to our 2022 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
The information required by this item is incorporated herein by reference to our 2022 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated herein by reference to our 2022 Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is incorporated herein by reference to our 2022 Proxy Statement.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULE
(a)(1) Financial Statements
PART IV
See Index to consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
(a)(2) Financial Statement Schedule
All financial statement schedules have been omitted as the information is not required under the related instructions or is not applicable or because the
information required is already included in the financial statements or the notes to those financial statements.
(a)(3) Exhibits
We have filed the exhibits listed on the accompanying Exhibit Index, which is incorporated herein by reference.
ITEM 16. FORM 10-K SUMMARY
None.
112
Incorporated by Reference
Form
File No.
Exhibit
Filing Date
Filed
Herewith
Table of Contents
EXHIBIT INDEX
Exhibit
Number
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
10.1†
10.2†
10.3†
10.4†
10.5†
10.6†
10.7†
10.8†
10.9†
10.10†
10.11†
10.12†
10.13†
10.14†
10.15
Exhibit Description
Amended and Restated Certificate of Incorporation of the Registrant, as
currently in effect.
Bylaws of the Registrant, as currently in effect.
Amended and Restated Stockholders Agreement among the Registrant
and certain holders of its capital stock, dated as of June 21, 2018, as
amended on September 25, 2018 and April 17, 2019.
Amended and Restated Registration Rights Agreement among the
Registrant and certain holders of its capital stock, dated as of June 21,
2018.
Class A common stock certificate of the Registrant.
Description of Registrant’s securities.
Indenture dated as of January 20, 2021, between CrowdStrike Holdings,
Inc. and U.S. Bank National Association, as trustee
First Supplemental Indenture, dated as of January 20, 2021, between
CrowdStrike Holdings, Inc. and U.S. Bank National Association, as
trustee
Form of 3.000% Senior Notes due 2029 (included in Exhibit 4.9)
Form of Indemnification Agreement between the Registrant and each of
its directors and executive officers.
2019 Equity Incentive Plan and related form agreement.
Form of Global Restricted Stock Unit Agreement Outside Directors –
Annual Grant under the Company’s 2019 Equity Incentive Plan
Form of Global Restricted Stock Unit Agreement Outside Directors –
Initial Grant under the Company’s 2019 Equity Incentive Plan
CrowdStrike Holdings, Inc. 2019 Equity Incentive Plan Global
Performance Unit Agreement
Amended and Restated 2011 Stock Incentive Plan and related form
agreements.
Amended and Restated 2019 Employee Stock Purchase Plan and related
form agreements.
CrowdStrike Holdings, Inc. Corporate Incentive Plan.
Outside Director Compensation Policy, as amended on June 30, 2021.
Employment Agreement between the Registrant and George Kurtz, dated
as of November 18, 2011.
Offer Letter between the Registrant and Colin Black, dated as of October
3, 2015.
Offer Letter between the Registrant and Burt W. Podbere, dated as of
August 10, 2015.
Offer Letter between the Registrant and Roxanne S. Austin dated as of
September 10, 2018.
Offer Letter between the Registrant and Godfrey R. Sullivan, undated.
Office Lease between CrowdStrike, Inc. and SPF Mathilda, LLC, dated as
of April 4, 2017, as amended on September 18, 2017, October 27, 2017
and November 5, 2018.
113
8-K
8-K
S-1
001-38933
001-38933
333-231461
S-1
333-231461
S-1/A
10-K
8-K
8-K
8-K
S-1
S-1/A
10-Q
10-K
10-Q
333-231461
001-38933
001-38933
001-38933
001-38933
333-231461
333-231461
001-38933
001-38933
001-38933
S-1
333-231461
10-Q
001-38933
001-38933
001-38933
333-231461
333-231461
333-231461
333-231461
8-K
8-K
S-1
S-1
S-1
S-1
S-1
S-1
3.1
3.2
4.1
4.2
4.3
4.4
4.1
4.2
4.2
10.1
10.2
10.1
10.4
10.1
10.4
10.2
99.1
10.1
10.6
10.7
10.8
10.9
June 14, 2019
June 14, 2019
May 14, 2019
May 14, 2019
May 29, 2019
March 23, 2020
January 20, 2021
January 20, 2021
January 20, 2021
May 14, 2019
May 29, 2019
September 3, 2020
March 18, 2021
June 3, 2020
May 14, 2019
September 1, 2021
March 12, 2021
July 2, 2021
May 14, 2019
May 14, 2019
May 14, 2019
May 14, 2019
333-231461
10.10
May 14, 2019
333-231461
10.12
May 14, 2019
Table of Contents
10.16
10.17
10.18
10.19
10.20
10.21†
10.22†
10.23†
10.24†
10.25†
21.1
22.1
23.1
24.1
31.1
31.2
32.1*
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Fourth Amendment to Office Lease between SPF Mathilda, LLC and
CrowdStrike, Inc., dated August 16, 2019.
Fifth Amendment to Office Lease between SPF Mathilda, LLC and
CrowdStrike, Inc., dated October 2, 2019.
Office Lease Agreement between EQC Capitol Tower Property LLC and
CrowdStrike, Inc., dated April 20, 2018.
First Amendment to Office Lease Agreement between EQC Capitol
Tower Property LLC and CrowdStrike, Inc., dated June 6, 2019.
Amended and Restated Credit Agreement dated as of January 4, 2021, as
amended on January 6, 2022 among CrowdStrike Holdings, Inc., as
guarantor, CrowdStrike, Inc. as borrower, and Silicon Valley Bank and
the other lenders party thereto.
Amended and Restated Performance Unit Agreement with George Kurtz,
dated September 1, 2021, under the CrowdStrike Holdings, Inc. 2019
Equity Incentive Plan.
Change in Control and Severance Agreement, dated as of September 1,
2021, by and between CrowdStrike Holdings, Inc. and George Kurtz.
Performance Unit Agreement with Burt Podbere, dated January 12, 2022,
under the CrowdStrike Holdings, Inc. 2019 Equity Incentive Plan.
Offer Letter between the Registrant and Michael Carpenter, dated as of
October 25, 2016.
Offer Letter between the Registrant and Shawn Henry, dated as of March
4, 2012.
List of Subsidiaries of the Registrant.
List of Subsidiary Guarantors
Consent of PricewaterhouseCoopers LLC, independent registered public
accounting firm.
Power of Attorney (reference is made to the signature page hereto).
Certification of the Principal Executive Officer pursuant to Exchange Act
Rules 13a14(a) and 15d14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Principal Financial Officer pursuant to Exchange Act
Rules 13a14(a) and 15d14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Principal Executive Officer and Principal Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Inline XBRL Instance Document
Inline XBRL Taxonomy Extension Schema Document
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Taxonomy Extension Definition Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File – the cover page XBRL tags are
embedded within the Inline Instance XBRL document
_______________________________________
114
10-Q
10-K
001-38933
10.1
December 6, 2019
001-38933
10.14
March 23, 2020
10-Q
001-38933
10-Q
001-38933
8-K
001-38933
10-Q
001-38933
10-Q
001-38933
10.4
10.3
10.1
10.1
10.2
September 1, 2021
September 1, 2021
January 14, 2022
June 4, 2021
June 4, 2021
S-3ASR
333-252007
22.1
January 11, 2021
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Table of Contents
†
*
Indicates management contract or compensatory plan, contract or agreement.
The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Annual Report on Form 10-K and will not be deemed “filed” for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.
115
Table of Contents
Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, in Austin, Texas, on the day of March 16, 2022.
CROWDSTRIKE HOLDINGS, INC.
SIGNATURES
/s/ George Kurtz
George Kurtz
President, Chief Executive Officer and Director (Principal Executive
Officer)
By:
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Table of Contents
POWER OF ATTORNEY
KNOW ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints George Kurtz and
Burt W. Podbere, and each of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her
and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their, his or her substitutes, may lawfully do or 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
Registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ George Kurtz
George Kurtz
/s/ Burt W. Podbere
Burt W. Podbere
/s/ Gerhard Watzinger
Gerhard Watzinger
/s/ Cary J. Davis
Cary J. Davis
/s/ Denis J. O’Leary
Denis J. O’Leary
/s/ Godfrey R. Sullivan
Godfrey R. Sullivan
/s/ Laura J. Schumacher
Laura J. Schumacher
/s/ Roxanne S. Austin
Roxanne S. Austin
/s/ Sameer K. Gandhi
Sameer K. Gandhi
President, Chief Executive Officer, and Director (Principal
Executive Officer)
March 16, 2022
Chief Financial Officer (Principal Financial Officer and Principal
Accounting Officer)
March 16, 2022
Chairman of the Board of Directors
March 16, 2022
Director
Director
Director
Director
Director
Director
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March 16, 2022
March 16, 2022
March 16, 2022
March 16, 2022
March 16, 2022
March 16, 2022
Exhibit 10.18
CAPITOL TOWER
AUSTIN, TEXAS
OFFICE LEASE AGREEMENT
BETWEEN
EQC CAPITOL TOWER PROPERTY LLC
(“LANDLORD”)
AND
CROWDSTRIKE, INC.
(“TENANT”)
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TABLE OF CONTENTS
1. Basic Lease Information.
2. Lease Grant.
3. Adjustment of Commencement Date; Possession.
4. Rent.
5. Compliance with Laws; Use.
6. Security Deposit.
7. Building Services and Signage .
8. Leasehold Improvements.
9. Repairs and Alterations.
10. Entry by Landlord.
11. Assignment and Subletting.
12. Liens.
13. Indemnity and Waiver of Claims.
14. Insurance.
15. Subrogation.
16. Casualty Damage.
17. Condemnation.
18. Default.
19. Remedies.
20. Limitation of Liability.
21. Intentionally Omitted.
22. Holding Over.
23. Subordination to Mortgages; Estoppel Certificate.
24. Notice.
25. Surrender of Premises.
26. Miscellaneous.
Exhibits:
Exhibit A - Outline and Location of Premises
Exhibit A-1 - Outline and Location of Offer Space
Exhibit A-2 - Outline and Location of ROFR Space
Exhibit B - Expenses and Taxes
Exhibit C - Work Letter
Schedule C-1 - Space Plans
Exhibit D - Premises Acceptance Letter
Exhibit E - Building Rules and Regulations
Exhibit F - Additional Provisions
Exhibit F-1 - Form of Letter of Credit
Exhibit G - Intentionally Omitted
Exhibit G-1 - State Specific Rider
Exhibit H - Parking Agreement
Exhibit H-1 - Parking Facility Rules
Exhibit I - Form of Subordination, Non-Disturbance and Attornment Agreement
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OFFICE LEASE AGREEMENT
THIS OFFICE LEASE AGREEMENT (this “Lease”) is made and entered into as of April 20, 2018 (the “Effective Date”),
by and between EQC CAPITOL TOWER PROPERTY LLC, a Delaware limited liability company (“Landlord”) and
CROWDSTRIKE, INC., a Delaware corporation (“Tenant”).
1.
Basic Lease Information.
1.01.
“Building” shall mean the building located at 206 East 9th Street, Austin, Texas, commonly known as Capitol
Tower. “Rentable Square Footage of the Building” is deemed to be 175,510 square feet.
1.02.
“Premises” shall mean the area shown on Exhibit A to this Lease. The Premises is located on the 14th floor and
known as Suite 1400. If the Premises include one or more floors in their entirety, all corridors and restroom
facilities located on such full floor(s) shall be considered part of the Premises. The “Rentable Square Footage of
the Premises” is deemed to be 25,805 square feet. Landlord and Tenant stipulate and agree that the Rentable
Square Footage of the Building and the Rentable Square Footage of the Premises are correct and shall not be
remeasured, unless there is an actual physical change in the Premises or the Building.
1.03.
“Base Rent”:
Full Calendar Months of
Term
(together with any partial
calendar months at the
beginning of the Term, as
indicated below)
Commencement Date –
Last day of 12th full
calendar month of Term
13th – 24th
25th – 36th
37th – 48th
49th – 60th
61st – 72nd
73rd
Annual
Base Rent
Annual Rate
Per Square Foot
Monthly
Base Rent
$812,857.56
$837,372.24
$862,403.16
$888,208.08
$914,787.24
$942,140.52
$970,526.04
$31.50
$32.45
$33.42
$34.42
$35.45
$36.51
$37.61
$67,738.13
$69,781.02
$71,866.93
$74,017.34
$76,232.27
$78,511.71
$80,877.17
Notwithstanding anything in this Section of this Lease to the contrary, so long as Tenant is not in Material Default
(as defined in Section 18) under this Lease, Tenant shall be entitled to an abatement of the entire Base Rent due
for the Premises initially described in this Lease during the 1st full calendar month of the Term (as defined in
Section 1.06) (the "Rent Abatement Period"). The total amount of Base Rent abated during the Rent
Abatement Period shall be referred to as the "Abated Base Rent". If Tenant Defaults (as defined in Section 18)
at any time during the Term and such Default results in termination of this Lease, all Abated Base Rent shall
immediately become due and payable. The payment by Tenant of the Abated Base Rent in the event of such
Default shall not limit or affect any of Landlord's other rights, pursuant to this Lease or at law or in equity. During
the Rent Abatement Period, only Base Rent with respect to the Premises
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initially described in this Lease shall be abated, and all Additional Rent and other costs and charges specified in
this Lease shall remain as due and payable pursuant to the provisions of this Lease.
1.04.
“Tenant’s Pro Rata Share”: 14.7029%.
1.05.
“Fiscal Year” shall mean the fiscal year for Taxes for the applicable jurisdiction, which is currently from the
beginning of January to the end of December.
1.06.
“Term”: A period of 73 full calendar months, plus any partial calendar month at the beginning of the Term,
commencing on the Commencement Date (defined below) and, unless terminated earlier in accordance with this Lease, ending
on the last day of the 73rd full calendar month of the Term (the “Termination Date”). The “Commencement Date” shall mean
date that is the earlier of: (a) 150 days after the Premises Delivery Date (defined below), (b) the date on which Tenant first
occupies the Premises for the purpose of conducting its business, or (c) the date on which Tenant receives from the appropriate
governmental authorities, with respect to the Initial Alterations, all approvals necessary for the occupancy of the Premises. The
"Premises Delivery Date" shall mean the date on which Landlord delivers possession of the Premises to Tenant free from
occupancy of any other party and free of all Mutual Mobile personal property. Tenant shall have the right to extend the Term of
this Lease as set forth in Exhibit F.
1.07.
“Allowance”: shall mean an amount equal to $1,032,200.00 ($40.00 per Rentable Square Foot in the Premises),
which shall be used and paid in accordance with the terms of Exhibit C.
1.08.
“Security Deposit”: $800,000.00, which shall be in the form of a letter of credit, as more fully described in
Section 6, and is subject to reduction as provided in Section IV of Exhibit F.
1.09.
Intentionally Omitted
1.10.
“Broker(s)”: Collectively the “Landlord’s Broker”, which is Jones Lang LaSalle, and the “Tenant’s Broker”,
which is Jones Lang LaSalle.
1.11.
“Permitted Use”: General office purposes, and for no other use or purpose.
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1.12.
“Notice Address(es)”:
Landlord:
Equity Commonwealth Management LLC
Two North Riverside Plaza
Suite 2100
Chicago, Illinois 60606
Attn: Legal Department - Leasing
With a copy to:
Equity Commonwealth Management LLC
Two North Riverside Plaza
Suite 2100
Chicago, Illinois 60606
Attn: General Counsel
Tenant:
CrowdStrike
150 Mathilda Place, 3rd Floor
Sunnyvale, CA 94086
Attn: Robin Cline
1.13.
“Business Day(s)” are Monday through Friday of each week, exclusive of New Year’s Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day (“Holidays”). Landlord may designate
additional Holidays that are commonly recognized by other office buildings in the area where the Building is
located. “Building Service Hours” are 8:00 a.m. to 6:00 p.m. on Business Days and 8:00 a.m. to 1:00 p.m. on
Saturdays, excluding Holidays (but may be different for freight elevator and/or loading dock purposes, if
applicable).
1.14.
“Landlord Work” means none, except as expressly provided in Exhibit C, Section 5.
1.15.
“Property” means the Building and the parcel(s) of land on which it is located and, at Landlord’s discretion, the
parking facilities and other improvements, if any, serving, or operated in connection with, the Building and the
parcel(s) of land on which they are located.
1.16. Additional Rights Granted to Tenant.
Renewal Option (See Section I of Exhibit F)
Right of First Offer (See Section II of Exhibit F)
Right of First Refusal (See Section III of Exhibit F)
Parking (See Exhibit H)
2.
Lease Grant.
The Premises are hereby leased to Tenant from Landlord, together with the right to use any portions of the Property that
are designated by Landlord for the common use of tenants and others (the “Common Areas”).
3.
Adjustment of Commencement Date; Possession.
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3.01.
(a) Landlord anticipates delivering possession of the Premises to Tenant on April 1, 2018. Notwithstanding the
foregoing, Landlord’s failure to deliver possession of the Premises to Tenant by such date for reasons outside Landlord’s
reasonable control, including, without limitation, the holding over in possession of the Premises or any portion thereof by the
current occupant thereof, shall not affect the enforceability of this Lease, or subject Landlord to any liability to Tenant for damage
or be deemed a default by Landlord of its obligations under the Lease.
(b)
If the Commencement Date is not a fixed date, the provisions of this Section 3.01(b) shall apply. A form of
premises acceptance letter is attached as Exhibit D (the “Premises Acceptance Letter”). Promptly after the determination of
the Commencement Date, and prior to Tenant being permitted to move Tenant’s Property (defined in Section 14 below) into the
Premises, Tenant shall execute and deliver to Landlord a completed Premises Acceptance Letter, provided Landlord has
prepared and furnished the same to Tenant. In addition, Tenant hereby designates Robin Cline as the party authorized to
execute the Premises Acceptance Letter on Tenant’s behalf.
3.02. The Premises are accepted by Tenant in “as is” condition and configuration, without any representations or
warranties by Landlord or any party acting on Landlord’s behalf, except as expressly set forth in this Lease. On the Premises
Delivery Date, (i) the HVAC systems, electrical systems and plumbing systems serving the Premises, and the HVAC systems,
electrical systems and plumbing systems serving the common areas serving the Premises shall be in good working order, (ii) the
structure of the Premises (exterior walls, exterior windows, floor slabs, columns and other base building elements) shall be
structurally sound and in water tight condition, and (iii) all personal property of the prior tenant shall be removed. Tenant’s failure
to notify Landlord of any failure to deliver the Premises in the condition required by this Lease within fifteen (15) Business Days
after the Premises Delivery Date shall be construed as Tenant’s agreement that the Premises are in good order and satisfactory
condition as delivered. Subject to the foregoing, by taking possession of the Premises, Tenant agrees that the Premises are in
good order and satisfactory condition and that Landlord has no obligation to perform any work in the Premises, the Building or
the Property or otherwise prepare the Premises for Tenant’s occupancy. Landlord shall not be liable for, and the validity of this
Lease shall not be impaired by, a failure to deliver possession of the Premises or any other space due to the holdover or
continued wrongful possession of such space by another party, provided, however, Landlord shall use reasonable efforts to
obtain possession of any such space. Except as otherwise provided in this Lease, Tenant shall not be permitted to take
possession of or enter the Premises prior to the Commencement Date without Landlord’s permission. Provided that Tenant has
delivered to Landlord the Security Deposit, the installment of Base Rent due for the 2nd full calendar month of the Term, and
evidence of the insurance required of Tenant hereunder, Landlord shall permit Tenant to have access to the Premises on the
Premises Delivery Date for the sole purpose of performing, in accordance with the terms of this Lease (including, without
limitation, Section 9.03 hereof), the Initial Alterations and, to the extent permitted by applicable Law, installing furniture,
equipment and other personal property. If Tenant takes possession of or enters the Premises before the Commencement Date,
Tenant shall pay for all services requested by Tenant other than freight elevator and loading dock usage and Tenant shall be
subject to the terms and conditions of this Lease; provided, however, Tenant shall not be required to pay any Base Rent, Tax
Rent or Expense Rent for any entry or possession before the Commencement Date during which Tenant, with Landlord’s
approval, has entered, or is in possession of, the Premises for the sole purpose of performing improvements or installing
furniture, equipment or other personal property.
4.
Rent.
4.01. Tenant shall pay Landlord in lawful money of the United States of America, without any setoff or deduction,
unless expressly set forth in this Lease, all Base Rent and Additional Rent due for the Term (collectively referred to as “Rent”).
“Additional Rent” means all sums (exclusive of Base Rent) that Tenant is required to pay Landlord under this Lease. Tenant
shall pay and be liable for all rental, sales and use taxes (but excluding income taxes), if
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any, imposed upon or measured by Rent. Base Rent and recurring monthly charges of Additional Rent shall be due and payable
in advance on the first day of each calendar month without notice or demand, provided that the installment of Base Rent for the
first full calendar month of the Term following the Rent Abatement Period, and the first monthly installment of Expense Rent and
Tax Rent, shall be payable upon the execution of this Lease by Tenant. All other items of Rent shall be due and payable by
Tenant on or before 30 days after billing by Landlord. All payments of Rent shall be made by electronic money transfer in
accordance with Landlord’s written instructions regarding the same or by such other means or method of payment as Landlord
may direct in writing. Unless otherwise notified in writing by Landlord, all payments of Rent shall be made by ACH transfer to
Landlord in accordance with the following: Bank: Citizens Bank, Bank Address: 1 Citizens Drive, Riverside, RI 02915, Account
Name: Equity Commonwealth, ABA Routing #: 211070175, Account #: 1324602233, Reference: 605330. If Tenant does not pay
any Rent when due hereunder, Tenant shall pay Landlord an administration fee in the amount of 5% of the past due Rent,
provided that Tenant shall be entitled to a grace period of up to 5 days after delivery of notice from Landlord for the first 2 late
payments of Rent in a calendar year. In addition, past due Rent shall accrue interest at a rate (the “Interest Rate”) per annum
equal to the lesser of (i) 12% per annum and (ii) 4 percentage points above the rate of interest then most recently publicly
announced by a federally insured bank selected by Landlord as its “prime rate” or “base rate” (the “Prime Rate”) until paid in full,
including after the entry of any judgment. If accrual or payment of interest at the Interest Rate should be unlawful, then the
Interest Rate shall be the maximum legal rate. Tenant shall pay Landlord a reasonable fee for any checks returned by Tenant’s
bank for any reason. Landlord’s acceptance of less than the correct amount of Rent shall be considered a payment on account
of the oldest obligation due from Tenant hereunder, then to any current Rent then due hereunder, notwithstanding any statement
to the contrary contained on or accompanying any such payment from Tenant and acceptance of any such partial payment shall
not be deemed a waiver of Landlord’s right to the full amount due. Rent for any partial month during the Term shall be prorated
based on the number of days in such month. No endorsement or statement on a check or letter accompanying payment shall be
considered an accord and satisfaction. Tenant’s covenant to pay Rent is independent of every other covenant in this Lease.
4.02. Tenant shall pay Expense Rent and Tax Rent in accordance with Exhibit B to this Lease.
4.03. Tenant shall pay the Parking Charges (as defined in Section 1 of Exhibit H) and shall have the parking rights set
forth in Exhibit H.
5.
Compliance with Laws; Use.
The Premises shall be used for the Permitted Use and for no other use whatsoever. Tenant shall comply, and shall cause
all of the Tenant Related Parties to comply, with all laws, statutes, codes, ordinances, orders, rules and regulations of any
municipal or governmental entity whether in effect now or later, including, without limitation, the Americans with Disabilities Act
(“Law(s)”), regarding the operation of Tenant’s business and the use, condition, configuration and occupancy of the Premises. In
addition, Tenant shall, at its sole cost, promptly comply with any Laws that relate to the Common Areas and other portions of the
Property, other than the Premises, but only to the extent such obligations are triggered by Tenant’s specific use of the Premises,
or Alterations or improvements in the Premises performed or requested by Tenant, or Tenant’s obligations as an employer, or
the breach of any of Tenant’s obligations under this Lease, or the negligence or willful misconduct of Tenant or any of the Tenant
Related Parties (“Tenant Triggered Compliance”). Notwithstanding the foregoing, Tenant shall notify Landlord prior to
commencing any Tenant Triggered Compliance and Landlord may elect, by written notice to Tenant within 10 days after receipt
of Tenant’s notice, to perform any such Tenant Triggered Compliance, at Tenant’s sole cost. Tenant shall promptly provide
Landlord with copies of any notices it receives regarding an alleged violation of Law. Notwithstanding anything to the contrary
contained in this Lease, Tenant shall limit the number of work seats in the Premises at any time in such a manner as to not
exceed a ratio of one work seat for each 167 rentable square feet of the Premises, Tenant acknowledging that the number of
work seats
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per rentable square foot of the Premises has a material effect on Landlord’s ability to provide the HVAC, electrical, elevator and
other services set forth in this Lease. If any upgrade to the Building standard systems, including but not limited to the Building's
mechanical and electrical systems and restroom fixtures, is necessary by reason of Tenant's failure to comply with such
occupancy density requirements, as reasonably determined by Landlord, to accommodate Tenant's needs, and Tenant fails to
cure such failure within ten (10) days after notice from Landlord, Tenant will reimburse Landlord promptly upon Landlord's
demand for all costs incurred by Landlord in connection with such upgrade. Tenant shall comply (and cause the Tenant Related
Parties and their respective contractors and vendors to comply) with the rules and regulations of the Building attached as
Exhibit E and such other reasonable rules and regulations adopted by Landlord from time to time, including rules and
regulations for the performance of Alterations (defined in Section 9.03).
6.
Security Deposit.
The Security Deposit shall be delivered to Landlord upon the execution of this Lease by Tenant and held by Landlord
without liability for interest (unless required by Law) as security for the performance of Tenant’s obligations. The Security Deposit
is not an advance payment of Rent or a measure of damages. Landlord may from time to time and without prejudice to any other
remedy provided in this Lease or by Law, use all or a portion of the Security Deposit to the extent necessary to satisfy past due
Rent or to satisfy any other obligation, loss or damage resulting from Tenant’s breach under this Lease. If Landlord uses any
portion of the Security Deposit, Tenant, within 5 days after demand, shall restore the Security Deposit to its original amount.
Landlord shall return any unapplied portion of the Security Deposit to Tenant within 45 days after the later to occur of:
(a) determination of the final Rent due from Tenant; or (b) the later to occur of the Termination Date or the date Tenant
surrenders the Premises to Landlord in compliance with Section 25. Landlord may assign the Security Deposit to a successor or
transferee and, following the assignment, Landlord shall have no further liability for the return of the Security Deposit. Landlord
shall not be required to keep the Security Deposit separate from its other accounts. Notwithstanding the foregoing, the Security
Deposit shall be the form of a Letter of Credit and shall be subject to reduction as more particularly described in Section IV of
Exhibit F.
7.
Building Services and Signage.
7.01. Landlord shall furnish Tenant with the following services: (a) water for normal office use within the Premises
(including the lavatories), consistent with water service provided to other premises within the Building; (b) customary heat and
air conditioning in season during Building Service Hours, although (i) Tenant shall have the right to receive HVAC service during
hours other than Building Service Hours (and Landlord may impose a minimum number of hours for such HVAC usage after
Building Service Hours) by paying Landlord’s then standard charge for additional HVAC service and providing such prior notice
to Landlord as is reasonably specified by Landlord, and (ii) if Tenant is permitted to connect any supplemental HVAC units to the
Building’s condenser water loop or chilled water line (if any), such permission shall be conditioned upon Landlord having
adequate excess capacity from time to time and such connection and use shall be subject to Landlord’s reasonable approval
and reasonable restrictions imposed by Landlord, and Landlord shall have the right to charge Tenant a connection fee and/or a
monthly usage fee, as reasonably determined by Landlord; (c) standard janitorial service on Business Days in accordance with
Landlord’s standard cleaning specifications then in effect for the Building, provided that if Tenant’s use, floor covering or other
improvements require special services in excess of the standard services for the Building (and for purposes of this Lease,
cleaning a kitchen or private bathroom [among other things] shall be deemed to be special services) or if Tenant’s trash requires
special handling (including, without limitation, because of its size or volume or because it cannot be disposed of in the ordinary
course), Tenant shall pay the additional cost attributable to such special services or special handling, which payment shall be
made monthly if the services are regularly recurring services and otherwise within 15 days after receipt of an invoice therefor;
(d) elevator service and, if there is a freight elevator or loading area available for Tenant’s use, Tenant shall have the right
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to use the same subject to availability and provided Tenant complies with Landlord’s scheduling requirements, if any (including,
without limitation, minimum hours of usage after Building Service Hours and required usage after Building Service Hours if
Tenant’s use will be construction related or otherwise lengthy or disruptive to Building operations), and, if Tenant uses such
freight elevator or loading dock after Building Service Hours, then, with respect to any such use following substantial completion
of the Initial Alterations, Tenant shall pay Landlord’s standard charge for such use; (e) electricity in accordance with the terms
and conditions in Section 7.02; (f) access to the Building for Tenant and its employees 24 hours per day/7 days per week,
subject to the terms of this Lease and such protective services or monitoring systems, if any, as Landlord may reasonably
impose, including, without limitation, sign-in procedures and/or use of card keys; and (g) such other services as Landlord
reasonably determines are necessary or appropriate for the Property. Tenant shall participate in any recycling programs adopted
by Landlord. Tenant shall (i) obtain, at Tenant’s sole cost, any services that are required for Tenant to operate its business in the
Premises and that are not Landlord’s express responsibility under this Lease and (ii) pay, prior to delinquency, for all such
services, and if Tenant fails to timely do so, Landlord may, at its option (and without any obligation to investigate the validity of
the amounts due), do so and Tenant shall reimburse Landlord therefor (plus interest at the Interest Rate until paid, including
after the entry of any judgment) upon demand. Landlord shall have the right to designate the service provider for any such
services. If Landlord, at Tenant’s request, elects to provide any services which are not Landlord’s express obligation under this
Lease, including, without limitation, any repairs which are Tenant’s responsibility pursuant to Section 9 below, Tenant shall pay
Landlord, or such other party designated by Landlord, the cost of providing such service plus, to the extent not prohibited by
applicable Laws, a reasonable administrative charge.
7.02. Subject to the provision below with respect to excess electrical usage, electricity and water used by Tenant in the
Premises shall, at Landlord’s option, be paid for by Tenant either: (a) through inclusion in Expenses (except as provided for
excess electrical usage); (b) by a separate charge payable by Tenant to Landlord; or (c) by separate charge billed by the
applicable utility company and payable directly by Tenant. Without the consent of Landlord, Tenant’s use of electrical service
shall not exceed the Building standard usage, per square foot. For purposes hereof, the “electrical standard” for the Building is:
(i) a design load of 2 watts per square foot of net usable floor area for all building standard overhead lighting located within the
Premises which requires a voltage of 480/277 volts; and (ii) a connected load of 5 watts per square foot of net usable area for all
equipment located and operated within the Premises which requires a voltage of 120/208 volts single phase or less, it being
understood that electricity required to operate the base building HVAC system is not included within or deducted from the watts
per square foot described in this subsection (ii). Without the consent of Landlord, Tenant’s use of electrical service shall not
exceed the Building standard usage, per square foot, as reasonably determined by Landlord, based upon the Building standard
electrical design load. If electrical or water service to all or any portion of the Premises is not separately metered, Landlord may
add Landlord’s reasonable administrative charge to the cost of such service (to the extent not prohibited by applicable Laws).
Landlord shall have the right to measure usage of electricity and/or water by any commonly accepted method, including, without
limitation, (i) installing (or requiring Tenant to install) measuring devices such as submeters and check meters, at Tenant’s cost,
(ii) allocating to the Premises a share of the cost of such utility based on the Rentable Square Footage of the Premises as a
percentage of the rentable square footage of premises occupied by tenants whose consumption of such utility is measured by
the meter serving the Premises and (iii) estimating Tenant’s usage of such utility (based on reasonable estimates by Landlord’s
consultants or engineers or such other reasonable measuring methodologies as Landlord may utilize from time to time). If it is
determined that Tenant is using electricity in such quantities or during such periods as to cause the total cost of Tenant’s
electrical usage, on a monthly, per-rentable-square-foot basis, to materially exceed that which Landlord reasonably deems to be
standard for the Building, Tenant shall pay Landlord Additional Rent for the cost of such excess electrical usage (plus Landlord’s
reasonable administrative charge [to the extent not prohibited by applicable Laws]) and, if applicable, for the cost of purchasing,
installing, repairing and maintaining the measuring device(s). The cost of
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electricity and water to be paid by Tenant shall include all federal, state and local taxes imposed upon or payable in connection
with utility services.
7.03. Landlord’s failure to furnish, or any interruption, diminishment or termination of services due to the application of
Laws, the failure of any equipment, the performance of maintenance, repairs, improvements or alterations, utility interruptions or
the occurrence of an event of Force Majeure (defined in Section 26.03) or any other cause (collectively a “Service Failure”)
shall not render Landlord liable to Tenant, constitute a constructive eviction of Tenant, give rise to an abatement of Rent, nor
relieve Tenant from the obligation to fulfill any covenant or agreement. Without limiting the foregoing, Tenant agrees that
Landlord shall not be liable to Tenant for any loss or damage, including the theft of Tenant’s Property (defined in Section 14),
arising out of or in connection with the failure of any security services, personnel or equipment, or the breach or failure of any
data, computer or telecommunication network, equipment, system or infrastructure (collectively, “Data Systems”). However, if
the Premises, or a material portion of the Premises, are made untenantable for a period in excess of 3 consecutive Business
Days as a result of a Service Failure that is reasonably within the control of Landlord to correct (provided that such 3 Business
Day period shall be extended to the extent that Landlord is delayed in correcting the Service Failure due to Force Majeure), then
Tenant, as its sole remedy, shall be entitled to receive an abatement of Base Rent, Tax Rent and Expense Rent payable
hereunder during the period beginning on the 4 consecutive Business Day after the later to occur of (a) the Service Failure and
(b) the date Landlord receives notice of the Service Failure from Tenant, and ending on the day the service has been restored. If
the entire Premises have not been rendered untenantable by the Service Failure, the amount of abatement shall be equitably
prorated based on the square footage of the Premises that is not usable for the Permitted Use. For purposes of this Lease, the
Premises shall be deemed to be untenantable only if the Premises (or the portion thereof claimed to be untenantable) cannot be
used for the use contemplated hereunder and Tenant has actually ceased using the same.
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7.04.
If any lights, machines, equipment or methods of operation are used by Tenant in the Premises which materially
affect the temperature otherwise maintained by the HVAC system of the Building or generate substantially more heat in the
Premises than would be generated by lighting standard to the Building and normal tenant use, Landlord shall have the right, with
prior written notice to Tenant, to install any machinery and equipment which Landlord deems necessary to restore the
temperature balance in any affected part of the Building. The reasonable cost thereof, including the cost of installation and any
additional cost of operations and maintenance occasioned thereby, shall be paid by Tenant to Landlord within 15 days after
Landlord’s demand.
7.05. Tenant agrees to cooperate fully, at all times, with Landlord in abiding by all reasonable regulations and
requirements which Landlord may prescribe for the Building to conserve energy related services or for the proper functioning
and protection of all utilities and services reasonably necessary for the operation of the Premises and the Building.
7.06.
(a) Notwithstanding anything to the contrary contained in Section 3 and Section 4 of Exhibit E (Building Rules
and Regulations) to this Lease, Landlord, at Landlord’s cost, shall install for the Tenant initially named herein, using the standard
graphics for the Building, initial Building standard tenant identification (a) at the entrance to the initial Premises, and (b) on the
Building directory in the main Building lobby (subject to Section 4 of Exhibit E to this Lease). Thereafter, any additional or
replacement tenant identification shall be subject to Landlord’s prior review and reasonable approval, and shall be installed by
Landlord, at Tenant’s cost, using the standard graphics for the Building. Upon expiration or earlier termination of this Lease or
Tenant’s right to occupancy, if requested by Landlord, Tenant, at its cost, shall remove all suite entry signage installed by or for
the benefit of Tenant and repair any damage resulting therefrom and restore the affected area to the condition it was in prior to
installation of such signage.
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(b)
So long as CrowdStrike, Inc. or its Permitted Transferee is leasing and occupying at least all of the rentable area
on an entire floor within the Building (and not subleasing any portion thereof) and subject to (i) the terms of this Section 7.06,
and (ii) Tenant's obtaining all required governmental approvals, Tenant shall have the non-exclusive right to install and maintain,
at Tenant's sole cost and expense, one (1) sign on the façade of the Building that faces westward toward Congress Avenue at a
location that is on the 12th floor of the Building or lower agreed upon by Landlord and Tenant ("Façade Sign"). The size,
configuration, design, location, materials, color and construction of the Façade Sign, as well as the way in which it is attached to
the Building, shall be subject to Landlord's reasonable written approval and the approval of applicable governmental authorities.
The Façade Sign shall be professionally fabricated. The content of the Façade Sign shall be limited to Tenant's name and/or
trade name or business logo, and shall be subject to Landlord's prior written approval. Tenant shall obtain all required
governmental approvals to install and maintain the Façade Sign. Tenant shall maintain Façade Sign in first class condition and
in compliance with all applicable laws, at Tenant's sole cost and expense. If Tenant fails to so maintain the Façade Sign,
Landlord, after delivering notice to Tenant and the passage of any applicable cure period, shall have the right, but not the
obligation, to do so, at Tenant's sole cost and expense. At the expiration of the Term or the sooner termination of Tenant's right
to possession of the Premises or Tenant's right to maintain the Façade Sign under this Section or if Tenant replaces the Façade
Sign with the Rooftop Sign (as defined and described below), Tenant shall remove the Façade Sign and repair all damage
caused in connection therewith at Tenant's sole cost and expense. Tenant's rights with respect to the Façade Sign shall
automatically expire if, at any time from and after the Commencement Date, CrowdStrike, Inc. shall not be leasing and
occupying at least all of the rentable area on an entire floor within the Building.
(c)
So long as CrowdStrike, Inc. is leasing and occupying at least 48,000 square feet of rentable area within the
Building (and not subleasing any portion thereof) and subject to (i) the terms of this Section 7.06, and (ii) Tenant's obtaining all
required governmental approvals, Tenant shall have the non-exclusive right to install and maintain one (1) sign on the exterior
top of the Building in a location agreed upon by Landlord and Tenant (the "Rooftop Sign"). If Tenant elects to install the Rooftop
Sign, it shall remove the Façade Sign, as provided in Section 7.06(b). The size, configuration, design, location, materials, color
and construction of the Rooftop Sign, as well as the way in which it is attached to the Building, shall be subject to Landlord's
reasonable written approval and the approval of applicable governmental authorities. The Rooftop Sign shall be professionally
fabricated. The content of the Rooftop Sign shall be limited to Tenant's name and/or trade name or business logo, and shall be
subject to Landlord's prior written approval. Tenant shall obtain all required governmental approvals to install and maintain the
Rooftop Sign. Tenant shall maintain the Rooftop Sign in first class condition and in compliance with all applicable laws, at
Tenant's sole cost and expense. If Tenant fails to so maintain the Rooftop Sign, Landlord, after delivering notice to Tenant and
the passage of any applicable cure period, shall have the right, but not the obligation, to do so, at Tenant's sole cost and
expense. At the expiration of the Term or the sooner termination of Tenant's right to possession of the Premises or Tenant's right
to maintain the Rooftop Sign under this Section, Tenant shall remove the Rooftop Sign and repair all damage caused in
connection therewith at Tenant's sole cost and expense. Tenant's rights with respect to the Rooftop Sign shall automatically
expire if, at any time from and after the Commencement Date, CrowdStrike, Inc. shall not be leasing and occupying at least
48,000 square feet of rentable area within the Building.
(d)
Tenant's rights under Sections 7.06(b) and 7.06(c) shall be personal to CrowdStrike, Inc. and its Permitted
Transferee and are not otherwise assignable. Notwithstanding anything to the contrary contained herein, Landlord's prior written
consent shall be required to any change in the name on the Façade Sign or the Rooftop Sign, which consent shall not be
unreasonably withheld, conditioned or delayed, it being agreed that it shall not be unreasonable for Landlord to withhold its
consent to any such change in name if, among other things, Landlord determines that signage bearing the name of such party
(whether because of such party's name itself or because of such party's reputation or business operations) is not acceptable
given the character of the Building as a first class office building.
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8.
Leasehold Improvements.
All improvements in and to the Premises, including any Alterations (defined in Section 9.03) (collectively, “Leasehold
Improvements”) shall remain upon the Premises at the end of the Term without compensation to Tenant, provided that Tenant,
at its expense, shall remove any Cable (defined in Section 9.01 below) that Landlord requires be removed pursuant to written
notice delivered to Tenant at least 120 days prior to the expiration of the Lease, with such removal to be in compliance with the
National Electric Code or other applicable Law. Any Cable which Tenant is not required to remove and which is to remain behind
shall be handled in a manner so as not to cause such Cable to be deemed “abandoned” or otherwise in a condition requiring
removal under applicable Law. In addition, Landlord, by written notice to Tenant at least 30 days prior to the Termination Date,
may require Tenant, at Tenant’s cost, to remove any Alterations that, in Landlord’s reasonable judgment, are of a nature that
would require removal and repair costs that are materially in excess of the removal and repair costs associated with standard
office improvements (the Cable and such other items collectively are referred to as “Required Removables”), except to the
extent that Landlord has notified Tenant that any such Alteration is not a Required Removable in accordance with the last
sentence of this paragraph. Required Removables shall include, without limitation, internal stairways, raised floors, personal
baths and showers, vaults, rolling file systems and structural alterations and modifications. The Required Removables shall be
removed by Tenant before the Termination Date. Tenant shall repair damage caused by the installation or removal of Required
Removables. If Tenant fails to perform its obligations under this Section 8 in a timely manner, Landlord may perform such work
at Tenant’s cost. Tenant, at the time it requests approval for a proposed Alteration, including any Initial Alterations, as such term
may be defined in the Work Letter attached as Exhibit C, may request in writing that Landlord advise Tenant whether the
Alteration, including any Initial Alterations, or any portion thereof, is a Required Removable. Within 10 days after receipt of
Tenant’s request, Landlord shall advise Tenant in writing as to which portions of the Alterations are Required Removables.
Tenant may, at its sole cost and expense, install a security system within the Premises, subject to: (a) the terms and
conditions of this paragraph, (b) compliance with the terms and conditions of Section 9 of, and Exhibit C to, this Lease; (c)
Landlord's approval of the plans and specifications for the same, which shall not be unreasonably withheld, conditioned or
delayed; and (d) the requirement that Landlord at all times have access to all portions of the Premises and keys or passcodes to
the same, except as specifically provided in the second paragraph of Section 10 of this Lease ("Tenant's Security System").
Notwithstanding anything to the contrary contained herein, if Tenant's Security System ties into the Building security system,
Tenant shall, at its sole cost and expense, coordinate the installation and operation of Tenant's Security System with Landlord to
assure that Tenant's Security System is compatible with the Building security system and the systems and equipment of the
Building and to the extent that Tenant's Security System is not compatible with the Building security system or the systems and
equipment of the Building, Tenant shall not be entitled to install or operate it. Subject to the terms of this Section 8, Tenant's
Security System may include a biometric locking security system (with upgrades from time to time) on all entry doors to the
Premises (including an intercom and camera installed at the main entrance to the Premises provided the same is, in Landlord's
sole but good faith discretion, aesthetically consistent with the Building), provided that such system does not prevent Landlord,
at any time, from having access to the entire Premises that is as effective as use of Landlord's master key to the Building
(subject to the second paragraph of Section 10 of this Lease). Tenant shall be solely responsible, at Tenant's sole cost and
expense, for the monitoring, operation and removal of Tenant's Security System, subject to Section 25 of this Lease. Promptly
upon installation and from time to time thereafter, Tenant shall provide and update Landlord with any information reasonably
required regarding Tenant's Security System that will allow Landlord, its agents and emergency personnel such access to the
Premises as is necessary in an emergency. Upon the expiration or earlier termination of the Term (unless Landlord elects
otherwise in writing), Tenant shall remove Tenant's Security System and repair all damage to the Building resulting from such
removal, at Tenant's sole cost and expense.
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9.
Repairs and Alterations.
9.01. Tenant shall periodically inspect the Premises to identify any conditions that are dangerous or in need of
maintenance or repair. Tenant shall promptly provide Landlord with notice of any such conditions. Tenant, at its sole cost, shall
promptly perform all maintenance and repairs to the Premises that are not Landlord’s express responsibility under this Lease,
and keep the Premises in good condition and repair, reasonable wear and tear excepted. Tenant’s repair and maintenance
obligations include, without limitation, repairs to: (a) floor covering; (b) interior partitions; (c) doors; (d) the interior side of
demising walls; (e) Alterations (defined in Section 9.03); (f) supplemental air conditioning units, restrooms, kitchens, including
hot water heaters, plumbing, and similar facilities and other mechanical (including HVAC), electrical, plumbing and fire/life safety
systems and equipment exclusively serving Tenant, whether such items are installed by Tenant, or by Landlord for the benefit of
Tenant, or are currently existing in the Premises; (g) electronic, fiber, phone and data cabling and related equipment that is
installed by or for the exclusive benefit of Tenant and located in the Premises or other portions of the Building (collectively,
“Cable”) and (h) window blinds. All repairs and other work performed by Tenant or its contractors, including that involving Cable,
shall be subject to the terms of Section 9.03 below. If Tenant fails to make any repairs to the Premises for more than 15 days
after written notice from Landlord (although notice shall not be required in an emergency), Landlord may make the repairs, and,
within 30 days after demand, Tenant shall pay the reasonable cost of the repairs, together with an administrative charge in an
amount equal to 10% of the cost of the repairs.
9.02. Landlord shall, in a manner consistent with other Class-A office buildings located in the central business district of
Austin, Texas, keep and maintain in good repair and working order and perform maintenance upon the: (a) structural elements
of the Building, including structural elements within the Premises; (b) mechanical (including HVAC), electrical, plumbing and
fire/life safety systems serving the Building in general; (c) Common Areas; (d) roof of the Building; (e) exterior windows of the
Building; and (f) elevators serving the Building. Landlord shall promptly make repairs for which Landlord is responsible.
9.03. Tenant shall not make alterations, repairs, additions or improvements, including any Initial Alterations (as defined
in Exhibit C), or install any Cable (collectively referred to as “Alterations”) without first obtaining the written consent of Landlord
in each instance, which consent shall not be unreasonably withheld or delayed. However, Landlord’s consent shall not be
required for any Alteration that satisfies all of the following criteria (a “Cosmetic Alteration”): (a) is of a cosmetic nature such as
painting, wallpapering, hanging pictures and installing carpeting; (b) is not visible from the exterior of the Premises or Building;
(c) will not affect the Building mechanical, electrical, plumbing and fire/life safety systems and equipment serving or designed to
serve more than one occupant of the Building (the “Common Systems”) or the structure of the Building; and (d) does not
require work to be performed inside the walls, below the floor or above the ceiling of the Premises or outside of the Premises.
Cosmetic Alterations shall be subject to all the other provisions of this Section 9.03. Prior to starting work, Tenant shall furnish
Landlord with plans and specifications reasonably acceptable to Landlord (which shall be in CAD format if requested by
Landlord); names of contractors reasonably acceptable to Landlord (provided that Landlord may designate specific contractors
with respect to structural alterations, fire/life safety systems, or other Common Systems or vertical Cable, as may be described
more fully below); required permits and approvals; evidence of contractor’s and subcontractor’s insurance in amounts and with
coverages and waivers of subrogation reasonably required by Landlord and naming Landlord and the Additional Insureds (as
defined in Section 14) as additional insureds (pursuant to the form of additional insured endorsement providing the broadest
coverage for the additional insured); and, for Alterations estimated to cost more than $50,000.00 per project, any security for
performance in amounts reasonably required by Landlord. Landlord may designate specific contractors with respect to
oversight, installation, repair, connection to, and removal of vertical Cable. All Cable shall be clearly marked with adhesive
plastic labels (or plastic tags attached to such Cable with wire) to show Tenant’s name, suite number, and the purpose of such
Cable (i) every 6 feet outside the Premises (specifically including, but not limited to, the electrical room risers and any Common
Areas), and (ii) at the
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termination point(s) of such Cable. Changes to the plans and specifications must also be submitted to Landlord for its approval.
Alterations shall comply with applicable Laws and shall be constructed in a good and workmanlike manner, using materials of a
quality reasonably approved by Landlord, and Tenant shall ensure that no Alteration impairs any of the Common Systems or
Landlord’s ability to perform its obligations hereunder. Tenant shall comply (and shall cause the Tenant Related Parties and their
respective contractors and vendors to comply) with Landlord’s reasonable rules, regulations and procedures for the performance
of work in the Building and, to the extent reasonably necessary to avoid disruption to the occupants of the Building, Landlord
shall have the right to designate the time when Alterations may be performed. Tenant shall not take any action which would
cause a work stoppage, picketing, labor disruption or dispute, or interfere with Landlord’s or any other tenant’s or occupant’s
business or with the rights and privileges of any person lawfully in the Building. Further, Tenant agrees that the installation,
operation or modification of any Data Systems (as previously defined in Section 7.03) installed by or for the benefit of Tenant
(“Tenant’s Data Systems”) shall not interfere with the operation, or cause a loss of quality, of any other Data Systems that are
installed in or at the Building prior to the installation, or, if applicable, the modification, of such portions of Tenant’s Data Systems
that are causing such interference or loss of quality, and if any such interference or loss of quality described in this sentence
occurs, Tenant shall eliminate the cause thereof at Tenant’s expense. Tenant shall reimburse Landlord for any sums paid by
Landlord for third party examination of Tenant’s plans for non-Cosmetic Alterations. In addition, Tenant shall pay Landlord a fee
for Landlord’s oversight and coordination of any non-Cosmetic Alterations equal to 3% of the cost of the non-Cosmetic
Alterations. Upon completion, Tenant shall furnish “as-built” plans (in CAD format, if requested by Landlord) for non-Cosmetic
Alterations, completion affidavits and full and final waivers of lien. Neither Landlord’s approval of an Alteration or the plans
therefor nor Landlord’s coordination or oversight of an Alteration shall be deemed a representation by Landlord that the
Alteration complies with applicable Laws or is structurally sound or adequate for its intended purpose.
10.
Entry by Landlord.
Landlord and the Landlord Related Parties may enter the Premises to inspect, show or clean the Premises or to perform
or facilitate the performance of repairs, alterations or additions to the Premises or any portion of the Building or to perform any of
its obligations or exercise any of its rights under this Lease. Except in emergencies or to provide Building services, Landlord
shall provide Tenant with reasonable prior verbal notice of entry and shall use reasonable efforts to minimize any interference
with Tenant’s use of the Premises. If reasonably necessary, Landlord may temporarily close all or a portion of the Premises to
perform repairs, alterations and additions. However, except in emergencies, Landlord will not close the Premises if the work can
reasonably be completed on weekends and/or after Building Service Hours on Business Days. Entry by Landlord shall not
constitute a constructive eviction or entitle Tenant to an abatement or reduction of Rent.
Tenant may, upon not less than ten (10) days' prior written notice to Landlord, reasonably establish a reasonable number
of secured areas within the Premises, which shall not be generally accessible to Landlord (collectively, the "Secured Area").
Landlord shall have no obligation to provide janitorial or cleaning services to the Secured Area and Tenant shall cause such
Secured Area to be maintained in a neat and clean manner at Tenant's sole cost and expense. If Landlord must gain access to a
Secured Area in a non-emergency situation (e.g., to perform a repair for which Landlord needs access to the Premises),
Landlord shall contact Tenant in writing or orally, and Landlord and Tenant, both acting reasonably and in good faith, shall
arrange a time for Landlord to have access, no less than twenty-four hours thereafter. If Landlord determines in its reasonable
discretion that an emergency in the Building or the Premises involving the health or safety of persons or the damage to property
requires Landlord to gain access to a Secured Area, Tenant hereby authorizes Landlord to forcibly enter the Secured Area. In
such event, Landlord shall have no liability whatsoever to Tenant, and Tenant shall pay all reasonable expenses incurred by
Landlord in repairing or reconstructing any portion of the Premises damaged as a result of such forced entry.
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11.
Assignment and Subletting.
11.01. Except in connection with a Permitted Transfer (defined in Section 11.04), Tenant shall not assign (by operation
of Law or otherwise), transfer or encumber any interest in this Lease or sublease or allow any third party to use any portion of
the Premises (collectively or individually, a “Transfer”) without the prior written consent of Landlord, which consent, in the case
of a proposed assignment of this Lease or a subletting of all or a portion of the Premises, shall not be unreasonably withheld,
conditioned or delayed if Landlord does not exercise its recapture rights under Section 11.02. Without limitation, it is agreed that
Landlord’s consent shall not be considered unreasonably withheld if Tenant is in Material Default under this Lease or if, in
Landlord’s reasonable judgment, the proposed transferee does not have sufficient financial means to perform all of its
obligations under this Lease or the sublease, as applicable, or its business is not suitable for a first class building like the
Building or if Landlord has had prior unsatisfactory dealings with the proposed transferee or the proposed transferee is a
governmental entity or entity entitled to sovereign immunity or the proposed transferee (or an affiliate) is an occupant of the
Building or is (or has been, in the last 6 months) in discussions with Landlord regarding the leasing of space within the Building
or if Landlord has any other reasonable basis for withholding consent. If the entity(ies) which directly or indirectly controls the
voting shares/rights of Tenant (other than through the ownership of voting securities listed on a recognized securities exchange)
changes at any time, whether in a single transaction or a series of transactions, such change of ownership or control shall
constitute a Transfer. Any Transfer in violation of this Section shall, at Landlord’s option, be deemed a Default by Tenant as
described in Section 18, and shall be voidable by Landlord. In no event shall any Transfer, including a Permitted Transfer,
release or relieve Tenant from any obligation under this Lease, and Tenant shall remain primarily liable for the performance of
the tenant’s obligations under this Lease, as amended from time to time.
11.02. Tenant shall provide Landlord with financial statements for the proposed transferee (or, in the case of a change of
ownership or control, for the proposed new controlling entity(ies)), a fully executed copy of the proposed assignment, sublease
or other Transfer documentation and such other information as Landlord may reasonably request. Within 10 Business Days after
receipt of the required information and documentation, Landlord shall either: (a) consent to the Transfer by execution of a
consent agreement in a form reasonably designated by Landlord; (b) reasonably refuse to consent to the Transfer in writing; or
(c) in the event of an assignment of this Lease or subletting of more than 50% of the Rentable Square Footage of the Premises,
except to a Permitted Transferee, recapture the portion of the Premises that Tenant is proposing to Transfer. If Landlord
exercises its right to recapture, this Lease shall automatically be amended (or terminated if the entire Premises is being
assigned or sublet) to delete the applicable portion of the Premises effective on the proposed effective date of the Transfer,
although Landlord may require Tenant to execute a reasonable amendment or other document reflecting such reduction or
termination. Notwithstanding the above, Tenant, within 5 Business Days after receipt of Landlord’s notice of intent to recapture,
may withdraw its request for consent to the Transfer. In that event, Landlord’s election to recapture the Premises (or applicable
portion thereof) shall be null and void and of no force and effect. Tenant shall pay Landlord the actual reasonable costs
(including reasonable attorney’s fees) incurred by Landlord in connection with any Permitted Transfer or requested Transfer,
including the review thereof and the preparation and negotiation of any consent Landlord requires related thereto; provided,
however, if neither the Tenant nor the proposed transferee requests any changes to this Lease or Landlord’s standard form of
consent in connection with the proposed Transfer, such costs shall not exceed $1,500.00.
11.03. Tenant shall pay Landlord 50% of the “Transfer Consideration” (being defined as all rent and other
consideration which Tenant receives as a result of a Transfer) in the case of an assignment and 50% of the Transfer
Consideration that is in excess of the Rent payable to Landlord for the portion of the Premises and Term covered by the
Transfer, in the case of a sublease. Tenant shall pay Landlord for Landlord’s share of the excess within 30 days after Tenant’s
receipt of the excess. In determining the excess due Landlord, Tenant may deduct from the excess (prior to splitting the same
with Landlord), on a straight-line basis, all
13
reasonable and customary expenses directly incurred by Tenant attributable to the Transfer. If Tenant is in Material Default,
Landlord may require that all sublease payments be made directly to Landlord, in which case Tenant shall receive a credit
against Rent in the amount of Tenant’s share of payments received by Landlord.
11.04. Tenant may assign this Lease to a successor to Tenant by merger, consolidation or the purchase of substantially
all of Tenant’s assets (“Permitted Successor Event”), or assign this Lease or sublet all or a portion of the Premises to an
Affiliate (defined below), without the consent of Landlord, provided that all of the following conditions are satisfied (each a
“Permitted Transfer”, and any transferee of a Permitted Transfer being a “Permitted Transferee”): (a) Tenant must not be in
Material Default; (b) Tenant must give Landlord written notice at least 15 Business Days before such Transfer; (c) the Transfer is
not a subterfuge by Tenant to avoid its obligations under this Lease to get consent to a Transfer; and (d) if the Transfer is a
Permitted Successor Event, Tenant’s successor shall own all or substantially all of the assets of Tenant and Tenant’s successor
shall have a tangible net worth which is at least equal to the greater of Tenant’s tangible net worth at the date of this Lease or
Tenant’s tangible net worth as of the day prior to the proposed merger, consolidation or purchase. Tenant’s notice to Landlord
shall include information and documentation evidencing the Permitted Transfer and showing that each of the above conditions
has been satisfied. “Affiliate” shall mean an entity controlled by, controlling or under common control with Tenant and the term
“control” shall mean ownership of a majority of the voting shares/rights of the applicable entity.
11.05. Notwithstanding anything to the contrary contained in this Section 11, neither Tenant nor any other person having
a right to possess, use, or occupy (for convenience, collectively referred to in this subsection as “Use”) the Premises shall enter
into any lease, sublease, license, concession or other agreement for Use of all or any portion of the Premises which provides for
rental or other payment for such Use based, in whole or in part, on the net income or profits derived by any person that leases,
possesses, uses, or occupies all or any portion of the Premises (other than an amount based on a fixed percentage or
percentages of receipts or sales), and any such purported lease, sublease, license, concession or other agreement shall be
absolutely void and ineffective as a transfer of any right or interest in the Use of all or any part of the Premises. Each and every
assignment and sublease shall be expressly subject and subordinate to each and every provision contained in this Lease. Each
assignee (including, without limitation, an assignee pursuant to a Permitted Transfer) shall expressly assume in writing for the
benefit of Landlord the obligations of Tenant under this Lease and shall be liable jointly and severally with Tenant for the
payment of the Rent and the performance of all the terms, covenants, conditions and agreements herein contained on Tenant’s
part to be performed for the Term.
12.
Liens.
Tenant shall not permit mechanics’ or other liens to be placed upon the Property, Premises or Tenant’s leasehold interest
in connection with any work or service done or purportedly done by or for the benefit of Tenant or its transferees. Tenant shall
give Landlord notice at least 15 days prior to the commencement of any work in the Premises to afford Landlord the opportunity,
where applicable, to post and record notices of non-responsibility. Tenant, within 10 days of written notice from Landlord, shall
fully discharge any lien by settlement, by bonding or by insuring over the lien in the manner prescribed by the applicable lien
Law and, if Tenant fails to do so, Tenant shall be deemed in Default under this Lease (without any further notice or opportunity to
cure) and, in addition to any other remedies available to Landlord as a result of such Default by Tenant, Landlord, at its option,
may bond, insure over or otherwise discharge the lien and Tenant shall reimburse Landlord for any amount paid by Landlord,
including, without limitation, reasonable attorneys’ fees.
13.
Indemnity and Waiver of Claims.
Tenant hereby agrees to indemnify, defend and hold Landlord and its trustees, members, principals, beneficiaries,
partners, officers, directors, employees, Mortgagees (defined in
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Section 23) and agents (the “Landlord Related Parties”) harmless from and against any and all claims, charges, liabilities,
obligations, penalties, causes of action, liens, damages, costs and expenses, including, without limitation, reasonable attorneys’
fees and other professional fees (to the extent permitted by Law) (collectively, “Claims”) for property damage, personal injury or
any other matter arising, claimed, charged or incurred against or by Landlord or any of the Landlord Related Parties in
connection with or relating to any event, condition, matter or thing which (a) occurs in, at or about the Premises from any cause,
except to the extent due to the negligence or willful misconduct of Landlord or any of the Landlord Related Parties, or (b) occurs
in, at or about the remainder of the Property to the extent due to the negligence or willful misconduct of Tenant or any of its
trustees, members, principals, beneficiaries, partners, officers, directors, employees and agents (the “Tenant Related Parties”
and together with the Landlord Related Parties, the “Related Parties”), or (c) is caused by or relates to any default, breach,
violation or non-performance by Tenant of any provision of this Lease. Landlord hereby agrees to indemnify, defend and hold
Tenant and the Tenant Related Parties harmless from and against any and all Claims for property damage, personal injury or
any other matter arising, claimed, charged or incurred against or by Tenant or any of the Tenant Related Parties in connection
with or relating to any event, condition, matter or thing which occurs in, at or about the Property to the extent due to the
negligence or willful misconduct of Landlord or any of the Landlord Related Parties. Notwithstanding anything to the contrary
contained herein, Tenant hereby waives all claims against and releases Landlord and the Landlord Related Parties from all
claims for any injury to or death of persons, damage to property or business loss in any manner related to (i) Force Majeure,
(ii) acts of third parties, (iii) the bursting or leaking of any tank, water closet, drain or other pipe, (iv) the inadequacy or failure of
any security or protective services, personnel or equipment, (v) the breach or failure of any Data Systems, or (vi) any other
cause except the negligence or intentional misconduct of Landlord or any of the Landlord Related Parties.
14.
Insurance.
Commencing on the Commencement Date or, if earlier, the date the Tenant enters the Premises for any purpose, Tenant
shall maintain the following insurance (“Tenant’s Insurance”): (a) Commercial General Liability Insurance applicable to the
Premises and its appurtenances providing, on an occurrence basis, a minimum limit of $5,000,000.00, with a host liquor liability
endorsement; (b) Property and Business Income Coverage Insurance written on an All Risk or Special Cause of Loss Form,
including flood, earthquake and water damage of all types, including sprinkler leakage, at replacement cost value and with a
replacement cost endorsement covering all of Tenant’s business and trade fixtures, equipment, movable partitions, furniture,
merchandise and other personal property within the Premises (“Tenant’s Property”) and all Leasehold Improvements in the
Premises (whether installed by Tenant or another party); (c) Workers’ Compensation Insurance in amounts required by Law; and
(d) Employers Liability Coverage of at least $1,000,000.00 per occurrence. Whenever good business practice, in accordance
with industry standards, indicates the need for additional insurance in connection with the Premises or Tenant’s use and
occupancy thereof, as reasonably determined by Landlord, Tenant shall, upon request from Landlord, obtain such insurance at
Tenant’s cost and provide Landlord with evidence thereof, subject to the terms and provisions of this Section. Any company
writing Tenant’s Insurance shall have an A.M. Best rating of not less than A-VII. All Commercial General Liability Insurance
policies shall name as additional insureds (pursuant to the form of additional insured endorsement providing the broadest
possible coverage for the additional insureds) the following: EQC Capitol Tower Property LLC, the managing agent for the
Building, Equity Commonwealth, Equity Commonwealth Management LLC, EQC Operating Trust, and their respective
successors and assigns and, with respect to such parties, their respective members, principals, beneficiaries, partners, officers,
directors, employees, and agents, and other designees of Landlord and its successors and assigns as the interest of such
designees shall appear (the “Additional Insureds”). In addition, Landlord shall be named as a loss payee with respect to
Tenant’s Property Insurance on the Leasehold Improvements. Tenant shall give Landlord and its designees at least 30 days’
advance written notice of any cancellation, termination, material change or lapse of insurance. Tenant shall provide Landlord
with a certificate of insurance
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evidencing Tenant’s Insurance prior to the earlier to occur of the Commencement Date or the date Tenant is provided with
possession of the Premises, and thereafter as necessary to assure that Landlord always has current certificates evidencing
Tenant’s Insurance. Tenant’s insurance shall be primary and any insurance carried by the Additional Insureds shall be excess
and non-contributory. Required limits may be provided by a combination of primary and/or excess or umbrella policies provided
that all other terms and conditions of this Section are complied with. Tenant’s Insurance may provide for commercially
reasonable deductibles, but Tenant shall not have any self-insured retention or self-insure for the coverages required under this
Lease. Except as specifically provided to the contrary, the limits of Tenant’s Insurance shall not limit its liability under this Lease.
In the event Tenant’s occupancy or operation causes any increase of premiums for the property coverage and/or casualty rates
on the Premises or Building or any part thereof or causes any increase in the premiums for any other insurance policy that may
be carried by Landlord above the rate for the least hazardous type of occupancy legally permitted in the Premises, Tenant shall
pay the additional premium with respect to such insurance policies by reason thereof within 10 days following the billing thereof
as additional rent. So long as the same is available at commercially reasonable rates, Landlord shall maintain so called All Risk
property insurance on the Building at replacement cost value as reasonably estimated by Landlord, together with such other
insurance coverage as Landlord, in its reasonable judgment, may elect to maintain. Landlord may self-insure for the insurance
coverage required to be maintained by Landlord hereunder.
15.
Subrogation.
Notwithstanding anything herein to the contrary, Landlord and Tenant hereby waive and shall cause their respective
insurance carriers to waive any and all rights of recovery, claims, actions or causes of action against the other, and the other’s
Related Parties, for any loss or damage with respect to Tenant’s Property, Leasehold Improvements, the Building, the Premises,
or any contents thereof, including rights, claims, actions and causes of action based on negligence, which loss or damage is (or
would have been, had the insurance required by this Lease been carried) covered by insurance. Landlord and Tenant shall each
cause their property insurance policies to be properly endorsed to reflect the insurer’s waiver of its rights of subrogation. For the
purposes of this waiver, any deductible with respect to a party’s insurance shall be deemed covered by and recoverable by such
party under valid and collectable policies of insurance.
16.
Casualty Damage.
16.01. If all or any portion of the Premises becomes untenantable or inaccessible by fire or other casualty to the
Premises or the Common Areas (collectively a “Casualty”), Landlord, with reasonable promptness, shall cause a general
contractor selected by Landlord to provide Landlord with a written estimate (“Completion Estimate”) of the amount of time
required, using standard working methods, to substantially complete the repair and restoration of the Premises and any
Common Areas necessary to provide access to the Premises (“Landlord’s Restoration Work”). Landlord shall promptly
forward a copy of the Completion Estimate to Tenant. If (a) the Completion Estimate indicates that the Premises or any Common
Areas necessary to provide access to the Premises cannot be made tenantable within 270 days (or, in the case of a major
Casualty affecting more than just the Building [such as, for example, a hurricane], 365 days) from the date the repair is started
or (b) the Premises have been materially damaged and there is less than 2 years of the Term remaining on the date of the
Casualty, then either party shall have the right to terminate this Lease upon written notice to the other within 10 days after
Tenant’s receipt of the Completion Estimate, in the case of clause (a), and within 90 days after the date of the Casualty, in the
case of clause (b). Tenant, however, shall not have the right to terminate this Lease if the Casualty was caused by the
negligence or willful misconduct of Tenant or any Tenant Related Parties. In addition, Landlord, by written notice to Tenant within
90 days after the date of the Casualty, shall have the right to terminate this Lease if: (1) the Property or the Building shall be
damaged so that, in Landlord’s reasonable judgment, substantial alteration or reconstruction of the Property or the Building (as
applicable) shall be required (whether or not the Premises has been damaged); (2) Landlord is
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not permitted by Law to rebuild the Property or the Building in substantially the same form as existed before the fire or casualty;
(3) any Mortgagee requires that the insurance proceeds be applied to the payment of the mortgage debt; or (4) a material
uninsured loss to the Building or Premises occurs.
16.02. If this Lease is not terminated, Landlord shall promptly and diligently, subject to reasonable delays for insurance
adjustment or other matters beyond Landlord’s reasonable control, complete Landlord’s Restoration Work. Such restoration
shall be to substantially the same condition that existed prior to the Casualty, except for modifications required by Law or any
other modifications to the Common Areas deemed desirable by Landlord. Upon written notice from Landlord, Tenant shall assign
or endorse over to Landlord (or to any party designated by Landlord) all property insurance proceeds payable to Tenant under
Tenant’s Insurance with respect to any Leasehold Improvements in the Premises; provided if the estimated cost to repair such
Leasehold Improvements exceeds the amount of insurance proceeds received by Landlord from Tenant’s insurance carrier, the
excess cost of such repairs shall be paid by Tenant to Landlord prior to Landlord’s commencement of repairs. Within 15 days of
demand, Tenant shall also pay Landlord for any additional excess costs that are determined during the performance of the
repairs to such Leasehold Improvements. In no event shall Landlord be required to spend more for the restoration of the
Premises (including the Leasehold Improvements) and Common Areas than the proceeds received by Landlord, whether
insurance proceeds (whether from Landlord’s or Tenant’s insurance) or proceeds from Tenant. Landlord shall not be liable for
any inconvenience to Tenant, or injury to Tenant’s business resulting in any way from the Casualty or the repair thereof.
Provided that Tenant is not in Material Default, during any period of time that all or a material portion of the Premises is rendered
untenantable as a result of a Casualty, the Rent shall abate for the portion of the Premises that is untenantable and not used by
Tenant. Such Rent abatement shall end on the date Landlord has substantially completed Landlord’s Restoration Work,
including restoration of the Leasehold Improvements to the extent required above. Landlord and Tenant hereby waive the
provisions of any Law relating to the matters addressed in this Section 16, and agree that their respective rights for damage to
or destruction of the Premises shall be those specifically provided in this Lease.
17.
Condemnation.
Either party may terminate this Lease if any material part of the Premises is taken or condemned for any public or quasi-
public use under Law, by eminent domain or private purchase in lieu thereof (a “Taking”). Landlord shall also have the right to
terminate this Lease if there is a Taking of any portion of the Building or Property which would have a material adverse effect on
Landlord’s ability to profitably operate the remainder of the Building. Tenant may also terminate this Lease if there is a Taking of
a material part of the Building such that Tenant is prevented from accessing the Premises or otherwise utilizing the Premises for
the purposes described herein. The terminating party shall provide written notice of termination to the other party within 45 days
after it first receives notice of the Taking. The termination shall be effective as of the effective date of any order granting
possession to, or vesting legal title in, the condemning authority. If this Lease is not terminated, Base Rent and Tenant’s Pro
Rata Share shall be appropriately adjusted to account for any reduction in the square footage of the Building and/or Premises.
All compensation awarded for a Taking shall be the property of Landlord. The right to receive compensation or proceeds is
expressly waived by Tenant, provided, however, Tenant may file a separate claim for Tenant’s Property and Tenant’s reasonable
relocation expenses, provided the filing of the claim does not diminish the amount of Landlord’s award. If only a part of the
Premises is subject to a Taking and this Lease is not terminated, Landlord, with reasonable diligence, will restore the remaining
portion of the Premises as nearly as practicable to the condition immediately prior to the Taking.
18.
Default.
In addition to any other default specifically described in this Lease, each of the following occurrences shall be a
“Default”: (a) Tenant’s failure to pay any portion of Rent when due, if the
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failure continues for more than 5 days after such payment was due, provided that in the case of only the first 2 such failures by
Tenant to timely pay any portion of the Rent in a given calendar year, such 5 day grace period shall not commence until
Landlord gives Tenant written notice of the applicable failure by Tenant to timely pay such portion of the Rent (“Monetary
Default”); (b) Tenant’s failure (other than a Monetary Default) to comply with any term, provision, condition or covenant of this
Lease, if the failure is not cured within 30 days after written notice to Tenant provided, however, (i) if Tenant’s failure to comply
cannot reasonably be cured within 30 days, Tenant shall be allowed additional time (not to exceed 90 days) as is reasonably
necessary to cure the failure so long as Tenant begins the cure within 15 days and diligently pursues the cure to completion and
(ii) if Tenant’s failure to comply creates a hazardous condition, the failure must be cured immediately upon written notice to
Tenant; (c) Tenant permits a Transfer without Landlord’s required approval or otherwise in violation of Section 11 of this Lease;
(d) Tenant or any Guarantor becomes insolvent, makes a transfer in fraud of creditors, makes an assignment for the benefit of
creditors, admits in writing its inability to pay its debts when due or forfeits or loses its right to conduct business; (e) the
leasehold estate is taken by process or operation of Law; (f) in the case of any ground floor or retail Tenant, Tenant does not
take possession of or abandons or vacates all or any portion of the Premises; or (g) Tenant is in default beyond any notice and
cure period under any other lease or agreement with Landlord at the Building or Property. All notices sent under this Section
shall be in satisfaction of, and not in addition to, notice required by Law. As used in this Lease, the term "Material Default" shall
mean (i) any Default by Tenant as provided in Section 18(a), Section 18(b)(ii), Section 18(c), Section 18(d) or Section 18(e), or
(ii) any Default by Tenant as provided in Section 18(b)(i) the circumstances of which either (1) involve imminent harm to persons
or material damage to property, (2) increase Landlord's cost to operate the Building as a first class office building or to provide
services to other tenants of the Building, (3) create a nuisance to tenants of the Building, or (4) cause a violation of law for which
Landlord is liable.
19.
Remedies.
19.01. Upon Default, Landlord shall have the right to pursue any one or more of the following remedies:
(a)
Terminate this Lease, in which case Tenant shall immediately surrender the Premises to Landlord. If Tenant fails
to surrender the Premises, Landlord, in compliance with Law, may enter upon and take possession of the Premises and remove
Tenant, Tenant’s Property and any party occupying the Premises. Tenant shall pay Landlord, on demand, all past due Rent and
other losses and damages Landlord suffers as a result of Tenant’s Default, including, without limitation, all Costs of Reletting
(defined below) and any deficiency that may arise from reletting or the failure to relet the Premises. “Costs of Reletting” shall
include all reasonable costs and expenses incurred by Landlord in reletting or attempting to relet the Premises, including,
without limitation, legal fees, brokerage commissions, the cost of alterations and the value of other concessions or allowances
granted to a new tenant. Landlord agrees to use reasonable efforts to mitigate damages, provided that those efforts shall not
require Landlord to relet the Premises in preference to any other space in the Building or to relet the Premises to any party that
Landlord could reasonably reject as a transferee pursuant to Section 11.
(b)
Terminate Tenant’s right to possession of the Premises, without terminating this Lease, and, in compliance with
Law, remove Tenant, Tenant’s Property and any parties occupying the Premises, in which case Tenant shall immediately
surrender the Premises to Landlord. Landlord may (but, except to the extent required by Law, shall not be obligated to) relet all
or any part of the Premises, without notice to Tenant, for such period of time and on such terms and conditions (which may
include concessions, free rent and work allowances) as Landlord in its absolute discretion shall determine. Landlord may collect
and receive all rents and other income from the reletting. Tenant shall pay Landlord on demand all past due Rent, all Costs of
Reletting and any deficiency arising from the reletting or failure to relet the Premises. In no event shall Tenant be entitled to
receive any excess of such net rents over the sums payable by Tenant to Landlord hereunder, nor shall Tenant be entitled in any
suit for the
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collection of damages pursuant hereto to a credit in respect of any net rents from a re-letting. Landlord shall not be responsible
or liable for the failure to relet all or any part of the Premises or for the failure to collect any Rent. The re-entry or taking of
possession of the Premises shall not be construed as an election by Landlord to terminate this Lease.
19.02. In lieu of calculating damages under Section 19.01, Landlord may elect to receive as damages the sum of (a) all
Rent accrued through the date of termination of this Lease or Tenant’s right to possession, and (b) an amount equal to (i) the
total Rent that Tenant would have been required to pay for the remainder of the Term discounted to present value at the Prime
Rate (as defined in Section 4.01) then in effect, minus (ii) the then fair rental value of the Premises (taking into account the
period of time the Premises can reasonably be expected to be vacant) for the remainder of the Term, similarly discounted to
present value, provided that Landlord shall deduct from the present value of the fair rental value, all anticipated Costs of
Reletting.
19.03. If Tenant is in Default of any of its non-monetary obligations under this Lease, Landlord shall have the right to
perform such obligations, with 2 days prior written notice (except in the case of any dangerous condition or emergency, in which
case no notice shall be required). Tenant shall reimburse Landlord for the cost of such performance upon demand together with
an administrative charge equal to 10% of the cost of the work performed by Landlord. The repossession or re-entering of all or
any part of the Premises shall not relieve Tenant of its liabilities and obligations under this Lease. Without limiting the foregoing,
receipt by Landlord of Tenant’s keys to the Premises shall not constitute an acceptance or surrender of the Premises. No right or
remedy of Landlord shall be exclusive of any other right or remedy. Each right and remedy shall be cumulative and in addition to
any other right and remedy now or subsequently available to Landlord at Law or in equity.
19.04. Tenant expressly waives any and all rights of redemption and all rights to relief from forfeiture under any present
or future Laws.
20.
Limitation of Liability.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, THE LIABILITY OF LANDLORD
(AND OF ANY SUCCESSOR LANDLORD) HEREUNDER SHALL BE LIMITED TO THE INTEREST OF LANDLORD IN THE
PROPERTY (INCLUDING, WITHOUT LIMITATION, UNCOLLECTED RENT, PROPERTY INSURANCE, CONDEMNATION AND
SALE PROCEEDS PRIOR TO DISTRIBUTION THEREOF, BUT SUBJECT TO THE RIGHTS OF ANY MORTGAGEE AND TO
LANDLORD’S RIGHT TO USE ANY INSURANCE AND CONDEMNATION PROCEEDS FOR THE PURPOSES OF
REPAIRING AND RESTORING THE BUILDING AND THE PROPERTY) (THE “LANDLORD’S EQUITY INTEREST”), AND
TENANT SHALL LOOK SOLELY TO LANDLORD’S EQUITY INTEREST FOR THE RECOVERY OF ANY JUDGMENT OR
AWARD AGAINST LANDLORD OR ANY LANDLORD RELATED PARTY. NEITHER LANDLORD (EXCEPT TO THE EXTENT
OF LANDLORD’S EQUITY INTEREST) NOR ANY LANDLORD RELATED PARTY SHALL BE PERSONALLY LIABLE FOR
ANY JUDGMENT OR DEFICIENCY, AND IN NO EVENT SHALL LANDLORD OR ANY LANDLORD RELATED PARTY BE
LIABLE TO TENANT FOR ANY LOST PROFIT, DAMAGE TO OR LOSS OF BUSINESS OR ANY FORM OF SPECIAL,
INDIRECT OR CONSEQUENTIAL DAMAGE. BEFORE FILING SUIT FOR AN ALLEGED DEFAULT BY LANDLORD, TENANT
SHALL GIVE LANDLORD AND THE MORTGAGEE(S) WHOM TENANT HAS BEEN NOTIFIED HOLD MORTGAGES
(DEFINED IN SECTION 23 BELOW), NOTICE AND REASONABLE TIME TO CURE THE ALLEGED DEFAULT. IN ADDITION,
TENANT ACKNOWLEDGES THAT ANY ENTITY MANAGING THE BUILDING OR PROPERTY ON BEHALF OF LANDLORD,
OR WHICH EXECUTES THIS LEASE AS AGENT FOR LANDLORD, IS ACTING SOLELY IN ITS CAPACITY AS AGENT FOR
LANDLORD AND SHALL NOT BE LIABLE FOR ANY OBLIGATIONS, LIABILITIES, LOSSES, DAMAGES OR CLAIMS
ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, ALL OF WHICH ARE EXPRESSLY WAIVED BY TENANT.
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21.
22.
Intentionally Omitted
Holding Over.
Subject to the provisions of this Section 22, so long as no Material Default then exists under this Lease, Tenant shall
have the one (1) time right to extend the Term for either thirty (30) days, sixty (60) days or ninety (90) days by delivering written
notice (a "Holdover Notice") thereof to Landlord no later than twelve (12) months before the then current Termination Date of
the Term, time being of the essence. The Holdover Notice shall specify the period (either thirty (30) days, sixty (60) days or
ninety (90) days) that Tenant desires to hold over in possession of the Premises after the then scheduled Termination Date of
the Term (the "Permitted Holdover Period"). During the Permitted Holdover Period, Tenant shall pay shall pay an amount (on a
per month basis without reduction for partial months during the holdover) equal to the sum of the Additional Rent, plus 125%
(the “Permitted Holdover Percentage”) of the Base Rent due for the period immediately preceding the holdover (not taking into
consideration any Rent abatement Tenant might have been entitled to during such period). If Tenant fails to deliver the Holdover
Notice and holds over in possession of the Premises or a part thereof after the then scheduled Termination Date of the Term or
the sooner termination of this Lease or Tenant's right to possession of the Premises, or if Tenant delivers the Holdover Notice
and holds over in possession of the Premises or a part thereof beyond the Permitted Holdover Period or the sooner termination
of this Lease or Tenant's right to possession of the Premises (each such event being referred to herein as an "Unpermitted
Holdover Period"), such holding over shall be a tenancy at sufferance and Tenant shall, throughout the entire Unpermitted
Holdover Period, be subject to all the terms and provisions of this Lease and Tenant shall pay an amount (on a per month basis
without reduction for partial months during the Unpermitted Holdover Period) equal to one hundred fifty percent (150%) of the
Base Rent and Additional Rent due under this Lease for the last full month of the Term (not taking into consideration any Rent
abatement Tenant might have been entitled to during such period) for the first thirty (30) days of such Unpermitted Holdover
Period and thereafter two hundred percent (200%) of the Base Rent and Additional Rent due under this Lease for the last full
month of the Term (not taking into consideration any Rent abatement Tenant might have been entitled to during such period). No
holdover by Tenant during an Unpermitted Holdover Period or payment by Tenant after the termination of this Lease shall be
construed to extend the Term or prevent Landlord from immediate recovery of possession of the Premises by summary
proceedings or otherwise. If, during an Unpermitted Holdover Period, Landlord is unable to deliver possession of the Premises
to a new tenant or to perform improvements for a new tenant as a result of Tenant’s holdover and Tenant fails to vacate the
Premises within 15 days after written notice from Landlord, Tenant shall be liable for all damages that Landlord suffers from the
holdover (including, without limitation, consequential damages).
23.
Subordination to Mortgages; Estoppel Certificate.
Tenant accepts this Lease subject and subordinate to any mortgage(s), deed(s) of trust, ground or underlying lease(s)
and other lien(s) now existing or subsequently arising upon the Premises, the Building or the Property, and to renewals,
modifications, refinancings and extensions thereof (collectively referred to as a “Mortgage”). The party having the benefit of a
Mortgage shall be referred to as a “Mortgagee”. This clause shall be self-operative, but upon request from a Mortgagee, Tenant
shall execute a commercially reasonable subordination and attornment agreement in favor of the Mortgagee. As an alternative,
a Mortgagee shall have the right at any time to subordinate its Mortgage to this Lease. Upon request, Tenant, without charge,
shall attorn to any successor to Landlord’s interest in this Lease. Tenant shall, within 10 days after receipt of a written request
from Landlord, execute and deliver a commercially reasonable, factually correct estoppel certificate to those parties as are
reasonably requested by Landlord (including a Mortgagee or prospective purchaser). Without limitation, such estoppel certificate
may include a certification as to the status of this Lease, the existence of any defaults and the date to which Rent has been paid.
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Landlord represents and warrants to Tenant, that except for a mortgage or deed of trust in favor of Wells Fargo Bank
National Association, not individually, but solely as Trustee for the Morgan Stanley Capital I Inc., Commercial Mortgage Pass-
Through Certificates Series 2011-C1, under that certain Pooling and Servicing Agreement dated as of February 1, 2011
("Current Lender"), neither the Building nor the land upon which the Building is situated is encumbered by any other mortgage
or deed of trust. Concurrently with the execution and delivery of this Lease, Tenant, Landlord and Landlord's current Mortgagee
shall enter into a Subordination, Non- Disturbance and Attornment Agreement in the form of Exhibit I attached hereto ("Current
Mortgage SNDA"). Landlord shall not be required to incur any cost, expense or liability in connection with obtaining or
negotiating the Current Mortgage SNDA, and Tenant shall bear all such cost, expense and liability. With respect to any fee or
review costs charged by the Current Lender in connection with the Current Mortgage SNDA, Tenant shall pay all such amounts
to Current Lender, including any required retainer, promptly upon Current Lender's or Landlord's request.
Notwithstanding the foregoing in this Section to the contrary, as a condition precedent to the future subordination of this
Lease to a future Mortgage, Landlord shall be required to provide Tenant with a non-disturbance, subordination, and attornment
agreement in favor of Tenant from any Mortgagee who comes into existence after the Commencement Date. Such non-
disturbance, subordination, and attornment agreement in favor of Tenant shall provide that, so long as Tenant is paying the Rent
due under the Lease and is not otherwise in default under the Lease beyond any applicable cure period, its right to possession
and the other terms of the Lease shall remain in full force and effect. Such non-disturbance, subordination, and attornment
agreement may include other commercially reasonable provisions in favor of the Mortgagee, including, without limitation,
additional time on behalf of the Mortgagee to cure defaults of the Landlord and provide that (a) neither Mortgagee nor any
successor-in-interest shall be bound by (i) any payment of the Base Rent, Additional Rent, or other sum due under this Lease
for more than 1 month in advance or (ii) any amendment or modification of the Lease made without the express written consent
of Mortgagee or any successor-in-interest; (b) neither Mortgagee nor any successor-in-interest will be liable for (i) any act or
omission or warranties of any prior landlord (including Landlord), (ii) the breach of any warranties or obligations relating to
construction of improvements on the Property or any tenant finish work performed or to have been performed by any prior
landlord (including Landlord), or (iii) the return of any security deposit, except to the extent such deposits have been received by
Mortgagee; and (c) neither Mortgagee nor any successor-in-interest shall be subject to any offsets or defenses which Tenant
might have against any prior landlord (including Landlord).
24.
Notice.
All demands, approvals, consents or notices (collectively referred to as a “notice”) shall be in writing and delivered by
hand or sent by registered, express, or certified mail, with return receipt requested or with delivery confirmation requested from
the U.S. postal service, or sent by overnight or same day courier service at the party’s respective Notice Address(es) set forth in
Section 1; provided, however, notices sent by Landlord regarding general Building operational matters may be posted in the
Building mailroom or the general Building newsletter or sent via e-mail to the e-mail address provided by Tenant to Landlord for
such purpose. In addition, if the Building is closed (whether due to emergency, governmental order or any other reason), then
any notice address at the Building shall not be deemed a required notice address during such closure, and, unless Tenant has
provided an alternative valid notice address to Landlord for use during such closure, any notices sent during such closure may
be sent via e-mail or in any other practical manner reasonably designed to ensure receipt by the intended recipient. Each notice
shall be deemed to have been received on the earlier to occur of actual delivery or the date on which delivery is refused, or, if
Tenant has vacated the Premises or any other Notice Address of Tenant without providing a new Notice Address, 3 days after
notice is deposited in the U.S. mail or with a courier service in the manner described above. Either party may, at any time,
change its Notice Address (other than to a post office box address) by giving the other party written notice of the new address.
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25.
Surrender of Premises.
At the termination of this Lease or Tenant’s right of possession, Tenant shall comply with Section 8 hereof and shall
remove Tenant’s Property from the Premises, and quit and surrender the Premises to Landlord, broom clean, and in good order,
condition and repair, ordinary wear and tear, Casualty Damage and damage which Landlord is obligated to repair hereunder
excepted. If Tenant fails to remove any of Tenant’s Property, or to restore the Premises to the required condition, within
2 Business Days after termination of this Lease or Tenant’s right to possession, subject to applicable Laws, Landlord, at Tenant’s
sole cost, shall be entitled (but not obligated) to remove and store Tenant’s Property and/or perform such restoration of the
Premises. Landlord shall not be responsible for the value, preservation or safekeeping of Tenant’s Property. Tenant shall pay
Landlord, upon demand, the expenses and storage charges incurred. If Tenant fails to remove Tenant’s Property from the
Premises or storage, within 30 days after written notice, Landlord may deem all or any part of Tenant’s Property to be
abandoned and, at Landlord’s option, subject to applicable Laws, title to Tenant’s Property shall vest in Landlord or Landlord
may dispose of Tenant’s Property in any manner Landlord deems appropriate.
26.
Miscellaneous.
26.01. This Lease shall be interpreted and enforced in accordance with the Laws of the state or commonwealth in which
the Building is located and Landlord and Tenant hereby irrevocably consent to the jurisdiction and proper venue of such state or
commonwealth. If any term or provision of this Lease shall to any extent be void or unenforceable, the remainder of this Lease
shall not be affected. Whenever a matter is subject to the approval of governmental authorities or other governmental parties, or
whenever the approval of any such parties is otherwise required under this Lease, the parties agree that the same shall include
quasi-governmental authorities. The headings and titles to the Articles and Sections of this Lease are for convenience only and
shall have no effect on the interpretation of any part of this Lease. If there is more than one Tenant or if Tenant is comprised of
more than one party or entity, the obligations imposed upon Tenant shall be joint and several obligations of all the parties and
entities, and requests or demands from any one person or entity comprising Tenant shall be deemed to have been made by all
such persons or entities. Notices to any one person or entity shall be deemed to have been given to all persons and entities.
Tenant represents and warrants to Landlord, and agrees, that each individual executing this Lease on behalf of Tenant is
authorized to do so on behalf of Tenant and that the entity(ies) or individual(s) constituting Tenant or Guarantor or which may
own or control Tenant or Guarantor or which may be owned or controlled by Tenant or Guarantor are not and at no time will be
(i) in violation of any Laws relating to terrorism or money laundering, or (ii) among the individuals or entities identified on any list
compiled pursuant to Executive Order 13224 for the purpose of identifying suspected terrorists or on the most current list
published by
its official website,
http://www.treas.gov/ofac/tllsdn.pdf or any replacement website or other replacement official publication of such list. A breach by
Tenant of the foregoing representation or warranty contained in this Section 26.01 will constitute an immediate and incurable
Default.
the U.S. Treasury Department Office of Foreign Assets Control at
26.02. If Landlord retains an attorney or institutes legal proceedings due to Tenant’s failure to pay Rent when due, then
Tenant shall be required to pay Additional Rent in an amount equal to the reasonable attorneys’ fees and costs actually incurred
by Landlord in connection therewith. Notwithstanding the foregoing, in any action or proceeding between Landlord and Tenant,
including any appellate or alternative dispute resolution proceeding, the prevailing party shall be entitled to recover from the non-
prevailing party all of its costs and expenses in connection therewith, including, but not limited to, reasonable attorneys’ fees
actually incurred. TENANT HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY PROCEEDING BASED UPON A
BREACH OF THIS LEASE AND TENANT WAIVES THE RIGHT TO FILE ANY COUNTERCLAIMS OR CROSS-CLAIMS
(OTHER THAN COMPULSORY COUNTERCLAIMS OR CROSS-CLAIMS) IN ACTIONS FOR RECOVERY OF POSSESSION
OF THE PREMISES ONLY. No failure by either party to declare a default immediately upon its occurrence, nor any
22
delay by either party in taking action for a default, nor Landlord’s acceptance of Rent with knowledge of a default by Tenant,
shall constitute a waiver of the default, nor shall it constitute an estoppel.
26.03. Whenever a period of time is prescribed for the taking of an action by Landlord or Tenant (other than the payment
of the Security Deposit or Rent), the period of time for the performance of such action shall be extended by the number of days
that the performance is actually delayed due to strikes, acts of God, shortages of labor or materials, war, terrorist acts or breach
or failure of any Data Systems, pandemics, civil disturbances and other causes beyond the reasonable control of the performing
party (“Force Majeure”). However, events of Force Majeure shall not extend any period of time for the payment of Rent or other
sums payable by either party or any period of time for the written exercise of an option or right by either party.
26.04. Landlord shall have the right to transfer and assign, in whole or in part, all of its rights and obligations under this
Lease and in the Building and Property. Upon transfer, Landlord shall be released from any further obligations hereunder and
Tenant agrees to look solely to the successor in interest of Landlord for the performance of such obligations. If Landlord is
requested to produce the following information in connection with a proposed financing or sale, then Tenant, within 15 days after
request, shall provide Landlord with a current financial statement and such other information as Landlord may reasonably
request in order to create a “business profile” of Tenant and determine Tenant’s ability to fulfill its obligations under this Lease.
26.05. Landlord has delivered a copy of this Lease to Tenant for Tenant’s review only and the delivery of it does not
constitute an offer to Tenant or an option. Tenant represents that it has dealt directly with and only with the Tenant’s Broker (as
defined in Section 1.10) as a broker representing Tenant in connection with this Lease. Tenant shall indemnify and hold Landlord
and the Landlord Related Parties harmless from all claims of any other brokers claiming to have represented Tenant in
connection with this Lease. Landlord hereby agrees to pay all brokerage commissions or finder’s fees (if any) that may be due to
the Brokers in connection with this Lease pursuant to its written agreements, if any, with each such Broker. Landlord shall
indemnify and hold Tenant and the Tenant Related Parties harmless from all claims of any brokers claiming to have represented
Landlord in connection with this Lease. Landlord’s Broker (as defined in Section 1.10), or such other entity affiliated with
Landlord’s Broker, that is involved in the negotiation of this Lease, represents only the Landlord in this transaction. Any
assistance rendered by any agent or employee of Landlord’s Broker, or of such other entity affiliated with Landlord’s Broker, in
connection with this Lease or any subsequent amendment or modification or any other document related hereto has been or will
be made as an accommodation to Tenant solely in furtherance of consummating the transaction on behalf of Landlord, and not
as agent for Tenant.
26.06. Time is of the essence with respect to all of the provisions of this Lease. This Lease shall create only the
relationship of Landlord and Tenant between the parties, and not a partnership, joint venture or any other relationship. This
Lease and the covenants and conditions in this Lease shall inure only to the benefit of and be binding only upon Landlord and
Tenant and their permitted successors and assigns. Tenant agrees that Tenant may acknowledge only the existence of this
Lease by and between Landlord and Tenant, that Tenant may not disclose any of the terms and provisions contained in this
Lease to any tenant or other occupant in the Building or to any agent, employee, subtenant or assignee of such tenant or
occupant, and Tenant also shall cause the Tenant Related Parties (including, without limitation, its brokers) to comply with the
restrictions set forth in this sentence. The terms and provisions of the preceding sentence shall survive the termination of this
Lease (whether by lapse of time or otherwise).
26.07. The expiration of the Term, whether by lapse of time, termination or otherwise, shall not relieve either party of any
obligations which accrued prior to or which may continue to accrue after the expiration or termination of this Lease. Without
limiting the scope of the prior
23
sentence, it is agreed that Tenant’s obligations under Sections 4, 8, 12, 13, 19, 22, 25 and 26.10 shall survive the expiration or
early termination of this Lease.
26.08. Landlord represents and warrants that it has full right and authority to enter into this Lease. Tenant may
peacefully have, hold and enjoy the Premises, subject to the terms of this Lease and to all Mortgages and other matters of
record from time to time, provided Tenant pays the Rent and fully performs all of its covenants and agreements. This covenant
shall be binding upon Landlord and its successors only during its or their respective periods of ownership of the Building.
Landlord shall not be responsible for the acts or omissions of any other tenant, Tenant or third party that may interfere with
Tenant's use and enjoyment of the Premises; provided upon receipt of notice from Tenant of such interference, Landlord shall
use commercially reasonable efforts (e.g. by enforcing the terms of applicable leases and the Building Rules and Regulations of
the Building) to remedy such interference but shall incur no liability as a result of the refusal or failure of such third parties to
comply. Notwithstanding the foregoing, Landlord shall not be required to take any legal action in connection therewith, including,
without limitation, exercising any rights Landlord may have to terminate the lease or other agreement with any such other tenant
or third party.
26.09. This Lease does not grant any rights to light or air over or about the Building. Landlord excepts and reserves
exclusively to itself any and all rights not specifically granted to Tenant under this Lease, including, without limitation, the
exclusive right to the use of: (1) roofs, (2) telephone, electrical and janitorial closets, (3) equipment rooms, Building risers or
similar areas that are used by Landlord for the provision of Building services, (4) rights to the land and improvements below the
floor of the Premises (including, without limitation, any basements, cellars, vaults, vault space or area), (5) the improvements
and air rights above the Premises, (6) the improvements and air rights outside the demising walls of the Premises, including,
without limitation, all balconies, terraces and roofs adjacent to the Premises and (7) the areas below the improved floor level of
the Premises, within the walls of the Premises, and above the improved ceiling of the Premises and those areas and risers
within the Premises used for the installation of utility lines, facilities and equipment and other installations serving the Building or
occupants of the Building, and Landlord specifically reserves to itself the right to use, maintain and repair the same and the right
to make additional installations therein and elsewhere in the Premises, provided the same are concealed and do not reduce the
usable square footage of the Premises by more than a de minimis amount. Without limiting the foregoing, Tenant agrees that
Landlord, throughout the Term of this Lease, shall have free access to any and all mechanical installations, and Tenant agrees
that there shall be no construction or partitions or other obstructions which might interfere with the moving of the servicing
equipment of Landlord to or from the enclosures containing said installations. Tenant further agrees that neither Tenant nor any
of the Tenant Parties shall at any time tamper with, adjust or otherwise in any manner affect Landlord’s mechanical installations.
Landlord shall have the right at any time to change the name or address of the Building and to install, affix and maintain any and
all signs on the exterior and on the interior of the Building. Landlord shall also have the right to make such other changes to the
Property and Building as Landlord deems appropriate, provided the changes do not materially adversely affect Tenant’s ability to
use the Premises for the Permitted Use, materially increase Tenant's obligations under this Lease or materially reduce Tenant's
rights under this Lease. Landlord shall also have the right (but not the obligation) to temporarily close the Building if Landlord
reasonably determines that there is an imminent danger of significant damage to the Building or of personal injury to Landlord’s
employees or the occupants of the Building. The circumstances under which Landlord may temporarily close the Building shall
include, without limitation, electrical interruptions, hurricanes and civil disturbances. A closure of the Building under such
circumstances shall not constitute a constructive eviction nor entitle Tenant to an abatement or reduction of Rent.
26.10. Tenant covenants and agrees that Tenant shall, at all times during the Term and at its sole cost, comply with and
assume responsibility and liability under all Environmental Laws applicable to occupancy or use of or operations at the Premises
by Tenant and the Tenant Related Parties and their respective contractors and vendors. In the event that Tenant proposes to
undertake any Alterations, Tenant shall comply (at Tenant’s sole cost) with Landlord’s criteria
24
(as established from time to time), if any, for testing and remediation of Hazardous Materials. Tenant agrees that should it or any
of the Tenant Related Parties know of (a) any violation of Environmental Laws relating to the Premises, or (b) the escape,
release or threatened release of any Hazardous Materials in, at or about the Premises, Tenant shall promptly notify Landlord in
writing of such violation, escape, release or threatened release, and Tenant shall provide all warnings of exposure to Hazardous
Materials in, at or about the Premises in strict compliance with all applicable Environmental Laws. Tenant shall at no time use,
analyze, generate, manufacture, produce, transport, store, treat, release, dispose of or permit the escape of, or otherwise
deposit in, at or about the Premises or the Property, any Hazardous Materials, or permit or allow any of the Tenant Related
Parties or their respective contractors or vendors to do so. If Tenant or any of the Tenant Related Parties or their respective
contractors or vendors violates the provisions of this Section 26.10, in addition to Landlord’s other rights and remedies in the
case of such default, Tenant shall be responsible, at its sole cost, for the removal and disposal, in compliance with
Environmental Laws, of any Hazardous Materials present at or emanating from the Property as a result of such violation and for
the repair and restoration of any damage to the Property caused thereby (or, at Landlord’s option, Landlord may perform such
work, at Tenant’s sole cost). As used in this Lease, the term “Environmental Laws” shall mean any and all federal, state and
local laws, regulations, ordinances, codes and policies, and any and all judicial or administrative interpretations thereof by
governmental authorities, as now in effect or hereinafter amended or enacted, relating to (i) pollution or protection of the
environment, natural resources or health and safety; including, without limitation, those regulating, relating to, or imposing
liability for emissions, discharges, releases or threatened releases of Hazardous Materials into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage, disposal, release, transport or handling of
Hazardous Materials; and (ii) the use of chemical, electrical, radiological or nuclear processes, radiation, sophisticated electrical
and/or mechanical equipment, sonar and sound equipment, lasers, and laboratory analysis and materials, and the term
“Hazardous Materials” shall mean any and all substances, chemicals, wastes, sewage or other materials that are now or
hereafter regulated, controlled or prohibited by any Environmental Laws, including, without limitation, any (1) substance defined
as a “hazardous substance”, “extremely hazardous substance”, “hazardous material”, “hazardous chemical”, “hazardous waste”,
“toxic substance” or “air pollutant” by the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101, et seq.; the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, et seq.; the Federal Water Pollution Control Act, 33 U.S.C. Section 1251, et seq.;
the Clean Air Act, 42 U.S.C. Section 7401, et seq.; the Emergency Planning and Community Right-to-Know Act, 42 U.S.C.
Section 11001, et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health
Act, 29 U.S.C. Section 651 et seq.; or the Occupational Safety and Health Standards, 25 C.F.R. 1910-1000 et seq., or
regulations promulgated thereunder, all as amended to date and as amended hereafter; (2) hazardous substance, hazardous
waste, toxic substance, toxic waste or hazardous material, waste, chemical or compound described in any other Environmental
Laws; and (3) asbestos, polychlorinated biphenyls, urea formaldehyde insulation, flammable or explosive or radioactive
materials, gasoline, oil, motor oil, waste oil, petroleum (including, without limitation, crude oil or any component thereof),
petroleum-based products, paints, solvents, lead, cyanide, DDT, printing inks, acids, pesticides, ammonium compounds, and
other regulated chemical products. To the actual knowledge of Mike Nootens (Landlord's employee whose responsibilities
include the management of environmental matters related to the Building), Landlord has not received any written notice from
any governmental entity that the Property or the Building is currently in breach of any Environmental Laws. If Landlord receives
written notice of the presence of Hazardous Materials in the Building in violation of Environmental Laws which were not brought
into the Building by Tenant, by any Tenant Related Party or by any contractor or invitee of Tenant or any Tenant Related Party,
Landlord shall remediate such Hazardous Materials to the extent required by applicable Environmental Laws. The cost of such
remediation shall not be included in Operating Expenses except to the extent such costs are incurred in the ordinary course of
operating the Building, such as costs to dispose of batteries, electronics, paint, ballasts, lamps, diesel fuel and similar materials.
25
26.11. Landlord or its beneficial owner is a real estate investment trust (REIT). A REIT is subject to regulations regarding
the nature of its income. As long as an adjustment does not increase the monetary obligations of Tenant, and in order to protect
Landlord and its beneficial owners from an adverse tax event under the REIT regulations, Landlord may require that the rent or
fees (or a portion thereof) payable under this Lease be decreased or paid directly to an affiliate of Landlord, and Tenant shall,
without charge and within 10 days after Landlord’s written request, execute and deliver to Landlord such amendments to this
Lease, or such other documents, as may be reasonably required by Landlord to avoid the adverse tax event in the manner
described above.
26.12. This Lease shall be construed without regard to any presumption or other rule requiring construction against the
party causing this Lease to be drafted. This Lease may be executed in counterparts and shall constitute an agreement binding
on all parties notwithstanding that all parties are not signatories to the original or the same counterpart, provided that all parties
are furnished a copy or copies thereof reflecting the signature of all parties. The parties acknowledge and agree that they intend
to conduct this transaction by electronic means and that this Lease may be executed by electronic signature, which shall be
considered as an original signature for all purposes and shall have the same force and effect as an original signature. Without
limitation, in addition to electronically produced signatures, “electronic signature” shall include electronically scanned and
transmitted versions (e.g., via pdf) of an original signature.
26.13. Tenant agrees to submit to Landlord any information required (directly or indirectly) in order for Landlord to (a)
comply with Laws and (b) submit to any governmental authority any information legally required by such authority. In addition,
Tenant authorizes Landlord to request and receive directly from any utility provider providing utilities to the Premises on a
separately metered basis, copies of Tenant’s utility billing records, if required by Landlord in connection with an analysis of utility
consumption at the Building and Tenant agrees to furnish any such records in Tenant’s possession to Landlord within 10 days
after a written request from Landlord, if Landlord is not able to obtain such records from the utility company.
26.14. The Building name (and/or any other trade names and/or marks of Landlord or any affiliate of Landlord) and the
goodwill associated therewith (collectively, the “Trademark”) used by Landlord is owned by Landlord and/or an affiliate of
Landlord and all rights with respect to the Trademark are reserved to Landlord and its affiliates. Neither Tenant nor any other
party affiliated with Tenant shall use the Trademark without Landlord’s prior written consent. In addition, Tenant shall not use (or
permit any party affiliated with Tenant to use) any name associated with the Building or any pictures, illustrations or likenesses of
the Property or Building or any symbol, design, mark or insignia adopted by Landlord for the Building, in Tenant’s advertising or
other publicity or for any purpose other than as the address of the business to be conducted by Tenant in the Premises, without
the prior written consent of Landlord.
26.15. This Lease (including, without limitation, the exhibits and attachments listed in the table of contents, which
constitute part of this Lease and are hereby incorporated into and made a part of this Lease and shall be binding on, and shall
be complied with, by the parties to this Lease, as if fully set forth in the body of this Lease) constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings related to the Premises, including all lease
proposals, letters of intent and other documents. Neither party is relying upon any warranty, statement or representation not
contained in this Lease. This Lease may be modified only by a written agreement signed by an authorized representative of
Landlord and Tenant. Tenant shall not record this Lease or any memorandum or notice without Landlord’s prior written consent.
[signature page follows]
26
Landlord and Tenant have executed this Lease as of the day and year first above written.
LANDLORD:
EQC CAPITOL TOWER PROPERTY LLC, a Delaware limited
liability company
By: /s/ Eric Marx
Name: Eric Marx
Title: Authorized Signatory
TENANT:
CROWDSTRIKE, INC., a Delaware corporation
By: /s/ Burt Podbere
Name: Burt Podbere
Title: CFO
Tenant’s Tax ID Number (SSN or FEIN): [***]
27
EXHIBIT A
OUTLINE AND LOCATION OF PREMISES
This Exhibit is attached to and made a part of the Office Lease Agreement (the “Lease”) by and between EQC CAPITOL
TOWER PROPERTY LLC, a Delaware limited liability company (“Landlord”) and CROWDSTRIKE, INC., a Delaware
corporation (“Tenant”) for space in the Building (as defined in the Lease) located at 206 East 9th Street, Austin, Texas.
[Attached]
EXHIBIT A
1
EXHIBIT A
2
EXHIBIT A-1
OUTLINE AND LOCATION OF OFFER SPACE
This Exhibit is attached to and made a part of the Office Lease Agreement (the “Lease”) by and between EQC CAPITOL
TOWER PROPERTY LLC, a Delaware limited liability company (“Landlord”) and CROWDSTRIKE, INC., a Delaware
corporation (“Tenant”) for space in the Building (as defined in the Lease) located at 206 East 9th Street, Austin, Texas.
[Attached]
EXHIBIT A-1
1
EXHIBIT A-1
2
EXHIBIT A-1
3
EXHIBIT A-2
OUTLINE AND LOCATION OF ROFR SPACE
This Exhibit is attached to and made a part of the Office Lease Agreement (the “Lease”) by and between EQC CAPITOL
TOWER PROPERTY LLC, a Delaware limited liability company (“Landlord”) and CROWDSTRIKE, INC., a Delaware
corporation (“Tenant”) for space in the Building (as defined in the Lease) located at 206 East 9th Street, Austin, Texas.
[Attached]
EXHIBIT A-2
1
EXHIBIT A-2
2
EXHIBIT B
EXPENSES AND TAXES
This Exhibit is attached to and made a part of the Office Lease Agreement (the “Lease”) by and between EQC CAPITOL
TOWER PROPERTY LLC, a Delaware limited liability company (“Landlord”) and CROWDSTRIKE, INC., a Delaware
corporation (“Tenant”) for space in the Building (as defined in the Lease) located at 206 East 9th Street, Austin, Texas.
Capitalized terms used but not defined herein shall have the meanings given in the Lease.
1. Payments.
1.01. Tenant shall pay Tenant’s Pro Rata Share of Expenses (as defined in Section 2 below) (the “Expense Rent”) for each
calendar year during the Term and Tenant’s Pro Rata Share of Taxes (as defined in Section 2 below) (the “Tax Rent”) for each
Fiscal Year during the Term. Landlord shall provide Tenant with a good faith estimate of the Expense Rent for each calendar
year and of the Tax Rent for each Fiscal Year during the Term. On or before the first day of each month, Tenant shall pay to
Landlord a monthly installment equal to 1/12th of Landlord’s estimate of both the Expense Rent and the Tax Rent. If Landlord
determines that its good faith estimate was incorrect by a material amount, Landlord may provide Tenant with a revised estimate
and bill Tenant for any deficiency which may have accrued. After its receipt of the revised estimate, Tenant’s monthly payments
shall be based upon the revised estimate. If Landlord does not provide Tenant with an estimate of the Expense Rent by January
1 of a calendar year or of the Tax Rent by the first day of a Fiscal Year, Tenant shall continue to pay monthly installments based
on the previous year’s estimate(s) until Landlord provides Tenant with the new estimate. Upon delivery of the new estimate, an
adjustment shall be made for any month for which Tenant paid monthly installments based on the previous year’s estimate.
Tenant shall pay Landlord the amount of any underpayment within 30 days after receipt of the new estimate. Any overpayment
shall be refunded to Tenant within 30 days or credited against the next due future installment(s) of Additional Rent.
1.02. As soon as is practical following the end of each calendar year or Fiscal Year, as the case may be, Landlord shall
furnish Tenant with a statement of the actual Expenses and Expense Rent for such calendar year or the actual Taxes and Tax
Rent for such Fiscal Year, as applicable (“Landlord’s Statement”). If the estimated Expense Rent or estimated Tax Rent is
more than the actual Expense Rent or actual Tax Rent for the applicable calendar year or Fiscal Year, as applicable, Landlord
shall either provide Tenant with a refund or apply any overpayment by Tenant against Additional Rent due or next becoming due,
provided if the Term expires before the determination of the overpayment, Landlord shall refund any overpayment to Tenant after
first deducting the amount of Rent due. If the estimated Expense Rent or estimated Tax Rent is less than the actual Expense
Rent or actual Tax Rent for the applicable calendar year or Fiscal Year, as applicable, Tenant shall pay Landlord, within 30 days
after its receipt of Landlord’s Statement, any underpayment for the prior calendar year.
2. Expenses.
2.01. “Expenses” shall mean all costs and expenses incurred in each calendar year in connection with operating, equipping,
maintaining, repairing, managing and making replacements to the Building and the Property (including, without limitation, all
systems, structures, structural elements, personal property and Common Areas related thereto), including, but not limited to:
types of insurance, uniforms, training, and retirement and pension plans and other employee benefits.
(i)
Labor costs, including, wages, salaries, social security and employment taxes, medical and other
management office (provided if the management office
(ii)
Management fees, the cost of equipping, staffing, operating and maintaining an on-site or off-site
EXHIBIT B
1
services one or more other buildings or properties, the shared costs and expenses of such management office[s] shall be
equitably prorated and apportioned between the Building and the other buildings or properties), accounting and
bookkeeping services, legal fees not attributable to leasing or collection activity, and other administrative costs, and
Landlord, by itself or through an affiliate, shall have the right to directly perform or provide any services under the Lease
(including management services) and be compensated therefor, provided that the cost of any such services shall not
exceed the cost that would have been incurred had Landlord entered into an arm’s-length contract for such services with
an unaffiliated entity of comparable skill and experience.
(iii)
The cost of services, including amounts paid to service providers (including, without limitation,
contractors and/or suppliers) and the rental and purchase cost of parts, materials, supplies, tools and equipment. At
Landlord’s option, major equipment purchases may be amortized over a reasonable period selected by Landlord and
major repair items may be amortized over a period of up to 5 years.
(iv)
Premiums and deductibles paid by Landlord for insurance, including workers compensation,
property coverage, earthquake, general liability, rental loss, elevator, boiler and other insurance customarily carried from
time to time by owners of comparable properties. If Landlord self-insures any risk rather than obtaining third party
coverage therefor, Landlord shall be entitled to include in Expenses the fees, costs and charges Landlord would have
incurred if Landlord had not elected to self-insure any such risk.
(v)
Electrical Costs (defined below) and charges for water, hot and/or chilled water, gas, steam, heat
(including, without limitation, heating oil), air conditioning and ventilation and sewer and other utilities, but excluding (1)
those charges for which Landlord is reimbursed by tenants (other than through a payment of a share of Expenses) and
(2) the cost of providing a given utility service to individual tenant spaces in the Building if Tenant is billed directly for the
cost of providing such utility service to the Premises as a separate charge in addition to Base Rent and Expense Rent.
“Electrical Costs” means: (i) charges paid by Landlord for electricity; (ii) costs incurred in connection with an energy
management program for the Property; and (iii) if and to the extent permitted by Law, a fee for the services provided by
Landlord in connection with the selection of utility companies and the negotiation and administration of contracts for
electricity, provided that such fee shall not exceed 50% of any savings obtained by Landlord. For purposes of
determining utility charges to be included in Expenses, Landlord may make reasonable estimates of usage to the extent
service to any relevant portion of the Building is not separately metered.
(vi)
The cost of capital improvements (as distinguished from replacement parts or components
installed in the ordinary course of business, which shall be included in Expenses) made to the Property, which are (a)
performed primarily to reduce current or future operating expense costs, upgrade security or otherwise improve the
operating efficiency of the Property or (b) required to comply with any Laws that are enacted, or first interpreted to apply
to the Property after the date of the Lease. The cost of capital improvements shall be amortized by Landlord over the
useful life of the applicable item or, in the case of a cost saving capital improvement, over the Payback Period (as
defined below), if such period is fewer years. The amortized cost of capital improvements, and the amortized cost of the
items amortized pursuant to Section 2.01(iii) above, may, at Landlord’s option, include actual or imputed interest at the
rate that Landlord would reasonably be required to pay to finance the cost of the capital improvement or such other
items. “Payback Period” means the reasonably estimated period of time that it takes for the cost savings resulting from
a capital improvement to equal the total cost of the capital improvement.
EXHIBIT B
2
practice with respect to the operation of a first class office building, would be construed as an operating expense.
(vii)
Any other expense or charge of any nature whatsoever which, in accordance with general industry
Notwithstanding anything to the contrary contained herein, if any Expenses are incurred with respect to an item or service or
portion of the Beneficial Common Areas (defined in Section 2.05 below) that serves or benefits another building or property in
addition to the Building or Property, in order to determine the amount of the Expenses for the applicable period allocable or
attributable to the Building and Property, Landlord shall make a reasonable allocation of any such Expenses between the
Building or Property and such other buildings or properties, which need not be based on relative size and use, provided that if
any such Expenses are paid pursuant to a reciprocal easement agreement, common area agreement or similar agreement, any
allocation shall be made in accordance with such agreement to the extent such allocation is addressed by such agreement.
Nothing contained in this Section 2.01 shall expand Landlord’s obligations under this Lease (including, without limitation,
Landlord’s obligations to provide services).
2.02. Expenses shall not include: (a) the cost of capital improvements (except as set forth above); (b) depreciation; (c)
principal payments of mortgage and other non-operating debts of Landlord; (d) the cost of repairs or other work to the extent
Landlord is reimbursed by insurance or condemnation proceeds; (e) costs in connection with leasing space in the Building; (f)
lease concessions, rental abatements and construction allowances granted to specific tenants; (g) costs incurred in connection
with the sale, financing or refinancing of the Building; (h) fines, interest and penalties incurred due to the late payment of Taxes
or Expenses by Landlord; (i) organizational expenses associated with the creation and operation of the entity which constitutes
Landlord; (j) any penalties or damages that Landlord pays to Tenant under the Lease or to other tenants in the Building under
their respective leases (k) real estate brokers’ leasing commissions; (l) costs of other services or work performed for the singular
benefit of another tenant or occupant (other than for Common Areas of the Building) and either not available to Tenant or
provided to Tenant only for an additional fee (in addition to its payment of a share of Expenses under this Exhibit); (m) Taxes and
any inheritance, estate, succession, transfer, gift, franchise, corporation, income, gains or profit tax or capital levy and other
taxes excluded from the definition of Taxes; (n) rental under any ground lease; (o) reserves of any kind; and (p) political
contributions or contributions to charities.
2.03. If at any time during a calendar year the Building is less than 95% occupied or Landlord is not supplying services to at
least 95% of the total Rentable Square Footage of the Building, Expenses shall, at Landlord’s option, be determined as if the
Building had been 95% occupied and Landlord had been supplying services to 95% of the Rentable Square Footage of the
Building during that calendar year.
2.04. “Taxes” shall mean: (a) all real property taxes and other assessments on or allocable or attributable to the Building
and/or Property, including, but not limited to, gross receipts taxes, assessments for special improvement districts and building
improvement districts, governmental charges and fees and assessments for police, fire, traffic mitigation or other governmental
service of purported benefit to the Property; (b) all personal property taxes for property that is owned by Landlord and used in
connection with the operation, maintenance and repair of the Property;(c) all impositions (whether or not such impositions
constitute tax receipts to governmental agencies) in substitution, partially or totally, of any impositions now or previously included
within the definition of Taxes, including, without limitation, those imposed or required by governmental agencies to increase tax
increments to governmental agencies and (d) all costs and fees incurred in connection with seeking reductions in any tax
liabilities described in (a), (b) and (c) above, including, without limitation, any costs incurred by Landlord for compliance, review
and appeal of tax liabilities. Taxes shall not include any income, capital levy, transfer, capital stock, gift, estate or inheritance tax
or any taxes for which any tenant of the Property is directly responsible to taxing authorities or any fines, interest and penalties
incurred due to the late payment of Taxes. If a reduction in Taxes is obtained for any year of the Term with respect to which
Tenant paid Tax Rent, then Taxes for that year will be retroactively adjusted and
EXHIBIT B
3
Landlord shall provide Tenant with a credit, if any, based on the adjustment, provided that if a reduction in Taxes pertains to a
particular tenant (such as, for example, if a particular tenant is tax exempt), Tenant shall not be entitled to any portion of such
reduction and for purposes of determining Tenant’s Pro Rata Share of Taxes, such reduction shall be disregarded.
If Landlord is permitted to pay a Tax assessment in installments, and Landlord elects to do so, Taxes for the year shall
include the amount of the installment and any interest due and payable during that year. For all other taxes, Taxes for a given
year shall, at Landlord’s election, include either the amount accrued, assessed or otherwise imposed for the applicable year or
the amount due and payable for such year, provided that Landlord’s election shall be applied consistently throughout the Term.
Notwithstanding anything to the contrary contained herein, if the Property or any portion thereof is not separately assessed or if
any portion of the Beneficial Common Areas serves or benefits another building or property in addition to the Building or
Property, in order to determine the amount of the Taxes allocable or attributable to the Property for the applicable period,
Landlord shall make a reasonable allocation of the Taxes for the tax parcels containing the applicable portion of the Property or
such Beneficial Common Area (as applicable) between the Property and the other building[s] or property[ies] involved, which
allocation may, at Landlord’s option, take into account (among other things), the differential tax rates applicable to the different
uses in the Property or such other buildings or properties, provided that if any such Tax is paid pursuant to a reciprocal
easement agreement, common area agreement or similar agreement, any allocation shall be made in accordance with such
agreement to the extent such allocation is addressed by such agreement.
2.05. Notwithstanding anything to the contrary contained herein, for purposes only of calculating Expenses and Taxes for
purposes of the Lease, the Common Areas may include, at Landlord’s election, areas which are not part of the Property, but
which serve or otherwise benefit the Property, and are maintained in whole or in part by Landlord or an affiliate of Landlord (or
by another party to whom Landlord is obligated to pay all or any portion of the cost thereof) (“Beneficial Common Areas”).
2.06. Notwithstanding the foregoing, for purposes of computing Tenant's Pro Rata Share of Expenses, commencing with the
calendar year following the first full calendar year of the Term, Controllable Expenses (hereinafter defined) shall not increase by
more than five percent (5%) each calendar year, on a cumulative, compounded basis, over the course of the Term.
"Controllable Expenses" shall mean all Expenses exclusive of (i) the cost of insurance, taxes, utilities, snow removal, (ii) the
annual amortized capital costs incurred by Landlord to comply with laws that were not applicable to the Building as of the
Commencement Date or incurred by Landlord primarily for the purpose of reducing operating expenses or otherwise improving
the operating efficiency of the Property or Building, (iii) costs incurred by Landlord in connection with increased levels or
additional types of services at the Property or Building, and (iv) any other costs incurred by Landlord for reasons outside
Landlord's reasonable control (e.g., costs incurred as a result of increases in union wages or non-capital costs incurred in
complying with governmental laws and regulations).
3. Audit Rights.
3.01. Within 60 days after receiving Landlord’s Statement of Expenses (each such period is referred to as the “Review
Notice Period”), Tenant may give Landlord written notice (“Review Notice”) that Tenant intends to review Landlord’s records of
the Expenses for the calendar year to which the statement applies, and within 60 days after sending the Review Notice to
Landlord (such period is referred to as the “Request for Information Period”), Tenant shall send Landlord a written request
identifying, with a reasonable degree of specificity, the information that Tenant desires to review (the “Request for
Information”). Within a reasonable time after Landlord’s receipt of a timely Request for Information and executed Audit
Confidentiality Agreement (referenced below), Landlord, as determined by Landlord, shall forward to Tenant, or make all
pertinent records available for inspection on site at such location deemed reasonably appropriate by Landlord, such records (or
copies thereof) for the applicable calendar year that are reasonably necessary for Tenant to conduct its review of the information
appropriately
EXHIBIT B
4
identified in the Request for Information. Within 60 days after any particular records are made available to Tenant (such period is
referred to as the “Objection Period”), Tenant shall have the right to give Landlord written notice (an “Objection Notice”)
stating in reasonable detail any objection to Landlord’s Statement of Expenses for that year which relates to the records that
have been made available to Tenant. If Tenant provides Landlord with a timely Objection Notice, Landlord and Tenant shall work
together in good faith to resolve any issues raised in Tenant’s Objection Notice. If Landlord and Tenant determine that Expenses
for the calendar year are less than reported, Landlord shall provide Tenant with a credit against the next installment of Rent in
the amount of the overpayment by Tenant. Likewise, if Landlord and Tenant determine that Expenses for the calendar year are
greater than reported, Tenant shall pay Landlord the amount of any underpayment within 30 days. If Tenant fails to give Landlord
an Objection Notice with respect to any records that have been made available to Tenant prior to expiration of the Objection
Period applicable to the records which have been provided to Tenant, Tenant shall be deemed to have approved Landlord’s
Statement of Expenses with respect to the matters reflected in such records and shall be barred from raising any claims
regarding the Expenses relating to such records for that year. If Tenant fails to provide Landlord with a Review Notice prior to
expiration of the Review Notice Period or fails to provide Landlord with a Request for Information prior to expiration of the
Request for Information Period described above, Tenant shall be deemed to have approved Landlord’s Statement of Expenses
and shall be barred from raising any claims regarding the Expenses for that year. If Tenant provides Landlord with a timely
Review Notice and Request for Information and Objection Notice, Tenant shall be barred from raising any issues with respect to
the applicable statement of Expenses or the Expenses for the applicable year that are not covered by such Objection Notice.
If Tenant retains an agent to review Landlord’s records, the agent must be with a CPA firm licensed to do business in the state or
commonwealth where the Property is located, and the fees charged cannot be based in whole or in part on a contingency basis.
Tenant shall be solely responsible for all costs, expenses and fees incurred for the audit; provided, if it is ultimately determined
that the amount paid by Tenant as Tenant's Pro Rata Share of Expenses and Tenant's Pro Rata Share of Taxes, in the
aggregate, exceeds the actual Tenant's Pro Rata Share of Expenses and Tenant's Pro Rata Share of Taxes, in the aggregate
(an "Overpayment"), by more than five percent (5%), then Landlord shall pay the reasonable, actual out of pocket costs
incurred by Tenant in connection with such audit not to exceed the lesser of (a) $3,000.00, and (b) the amount of the
Overpayment. The records and related information obtained by Tenant shall be treated as confidential, and applicable only to
the Building, by Tenant and its auditors, consultants and other parties reviewing such records on behalf of Tenant (collectively,
“Tenant’s Auditors”), and, prior to making any records available to Tenant or Tenant’s Auditors, Landlord may require Tenant
and Tenant’s Auditors to each execute a reasonable confidentiality agreement (“Audit Confidentiality Agreement”) in
accordance with the foregoing. In no event shall Tenant be permitted to examine Landlord’s records or to dispute any statement
of Expenses unless Tenant has paid and continues to pay all Rent when due (including any disputed amounts). In no event will
Tenant be permitted to conduct an audit during any period when Tenant is in Monetary Default.
3.02. Notwithstanding anything to the contrary contained in this Lease, Tenant’s failure to object to any statement, invoice or
billing rendered by Landlord (other than Landlord’s Statement of Expenses, which shall be governed by the provisions of Section
3.01 above) within a period of 120 days after receipt of the same shall constitute Tenant’s unconditional acquiescence with
respect thereto and Tenant shall be deemed to have waived its right, if any, to challenge or object to such statement. Any
objection by Tenant must (a) be in writing (the “Billing Objection Notice”), (b) be delivered to Landlord within the
aforementioned 120 day period and (c) reference the statement, invoice or billing in dispute, include the amount that is in
dispute and the specific reason for such objection. If Tenant’s Billing Objection Notice fails to meet the aforementioned
requirements, such failure will render Tenant’s objection null and void. Landlord and Tenant intend that the foregoing provision
sets forth Tenant’s sole right to object to any statement, invoice or billing rendered by Landlord and shall supersede any right of
Tenant to audit or request back up documentation from Landlord which may otherwise be provided at Law,
EXHIBIT B
5
in equity or by this Lease (other than Landlord’s Statement of Expenses, which shall be governed by the provisions of Section
3.01 above). If Tenant provides Landlord with a Billing Objection Notice that meets the requirements set forth in this Section
3.02, Tenant shall be barred from raising any issues with respect to the applicable statement, invoice or billing referenced in
Tenant’s Billing Objection Notice that are not raised by Tenant in such Billing Objection Notice. Landlord and Tenant shall work
together in good faith to resolve any issues raised in Tenant’s Billing Objection Notice. If upon resolution of the issues raised by
Tenant’s Billing Objection Notice it is determined that there have been any overpayments or underpayments by Tenant, such
overpayments and underpayments shall be handled in the same manner as overpayments or underpayments of Expenses are
handled under Section 3.01 of this Exhibit B.
4. Personal Property Taxes.
Tenant shall pay prior to delinquency all taxes, if any, assessed against or levied upon its occupancy of the Premises or upon
the fixtures, furnishings, equipment and all other personal property of Tenant located in the Premises and when possible Tenant
shall cause said fixtures, furnishings, equipment and other personal property to be assessed and billed separately from the
property of Landlord. In the event any or all of Tenant's fixtures, furnishings, equipment or other personal property or its
occupancy of the Premises shall be assessed and taxed with the property of Landlord, Tenant shall pay to Landlord its share of
such taxes within 20 days after delivery to Tenant by Landlord of a statement in writing setting forth the amount of such taxes
applicable to Tenant's fixtures, furnishings, equipment, personal property or occupancy.
EXHIBIT B
6
EXHIBIT C
WORK LETTER
This Exhibit is attached to and made a part of the Office Lease Agreement (the “Lease”) by and between EQC CAPITOL
TOWER PROPERTY LLC, a Delaware limited liability company (“Landlord”) and CROWDSTRIKE, INC., a Delaware
corporation (“Tenant”) for space in the Building (as defined in the Lease) located at 206 East 9th Street, Austin, Texas.
Capitalized terms used but not defined herein shall have the meanings given in the Lease.
As used in this Work Letter, the "Premises" shall be deemed to mean the Premises, as initially defined in the Lease.
1.
Tenant, following the delivery of the Premises by Landlord and the full and final execution and delivery of the Lease to
which this Exhibit is attached and all prepaid rental and security deposits required under such agreement, shall have the right to
perform alterations and improvements in the Premises (the "Initial Alterations"). Notwithstanding the foregoing, Tenant and its
contractors shall not have the right to perform Initial Alterations in the Premises unless and until Tenant has complied with all of
the terms and conditions of Section 9 of the Lease, including, without limitation, approval by Landlord of the final plans for the
Initial Alterations and the contractors (both general contractors and subcontractors) to be retained by Tenant to perform such
Initial Alterations. Tenant shall be responsible for all elements of the design of Tenant's plans (including, without limitation,
compliance with law, functionality of design, the structural integrity of the design, the configuration of the premises and the
placement of Tenant's furniture, appliances and equipment), and Landlord's approval of Tenant's plans shall in no event relieve
Tenant of the responsibility for such design. Landlord’s approval of Tenant’s plans for the Initial Alterations shall not be
unreasonably withheld. Landlord shall review Tenant’s plans within 15 Business Days after Tenant’s delivery of such plans (in
PDF, CAD and hard copy formats) to Landlord’s Building manager. Unless otherwise expressly agreed to by Landlord in writing,
Tenant’s plans shall be consistent with the Building’s standards for leasehold improvements. Landlord's approval of the
contractors to perform the Initial Alterations shall not be unreasonably withheld, conditioned or delayed. The parties agree that
Landlord's approval of the general contractor to perform the Initial Alterations shall not be considered to be unreasonably
withheld if any such general contractor (i) does not have trade references reasonably acceptable to Landlord, (ii) does not
maintain insurance as required pursuant to the terms of this Lease, or (iii) is not licensed as a contractor in the state/municipality
in which the Premises is located. Tenant acknowledges the foregoing is not intended to be an exclusive list of the reasons why
Landlord may reasonably withhold its consent to a general contractor. Prior to commencing to perform any of the Initial
Alterations in the Premises, Tenant shall deliver to Landlord a copy of Tenant’s contract with Tenant’s general contractor. Tenant
shall ensure that all contractors performing the Initial Alterations include Landlord and such other parties as Landlord shall
require as additional insureds on the insurance policies maintained by such contractors. Promptly after Landlord approves
Tenant’s plans for the Initial Alterations, Tenant shall deliver to Landlord an itemized statement of the estimated hard and soft
costs of the Initial Alterations.
2.
"Allowance") toward the cost of performing the Initial Alterations in preparation of Tenant's occupancy of the Premises.
Subject to the terms and conditions of this Exhibit, Landlord agrees to contribute the sum of $ 1,032,200.00 (the
2.01. The Allowance may only be used for the cost of construction management (including the Landlord Fee),
permitting, preparing design and construction documents and mechanical and electrical plans for the Initial Alterations and for
hard costs in connection with the Initial Alterations. The Allowance, less a 10% retainage (which retainage shall be payable as
part of the final draw), shall be paid to Tenant or, at Landlord's option, to the order of the general contractor that performs the
Initial Alterations, in periodic disbursements within 30 days
EXHIBIT C
1
after receipt of the following documentation: (i) an application for payment and sworn statement of contractor substantially in the
form of AIA Document G-702 covering all work for which disbursement is to be made to a date specified therein; (ii)
Contractor's, subcontractor's and material supplier's waivers of liens which shall cover all Initial Alterations for which
disbursement is being requested and all other statements and forms required for compliance with the mechanics' lien laws of the
state in which the Premises is located, together with all such invoices, contracts, or other supporting data as Landlord or
Landlord's Mortgagee may reasonably require; (iii) copies of all construction contracts for the Initial Alterations, together with
copies of all change orders, if any; and (iv) a request to disburse from Tenant containing an approval by Tenant of the work done
and a good faith estimate of the cost to complete the Initial Alterations. Upon completion of the Initial Alterations, and prior to
final disbursement of the Allowance, Tenant shall furnish Landlord with: (1) general contractor and architect's completion
affidavits, (2) full and final waivers of lien, (3) receipted bills covering all labor and materials expended and used, (4) as-built
plans of the Initial Alterations, and (5) the certification of Tenant and its architect that the Initial Alterations have been installed in
a good and workmanlike manner in accordance with the approved plans, and in accordance with applicable laws, codes and
ordinances. In no event shall Landlord be required to disburse the Allowance more than one time per month. Notwithstanding
anything herein to the contrary, Landlord shall not be obligated to disburse any portion of the Allowance during the continuance
of an uncured Material Default under the Lease, and Landlord's obligation to disburse shall only resume when and if such
Material Default is cured.
2.02. Notwithstanding anything to the contrary contained herein, so long as there is no Material Default under the
Lease and the Initial Alterations are complete and have been paid for, no more than $129,025.00, being $5.00 per rentable
square foot of the Premises, of the Allowance may be applied toward Moving Costs and installing Cable. As used herein,
"Moving Costs" means Tenant's actual, reasonable costs in physically moving to the Premises.
3.
In no event shall the Allowance be used for the purchase of equipment, furniture or other items of personal property of
Tenant. If Tenant does not submit a request for payment of the entire Allowance to Landlord in accordance with the provisions
contained in this Exhibit by September 1, 2019, any unused amount shall accrue to the sole benefit of Landlord, it being
understood that Tenant shall not be entitled to any credit, abatement or other concession in connection therewith. Tenant shall
be responsible for all applicable state sales or use taxes, if any, payable in connection with the Initial Alterations and/or
Allowance.
4.
Tenant shall pay a fee to Landlord or, at Landlord’s direction, to Landlord’s Building manager, equal to one percent (1%)
of the hard costs of the Initial Alterations as compensation for Landlord’s project administration of the Initial Alterations,
including, without limitation, review of Tenant’s plans, processing payment of the Allowance and other payment requests,
coordination of the performance of the Initial Alterations and other work in the Building, monitoring of the Initial Alterations, and
project close-out. Landlord shall be entitled to deduct such fee from the Allowance.
5.
Tenant agrees to accept the Premises in the condition required pursuant to Section 3.02 of the Lease but otherwise in its
"as-is" condition and configuration, it being agreed that, Landlord shall not be required to (a) perform any work, except as
provided in Section 9 of this Exhibit C (subject to Landlord's obligation to deliver possession of the Premises in accordance with
the second sentence of Section 3.02 of the Lease), or (b) except as provided above with respect to the Allowance, incur any
costs in connection with the construction or demolition of any improvements in the Premises.
6.
This Exhibit shall not be deemed applicable to any additional space added to the Premises at any time or from time to
time, whether by any options under the Lease or otherwise, or to any portion of the original Premises or any additions to the
Premises in the event of a renewal or extension of the original Term of the Lease, whether by any options under the Lease or
otherwise, unless expressly so provided in the Lease or any amendment or supplement to the Lease.
EXHIBIT C
2
7.
Notwithstanding anything to the contrary contained in the Lease, neither Tenant, nor its general contractors,
subcontractors or consultants shall be charged by Landlord for their use of parking, hoists, freight elevators or access to loading
docks in connection with performance of the Initial Alterations.
8.
Landlord shall pay cost of the test fit drawings for the Premises performed with respect to the 14th floor and the 18th
floor of the Building, as well as one revision to such test fit drawings prepared for the 14th floor of the Building (collectively, the
"Test Fit"), up to a maximum amount of $4,988.30. Landlord shall pay such costs directly to the architect who prepared the Test
Fit. The Allowance shall not be used to pay for the Test Fit for the Premises that was performed prior to the Effective Date. To
the extent the cost of the Test Fit exceeds $4,988.30, Tenant shall reimburse Landlord for such excess or, at Tenant's direction,
such amount may be paid to Landlord from the Allowance.
Landlord shall perform improvements to the Premises to expand the women’s restroom within the Premises by (a)
9.
installing one additional stall and constructing a new wall that separates the women’s restroom from the break room, all as
shown on the Floor Plan dated February 8, 2018, prepared by Carson Design Associates as Job No. A1725404, attached hereto
as Schedule C-1 (the "Space Plan"), and (b) installing fixtures and finishes in such expanded portion of the women’s restroom
(i) using Building Standard methods, materials, and finishes consistent with those currently existing within the balance of the
women’s restroom, to the extent commercially reasonably available, and (ii) up to the new interior wall of the women’s restroom.
Such improvements described in the foregoing sentence are hereinafter referred to as the "Landlord Work."
9.01.
It is agreed that construction of the Landlord Work will be completed at Landlord's sole cost and expense (subject
to the terms of Section 9.03 below). Landlord shall enter into a direct contract for the Landlord Work with a general contractor
selected by Landlord. In addition, Landlord shall have the right to select and/or approve of any subcontractors used in
connection with the Landlord Work. Promptly after the Lease has been fully executed and delivered, Landlord shall cause
architectural plans for the Landlord Work to be prepared by an architect selected by Landlord, which architectural plans shall be
based on and consistent with the portion of the Space Plans related to the Landlord Work (the “Landlord Work Plans”).
9.02. Landlord's supervision or performance of the Landlord Work for or on behalf of Tenant shall not be deemed a
representation by Landlord that the Space Plans, the Landlord Work Plans or any revisions thereto comply with applicable
insurance requirements, building codes, ordinances, laws or regulations, or that the improvements constructed in accordance
with the Landlord Work Plans and any revisions thereto will be adequate for Tenant's use, it being agreed that Tenant shall be
responsible for all elements of the design of Tenant's plans (including, without limitation, compliance with law, functionality of
design, the structural integrity of the design, the configuration of the premises and the placement of Tenant's furniture,
appliances and equipment).
9.03.
If Tenant shall request any revisions to the Space Plans or Landlord Work Plans which were previously approved
by Tenant, Landlord shall have such revisions prepared at Tenant's sole cost and expense and Tenant shall reimburse Landlord
for the cost of preparing any such revisions to the Space Plans and/or Landlord Work Plans, plus any applicable state sales or
use tax thereon, within three (3) Business Days after Landlord’s written demand. Promptly upon completion of the revisions,
Landlord shall notify Tenant in writing as to whether such revisions to the Space Plans and/or Landlord Work Plans will cause a
delay in the completion of Landlord’s Work and/or an increase in the cost of Landlord’s Work. Tenant, within one (1) Business
Day, shall notify Landlord in writing whether it desires to proceed with such revisions. In the absence of such written
authorization, Landlord shall have the option to continue the Landlord Work disregarding the requested revision. Tenant shall be
responsible for any delay in completion of the Landlord Work resulting from any revision to the Space Plans and/or Landlord
Work Plans. If such revisions result in an increase in the cost of the Landlord
EXHIBIT C
3
Work, such increased costs, plus any applicable state sales or use tax thereon, shall be payable by Tenant to Landlord within
three (3) Business Days after Landlord’s written demand.
9.04. Tenant acknowledges that the Landlord Work may be performed by Landlord in the Premises during Normal
Business Hours subsequent to delivery of possession of the Premises to Tenant and simultaneously with Tenant’s performance
of the Initial Alterations. Landlord and Tenant agree to cooperate with each other in order to enable the Landlord Work and the
Initial Alterations to be performed in a timely manner and with as little inconvenience to the other party's work as is reasonably
possible. Landlord shall use commercially reasonable efforts to substantially complete the Landlord Work on or before the
Commencement Date. Notwithstanding anything herein to the contrary, any delay in the completion of the Landlord Work or
inconvenience suffered by Tenant during the performance of the Landlord Work shall not delay the Commencement Date, nor
shall it subject Landlord to any liability for any loss or damage resulting therefrom or entitle Tenant to any credit, abatement or
adjustment of Rent or other sums payable under the Lease.
EXHIBIT C
4
SCHEDULE C-1
SPACE PLANS
[Attached]
SCHEDULE C-1
1
SCHEDULE C-1
2
EXHIBIT D
PREMISES ACCEPTANCE LETTER
Date ______________________
Tenant ______________________
Address ______________________
______________________
______________________
Re: Premises Acceptance Letter with respect to that certain Office Lease Agreement dated as of ________, 2018, by and
between EQC Capitol Tower Property LLC, as Landlord, and CrowdStrike, Inc., as Tenant, for 25,805 rentable square
feet on the 14th floor of the Building located at 206 East 9th Street, Austin, Texas.
Dear __________________:
In accordance with the terms and conditions of the above referenced Lease, Tenant acknowledges and agrees:
1. Tenant accepted possession of the Premises on __________, 20__.
2. The Premises were delivered to Tenant in the condition required under the terms of the Lease.
3. The Commencement Date of the Lease is ____________________.
4. The Termination Date of the Lease is _________________________.
5.
If Tenant desires to exercise the Renewal Option, Tenant shall deliver the Renewal Notice to Landlord no earlier than _________ and
no later than ____________, and, if the Renewal Option is properly exercised, the Renewal Term shall commence on _________
and expire on _______________.
The parties intend to indicate their agreement to the matters in this Premises Acceptance Letter by electronic means and agree that this letter
agreement may be executed by electronic signature (including, without limitation, faxed versions of an original signature or electronically
scanned and transmitted versions [e.g., via pdf] of an original signature), which shall be considered as an original signature for all purposes
and shall have the same force and effect as an original signature.
[continues on following page]
EXHIBIT D
1
Please acknowledge the foregoing matters by signing this Premises Acceptance Letter in the space provided and then return the executed
agreement to me via email by scanning it and sending it to me at [REM – insert your e- mail address] _____________ or you may fax the
executed agreement to me at [REM – insert your fax number] ___________________. Tenant’s failure to execute and return this letter, or
to provide written objection to the statements contained in this letter, within 30 days after the date of this letter shall be deemed an approval
by Tenant of the statements contained herein.
Sincerely,
___________________________________
Authorized Signatory
Acknowledged and Accepted:
Tenant: ______________________
By: ______________________
Name: ______________________
Title: ______________________
Date: ______________________
EXHIBIT D
2
EXHIBIT E
BUILDING RULES AND REGULATIONS
This Exhibit is attached to and made a part of the Office Lease Agreement (the “Lease”) by and between EQC CAPITOL
TOWER PROPERTY LLC, a Delaware limited liability company (“Landlord”) and CROWDSTRIKE, INC., a Delaware
corporation (“Tenant”) for space in the Building (as defined in the Lease) located at 206 East 9th Street, Austin, Texas.
Capitalized terms used but not defined herein shall have the meanings given in the Lease.
The following rules and regulations shall apply, where applicable, to the Premises, the Building, the parking facilities (if
any), the Property and the appurtenances. In the event of a conflict between the following rules and regulations and the
remainder of the terms of the Lease, the remainder of the terms of the Lease shall control.
1. Sidewalks, doorways, vestibules, halls, stairways and other similar areas shall not be obstructed by Tenant or used by
Tenant for any purpose other than ingress and egress to and from the Premises. No rubbish, litter, trash, or material shall
be placed, emptied, or thrown in those areas. At no time shall Tenant permit Tenant’s employees to loiter in Common
Areas or elsewhere about the Building or Property.
2. Plumbing fixtures and appliances shall be used only for the purposes for which designed and no sweepings, rubbish, rags
or other unsuitable material shall be thrown or placed in the fixtures or appliances.
3. No signs, advertisements or notices shall be painted or affixed to windows, doors or other parts of the Building. No
decorations, posters, banners, decorative lights or other items shall be placed in or affixed to or painted on the windows
or adjacent to the windows in a location visible from the exterior of the Premises. All tenant identification and suite
numbers at the entrance to the Premises shall be installed by Landlord, at Tenant’s cost, using the standard graphics for
the Building. Except in connection with the hanging of lightweight pictures and wall decorations, no nails, hooks or
screws shall be inserted into any part of the Premises or Building except by the Building maintenance personnel without
Landlord’s prior approval, which approval shall not be unreasonably withheld.
4. Landlord may, at its option, provide and maintain in the first floor (main lobby) of the Building an alphabetical directory board
or other directory device listing tenants and no other directory shall be permitted to be installed.
5. Tenant shall not place any lock(s) on any door in the Premises or Building without Landlord’s prior written consent, which
consent shall not be unreasonably withheld, and Landlord shall have the right at all times to retain and use keys, key
cards or other access codes or devices (as applicable, “Keys”) to all locks within and into the Premises. A reasonable
number of Keys to the locks on the entry doors in the Premises shall be furnished by Landlord to Tenant at Tenant’s cost
and Tenant shall not make any duplicate Keys. All Keys shall be returned to Landlord at the expiration or early
termination of the Lease.
6. All contractors, contractor’s representatives, vendors and installation technicians performing work in the Building shall be
subject to Landlord’s prior approval, which approval shall not be unreasonably withheld, and shall be required to comply
with Landlord’s standard rules, regulations, policies and procedures, which may be revised from time to time (including,
without limitation, Landlord’s rules regarding the days and times when such parties may enter the Building and perform
work).
EXHIBIT E
1
7. Movement in or out of the Building of furniture or office equipment, or dispatch or receipt by Tenant of merchandise or
materials requiring the use of elevators, stairways, lobby areas or loading dock areas, shall be performed in compliance
with applicable Laws (including by persons holding all necessary licenses) and in a manner and restricted to hours
reasonably designated by Landlord. Tenant shall obtain Landlord’s prior approval, a reasonable number of days in
advance, by providing a detailed listing of the activity, including the names of any contractors, vendors or delivery
companies, which approval shall not be unreasonably withheld. Tenant shall assume all risk for damage, injury or loss in
connection with the activity.
8. Tenant shall not overload the floors of the Premises beyond their designed weight bearing capacity. Landlord shall have the
right to approve the weight, size, or location of heavy equipment or articles in and about the Premises, which approval
shall not be unreasonably withheld; provided that approval by Landlord shall not relieve Tenant from liability for any
damage in connection with such heavy equipment or articles.
9. Doors from the Premises into corridors, when not in use, shall be kept closed.
10. Tenant shall not: (a) make or permit any improper, objectionable or unpleasant noises, vibrations or odors in the Building,
or otherwise interfere in any way with other tenants or persons having business with them; (b) solicit business or
distribute or cause to be distributed, in any portion of the Building, handbills, promotional materials or other advertising;
or (c) conduct or permit other activities in the Building that might, in Landlord’s sole opinion, constitute a nuisance.
11. No animals, except those assisting handicapped persons, shall be brought into the Building or kept in or about the
Premises.
12. No inflammable, explosive or dangerous fluids or substances shall be used or kept by Tenant in the Premises, Building or
about the Property, except for those substances as are typically found in similar premises used for general office
purposes and are being used by Tenant in a safe manner and in accordance with all applicable Laws. Tenant shall not,
without Landlord’s prior written consent, use, store, install, spill, remove, release or dispose of, within or about the
Premises or any other portion of the Property, any asbestos-containing materials or any solid, liquid or gaseous material
now or subsequently considered toxic or hazardous under the provisions of 42 U.S.C. Section 9601 et seq. or any other
applicable environmental Law which may now or later be in effect. Tenant shall comply with all Laws pertaining to and
governing the use of these materials by Tenant and shall remain solely liable for the costs of abatement and removal.
13. Tenant shall not use or occupy the Premises in any manner or for any purpose which might injure the reputation or impair
the present or future value of the Premises or the Building. Tenant shall not use, or permit any part of the Premises to be
used for lodging, sleeping or for any illegal purpose. Tenant shall not permit any alcohol to be stored, served or
consumed at the Premises, other than on an incidental basis for the occasional use of its employees and guests and
then only if Tenant obtains the host liquor liability endorsement specified in Section 14 of the Lease. Tenant shall not
allow any cooking at the Premises without Landlord’s prior written consent, except heating up food in a microwave.
Tenant shall not use the Premises for photographic, multilith or multigraph reproductions, an employment bureau, a labor
union office, a medical or dental office or other service oriented office use or an educational facility, except to the extent
expressly permitted in the Permitted Use set forth in Section 1.11 of the Lease.
14. Tenant shall not take any action which would cause a work stoppage, picketing, labor disruption or dispute, or interfere
with Landlord’s or any other tenant’s or occupant’s business or with the rights and privileges of any person lawfully in the
Building (“Labor Disruption”). Tenant shall promptly, and in all events within 24 hours after the start of
EXHIBIT E
2
the Labor Disruption, take the actions necessary to resolve the Labor Disruption, and shall have pickets removed and, at
the request of Landlord, immediately terminate any work, or the provision of any service, in the Premises that gave rise
to the Labor Disruption, until Landlord gives its written consent for the work or service to resume. If Tenant fails to resolve
the Labor Disruption within 24 hours after the start of such Labor Disruption, such failure shall be deemed a Default
without any further notice required from Landlord and Landlord may, in addition to all other rights and remedies arising
from the Default, refuse entry to the Building, including the Premises, by any contractors or others working at the
Premises on behalf of Tenant. Tenant shall have no claim for damages against Landlord, any of the Landlord Related
Parties or any Mortgagee, nor shall the Commencement Date be extended as a result of the above actions.
15. Tenant shall not install, operate or maintain in the Premises or in any other area of the Building, electrical equipment that
would overload the electrical system beyond its capacity for proper, efficient and safe operation as determined solely by
Landlord. Tenant shall not furnish cooling or heating to the Premises, including, without limitation, the use of electric or
gas heating devices, without Landlord’s prior written consent. Tenant shall not use more than its proportionate share of
any telecommunication facilities available to service the Building.
16. Tenant shall not operate or permit to be operated a coin or token operated vending machine or similar device (including,
without limitation, telephones, lockers, toilets, scales, amusement devices and machines for sale of beverages, foods,
candy, cigarettes and other goods), except for food and beverage machines for the exclusive use of Tenant’s employees
and invitees.
17. Bicycles and other vehicles are not permitted inside the Building or on the walkways outside the Building, except in areas,
if any, designated by Landlord.
18. Landlord may from time to time adopt systems and procedures for the security and safety of the Building and Property, its
occupants, entry, use and contents. Tenant, its agents, employees, contractors, guests and invitees shall comply with
Landlord’s systems and procedures.
19. Neither Tenant nor its agents, employees, contractors, guests or invitees shall smoke or permit smoking in the Building or
the Common Areas, unless a portion of the Common Areas have been declared a designated smoking area by Landlord,
nor shall the above parties allow smoke from the Premises to emanate into the Common Areas or any other part of the
Building. Landlord shall have the right to designate the Building (including the Premises) as a non-smoking building.
20. Landlord shall have the right to designate and approve standard window coverings for the Premises and to establish rules
to assure that the Building presents a uniform exterior appearance. Tenant shall ensure, to the extent reasonably
practicable, that window coverings are closed on windows in the Premises while they are exposed to the direct rays of
the sun.
21. Deliveries to and from the Premises shall be made only at the times, in the areas and through the entrances and exits
reasonably designated by Landlord. Tenant shall not make deliveries to or from the Premises in a manner that might
interfere with the use by any other tenant of its premises or of the Common Areas, any pedestrian use, or any use which
is inconsistent with good business practice.
22. The work of cleaning personnel shall not be hindered by Tenant after 5:30 p.m., and cleaning work may be done at any
time when the offices are vacant. Windows, doors and fixtures may be cleaned at any time. Tenant shall provide
adequate waste and rubbish receptacles to prevent unreasonable hardship to the cleaning service.
EXHIBIT E
3
EXHIBIT F
ADDITIONAL PROVISIONS
This Exhibit is attached to and made a part of the Office Lease Agreement (the “Lease”) by and between EQC CAPITOL
TOWER PROPERTY LLC, a Delaware limited liability company (“Landlord”) and CROWDSTRIKE, INC., a Delaware
corporation (“Tenant”) for space in the Building (as defined in the Lease) located at 206 East 9th Street, Austin, Texas.
Capitalized terms used but not defined herein shall have the meanings given in the Lease.
I.
RENEWAL OPTION.
A.
Grant of Option; Conditions. Tenant shall have the right to extend the Term (the "Renewal Option") for one
additional period of five (5) years commencing on the day following the Termination Date of the initial Term and ending on the
fifth (5th) anniversary of the Termination Date (the "Renewal Term"), if:
1.
Landlord receives notice of exercise ("Initial Renewal Notice") not less than 12 full calendar months prior
to the expiration of the initial Term and not more than 15 full calendar months prior to the expiration of the initial Term;
and
2.
No Material Default exists at the time that Tenant delivers its Initial Renewal Notice or at the time Tenant
delivers its Binding Notice (as defined below). unless Landlord, in its sole and absolute discretion, otherwise agrees in
writing; and
No part of the Premises is sublet (other than pursuant to a Permitted Transfer, as defined in Article 11 of
the Lease) at the time that Tenant delivers its Initial Renewal Notice or at the time Tenant delivers its Binding Notice; and
3.
4.
The Lease has not been assigned (other than pursuant to a Permitted Transfer, as defined in Article 11 of
the Lease) prior to the date that Tenant delivers its Initial Renewal Notice or prior to the date Tenant delivers its Binding
Notice; and
5.
The Lease is in full force and effect at the time that Tenant delivers its Initial Renewal Notice and at the
time Tenant delivers its Binding Notice.
B.
Terms Applicable to Premises During Renewal Term.
1.
The initial Base Rent rate per rentable square foot for the Premises during the Renewal Term shall equal
the Prevailing Market (hereinafter defined) rate per rentable square foot for the Premises. Base Rent during the Renewal
Term shall increase, if at all, in accordance with the increases assumed in the determination of Prevailing Market rate.
Base Rent attributable to the Premises shall be payable in monthly installments in accordance with the terms and
conditions of Article 4 of the Lease.
2.
Tenant shall pay Additional Rent (i.e., Expense Rent and Tax Rent) for the Premises during the Renewal
Term in accordance with Article 4 and Exhibit B of the Lease, and the manner and method in which Tenant reimburses
Landlord for Tenant's share of Taxes and Expenses and the base year, if any, applicable to such matter, shall be some of
the factors considered in determining the Prevailing Market rate for the Renewal Term.
3.
The Renewal Term shall otherwise be upon the same terms, covenants, conditions, provisions and
agreements contained in the Lease, except as expressly set forth in the Lease.
EXHIBIT F
1
C.
Procedure for Determining Prevailing Market. Within 30 days after receipt of Tenant's Initial Renewal Notice,
Landlord shall advise Tenant in writing of the applicable Base Rent rate for the Premises for the Renewal Term. Tenant, within
30 days after the date on which Landlord advises Tenant of the Base Rent rate for the Renewal Term, shall either (i) give
Landlord final binding written notice ("Binding Notice") of Tenant's exercise of its Renewal Option, or (ii) if Tenant disagrees
with Landlord's determination, provide Landlord with written notice of rejection (the "Rejection Notice"). If Tenant fails to provide
Landlord with either a Binding Notice or Rejection Notice within such 30-day period, Tenant's Renewal Option shall be null and
void and of no further force and effect. If Tenant provides Landlord with a Binding Notice within such 30-day period, Landlord
and Tenant shall enter into the Renewal Amendment (as defined below) upon the terms and conditions set forth herein. If Tenant
provides Landlord with a Rejection Notice, Landlord and Tenant shall work together in good faith for a period of 15 days to agree
upon the Prevailing Market rate for the Premises for the Renewal Term. Upon agreement Tenant shall provide Landlord with
Binding Notice and Landlord and Tenant shall enter into the Renewal Amendment in accordance with the terms and conditions
hereof.
If Landlord and Tenant fail to agree upon the Prevailing Market rate within such 15-day period, Tenant, by written notice to
Landlord in writing (the "Broker Notice") within 5 days after the expiration of such 15-day period, shall have the right to have the
Prevailing Market rate determined in accordance with the following procedures. Upon Tenant’s delivering the Broker Notice to
Landlord, Tenant shall be deemed to have irrevocably exercised the Renewal Option. If Tenant fails to timely deliver the notice to
Landlord, Tenant's Renewal Option shall be deemed to be null and void and of no further force and effect. If Tenant provides
Landlord with a Broker Notice, Landlord and Tenant, within 10 days after the date of the Broker Notice, shall each
simultaneously submit to the other, in a sealed envelope, its good faith estimate of the Prevailing Market rate (collectively
referred to as the "Estimates"). If the higher Estimate is less than or equal to 103% of the lower Estimate, the Prevailing Market
rate shall be the average of the Estimates.
If the Prevailing Market rate is not resolved by the exchange of Estimates, Landlord and Tenant, within 7 days after the
exchange of Estimates, shall each select a real estate broker to determine which of the two Estimates more closely reflects the
Prevailing Market rate. Each real estate broker selected by either Landlord or Tenant shall be a broker licensed in Austin, Texas,
with at least 10 years continuous experience in the commercial leasing market in Austin, Texas, and shall have a working
knowledge of current rental rates and practices for commercial office properties in the Austin, Texas Central Business District.
Upon selection, Landlord's and Tenant's real estate brokers shall work together in good faith to agree upon which of the two
Estimates more closely reflects the Prevailing Market rate for the Premises for the Renewal Term. The Estimate chosen by such
real estate brokers shall be binding on both Landlord and Tenant as the Prevailing Market rate for the Premises during the
Renewal Term. If either Landlord or Tenant fails to appoint a real estate broker within the 7-day period referred to above, the real
estate broker appointed by the other party shall be the sole real estate broker for the purposes hereof and shall determine which
Estimate more closely reflects the Prevailing Market rate for the Premises. If the two real estate brokers cannot agree upon
which of the two Estimates more closely reflects the Prevailing Market rate within the 15 days after their appointment, then,
within 10 days after the expiration of such 15-day period, the two real estate brokers shall select a third real estate broker
meeting the aforementioned criteria. Once the third real estate broker has been selected as provided for above, then, as soon
thereafter as practicable, but in any case within 14 days, the third real estate broker shall make his or her determination of which
of the two Estimates more closely reflects the Prevailing Market rate and such Estimate shall be binding on both Landlord and
Tenant as the Prevailing Market rate for the Premises during the Renewal Term. The parties shall share equally in the costs of
the third real estate broker. Any fees of any real estate broker, counsel or experts engaged directly by Landlord or Tenant,
however, shall be borne by the party retaining such real estate broker, counsel or expert.
In the event that the Prevailing Market rate has not been determined by the commencement date of the Renewal Term, Tenant
shall pay Base Rent upon the terms and conditions in effect
EXHIBIT F
2
for the Premises during the final month of the initial Term until such time as the Prevailing Market rate has been determined.
Upon such determination, the Base Rent for the Premises shall be retroactively adjusted to the commencement of the Renewal
Term for the Premises. If such adjustment results in an underpayment of Base Rent by Tenant, Tenant shall pay Landlord the
amount of such underpayment within 30 days after the determination thereof. If such adjustment results in an overpayment of
Base Rent by Tenant, Landlord shall credit such overpayment against the next installment of Base Rent due under the Lease
and, to the extent necessary, any subsequent installments until the entire amount of such overpayment has been credited
against Base Rent.
D.
Renewal Amendment. If Tenant is entitled to and properly exercises its Renewal Option, Landlord shall prepare
an amendment (the "Renewal Amendment") to reflect changes in the Base Rent, Term, Termination Date and other appropriate
terms. The Renewal Amendment shall be sent to Tenant within a reasonable time after receipt of the Binding Notice and Tenant
shall execute and return the Renewal Amendment to Landlord within 15 days after Tenant's receipt of same, but, upon final
determination of the Prevailing Market rate applicable during the Renewal Term as described herein, an otherwise valid exercise
of the Renewal Option shall be fully effective whether or not the Renewal Amendment is executed.
E.
Definition of Prevailing Market. For purposes of this Renewal Option, "Prevailing Market" shall mean the arms
length fair market annual rental rate per rentable square foot under renewal leases and amendments entered into on or about
the date on which the Prevailing Market is being determined hereunder for space comparable to the Premises in the Building
and in office buildings comparable to the Building in the Central Business District of Austin, Texas. The determination of
Prevailing Market shall take into account any material economic differences between the terms of the Lease and any
comparison lease or amendment, such as rent abatements, construction costs and other concessions and the manner, if any, in
which the landlord under any such lease is reimbursed for operating expenses and taxes (including, without limitation, the base
year, if any). The determination of Prevailing Market shall also take into consideration any reasonably anticipated changes in the
Prevailing Market rate from the time such Prevailing Market rate is being determined and the time such Prevailing Market rate
will become effective under the Lease. Tenant acknowledges and agrees that Landlord shall have no obligation to provide
Tenant with a construction allowance, rent abatement or any other concessions for the Renewal Term, provided that the
Prevailing Market rate shall take into account the concessions (if any) that Landlord elects (in its sole discretion) to grant to
Tenant.
F.
Subordination. Notwithstanding anything herein to the contrary, Tenant's Renewal Option is subject and
subordinate to the expansion rights (whether such rights are designated as a right of first offer, right of first refusal, expansion
option or otherwise) of any tenant of the Building that is existing on the date hereof and has been disclosed to Tenant prior to
Lease execution.
II.
RIGHT OF FIRST OFFER. Landlord hereby grants to Tenant the one time right to lease (the “Right of First Offer”),
upon the terms and conditions hereinafter set forth, but subject to the existing rights of any current tenants of the Building and
subject to Landlord’s right to renew or extend the term of the lease of the then-current tenant or occupant of the Offer Space
(hereinafter defined), such portion of the 15th floor of the Building containing approximately 25,804 square feet of rentable area
and such portion of the 17th floor of the Building containing approximately 13,165 square feet of rentable area, both as depicted
on Exhibit A-1 attached hereto (the “Offer Space”) which become available for leasing (as determined in accordance with
paragraph (a) below) during the Offer Period (hereinafter defined), prior to entering into a lease for such space with another
party.
A.
A portion of the Offer Space shall be deemed to be “available for leasing” when Landlord is prepared to offer to
lease such space to parties other than to the then-current tenant
EXHIBIT F
3
or occupant of such Offer Space and other than to current tenants of the Building with existing rights to lease such space that
have been disclosed to Tenant prior to Lease execution.
B.
Prior to Landlord’s entering into a lease for any portion of the Offer Space which is available for leasing during the
Offer Period, Landlord shall give Tenant a written notice (the “Offer Notice”) setting forth (i) the location, (ii) the rentable area,
(iii) the rental rate, which shall be the fair market rental rate, as reasonably determined by Landlord, under similar new leases for
similar space in like office buildings in the Austin, Texas Central Business District, in then "as-is" condition (iv) all other material
economic terms; (v) the target delivery date (the “Offer Space Target Delivery Date”) and (vi) the commencement date (the
“Offer Space Commencement Date”)
C.
Tenant’s right to lease a portion of the Offer Space shall be exercisable by written notice (the “ROFO Exercise
Notice”) from Tenant to Landlord delivered not later than ten (10) days after the Offer Notice is delivered to Tenant, time being of
the essence. Tenant may not elect to lease less than the entire portion of the Offer Space described in an Offer Notice. If Tenant
does not exercise such right to lease such portion of the Offer Space, then Landlord shall have the right thereafter to lease such
space to another prospective tenant without offering such space to Tenant. If Tenant has validly exercised the Right of First Offer
to lease such Offer Space, then such Offer Space shall be included in the Premises, subject to all the agreements, terms and
conditions of this Lease, as modified by the terms set forth in the applicable Offer Notice.
D.
Tenant’s right to lease Offer Space is subject to the following additional terms and conditions:
1.
This Lease must be in full force and effect on the date on which Tenant delivers the ROFO Exercise
Notice to Landlord and on the applicable Offer Space Commencement Date;
2.
Tenant must not be in Material Default under this Lease either on the date Tenant delivers the ROFO
Exercise Notice to Landlord or on the applicable Offer Space Commencement Date, unless Landlord, in its sole and
absolute discretion, agrees in writing to permit Tenant to lease such Offer Space notwithstanding such Default; and
Tenant shall not have assigned this Lease and shall not have sublet any portion of the Premises, except
to a Permitted Transferee, and CrowdStrike, Inc. or its Permitted Transferee shall then be occupying the entire Premises.
3.
E.
If Tenant has validly exercised the Right of First Offer, then effective as of the applicable Offer Space
Commencement Date, such portion of the Offer Space shall be included in the Premises, subject to all of the terms, conditions
and provisions of this Lease except that:
1.
Base Rent per square foot of rentable area for such portion of the Offer Space shall be the rate (including
escalations) specified in the applicable Offer Notice;
2.
The rentable area in the Premises shall be increased by the number of square feet of rentable area in
such portion of the Offer Space and such rentable area in the Premises, as so increased, shall be used in calculating the
increases in Tenant’s Pro Rata Share;
3.
The Term with respect to the Offer Space shall commence on the applicable Offer Space Commencement
Date and shall expire simultaneously with the expiration or earlier termination of the Term, including any extension or
renewal thereof; provided, however, if the Offer Space Commencement Date with respect to any applicable Offer Space
is less than sixty (60) months prior to the last day of the Term, then (a) the Term with respect to such Offer Space shall
be sixty (60) full calendar months or such longer period as to which Landlord and Tenant agree in writing, and (b)
EXHIBIT F
4
the Term with respect to the remainder of the then-current Premises shall be extended to be coterminous with the Term
with respect to such Offer Space; and
4.
The Offer Space shall be rented in its “as is” condition as of the Offer Space Commencement Date,
without representation or warranty by Landlord or any other party acting on behalf of Landlord, except as may be
expressly set forth in the applicable Offer Notice.
F.
Landlord shall endeavor to deliver possession of the Offer Space to Tenant on the applicable Offer Space Target
Delivery Date. Tenant’s possession of Offer Space prior to the applicable Offer Space Commencement Date shall be subject to
all of the terms and conditions of this Lease, except that Base Rent and Additional Rent shall not commence to accrue with
respect to such Offer Space until the applicable Offer Space Commencement Date. If Landlord fails to deliver possession on the
applicable Offer Space Target Delivery Date of the portion of the Offer Space which Tenant has exercised the Right of First Offer
because of any act or occurrence beyond the reasonable control of Landlord, including, without limitation, the holding over of
any tenants or occupants beyond the expiration of their lease terms, then Landlord shall not be subject to any liability for failure
to deliver possession, and such failure to deliver possession shall not affect either the validity of this Lease or the obligations of
either Landlord or Tenant hereunder or be construed to extend the expiration of the Term either as to such portion of the Offer
Space or the balance of the Premises; provided, however, that under such circumstances, (i) Landlord shall make reasonable
efforts to obtain possession of such portion of the Offer Space, and (ii) the Offer Space Commencement Date shall not occur,
and Base Rent and Additional Rent shall not commence, as to such portion of the Offer Space until two (2) days after Landlord
has delivered possession thereof to Tenant.
G.
Upon the valid exercise by Tenant of the Right of First Offer, Landlord and Tenant shall promptly enter into a
written amendment to this Lease reflecting the terms, conditions and provisions applicable to such portion of the Offer Space, as
determined in according herewith.
H.
If any portion of the Offer Space is leased to Tenant other than pursuant to the Right of First Offer, such portion of
the Offer Space shall thereupon be deleted from the Offer Space.
I.
As used herein, the term “Offer Period” shall mean the period commencing on the date of this Lease and
expiring on the original Termination Date of this Lease.
RIGHT OF FIRST REFUSAL. Landlord hereby grants to Tenant the one time right to lease (the “Right of First
III.
Refusal”), upon the terms and conditions hereinafter set forth, but subject to the existing rights of any current tenants of the
Building and subject to Landlord’s right to renew or extend the term of the lease of the then-current tenant or occupant of the
ROFR Space (hereinafter defined), such portion of the 17th floor of the Building containing approximately 10,580 square feet of
rentable area, as depicted on Exhibit A-2 attached hereto (the “ROFR Space”) which become available for leasing (as
determined in accordance with paragraph (a) below) during the Term originally described in this Lease, prior to entering into a
lease for such space with another party.
A.
A portion of the ROFR Space shall be deemed to be “available for leasing” when Landlord is prepared to accept
an offer (an “Acceptable Offer”) to lease such space from another party, other than the then-current tenant or occupant of such
ROFR Space and other than a current tenant of the Building with existing right to lease such space.
B.
Prior to Landlord’s entering into a lease for any portion of the ROFR Space which is available for leasing during
the Term originally described in this Lease, Landlord shall notify Tenant in writing of the material terms of the applicable
Acceptable Offer (the “ROFR Availability Notice”) and setting forth (i) the location, (ii) the rentable area, (iii) the rental rate;
(iv) all other material economic terms; (v) the target delivery date (the “ROFR Space Target
EXHIBIT F
5
Delivery Date”), (vi) the commencement date (the “ROFR Space Commencement Date”), and (vii) the termination date (the
"ROFR Space Termination Date").
C.
Tenant’s right to lease a portion of the ROFR Space shall be exercisable by written notice (the “ROFR
Acceptance Notice”) from Tenant to Landlord delivered not later than seven (7) business days after the ROFR Availability
Notice is delivered to Tenant, time being of the essence. Tenant may not elect to lease less than the entire portion of the ROFR
Space described in a ROFR Notice. If Tenant does not exercise such right to lease such portion of the ROFR Space, then
Landlord shall have the right thereafter to lease such space to another prospective tenant without offering such space to Tenant.
If Tenant has validly exercised the Right of First Refusal, then such ROFR Space shall be included in the Premises, subject to all
the agreements, terms and conditions of this Lease, as modified by the terms set forth in the applicable ROFR Notice, as such
terms may be further modified as set forth below.
D.
Tenant’s right to lease ROFR Space is subject to the following additional terms and conditions:
1.
This Lease must be in full force and effect on the date on which Tenant delivers the ROFR Exercise
Notice to Landlord and on the applicable ROFR Space Commencement Date;
2.
Tenant must not be in Material Default under this Lease either on the date Tenant delivers the ROFR
Exercise Notice to Landlord or on the applicable ROFR Space Commencement Date, unless Landlord, in its sole and
absolute discretion, agrees in writing to permit Tenant to lease such ROFR Space notwithstanding such Default; and
3.
Tenant shall not have assigned this Lease and shall not have sublet any portion of the Premises except to
a Permitted Transferee and CrowdStrike, Inc. or its Permitted Transferee shall be occupying the entire Premises.
E.
If Tenant has validly exercised the Right of First Refusal, then effective as of the applicable ROFR Space
Commencement Date, such portion of the ROFR Space shall be included in the Premises, subject to all of the terms, conditions
and provisions of this Lease except that:
1.
Base Rent per square foot of rentable area for such portion of the ROFR Space shall be the rate
(including escalations) specified in the applicable ROFR Availability Notice;
2.
The rentable area in the Premises shall be increased by the number of square feet of rentable area in
such portion of the ROFR Space and such rentable area in the Premises, as so increased, shall be used in calculating
the increases in Tenant’s Pro Rata Share;
3.
The Term with respect to the ROFR Space shall commence on the applicable ROFR Space
Commencement Date. If Landlord delivers the ROFR Availability Notice within six (6) months after the date on which
Landlord delivers possession of the Premises to Tenant, the Term with respect to the ROFR Space shall expire
simultaneously with the expiration or earlier termination of the Term, including any extension or renewal thereof. If
Landlord delivers the ROFR Availability Notice more than six (6) months after the date on which Landlord delivers
possession of the Premises to Tenant, the Term with respect to the ROFR Space shall expire upon the later of (a) the
ROFR Space Termination Date, or (b) the expiration of the Term; provided, if there is an earlier termination of the Term
than the expiration date of the Term, the Term with respect to the ROFR Space also shall terminate upon such earlier
termination; and
4.
The ROFR Space shall be rented in its “as is” condition as of the ROFR Space Commencement Date,
without representation or warranty by Landlord or any
EXHIBIT F
6
other party acting on behalf of Landlord, except as may be expressly set forth in the applicable ROFR Availability Notice.
Notwithstanding the foregoing, if the Term of the Lease of the ROFR Space is not the same duration as the lease term set forth
in the applicable Acceptable Offer, the material economic terms of Tenant’s lease of such ROFR Space shall be equitably
adjusted by Landlord to reflect such different duration.
F.
Landlord shall endeavor to deliver possession of the ROFR Space to Tenant on the applicable ROFR Space
Target Delivery Date. Tenant’s possession of ROFR Space prior to the applicable ROFR Space Commencement Date shall be
subject to all of the terms and conditions of this Lease, except that Base Rent and Additional Rent shall not commence to accrue
with respect to such ROFR Space until the applicable ROFR Space Commencement Date. If Landlord fails to deliver
possession on the applicable ROFR Space Target Delivery Date of the portion of the ROFR Space which Tenant has exercised
the Right of First Refusal because of any act or occurrence beyond the reasonable control of Landlord, including, without
limitation, the holding over of any tenants or occupants beyond the expiration of their lease terms, then Landlord shall not be
subject to any liability for failure to deliver possession, and such failure to deliver possession shall not affect either the validity of
this Lease or the obligations of either Landlord or Tenant hereunder or be construed to extend the expiration of the Term either
as to such portion of the ROFR Space or the balance of the Premises; provided, however, that under such circumstances,
(i) Landlord shall make reasonable efforts to obtain possession of such portion of the ROFR Space, and (ii) Base Rent and
Additional Rent shall not commence as to such portion of the ROFR Space until two (2) days after Landlord has delivered
possession thereof to Tenant.
G.
Upon the valid exercise by Tenant of the Right of First Refusal, Landlord and Tenant shall promptly enter into a
written amendment to this Lease reflecting the terms, conditions and provisions applicable to such portion of the ROFR Space,
as determined in according herewith.
H.
If any portion of the ROFR Space is leased to Tenant other than pursuant to the Right of First Refusal, such
portion of the ROFR Space shall thereupon be deleted from the ROFR Space.
IV.
LETTER OF CREDIT. The Security Deposit required pursuant to Section 6 of the Lease shall be in the form of negotiable
standby letter of credit (the “Letter of Credit”), which Letter of Credit shall be delivered to Landlord upon the execution of this
Lease by Tenant and shall: (a) be in the amount of $800,000.00, (b) be issued on the form attached hereto as Exhibit F-1 or
another form meeting the requirements set forth herein and otherwise acceptable to Landlord, (c) name Landlord as its
beneficiary, (d) be drawn on Silicon Valley Bank or another FDIC insured financial institution satisfactory to the Landlord (the
“Issuing Bank”), (e) be able to be drawn upon in Chicago, Illinois, (f) be “callable” at sight, unconditional and irrevocable, (g) be
fully assignable, without a fee (or with a fee that shall be payable by Tenant), by Landlord and its successors and assigns, (h)
permit partial draws and multiple presentations. If permitted by applicable Law, the Letter of Credit shall be an “evergreen” letter
of credit, which shall be for a term of not less than 1 year, and which provides that the same shall be automatically renewed for
successive 1 year periods through a date which is not earlier than 60 days after the Termination Date of this Lease, as such date
is renewed or extended (the “LOC Expiration Date”). In the event an “evergreen” letter of credit is not permitted by applicable
Law or a letter of credit cannot be obtained through the LOC Expiration Date, the Letter of Credit (and any renewals or
replacements thereof) shall be for a term of not less than 1 year, and Tenant agrees that it shall from time to time, as necessary,
as a result of the expiration of the Letter of Credit then in effect, renew or replace the original and any subsequent Letter of
Credit so that a Letter of Credit, in the amount required hereunder and meeting the requirements set forth herein, is in effect until
a date which is at least 60 days after the LOC Expiration Date. If the LOC Expiration Date is after the stated expiration date of
the Letter of Credit then held by Landlord and either the Issuing Bank does not renew the Letter of Credit at least 60 days prior
to the stated
EXHIBIT F
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expiration date of such Letter of Credit or Tenant fails to furnish to Landlord such renewal or replacement at least 60 days prior
to the stated expiration date of such Letter of Credit, then Landlord, or its managing agent, may draw upon such Letter of Credit
and hold the proceeds thereof (and such proceeds need not be segregated) as a Security Deposit pursuant to the terms of
Section 6 of the Lease. In addition, Landlord, or its then managing agent, shall have the right to draw down an amount up to the
face amount of the Letter of Credit if any of the following shall have occurred or are applicable: (1) such amount is due to
Landlord under the terms and conditions of this Lease and remains unpaid after the expiration of any applicable notice and cure
period, or (2) Tenant has filed a voluntary petition under the U. S. Bankruptcy Code or any state bankruptcy code (collectively,
“Bankruptcy Code”), or (3) an involuntary petition has been filed against Tenant under the Bankruptcy Code, or (4) the long
term rating of the Issuing Bank has been downgraded to BBB or lower (by Standard & Poor’s) or Baa2 or lower (by Moody’s)
and Tenant has failed to deliver a new Letter of Credit from a bank with a long term rating of A or higher (by Standard & Poor’s)
or A2 or higher (by Moody’s) and otherwise meeting the requirements set forth in this Section within ten (10) Business Days
following notice from Landlord. The Letter of Credit will be honored by the Issuing Bank regardless of whether Tenant disputes
Landlord’s right to draw upon the Letter of Credit. Any renewal or replacement of the original or any subsequent Letter of Credit
shall meet the requirements for the original Letter of Credit as set forth above, except that such replacement or renewal shall be
issued by an FDIC insured financial institution satisfactory to the Landlord at the time of the issuance thereof.
If Landlord draws on the Letter of Credit as permitted in this Lease or by the Letter of Credit, then, within ten (10) Business Days
after receipt of Landlord’s written demand, Tenant shall restore the amount available under the Letter of Credit to its original
amount by providing Landlord with an amendment to the Letter of Credit evidencing that the amount available under the Letter
of Credit has been restored to its original amount and Tenant’s failure to do so shall constitute an incurable Default. In the
alternative, Tenant may provide Landlord with cash, to be held by Landlord in accordance with Section 6 of the Lease, equal to
the restoration amount required under the Letter of Credit. If Landlord desires to assign the Letter of Credit, Tenant shall execute
and deliver to the Issuing Bank and documents required to effectuate such transfer and pay any transfer and processing fees.
The use, application or retention of the Letter of Credit, or any portion thereof, by Landlord shall not prevent Landlord from
exercising any other right or remedy provided by this Lease or by any applicable Law, it being intended that Landlord shall not
first be required to proceed against the Letter of Credit, and it shall not operate as a limitation on any recovery to which Landlord
may otherwise be entitled. Tenant agrees not to interfere in any way with payment to Landlord of the proceeds of the Letter of
Credit. No condition or term of this Lease shall be deemed to render the Letter of Credit conditional to justify the Issuing Bank in
failing to honor a drawing upon such Letter of Credit in a timely manner. Tenant agrees and acknowledges that (a) the Letter of
Credit constitutes a separate and independent contract between Landlord and the Issuing Bank, (b) Tenant is not a third party
beneficiary of such contract, (c) Tenant has no property interest whatsoever in the Letter of Credit or the proceeds thereof, and
(d) in the event Tenant becomes a debtor under any chapter of the Bankruptcy Code, neither Tenant, any trustee, nor Tenant’s
bankruptcy estate shall have any right to restrict or limit Landlord’s claim and/or rights to the Letter of Credit and/or the proceeds
thereof by application of Section 502(b)(6) of the U. S. Bankruptcy Code or otherwise.
Notwithstanding any provision of this Lease to the contrary, provided that a Material Default does not exist under any of the
terms and conditions of this Lease and no more than 3 Monetary Defaults have occurred during the Term prior to the applicable
Reduction Date, the balance of the Letter of Credit shall be reduced to (i) $650,000.00 on the third (3rd) anniversary of the
Commencement Date, (ii) $500,000.00 on the fourth (4th) anniversary of the Commencement Date, and (iii) $350,000.00 on the
fifth (5th) anniversary of the Commencement Date (each a “Reduction Date”). On or before each Reduction Date, Tenant shall
send Landlord a notice requesting Landlord to reduce the Security Deposit. Provided the conditions set forth above are satisfied,
Landlord shall consent in writing to, and, at no cost to Landlord (A) accept from the
EXHIBIT F
8
Issuing Bank, an amendment to the Letter of Credit or a substitute Letter of Credit in the form annexed hereto as Exhibit F-1 or
another form meeting the requirements set forth herein and otherwise acceptable to Landlord, which reduces the Letter of Credit
as provided herein but which does not otherwise amend or modify same, and (B) if requested by the Issuing Bank, execute and
deliver to the Issuing Bank such instruments reasonably required by the Issuing Bank to effectuate such reduction.
EXHIBIT F
9
EXHIBIT F-1
FORM LETTER OF CREDIT
[LETTERHEAD OF ISSUER OF LETTER OF CREDIT]
____________________ (MONTH, DAY, YEAR)
REF: IRREVOCABLE LETTER OF CREDIT NO. _____________
EXPIRATION DATE: ______________ [NOTE TO ISSUER: INSERT DATE THAT IS 3 YEARS FROM THE ISSUANCE DATE.]
GENTLEMEN:
WE HEREBY OPEN OUR UNCONDITIONAL IRREVOCABLE CLEAN LETTER OF CREDIT NO. __________ IN YOUR
FAVOR AVAILABLE BY YOUR DRAFT(S) AT SIGHT FOR AN AMOUNT NOT TO EXCEED IN THE AGGREGATE
($800,000.00) EFFECTIVE IMMEDIATELY.
ALL DRAFTS SO DRAWN MUST BE MARKED “DRAWN UNDER IRREVOCABLE LETTER OF CREDIT OF [ISSUING BANK],
NO. __________, DATED _______________, 20__.”
THIS LETTER OF CREDIT IS ISSUED, PRESENTABLE AND PAYABLE AT OUR OFFICE AT _________________________,
OR SUCH OTHER OFFICE IN CHICAGO, ILLINOIS AS WE MAY DESIGNATE BY WRITTEN NOTICE TO YOU, AND
EXPIRES WITH OUR CLOSE OF BUSINESS ON ____________________. IT IS A CONDITION OF THIS LETTER OF
CREDIT THAT IT SHALL BE AUTOMATICALLY EXTENDED FOR ADDITIONAL TWELVE MONTH PERIODS THROUGH
____________________ [NOTE: INSERT DATE WHICH IS 60 DAYS AFTER LEASE EXPIRATION], UNLESS WE INFORM
YOU IN WRITING BY REGISTERED MAIL OR BY OVERNIGHT MAIL DELIVERED BY A REPUTABLE NATIONAL COURIER
AT
_______________________________________
COPY
____________________________________) DISPATCHED BY US AT LEAST 60 DAYS PRIOR TO THE THEN EXPIRATION
DATE THAT THIS LETTER OF CREDIT SHALL NOT BE EXTENDED. IN THE EVENT THIS CREDIT IS NOT EXTENDED FOR
AN ADDITIONAL PERIOD AS PROVIDED ABOVE, YOU MAY DRAW HEREUNDER. SUCH DRAWING IS TO BE MADE BY
MEANS OF A DRAFT ON US AT SIGHT WHICH MUST BE PRESENTED TO US BEFORE THE THEN EXPIRATION DATE OF
THIS LETTER OF CREDIT. THIS LETTER OF CREDIT CANNOT BE MODIFIED OR REVOKED WITHOUT YOUR CONSENT.
THIS LETTER OF CREDIT IS PAYABLE IN MULTIPLE DRAFTS AND SHALL BE TRANSFERABLE BY YOU WITHOUT
ADDITIONAL CHARGE.
ADDRESS
ABOVE
(WITH
THE
TO
A
DRAWS MAY BE PRESENTED BY FACSIMILE TO FAX NUMBER _____________ UNDER TELEPHONE PRE-ADVICE TO
______________. FURTHER PRESENTATION OF THE ORIGINAL DRAFT AND THIS LETTER OF CREDIT IS NOT
REQUIRED.
IF DEMAND FOR PAYMENT IS PRESENTED BEFORE 11:00 A.M. CENTRAL TIME, PAYMENT SHALL BE MADE TO YOU OF
THE AMOUNT DEMANDED IN IMMEDIATELY AVAILABLE FUNDS NOT LATER THAN 4:00 P.M. CENTRAL TIME ON THE
FOLLOWING BUSINESS DAY. IF DEMAND FOR PAYMENT IS PRESENTED AFTER 11:00 A.M. CENTRAL TIME, PAYMENT
SHALL BE MADE TO YOU OF THE AMOUNT DEMANDED IN IMMEDIATELY AVAILABLE FUNDS NOT LATER THAN
4:00 P.M. CENTRAL TIME ON THE SECOND BUSINESS DAY.
EXHIBIT F
10
WE HEREBY DO UNDERTAKE TO PROMPTLY HONOR YOUR SIGHT DRAFT OR DRAFTS DRAWN ON US, INDICATING
OUR LETTER OF CREDIT NO. __________ FOR THE AMOUNT AVAILABLE TO BE DRAWN ON THIS LETTER OF CREDIT
UPON PRESENTATION OF YOUR SIGHT DRAFT IN THE FORM OF SCHEDULE A ATTACHED HERETO DRAWN ON US AT
OUR OFFICES SPECIFIED ABOVE DURING OUR USUAL BUSINESS HOURS ON OR BEFORE THE EXPIRATION DATE
HEREOF.
EXCEPT AS EXPRESSLY STATED HEREIN, THIS UNDERTAKING IS NOT SUBJECT TO ANY AGREEMENTS,
REQUIREMENTS OR QUALIFICATION. OUR OBLIGATION UNDER THIS LETTER OF CREDIT IS OUR INDIVIDUAL
OBLIGATION AND IS IN NO WAY CONTINGENT UPON REIMBURSEMENT WITH RESPECT THERETO OR UPON OUR
ABILITY TO PERFECT ANY LIEN, SECURITY INTEREST OR ANY OTHER REIMBURSEMENT.
EXCEPT SO FAR AS OTHERWISE EXPRESSLY STATED, THIS LETTER OF CREDIT IS SUBJECT TO INTERNATIONAL
STANDBY PRACTICES 1998, INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 590.
[ISSUER OF LETTER OF CREDIT]
EXHIBIT F
11
for value received
SCHEDULE A TO LETTER OF CREDIT
pay at sight by wire transfer in immediately available funds to _________________________ the sum of U.S. $__________
drawn under
issued by
_________________________.
credit no. __________, dated _______________, 20__,
irrevocable
letter of
to: [issuer of letter of credit]
____________________________
[CITY, STATE]
EXHIBIT F
12
EXHIBIT G
Intentionally Omitted
EXHIBIT G
1
EXHIBIT G-1
STATE SPECIFIC RIDER
This Exhibit is attached to and made a part of the Office Lease Agreement (the “Lease”) by and between EQC CAPITOL
TOWER PROPERTY LLC, a Delaware limited liability company (“Landlord”) and CROWDSTRIKE, INC., a Delaware
corporation (“Tenant”) for space in the Building (as defined in the Lease) located at 206 East 9th Street, Austin, Texas.
Capitalized terms used but not defined herein shall have the meanings given in the Lease.
.
1. GENERAL PROVISIONS.
1.01. Purpose. This Exhibit G-1 sets forth certain provisions particular to the state or commonwealth in which the
Property is located.
1.02. Prevailing Provisions. If there are any inconsistencies between the Lease and the provisions of this Exhibit G-1,
the provisions of this Exhibit G-1 shall prevail.
2. AMENDMENT AND SUPPLEMENTS. The following Articles and Sections of the Lease are amended and supplemented as
follows:
2.01. The following shall be added at the end of Section 4.01:
LANDLORD AND TENANT AGREE THAT EACH PROVISION OF THIS LEASE FOR DETERMINING CHARGES AND
AMOUNTS PAYABLE BY TENANT (INCLUDING PROVISIONS REGARDING ADDITIONAL RENT AND ANY OTHER
CHARGES PAYABLE BY TENANT UNDER THIS LEASE) IS COMMERCIALLY REASONABLE AND, AS TO EACH
SUCH CHARGE OR AMOUNT, CONSTITUTES A STATEMENT OF THE AMOUNT OF THE CHARGE OR A METHOD
BY WHICH THE CHARGE IS TO BE COMPUTED FOR PURPOSES OF SECTION 93.012 OF THE TEXAS
PROPERTY CODE. ACCORDINGLY, TENANT AND LANDLORD HEREBY VOLUNTARILY AND KNOWINGLY WAIVE
ALL RIGHTS AND BENEFITS TO WHICH THEY MAY RESPECTIVELY BE ENTITLED UNDER SECTION 93.012 OF
THE TEXAS PROPERTY CODE, AS SUCH SECTION NOW EXISTS OR AS SAME MAY BE HEREAFTER AMENDED
OR SUCCEEDED.
2.02. The following shall be added after Section 19.04:
19.05. The provisions and remedies set forth herein are intended to fully supersede the provisions of Texas Property
Code §93.002 in the event Landlord reenters and repossesses the Premises and evicts tenant by self-help means and
without judicial process. Landlord may, but shall not be required, to post a notice on the front door of the Premises after
reentering and repossessing the Premises informing Tenant where it may obtain a new key only after payment of the
delinquent rent, or other sum, or curing the Default which was the basis for Landlord’s reentry and repossession of the
Premises.
19.06. Tenant shall not claim a lien on the Rent owed to Landlord by Tenant. Tenant shall pay all Rent due under the
Lease without offset or deduction for amounts which might be claimed by Tenant to be owed by Landlord. Any amounts
owed by Landlord to Tenant, if any, shall be paid by separate payments and not by offsets or deductions from the Rent
owed.
19.07. If Tenant vacates, deserts, or abandons the Premises or is evicted from the Premises by Landlord and to the
extent such events create a duty on the part of Landlord to mitigate its damages, then it is agreed that the following
standards shall apply in determining the reasonableness of Landlord’s efforts to relet the Premises: (a)
EXHIBIT G-1
1
Landlord may elect to relet or lease other vacant and/or available space in the Building, if any, before reletting the
Premises; (b) Landlord shall not be required to give preference to reletting the Premises over leasing other space in the
Building to a prospective tenant who is seeking to lease space in the Building and multiple spaces could satisfy such
prospective tenant’s needs; (c) Landlord may elect to consent to the leasing, assignment, or subletting of the Premises to
an existing tenant in the Building instead of leasing the Premises to a tenant which was not previously a tenant in the
Building; (d) Landlord may decline to lease to a prospective tenant which will cause or require Landlord to incur
substantial out-of-pocket costs for refurbishing or modifying the Premises; (e) Landlord may decline to lease the
Premises to a prospective tenant at rental rates less than the prevailing market rental rates, or for an amount less than
the rental rate Tenant is obligated to pay under the Lease; (f) Landlord may decline to relet the Premises to a prospective
tenant whose type of business or use of the Premises is, in the judgment of Landlord, not suitable or a good fit in the
Building; (g) Landlord may require a prospective tenant to demonstrate the same or similar financial capability that
Landlord would require of a tenant seeking to lease other space within the Building; (h) Landlord may require that any
prospective tenant seeking to lease the Premises must demonstrate financial capacity similar to the financial capacity of
Tenant at the commencement of the Lease; (i) Landlord may decline to relet the Premises to a prospective tenant whose
operations could breach a covenant in the Lease or any exclusivity provision granted to another tenant in the Building.
Landlord listing the Premises as available for lease with a broker or agent similar to the other vacant spaces in the
Building shall constitute a presumption that Landlord has exercised reasonable efforts to advertise and relet the
Premises, and Landlord shall not be required to make special efforts to relet the Premises beyond the normal and
reasonable efforts made to lease other vacant spaces within the Building.
2.03. The following shall be added at the end of Article 20:
TENANT HEREBY WAIVES AND SURRENDERS, FOR ITSELF AND FOR ALL PERSONS OR ENTITIES CLAIMING
BY, THROUGH AND UNDER TENANT, ANY RIGHTS, PRIVILEGES AND LIENS SET OUT UNDER SECTION
91.004(B) OF THE TEXAS PROPERTY CODE (AS SUCH SECTION NOW EXISTS OR AS SAME MAY BE
HEREAFTER AMENDED AND/OR SUCCEEDED), AND TENANT EXEMPTS LANDLORD FROM ANY LIABILITY OR
DUTY THEREUNDER.
2.04. The following shall be added after Section 26.20:
26.21 TO THE MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW, TENANT HEREBY WAIVES ALL OF
ITS RIGHTS UNDER THE TEXAS DECEPTIVE TRADE PRACTICES – CONSUMER PROTECTION ACT, SECTION
17.41 ET. SEQ. OF THE TEXAS BUSINESS AND COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL
RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF TENANT’S OWN SELECTION,
TENANT VOLUNTARILY CONSENTS TO SUCH WAIVER.
2.05. The following shall be added at the end of the first paragraph in Section 2.04 in Exhibit B:
Notwithstanding anything in this Lease to the contrary, Taxes shall include the so called “franchise tax” or “margin tax”
imposed under Chapter 171 of the Texas Tax Code, as the same may be amended, renewed or replaced from time to
time.
2.06. The following shall be added at the end of Section 2.04 in Exhibit B:
TO THE MAXIMUM EXTENT ALLOWED BY LAW, TENANT HEREBY WAIVES ALL RIGHTS TO PROTEST THE
APPRAISED VALUE OF THE BUILDING INCLUDING THE PREMISES OR APPEAL THE SAME AND ALL RIGHTS TO
RECEIVE NOTICES OF
EXHIBIT G-1
2
REAPPRAISALS SET FORTH IN SECTIONS 41.413 AND 42.015 OF THE TEXAS TAX CODE.
EXHIBIT G-1
3
EXHIBIT H
PARKING AGREEMENT
This Exhibit is attached to and made a part of the Office Lease Agreement (the “Lease”) by and between EQC CAPITOL
TOWER PROPERTY LLC, a Delaware limited liability company (“Landlord”) and CROWDSTRIKE, INC., a Delaware
corporation (“Tenant”) for space in the Building (as defined in the Lease) located at 206 East 9th Street, Austin, Texas.
Capitalized terms used but not defined herein shall have the meanings given in the Lease.
1. Landlord hereby grants to Tenant a license to use 40 parking spaces (the "Initial Spaces") in the parking facility
located at the Property (“Parking Facility”), up to 2 of which may be reserved spaces and the balance of which shall be non-
reserved parking spaces, on the terms and conditions set forth in this Exhibit. Commencing on the Premises Delivery Date,
Landlord grants to Tenant a license to use up to 50 additional parking spaces (the "Lease Term Additional Parking Spaces")
in the Parking Facility, up to 3 of which may be reserved spaces and the balance of which shall be non-reserved spaces. The
term of such license as to the Initial Spaces shall commence on the Effective Date under the Lease, and the term of such
license as to the Lease Term Additional Parking Spaces shall commence on the Premises Delivery Date under the Lease. The
term of such license as to the Initial Spaces and the Lease Term Additional Spaces shall continue until the earlier to occur of the
Termination Date under the Lease or the earlier termination of the Lease or Tenant’s right to occupy the Premises, or Tenant’s
abandonment of the Premises thereunder. Tenant shall not have the right to use more than the number of spaces set forth
above with respect to any period. Tenant may use parking spaces on an unlimited 24/7 basis, subject to the terms of this Exhibit,
including, without limitation, Section 3 below). During the term of such licenses, Tenant shall pay Landlord the then-current
monthly garage rate, plus tax, per parking space per month, which rate is subject to change by Landlord at any time so long as
any rate change is consistent with fair market pricing for comparable parking facilities (the “Parking Charge”), payable in
advance on the first day of each month (and on the Effective Date, if the Effective Date is not the first day of a month); provided,
from the Effective Date through the first (1st) anniversary of the Commencement Date, the charge for each reserved parking
space shall be $300 per month, plus applicable taxes, and the charge for each unreserved parking space shall be $200 per
month, plus applicable taxes. Unless otherwise directed by Landlord, the Parking Charge and other sums due hereunder shall
be paid to Landlord in the same manner that monthly Base Rent is paid to Landlord under the Lease. No deductions from the
monthly charge shall be made for days on which the Parking Facility or any parking spaces are not used by Tenant.
2. Tenant shall at all times comply with all applicable Laws respecting the use of the Parking Facility. Landlord reserves
the right to adopt, modify and enforce reasonable, non-discriminatory rules (“Rules”) governing the use of the Parking Facility
from time to time including any parking sticker, key-card, or other identification or entrance system and hours of operation.
Tenant shall comply with all such Rules, including, without limitation, the Rules attached hereto as Exhibit H-1 and shall cause
any of the Tenant Related Parties using the Parking Facility (“Tenant Users”) to comply with such Rules. To the extent permitted
under applicable Laws, Landlord may refuse to permit any person who violates such Rules to park in the Parking Facility, and
any violation of the Rules shall subject the applicable car to removal by towing from the Parking Facility.
3. Except for any reserved parking spaces licensed to Tenant hereunder, the parking spaces Tenant is permitted to use
hereunder shall be provided, subject to availability, on a non-designated “first-come, first-served” basis. Landlord reserves the
right to assign specific parking spaces, and to reserve parking spaces for visitors, small cars, handicapped persons and for other
tenants, types of tenants or guests of tenants or other parties, which assignment and reservation or passes may be relocated as
determined by Landlord from time to time, and Tenant shall not park in any location designated for assigned or reserved parking
spaces. Tenant acknowledges that the Parking Facility may be closed entirely or in part in order to make repairs or perform
maintenance services, or to alter, modify, re-stripe or renovate the Parking
EXHIBIT H
1
Facility, or if required by casualty, strike, condemnation, act of God, governmental law or requirement or other reason beyond
the reasonable control of the party operating the Parking Facility. Landlord will use commercially reasonable efforts to return the
affected portion of the Parking Facility to its full use as quickly as reasonably possible, and Tenant will not be entitled to any
abatement or reduction of Parking Charges.
4. If Tenant shall Default under this Exhibit, Landlord shall have the right to remove from the Parking Facility any
vehicles hereunder which shall have been involved or shall have been owned or driven by parties involved in causing such
Default, without liability therefor whatsoever. In addition, if Tenant shall Default under this Exhibit, Landlord shall have the right to
terminate the license and the rights granted to Tenant under this Exhibit, on 10 days’ written notice, unless within such 10-day
period, Tenant cures such Default. If Tenant Defaults with respect to the same term or condition under this Exhibit more than 3
times during any 12-month period, and Landlord notifies Tenant thereof promptly after each such Default, the next Default of
such term or condition during the succeeding 12-month period, shall, at Landlord’s election, constitute an incurable Default.
Such license termination right shall be cumulative and in addition to any other rights or remedies available to Landlord at law or
equity, or provided under the Lease.
5. Tenant shall not assign, sublease or transfer any of its rights under this Exhibit without the consent of Landlord, other
than in connection with a permitted assignment or sublease of the Premises pursuant to Article 11 of the Lease.
6. Landlord hereby reserves the right to enter into a management agreement or lease with an entity for the Parking
Facility (“Parking Facility Operator”). In such event, Tenant (or, at the option of Landlord or the Parking Facility Operator, the
Tenant Users), upon request of Landlord, shall enter into a parking agreement with the Parking Facility Operator (provided
Tenant shall still be obligated to comply with the provisions of this Exhibit) and shall pay the Parking Facility Operator the
monthly charge established hereunder, and, to the extent permitted under applicable Laws, Landlord shall have no liability for
claims arising through acts or omissions of the Parking Facility Operator. It is understood and agreed that the identity of the
Parking Facility Operator may change from time to time during the Lease Term. In connection therewith, any parking lease or
agreement entered into between Tenant or the Tenant Users and a Parking Facility Operator shall be freely assignable by such
Parking Facility Operator or any successors thereto.
7. TENANT ACKNOWLEDGES AND AGREES THAT, TO THE FULLEST EXTENT PERMITTED BY LAW, NEITHER
LANDLORD NOR ANY OF THE LANDLORD RELATED PARTIES SHALL BE RESPONSIBLE FOR AND TENANT WAIVES,
ON BEHALF OF ITSELF AND ANY TENANT USERS, ANY CLAIMS FOR LOSS OR DAMAGE TO TENANT OR ANY TENANT
USER OR THE PROPERTY OF ANY SUCH PARTIES (INCLUDING, WITHOUT LIMITATION, ANY LOSS OR DAMAGE TO
TENANT’S AND/OR TENANT’S USERS’ AUTOMOBILES OR THE CONTENTS THEREOF DUE TO THEFT, VANDALISM OR
ACCIDENT) ARISING FROM OR RELATED TO TENANT’S OR SUCH TENANT’S USERS’ USE OF THE PARKING FACILITY
OR EXERCISE OF ANY RIGHTS UNDER THIS EXHIBIT. In all events, Tenant agrees to look first to its insurance carrier and to
require that Tenant’s Users look first to their respective insurance carriers for payment of any losses sustained in connection
with any use of the Parking Facility. Tenant shall cause its insurance company to waive all rights of subrogation against Landlord
or the Landlord Related Parties for or with respect to the matters described above or herein.
8. Without limiting the provisions of Section 7 above, to the extent permitted under applicable Laws, Tenant, on behalf of itself
and the Tenant Users hereby voluntarily releases, discharges, waives and relinquishes any and all actions or causes of action
for personal injury or property damage occurring to Tenant or to such Tenant Users arising as a result of parking in the Parking
Facility, or any activities incidental thereto, wherever or however the same may occur, and further agrees that neither Tenant nor
the Tenant Users will prosecute any claim for personal injury or property damage against Landlord or any of the Landlord
Related Parties for
EXHIBIT H
2
any said causes of action. It is the intention of Tenant by this instrument, to exempt and relieve Landlord and the Landlord
Related Parties from liability for personal injury or property damage caused by negligence, to the extent permitted under
applicable Laws. To the extent permitted by law, the use of the parking spaces shall be at the sole risk of Tenant and/or the
Tenant Users.
EXHIBIT H
3
EXHIBIT H-1
PARKING FACILITY RULES
As used in these rules, the “operator of the Parking Facility” is deemed to mean Landlord or any third party operator of the Parking
Facility designated by Landlord. Capitalized terms used but not defined in this Exhibit shall have the meanings given in the immediately
preceding Exhibit or, if applicable, in the Lease.
1. Parking Facility hours shall be as set forth in Exhibit H. Neither Tenant nor the Tenant Users shall store any automobiles in the
Parking Facility without the prior written consent of the operator of the Parking Facility. Except for emergency repairs, neither Tenant nor the
Tenant Users shall perform any work on any automobiles while located in the Parking Facility, or on the Property. If it is necessary for Tenant
or the Tenant Users to leave an automobile in the Parking Facility overnight, Tenant or the Tenant Users, as applicable, shall provide the
operator of the Parking Facility with prior notice thereof designating the license plate number and model of such automobile.
2. Cars must be parked entirely within the painted stall lines, and only small cars may be parked in areas reserved for small cars.
Every parker must park “head in” and may not back into parking spaces.
3. All directional signs and arrows must be observed.
4. The speed limit shall be 5 miles per hour unless otherwise posted.
5. Parking spaces reserved for handicapped persons must be used only by vehicles properly designated as such.
6. Parking is prohibited in all areas not expressly designated for parking, including without limitation:
(a) Areas not striped for parking
(b) aisles
(c) where “no parking” signs are posted
(d) ramps
(e) loading zones
(f) spaces marked as reserved for other parkers
7. Parking stickers, key cards or any other devices or forms of identification permitting entry into the Parking Facility (“Entry
Devices”) supplied by the operator of the Parking Facility, if any, shall remain the property of the operator. Such Entry Devices must be
displayed as requested and may not be mutilated in any manner. The serial number of the Entry Devices may not be obliterated. Entry
Devices are not transferable and, at the request of the operator of the Parking Facility, shall be assigned to specific individuals, and may not
be used to permit entry into the Parking Facility by more than one vehicle at a time. Any Entry Device in the possession of an unauthorized
holder shall be void. The operator of the Parking Facility shall have the right to require Tenant or the Tenant Users to place a deposit on such
Entry Devices and to pay a fee for any lost or damaged Entry Devices.
8. Monthly fees, if any, shall be payable in advance prior to the first day of each month. Failure to do so shall automatically cancel
parking privileges and a charge at the prevailing daily parking rate shall be due, with no refund or offset of such daily parking rate charges
against subsequent payments made for monthly parking fees.
9. Parking Facility attendants, if any, are not authorized to make or allow any exceptions to these Rules.
EXHIBIT H-1
1
10. Every parker is required to park and lock his/her own car.
11. Loss or theft of Entry Devices must be reported to Landlord and to the operator of the Parking Facility immediately. Any Entry
Devices reported lost or stolen found on any unauthorized car shall be confiscated and the illegal holder shall be subject to prosecution. Lost
or stolen Entry Devices found by Tenant or the Tenant Users must be reported to the operator of the Parking Facility immediately.
12. Washing, waxing, cleaning or servicing of any vehicle by Tenant or the Tenant Users is prohibited. Parking spaces may be used
only for parking automobiles.
13. To the extent permitted by applicable laws, the operator of the Parking Facility reserves the right to remove by towing any
vehicle from the Parking Facility without liability whatsoever, at such violator’s risk and expense, if a vehicle is parked in the Parking Facility
and lacks a license plate, or is in an obvious state of disrepair, or is parked overnight.
14. Notwithstanding any other provision of the Lease, under no circumstances shall Tenant or the Tenant Users place or store any
of the following in or about the Parking Facility or any vehicle located therein: (i) combustible materials or substances (other than fuel in the
gas tank or oil in the engine of the vehicles parked in the Parking Facility), (ii) Hazardous Materials (as defined in the Lease), or (iii) materials
or substances that are regulated by Environmental Laws (as defined in the Lease). Without limiting the foregoing, Landlord and/or the
Landlord Related Parties shall have the right to prohibit and to require the immediate removal of any vehicle that is leaking significant
amounts of fuel, oil, coolant, or other fluids or vapors. Tenant and the Tenant Users shall indemnify, defend and hold Landlord and the
Landlord Related Parties harmless from any expense, cost and liability arising directly or indirectly from Tenant’s or the Tenant’s Users’
violation of this Section 14, which indemnification obligation shall survive the expiration or earlier termination of the Lease.
15. By signing the Lease, Tenant agrees to acquaint all Tenant Users with these Rules and to cause them to comply with these
rules.
EXHIBIT H-1
2
FORM OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
EXHIBIT I
[Attached]
1
AFTER RECORDING, RETURN TO:
Berkadia Commercial Mortgage LLC
323 Norristown Road, Suite 300
Ambler, PA 19002
Attn: Client Relations Manager – Loan # 010072830
SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
This Subordination, Non-Disturbance and Attornment Agreement ("Agreement"), is made as of this day of January 2, 2018 among Wells Fargo Bank
National Association, not individually, but solely as Trustee for the Morgan Stanley Capital I Inc., Commercial Mortgage Pass-Through Certificates Series
2011-C1, under that certain Pooling and Servicing Agreement dated as of February 1, 2011 (“Lender”), by and through Berkadia Commercial Mortgage
LLC, a Delaware limited liability company, its Sub Servicer on behalf of KeyBank National Association, Inc., pursuant to the Sub Servicing Agreement
dated as of March 30, 2012, January 18, 2013 (“Amended and Restated Sub Servicing Agreement”), June 24, 2013 (“First Amendment to Amended
and Restated Sub Servicing Agreement”) January 06, 2014 (“Second Amendment to Amended and Restated Sub Servicing Agreement”), April 03,
2015 (“Amendment No. 3 to Amended and Restated Sub Servicing Agreement”) and October 13, 2015 (“Amendment No. 4 to Amended and
Restated Sub Servicing Agreement”) EQC Capitol Tower Property LLC, a Delaware limited liability company ("Landlord"), and Crowdstrike Inc., a
Delaware corporation ("Tenant").
Background
Lender is the owner and holder of a deed of trust or mortgage or other similar security instrument (either, the “Security Instrument”),
covering, among other things, the real property commonly known and described as Capitol Tower Investors and further described on Exhibit “A” attached
hereto and made a part hereof for all purposes, and the building and improvements thereon (collectively, the “Property”).
Tenant is the lessee under that certain lease agreement between Landlord and Tenant dated _____ ("Lease"), demising a portion of the
A.
B.
Property described more particularly in the Lease ("Leased Space").
C.
Instrument.
Landlord, Tenant and Lender desire to enter into the following agreements with respect to the priority of the Lease and Security
NOW, THEREFORE, in consideration of the mutual promises of this Agreement, and intending to be legally bound hereby, the parties hereto agree as
follows:
subject to the lien and priority of the Security Instrument.
Subordination. Tenant agrees that the Lease, and all estates, options and rights created under the Lease, hereby are subordinated and made
Nondisturbance. Lender agrees that no foreclosure (whether judicial or nonjudicial), deed-in-lieu of foreclosure, or other sale of the
Property in connection with enforcement of the Security Instrument or otherwise in satisfaction of the underlying loan shall operate to terminate the Lease
or Tenant's rights thereunder to possess and use the Leased Space provided, however, that (a) the term of the Lease has commenced, (b) Tenant is in
possession of the Leased Space, and (c) the Lease is in full force and effect and no uncured default exists under the Lease, beyond any applicable notice
and cure periods.
3.
Attornment. Tenant agrees to attorn to and recognize as its landlord under the Lease each party acquiring legal title to the Property by
foreclosure (whether judicial or nonjudicial) of the Security Instrument, deed-in-lieu of foreclosure, or other sale in connection with enforcement of the
Security Instrument or otherwise in satisfaction of the underlying loan ("Successor Owner"). Provided that the conditions set forth in Section 2 above are
met at the time Successor Owner becomes owner of the Property, Successor Owner shall perform all obligations of the landlord under the Lease arising
from and after the date title to the Property was transferred to Successor Owner. In no event, however, will any Successor Owner be: (a) liable for any
default, act or omission of any prior landlord under the Lease (except that Successor Owner shall not be relieved from the obligation to cure any defaults
which are non-monetary and continuing in nature, and such that Successor Owner’s failure to cure would constitute a continuing default under the Lease;
for the avoidance of doubt, defaults which are non-monetary include repair and
2
1.
2.
maintenance defaults even though curing such defaults may require the expenditure of money); (b) subject to any offset or defense which Tenant may have
against any prior landlord under the Lease; (c) bound by any payment of rent or additional rent made by Tenant to Landlord more than 30 days in advance;
(d) bound by any modification or supplement to the Lease, or waiver of Lease terms, which revise Tenant’s or Landlord’s monetary obligations under the
Lease, modifies the term of the Lease, the parties’ termination rights or the description of the Leased Space, made without Lender’s written consent thereto;
(e) liable for the return of any security deposit or other prepaid charge paid by Tenant under the Lease, except to the extent such amounts were actually
received by Lender; (f) liable or bound by any right of first refusal or option to purchase all or any portion of the Property; or (g) liable for construction,
completion or payment to Tenant for any improvements to the Property or as required under the Lease for Tenant's use and occupancy (whenever arising);
provided, however, this clause (g) shall in no way modify, limit or impair any obligation of Successor Owner to perform maintenance and repair obligations
to existing improvements and provided further, that if Successor Owner fails to perform any such maintenance and repair obligations, then Tenant shall
have all rights and remedies available to it in the Lease, at law, and in equity. Although the foregoing provisions of this Agreement are self-operative,
Tenant agrees to execute and deliver to Lender or any Successor Owner such further instruments as Lender or a Successor Owner may from time to time
request in order to confirm this Agreement. If any liability of Successor Owner does arise pursuant to this Agreement, such liability shall be limited to
Successor Owner's interest in the Property.
4.
Rent Payments; Notice to Tenant Regarding Rent Payments. Tenant agrees not to pay rent more than one (1) month in advance unless
otherwise specified in the Lease. After notice is given to Tenant by Lender that Landlord is in default under the Security Instrument and that the rentals
under the Lease should be paid to Lender pursuant to the assignment of leases and rents granted by Landlord to Lender in connection therewith, Tenant
shall thereafter pay to Lender all rent and all other amounts due or to become due to Landlord under the Lease, and Landlord hereby expressly authorizes
Tenant to make such payments to Lender upon reliance on Lender's written notice (without any inquiry into the factual basis for such notice or any prior
notice to or consent from Landlord) and hereby releases Tenant from all liability to Landlord in connection with Tenant's compliance with Lender's written
instructions.
5.
Lender Opportunity to Cure Landlord Defaults. Tenant agrees that, until the Security Instrument is satisfied of record by Lender, it will
not exercise any remedies under the Lease following a Landlord default without having first given to Lender (a) written notice of the alleged Landlord
default and (b) the opportunity to cure such default within the time periods provided for cure by Landlord, measured from the time notice is received by
Lender. Tenant acknowledges that Lender is not obligated to cure any Landlord default, but if Lender elects to do so, Tenant agrees to accept cure by
Lender as that of Landlord under the Lease and will not exercise any right or remedy under the Lease for a Landlord default. Performance rendered by
Lender on Landlord's behalf is without prejudice to Lender's rights against Landlord under the Security Instrument or any other documents executed by
Landlord in favor of Lender in connection therewith.
6.
Miscellaneous.
(a) Notices. All notices under this Agreement will be effective only if made in writing and addressed to the
address for a party provided below such party's signature. A new notice address may be established from time to time by written
notice given in accordance with this Section. All notices will be deemed received only upon actual receipt. Notice to outside counsel
or parties other than the named Tenant, Lender and Landlord, now or hereafter designated by a party as entitled to notice, are for
convenience only and are not required for notice to a party to be effective in accordance with this section.
(b) Entire Agreement; Modification. This Agreement is the entire agreement between the parties relating to the
subordination and nondisturbance of the Lease, and supersedes and replaces all prior discussions, representations and agreements
(oral and written) with respect to the subordination and nondisturbance of the Lease. This Agreement controls any conflict between
the terms of this Agreement and the Lease. This Agreement may not be modified, supplemented or terminated, nor any provision
hereof waived, unless by written agreement of Lender and Tenant, and then only to the extent expressly set forth in such writing.
(c) Binding Effect. This Agreement binds and inures to the benefit of each party hereto and their respective heirs,
executors, legal representatives, successors and assigns, whether by voluntary action of the parties or by operation of law. If the
Security Instrument is a deed of trust, this Agreement is entered into by the trustee of the Security Instrument solely in its capacity as
trustee and not individually.
3
(d) Unenforceability. Any provision of this Agreement which is determined by a government body or court of
competent jurisdiction to be invalid, unenforceable or illegal shall be ineffective only to the extent of such holding and shall not
affect the validity, enforceability or legality of any other provision, nor shall such determination apply in any circumstance or to any
party not controlled by such determination.
(e) Construction of Certain Terms. Defined terms used in this Agreement may be used interchangeably in singular
or plural form, and pronouns cover all genders. Unless otherwise provided herein, all days from performance shall be calendar days,
and a "business day" is any day other than Saturday, Sunday and days on which Lender is closed for legal holidays, by government
order or weather emergency.
(without giving effect to its rules governing conflicts of laws).
(f) Governing Law. This Agreement shall be governed by the laws of the State in which the Property is located
(g) WAIVER OF JURY TRIAL. TENANT, AS AN INDUCEMENT FOR LENDER TO PROVIDE THIS
AGREEMENT AND THE ACCOMMODATIONS TO TENANT OFFERED HEREBY, HEREBY WAIVES ITS RIGHT, TO
THE FULL EXTENT PERMITTED BY LAW, AND AGREES NOT TO ELECT, A TRIAL BY JURY WITH RESPECT TO
ANY ISSUE ARISING OUT OF THIS AGREEMENT.
(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed
an original and all of which together constitute a fully executed agreement even though all signatures do not appear on the same
document.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
SIGNATURES AND NOTARIES APPEAR ON THE FOLLOWING PAGES
4
IN WITNESS WHEREOF, this Agreement is executed as of the date first above written.
LENDER:
Wells Fargo Bank National Association, not individually, but solely as
Trustee for the Morgan Stanley Capital I Inc., Commercial Mortgage Pass-
Through Certificates Series 2011-C1, Trustee
LENDER NOTICE ADDRESS:
Wells Fargo Bank National Association, not individually, but solely as
Trustee for the Morgan Stanley Capital I Inc., Commercial Mortgage Pass-
Through Certificates Series 2011-C1, Trustee
c/o Berkadia Commercial Mortgage LLC
323 Norristown Road, Suite 300
Ambler, PA 19002
Attn: Client Relations Manager
For Loan # 010072830
By: Berkadia Commercial Mortgage LLC, a Delaware limited liability
company, its Sub Servicer
By:
Name: Gary A. Routzahn
Title: Authorized Representative
Notary Acknowledgment for Lender:
COMMONWEALTH OF PENNSYLVANIA:
: ss
COUNTY OF MONTGOMERY s:
On ______________________, before me, ______________________, Notary Public, personally appeared Gary A. Routzahn, who proved to me
on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument, the person(s), or the entity upon behalf
of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the Commonwealth of Pennsylvania that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
SIGNATURE OF NOTARY PUBLIC
{seal}
[Tenant’s Signature and Acknowledgment continued on next page]
5
TENANT:
CrowdStrike, Inc., a Delaware corporation
TENANT NOTICE ADDRESS:
CrowdStrike
150 Mathilda Place, 3rd Floor
Sunnyvale, CA 94086
Attn: Robin Cline
By:
Name:
Notary Acknowledgment for Tenant:
:
: ss
:
On
______________________,
before
me,
______________________,
Notary
Public,
personally
appeared
________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument, the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
SIGNATURE OF NOTARY PUBLIC
{seal}
[Landlord’s Signature and Acknowledgment continued on next page]
6
LANDLORD:
EQC Capitol Tower Property LLC, a Delaware limited liability company
LANDLORD NOTICE ADDRESS:
Equity Commonwealth Management LLC
Two North Riverside Plaza
Suite 2100
Chicago, Illinois 60606
Attention: Legal Department-Leasing
With a copy to:
Equity Commonwealth Management LLC
Two North Riverside Plaza
Suite 2100
Chicago, Illinois 60606
Attention: General Counsel
By:
Name:
Notary Acknowledgment for Landlord:
:
: ss
:
On
______________________,
before
me,
______________________,
Notary
Public,
personally
appeared
________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument, the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
SIGNATURE OF NOTARY PUBLIC
{seal}
7
Exhibit “A”
(Legal Description of the Property)
1
Exhibit 10.19
THIS FIRST AMENDMENT TO LEASE (this “Amendment”) is made and entered into as of June 6, 2019, (the “Effective Date”) by and
between EQC CAPITOL TOWER PROPERTY LLC, a Delaware limited liability company (“Landlord”), and CROWDSTRIKE, INC., a
Delaware corporation (“Tenant”).
FIRST AMENDMENT TO LEASE
RECITALS
A.
B.
Landlord and Tenant are parties to that certain lease dated April 20, 2018 (the “Lease”). Pursuant to the Lease, Landlord has
leased to Tenant space currently containing approximately 25,805 rentable square feet (the "Original Premises") described as
Suite No. 1400 on the 14th floor of the building commonly known as Capitol Tower located at 206 East 9th Street, Austin, Texas
(the "Building").
Tenant has requested that additional space containing approximately 10,580 rentable square feet described as Suite No. 1750
on the 17th floor of the Building shown on Exhibit A hereto (the "Expansion Space") be added to the Premises and that the
Lease be appropriately amended and Landlord is willing to do the same on the following terms and conditions.
C.
Tenant and Landlord mutually desire that the Lease be amended on and subject to the following terms and conditions.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows:
1. Expansion. Effective as of the Expansion Effective Date (defined below), the Premises, as defined in the Lease, is increased
from 25,805 rentable square feet on the 14th floor to 36,385 rentable square feet on the 14th and 17th floors by the addition of the
Expansion Space, and from and after the Expansion Effective Date, the Original Premises and the Expansion Space, collectively,
shall be deemed the Premises, as defined in the Lease. The Term for the Expansion Space shall commence on the Expansion
Effective Date and end on the Termination Date (as defined in the Lease). The Expansion Space is subject to all the terms and
conditions of the Lease (including all restrictions set forth in Section 5 of the Lease, provided that in no event shall any portion of
the Landlord Work, as hereinafter defined, performed by Landlord in the Expansion Space prior the delivery of same to Tenant be
deemed to create any Tenant Triggered Compliance obligations), except as expressly modified herein and except that Tenant
shall not be entitled to receive any allowances, abatements or other financial concessions granted with respect to the Original
Premises unless such concessions are expressly provided for herein with respect to the Expansion Space. Landlord and Tenant
stipulate and agree that the rentable square footage of the Expansion Space is correct and shall not be remeasured, unless
there is an actual physical change in the Expansion Space.
Tenant shall deliver to Landlord the first month’s estimated gross Rent obligation concurrently with its delivery of the Tenant-
executed copy of this Amendment.
1.01.
The “Expansion Effective Date” shall be the earlier to occur of (i) August 1, 2019 and (ii) the date upon which Tenant
first occupies the Expansion Space for the conduct of its business.
1.02.
If for any reason Landlord fails to deliver possession of the Expansion Space by May 15, 2019, with all Landlord Work
described on Schedule A attached hereto substantially completed, including but not limited to, holding over by prior
occupants, then such delay shall solely delay the Expansion Effective Date but shall not subject Landlord to any liability
for any loss or damage resulting therefrom. If the Expansion Effective Date is delayed, the Termination Date shall not be
similarly extended.
1
2. Base Rent.
2.01.
Expansion Space from Expansion Effective Date through Termination Date. As of the Expansion Effective Date, the
schedule of Base Rent payable with respect to the Expansion Space for the balance of the Term is the following:
Months of Term or
Period
Annual Rate Per Square
Foot
Monthly Base Rent
Expansion Effective Date
– 9/30/2020
10/1/20 – 9/30/21
10/1/21 – 9/30/22
10/1/22 – 9/30/23
10/1/23 – 9/30/24
10/1/24 – 10/31/24
$35.00
$36.05
$37.13
$38.25
$39.40
$40.58
$30,858.33
$31,784.08
$32,737.61
$33,719.73
$34,731.33
$35,778.03
All such Base Rent shall be payable by Tenant in accordance with the terms of the Lease.
2.02 A form of “Premises Acceptance Letter” is attached as Exhibit C (the “Premises Acceptance Letter”). Promptly after the
determination of the Expansion Effective Date, Landlord and Tenant shall execute and deliver a Premises Acceptance
Letter specifying the dates referenced therein. Tenant’s failure to execute and return the Premises Acceptance Letter, or
to provide written objection to the statements contained in the Premises Acceptance Letter, within 30 days after the date
of the Premises Acceptance Letter shall be deemed an approval by Tenant of the statements contained therein.
3. Additional Security Deposit. Within 10 Business Days after Tenant's execution hereof, Tenant shall cause the Letter of Credit
to be increased by an additional $200,000 to be $1,000,000 in the aggregate. Landlord agrees to accept an amendment to the
Letter of Credit or a substitute Letter of Credit from the Issuing Bank that satisfies all requirements of Exhibit F, Section IV to the
original Lease. In addition, subject to the Default restrictions set forth in Exhibit F, Section IV to the original Lease, the Letter of
Credit may be reduced by Tenant at each Reduction Date described below to the following amounts (in lieu of the reduction
amounts set forth in the original Lease): (i) to $812,500 on October 1, 2021;
(ii) to $625,000 on October 1, 2022; and (iii) to $437,500 on October 1, 2023.
4. Tenant's Pro Rata Share. For the period commencing with the Expansion Effective Date and ending on the Termination Date,
“Tenant's Pro Rata Share” for the Expansion Space is 6.03%.
5. Expenses and Taxes.
5.01.
Expansion Space from Expansion Effective Date through Termination Date. For the period commencing with the
Expansion Effective Date and ending on the Termination Date, Tenant shall pay for Tenant’s Pro Rata Share of Expenses
and Taxes applicable to the Expansion Space in accordance with the terms of the Lease including the cap on
Controllable Expenses described in Section 2.06 of the Lease.
6.
Improvements to Expansion Space.
6.01. Condition of Expansion Space. Tenant has inspected the Expansion Space and agrees to accept the same "as is"
without any agreements, representations, understandings or obligations on the part of Landlord to perform any
alterations, repairs or improvements, except as may be expressly provided otherwise in this Amendment, including the
improvements shown on Schedule A attached hereto (collectively, the “Landlord Work”). Landlord shall deliver the
Landlord Work free from material defects and the systems serving the Expansion Space shall be in good working order
upon Landlord’s delivery of possession of the Expansion
2
Space as provided in Section 1.02. Landlord shall, upon delivery of possession of the Expansion Space to Tenant, deliver
to Tenant a set of “as built” plans for the Landlord Work.
1.02. Responsibility for Improvements to Expansion Space. Tenant may perform improvements to the Expansion Space in
accordance with the Work Letter attached hereto as Exhibit B and Tenant shall be entitled to an improvement allowance
in connection with such work as more fully described in Exhibit B.
7. Early Access to Expansion Space. Tenant shall have possession of the Expansion Space from and after the date that Landlord
delivers possession as provided in Section 1.02. Tenant’s possession of the Expansion Space before the Expansion Effective
Date shall be subject to the terms and conditions of the Lease and this Amendment, except that Tenant shall not be required to
pay Base Rent, Tax Rent, or Expense Rent for the Expansion Space for any days of possession before the Expansion Effective
Date during which Tenant is in possession of the Expansion Space for the sole purpose of performing improvements or installing
furniture, equipment or other personal property.
8. Renewal Option. Exhibit F, Section I shall continue to apply to the Premises, including the Expansion Space; provided, however,
Tenant shall have the option in its Initial Renewal Notice to renew either (i) the Original Premises together with the Expansion
Space or (ii) only the Original Premises (and surrender the Expansion Space on the original Termination Date). All other terms
and conditions of Exhibit F, Section I shall remain and apply.
9. Right of First Refusal. Exhibit F, Section III and Exhibit A-2 to the Lease are hereby deleted in their entirety.
10. Parking. In lieu of the allotment of parking spaces described in Exhibit H, Parking Agreement, Landlord hereby grants Tenant a
license to use up to 121 parking spaces in the Parking Facility, with the right of Tenant to allocate no more than 8 of those spaces
as reserved spaces, and the balance of which spaces shall be non-reserved parking spaces, in either case on the terms and
conditions set forth in Exhibits H and H-1. Tenant shall pay Landlord the Parking Charge applicable to each space per month,
which is currently $225 plus taxes per month for unreserved spaces and
$325 plus taxes per month for reserved spaces.
11. Miscellaneous.
a. This Amendment and the attached exhibits and schedule, which are hereby incorporated into and made a part of this
Amendment, set forth the entire agreement between the parties with respect to the matters set forth herein. There have
been no additional oral or written representations or agreements. This Amendment shall inure only to the benefit of and
be binding only upon Landlord and Tenant and their permitted successors and assigns. Under no circumstances shall
Tenant be entitled to any Rent abatement, improvement allowance, leasehold improvements, or other work to the
Premises, or any similar economic incentives that may have been provided Tenant in connection with entering into the
Lease, unless specifically set forth in this Amendment.
b. Except as herein modified or amended, the provisions, conditions and terms of the Lease shall remain unchanged and in
full force and effect and shall apply to the Expansion Space (including without limitation, all provisions in Exhibit G-1 to
the Lease).
c.
In the case of any inconsistency between the provisions of the Lease and this Amendment, the provisions of this
Amendment shall govern and control.
d. Submission of this Amendment by Landlord is not an offer to enter into this Amendment but rather is a solicitation for
such an offer by Tenant. Landlord shall not be bound by this Amendment until Landlord has executed and delivered the
same to Tenant.
e. The capitalized terms used in this Amendment shall have the same definitions as set forth in the Lease to the extent that
such capitalized terms are defined therein and not redefined in this Amendment.
f. Tenant hereby represents to Landlord that Tenant has dealt with no broker in connection with this Amendment, other
than Jones Lang LaSalle (“Tenant’s Broker”). Tenant agrees to indemnify and hold Landlord, its trustees, members,
principals, beneficiaries, partners,
3
officers, directors, employees, mortgagee(s) and agents, and the respective principals and members of any such agents
(collectively, the “Landlord Related Parties”) harmless from all claims of any other brokers claiming to have represented
Tenant in connection with this Amendment. Landlord hereby represents to Tenant that Landlord has dealt with no broker
in connection with this Amendment other than Jones Lang LaSalle (“Landlord’s Broker”). Landlord agrees to indemnify
and hold Tenant, its members, principals, beneficiaries, partners, officers, directors, employees, and agents, and the
respective principals and members of any such agents (collectively, the “Tenant Related Parties”) harmless from all
claims of any brokers claiming to have represented Landlord in connection with this Amendment.
g. Each signatory of this Amendment represents hereby that he or she has the authority to execute and deliver the same
on behalf of the party hereto for which such signatory is acting. Tenant agrees that Tenant may acknowledge only the
existence of this Amendment by and between Landlord and Tenant, that Tenant may not disclose any of the terms and
provisions contained in this Amendment to any tenant or other occupant in the Building or to any agent, employee,
subtenant or assignee of such tenant or occupant, and Tenant also shall cause the Tenant Related Parties (including,
without limitation, its brokers) to comply with the restrictions set forth in this sentence. The terms and provisions of the
preceding sentence shall survive the termination of the Lease (whether by lapse of time or otherwise).
h. This Amendment shall be construed without regard to any presumption or other rule requiring construction against the
party causing this Amendment to be drafted. This Amendment may be executed in counterparts and shall constitute an
agreement binding on all parties notwithstanding that all parties are not signatories to the original or the same
counterpart, provided that all parties are furnished a copy or copies thereof reflecting the signature of all parties. The
parties acknowledge and agree that they intend to conduct this transaction by electronic means and that this
Amendment may be executed by electronic signature, which shall be considered as an original signature for all purposes
and shall have the same force and effect as an original signature. Without limitation, in addition to electronically
produced signatures, “electronic signature” shall include faxed versions of an original signature or electronically scanned
and transmitted versions (e.g., via pdf) of an original signature.
[signature page follows]
4
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of the day and year first above written.
LANDLORD:
EQC CAPITOL TOWER PROPERTY LLC, a
Delaware
limited liability company
By: /s/ Nathan Dorzweiler
Name: Nathan Dorzweiler
Title: Authorized Signatory
TENANT:
CROWDSTRIKE, INC., a Delaware corporation
By: /s/ Tiffany Ketterer-Buchanan
Name: Tiffany Ketterer-Buchanan
Title: VP Finance
5
EXHIBIT A
EXPANSION SPACE
EXHIBIT A
1
EXHIBIT B
WORK LETTER
1.
Tenant, following the delivery of the Expansion Space by Landlord and the full and final execution and delivery of the
Amendment to which this Exhibit is attached and all prepaid rental and security deposits required under such agreement, shall have the
right to perform alterations and improvements in the Expansion Space (the "Initial Alterations"). Notwithstanding the foregoing, Tenant
and its contractors shall not have the right to perform Initial Alterations in the Expansion Space unless and until Tenant has complied with
all of the terms and conditions of Section 9 of the Lease, including, without limitation, approval by Landlord of the final plans for the Initial
Alterations and the contractors to be retained by Tenant to perform such Initial Alterations. Tenant shall be responsible for all elements of
the design of Tenant's plans (including, without limitation, compliance with law, functionality of design, the structural integrity of the
design, the configuration of the premises and the placement of Tenant's furniture, appliances and equipment), and Landlord's approval of
Tenant's plans shall in no event relieve Tenant of the responsibility for such design. Landlord’s approval of Tenant’s plans for the Initial
Alterations shall not be unreasonably withheld. Landlord shall review Tenant’s plans within 15 Business Days after Tenant’s delivery of
such plans (in PDF, CAD and hard copy formats) to Landlord’s Building manager. Unless otherwise expressly agreed to by Landlord in
writing, Tenant’s plans shall be consistent with the Building’s standards for leasehold improvements. Landlord's approval of the
contractors to perform the Initial Alterations shall not be unreasonably withheld, conditioned or delayed. The parties agree that Landlord's
approval of the general contractor to perform the Initial Alterations shall not be considered to be unreasonably withheld if any such
general contractor (i) does not have trade references reasonably acceptable to Landlord, (ii) does not maintain insurance as required
pursuant to the terms of this Lease, or (iii) is not licensed as a contractor in the state/municipality in which the Expansion Space is
located. Tenant acknowledges the foregoing is not intended to be an exclusive list of the reasons why Landlord may reasonably withhold
its consent to a general contractor. Tenant shall ensure that all contractors performing the Initial Alterations include Landlord and such
other parties as Landlord shall require as additional insureds on the insurance policies maintained by such contractors.
2.
Subject to the terms and conditions of this Exhibit, Landlord agrees to contribute the sum of $105,800 (the "Allowance")
toward the cost of performing the Initial Alterations in preparation of Tenant's occupancy of the Expansion Space.
The Allowance may only be used for the cost of construction management (including the Landlord Fee), permitting, preparing
design and construction documents and mechanical and electrical plans for the Initial Alterations and for hard costs in connection with
the Initial Alterations. The Allowance, less a 10% retainage (which retainage shall be payable as part of the final draw), shall be paid to
Tenant or, at Landlord's option, to the order of the general contractor that performs the Initial Alterations, in periodic disbursements within
30 days after receipt of the following documentation: (i) an application for payment and sworn statement of contractor substantially in the
form of AIA Document G-702 covering all work for which disbursement is to be made to a date specified therein; (ii) Intentionally Omitted;
(iii) Contractor's, subcontractor's and material supplier's waivers of liens which shall cover all Initial Alterations for which disbursement is
being requested and all other statements and forms required for compliance with the mechanics' lien laws of the state in which the
Premises is located, together with all such invoices, contracts, or other supporting data as Landlord or Landlord's Mortgagee may
reasonably require; (iv) copies of all construction contracts for the Initial Alterations, together with copies of all change orders, if any; and
(v) a request to disburse from Tenant containing an approval by Tenant of the work done and a good faith estimate of the cost to
complete the Initial Alterations. Upon completion of the Initial Alterations, and prior to final disbursement of the Allowance. Tenant shall
furnish Landlord with: (1) general contractor and architect's completion affidavits, (2) full and final waivers of lien, (3) receipted bills
covering all labor and materials expended and used, (4) as-built plans of the Initial Alterations in PDF, CAD and hard copy formats, and
(5) the certification of Tenant and its architect that the Initial Alterations have been installed in a good and workmanlike manner in
accordance with the approved plans, and in accordance with applicable laws, codes and ordinances. In no event shall Landlord be
required to disburse the Allowance more than one time per month. Notwithstanding anything herein to the contrary, Landlord shall not be
obligated to disburse any portion of the Allowance during the continuance of an uncured default under the Lease, provided Landlord has
delivered written notice to Tenant regarding the existence of such uncured default prior to receipt of Tenant’s request for disbursement of
Allowance funds, and Landlord's obligation to disburse shall only resume when and if such default is cured.
3.
In no event shall the Allowance be used for the purchase of equipment, furniture or other items of personal property of
Tenant. If Tenant does not submit a request for payment of the entire Allowance to Landlord in accordance with the provisions contained
in this Exhibit by April 1, 2020, any unused amount shall accrue to the sole benefit of Landlord, it being understood that Tenant shall not
be entitled to any credit, abatement or other concession in connection therewith. Tenant shall be responsible
EXHIBIT B
1
for all applicable state sales or use taxes, if any, payable in connection with the Initial Alterations and/or Allowance.
4.
In addition, Tenant may utilize and apply any unused and unapplied Allowance amounts, that were granted to Tenant in
Exhibit C to the original Lease in connection with the buildout of the Original Premises, towards completion of the Initial Alterations to the
Expansion Space. Accordingly, the outside date for applying/using that allowance in the original Lease (which was September 1, 2019,
as described in Exhibit C, paragraph 3 thereto) shall be extended to be an outside date of April 1, 2020.
5.
In addition to the Allowance, Landlord shall pay cost of the test fit drawings for the Expansion Space, up to a maximum
amount of $1,058. Tenant acknowledges that the baseline of the design in the test fit shall be inclusive of the Planned Speculative
Improvement Plan and said design shall only contain enhancements and customizations thereto. Landlord shall pay such amount directly
to the architect who prepares the test fit. To the extent the costs of that test fit exceed the amount in the first sentence of this paragraph,
Tenant shall reimburse Landlord for such excess or, at Tenant’s discretion, such amount may be paid to Landlord from the Allowance.
6.
Tenant shall pay a fee to Landlord or, at Landlord’s direction, to Landlord’s Building manager, equal to 1% of the hard
costs of the Initial Alterations as compensation for Landlord’s project administration of the Initial Alterations, including, without limitation,
review of Tenant’s plans, processing payment of the Allowance and other payment requests, coordination of the performance of the Initial
Alterations and other work in the Building, monitoring of the Initial Alterations, and project close-out. Landlord shall be entitled to deduct
such fee from the Allowance.
7.
In addition to any delay in the Expansion Effective Day arising pursuant to Section 1.02, if Tenant shall be actually
delayed in substantially completing the Initial Alterations as a result of Landlord’s failure to furnish information or approvals within any
time period specified in this Exhibit, then the Expansion Effective Date shall be delayed by the number of days by which Landlord actually
exceeded such time period(s) specified in this Exhibit.
8.
This Exhibit shall not be deemed applicable to any additional space added to the Premises at any time or from time to
time, whether by any options under the Lease or otherwise, or to any portion of the Original Premises or any additions to the Premises in
the event of a renewal or extension of the original Term of the Lease, whether by any options under the Lease or otherwise, unless
expressly so provided in the Lease or any amendment or supplement to the Lease.
EXHIBIT B
2
EXHIBIT C
PREMISES ACCEPTANCE LETTER
Date
Tenant Address
Re: Premises Acceptance Letter with respect to that certain First Amendment to Lease dated as of , 2019
(“Amendment”), by and between EQC Capitol Tower Property LLC, as Landlord, and CrowdStrike, Inc., as
Tenant, which Amendment modifies that certain Office Lease Agreement dated April 20, 2018, between Landlord
and Tenant (as amended, the “Lease”) for certain space in the Building located at 206 East 9th Street, Austin, TX.
Dear :
In accordance with the terms and conditions of the above referenced Amendment, Tenant acknowledges and agrees:
1. Tenant accepted possession of the Expansion Space, as defined in the Amendment, on
, 20 .
2. The Expansion Space was delivered to Tenant in the condition required under the terms of the Amendment.
3. The Expansion Effective Date as defined in the Amendment is .
4. The Termination Date of the Lease has not been modified and continues to be as defined in the Lease.
Please acknowledge the foregoing by signing all 3 counterparts of this Premises Acceptance Letter in the space provided and returning 2
fully executed counterparts to my attention. Tenant’s failure to execute and return this letter, or to provide written objection to the
statements contained in this letter, within 30 days after the date of this letter shall be deemed an approval by Tenant of the statements
contained herein.
Sincerely,
Authorized Signatory
Acknowledged and Accepted:
Tenant:
By:
Name:
Title:
Date:
EQC Form (PAL) 2/12/19
EXHIBIT C
1
SCHEDULE A
LANDLORD WORK
The Expansion Space shall be in the configuration shown below:
SCHEDULE A
1
Conformed through First Amendment (as defined below)
Exhibit 10.20
SENIOR SECURED CREDIT FACILITIES
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of January 4, 2021,
among
CROWDSTRIKE HOLDINGS, INC.,
as a Guarantor,
CROWDSTRIKE, INC.,
as the Borrower,
THE SEVERAL LENDERS FROM TIME TO TIME PARTY HERETO,
SILICON VALLEY BANK,
as Administrative Agent, Issuing Lender and Swingline Lender,
SILICON VALLEY BANK and JPMORGAN CHASE BANK, N.A.,
as Lead Arrangers,
and
BANK OF AMERICA, N.A.,
BARCLAYS BANK PLC,
CITIBANK, N.A.
and
WELLS FARGO BANK, NA.,
as Co-Syndication Agents
Table of Contents
Page
SECTION 1 DEFINITIONS
1.1 Defined Terms
1.2 Other Definitional Provisions.
1.3 Rounding
1.4 Limited Condition Acquisitions
1.5 Rates
1.6 Re-Classification and Incurrence Testing
SECTION 2 AMOUNT AND TERMS OF COMMITMENTS
2.1 [Reserved]
2.2 [Reserved]
2.3 [Reserved]
2.4 Revolving Commitments.
2.5 Procedure for Revolving Loan Borrowing
2.6 Swingline Commitment
2.7 Procedure for Swingline Borrowing; Refunding of Swingline Loans.
2.8 Overadvances
2.9 Fees.
2.10 Termination or Reduction of Revolving Commitments; Prepayments.
2.11 [Reserved].
2.12 [Reserved].
2.13 Conversion and Continuation Options.
2.14 Limitations on SOFR Tranches
2.15 Interest Rates and Payment Dates.
2.16 Computation of Interest and Fees.
2.17 Inability to Determine Interest Rate; Benchmark Replacement Setting.
2.18 Pro Rata Treatment and Payments.
2.19 Illegality; Requirements of Law.
2.20 Taxes.
2.21 Indemnity
2.22 Change of Lending Office
2.23 Substitution of Lenders
2.24 Defaulting Lenders.
2.25 [Reserved].
2.26 Notes
2.27 Incremental Facility.
SECTION 3 LETTERS OF CREDIT
3.1 L/C Commitment.
3.2 Procedure for Issuance of Letters of Credit
-i-
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2
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56
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63
65
65
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Table of Contents
(continued)
Page
3.3 Fees and Other Charges.
3.4 L/C Participations; Existing Letters of Credit.
3.5 Reimbursement.
3.6 Obligations Absolute
3.7 Letter of Credit Payments
3.8 Applications
3.9 Interim Interest
3.10 Cash Collateral.
3.11 Additional Issuing Lenders
3.12 Resignation of the Issuing Lender
3.13 Applicability of UCP and ISP
SECTION 4 REPRESENTATIONS AND WARRANTIES
4.1 Financial Condition.
4.2 No Change
4.3 Existence; Compliance with Law
4.4 Power, Authorization; Enforceable Obligations
4.5 No Legal Bar
4.6 Litigation
4.7 No Default
4.8 Ownership of Property; Liens; Investments
4.9 Intellectual Property
4.10 Taxes
4.11 Federal Regulations
4.12 Labor Matters
4.13 ERISA
4.14 Investment Company Act; Other Regulations
4.15 Subsidiaries
4.16 Use of Proceeds
4.17 Environmental Matters
4.18 Accuracy of Information, etc.
4.19 Security Documents.
4.20 Solvency
4.21 Regulation H
4.22 Designated Senior Indebtedness
4.23 [Reserved]
4.24 Insurance
4.25 No Casualty
4.26 [Reserved].
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Table of Contents
(continued)
Page
4.27 [Reserved].
4.28 OFAC
4.29 Anti-Corruption Laws
SECTION 5 CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit
5.2 Conditions to Each Extension of Credit
5.3 Post-Closing Conditions
SECTION 6 AFFIRMATIVE COVENANTS
6.1 Financial Statements
6.2 Certificates; Reports; Other Information
6.3 [Reserved].
6.4 Payment of Obligations
6.5 Maintenance of Existence; Compliance
6.6 Maintenance of Property; Insurance
6.7 Inspection of Books and Records; Discussions
6.8 Notices
6.9 Environmental Laws.
6.10 [Reserved]
6.11 [Reserved]
6.12 Additional Collateral, Etc.
6.13 [Reserved]
6.14 Use of Proceeds
6.15 Designated Senior Indebtedness
6.16 Anti-Corruption Laws
6.17 Further Assurances
SECTION 7 NEGATIVE COVENANTS
7.1 Financial Condition Covenants.
7.2 Indebtedness
7.3 Liens
7.4 Fundamental Changes
7.5 Disposition of Property
7.6 Restricted Payments
7.7 [Reserved]
7.8 Investments
7.9 ERISA
7.10 [Reserved]
7.11 Transactions with Affiliates
7.12 Sale Leaseback Transactions
-iii-
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Table of Contents
(continued)
Page
7.13 Swap Agreements
7.14 Accounting Changes
7.15 Negative Pledge Clauses
7.16 Clauses Restricting Subsidiary Distributions
7.17 Lines of Business
7.18 Designation of other Indebtedness
7.19 [Reserved]
7.20 Amendments to Organizational Agreements
7.21 Use of Proceeds
7.22 Subordinated Indebtedness.
7.23 Anti-Terrorism Laws.
SECTION 8 EVENTS OF DEFAULT
8.1 Events of Default
8.2 Remedies Upon Event of Default
8.3 Application of Funds
SECTION 9 THE ADMINISTRATIVE AGENT
9.1 Appointment and Authority.
9.2 Delegation of Duties
9.3 Exculpatory Provisions
9.4 Reliance by Administrative Agent
9.5 Notice of Default
9.6 Non-Reliance on Administrative Agent and Other Lenders
9.7 Indemnification
9.8 Agent in Its Individual Capacity
9.9 Successor Administrative Agent.
9.10 Collateral and Guaranty Matters
9.11 Administrative Agent May File Proofs of Claim
9.12 No Other Duties, etc.
9.13 Cash Management Bank and Qualified Counterparty Reports
9.14 Erroneous Payments.
9.15 Certain ERISA Matters.
9.16 Survival
SECTION 10 MISCELLANEOUS
10.1 Amendments and Waivers.
10.2 Notices
10.3 No Waiver; Cumulative Remedies
10.4 Survival of Representations and Warranties
10.5 Expenses; Indemnity; Damage Waiver.
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Table of Contents
(continued)
10.6 Successors and Assigns; Participations and Assignments.
10.7 Adjustments; Set-off.
10.8 Payments Set Aside
10.9 Interest Rate Limitation
10.10 Counterparts; Electronic Execution of Assignments.
10.11 Severability
10.12 Integration
10.13 GOVERNING LAW
10.14 Submission to Jurisdiction; Waivers
10.15 Acknowledgements
10.16 Releases of Guarantees and Liens.
10.17 Treatment of Certain Information; Confidentiality
10.18 Automatic Debits
10.19 Judgment Currency
10.20 Patriot Act
10.21 Acknowledgement and Consent to Bail-In of Affected Financial Institutions
10.22 Amendment and Restatement of Existing Credit Agreement; Acknowledgement of Prior Obligations; No Novation
10.23 Acknowledgment Regarding Any Supported QFCs
-v-
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Table of Contents
(continued)
SCHEDULES
Schedule 1.1A: Commitments
Schedule 1.1B: Existing Letters of Credit
Schedule 4.4: Governmental Approvals, Consents, Authorizations, Filings and Notices
Schedule 4.6: Litigation
Schedule 4.15: Subsidiaries
Schedule 4.17: Environmental Matters
Schedule 4.19(a): Financing Statements and Other Filings
Schedule 7.2(d): Existing Indebtedness
Schedule 7.3(f): Existing Liens
Schedule 7.8(e): Existing Investments
EXHIBITS
Exhibit A: [Reserved]
Exhibit B: Form of Compliance Certificate
Exhibit C: Form of Secretary’s/Managing Member’s Certificate
Exhibit D: Form of Solvency Certificate
Exhibit E: Form of Assignment and Assumption
Exhibits F-1 – F-4: Forms of U.S. Tax Compliance Certificate
Exhibit G: [Reserved]
Exhibit H-1: Form of Revolving Loan Note
Exhibit H-2: Form of Swingline Loan Note
Exhibit I: [Reserved]
Exhibit J: Form of Collateral Information Certificate
Exhibit K: Form of Notice of Borrowing
Exhibit L: Form of Notice of Conversion/Continuation
-vi-
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”), dated as of January 4, 2021, is entered into
by and among CROWDSTRIKE HOLDINGS, INC., a Delaware corporation (“Holdings”), CROWDSTRIKE, INC., a Delaware
corporation (“CrowdStrike” or the “Borrower”), the several banks and other financial institutions or entities from time to time party to this
Agreement (each a “Lender” and, collectively, the “Lenders”), SILICON VALLEY BANK (“SVB”), as the Issuing Lender and the
Swingline Lender, and SVB, as administrative agent and collateral agent for the Lenders (in such capacities together with any successors and
assigns in such capacities, the “Administrative Agent”).
RECITALS:
WHEREAS, the Borrower is a party to that certain Credit Agreement, originally dated as of April 19, 2019 (as amended, restated or
otherwise modified prior to date hereof, the “Existing Credit Agreement”), among Holdings, the Borrower, CrowdStrike Services, Inc., a
Delaware corporation which has since merged with and into the Borrower, the lenders party thereto from time to time, SVB, as the
administrative agent and collateral agent for the lenders, pursuant to which the lenders, the issuing lenders and the swingline lenders have
made available certain extensions of credit;
WHEREAS, Holdings, the Borrower, the Lenders, the Departing Lenders (as hereafter defined) and the Administrative Agent have
agreed (a) to enter into this Agreement in order to (i) amend and restate the Existing Credit Agreement in its entirety and (ii) set forth the
terms and conditions under which the Lenders will, from time to time, make loans and extend other financial accommodations to the
Borrower, as set forth below, and (b) that each Departing Lender shall cease to be a party to the Existing Credit Agreement as evidenced by
its execution and delivery of its Departing Lender Termination Letter (as hereinafter defined);
WHEREAS, the Lenders have agreed to extend a revolving credit facility to the Borrower, upon the terms and conditions specified
in this Agreement, in an aggregate principal amount not to exceed $750,000,000, including a letter of credit sub-facility in the aggregate
availability amount of $100,000,000 (as a sublimit of the revolving loan facility), and a swingline sub-facility in the aggregate availability
amount of $50,000,000 (as a sublimit of the revolving loan facility);
WHEREAS, the Borrower has agreed to secure all of its Obligations by granting to the Administrative Agent, for the benefit of the
Secured Parties, a first priority lien (subject to Liens permitted by the Loan Documents) on substantially all of its assets; and
WHEREAS, each of the Guarantors has agreed to guarantee the Obligations of the Borrower and to secure its respective Obligations
in respect of such guarantee by granting to the Administrative Agent, for the benefit of the Secured Parties, a first priority lien (subject to
Liens permitted by the Loan Documents) on substantially all of its assets.
NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in this Agreement, and for good and
valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree that the Existing Credit Agreement shall
be amended and restated in its entirety to read as follows (it being agreed that this Agreement shall not be deemed to evidence or result in a
novation or repayment and reborrowing of the Obligations under, and as defined in, the Existing Credit Agreement):
1
1.1
Defined Terms. As used in this Agreement (including the recitals hereof), the terms listed in this Section 1.1 shall have the
respective meanings set forth in this Section 1.1.
SECTION 1
DEFINITIONS
“ABR”: for any day, a rate per annum equal to the highest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective
Rate in effect on such day plus 0.50%, and (c) the Term SOFR for a one-month tenor in effect on such day plus 1.00%. Any change in the
ABR due to a change in any of the Prime Rate, the Federal Funds Effective Rate, or the Term SOFR as the case may be, shall be effective as
of the opening of business on the effective day of the change in such rates.
“ABR Loans”: Loans, the rate of interest applicable to which is based upon the ABR.
“ABR Term SOFR Determination Day”: as defined in the definition of “Term SOFR”.
“Account Debtor”: any Person who may become obligated to any Person under, with respect to, or on account of, an Account, chattel
paper or general intangibles (including a payment intangible). Unless otherwise stated, the term “Account Debtor,” when used herein, shall
mean an Account Debtor in respect of an Account of the Borrower.
“Accounts”: all “accounts” (as defined in the UCC) of a Person, including, without limitation, accounts, accounts receivable, monies
due or to become due and obligations in any form (whether arising in connection with contracts, contract rights, instruments, general
intangibles, or chattel paper), in each case whether arising out of goods sold or services rendered or from any other transaction and whether
or not earned by performance, now or hereafter in existence, and all documents of title or other documents representing any of the foregoing,
and all collateral security and guaranties of any kind, now or hereafter in existence, given by any Person with respect to any of the foregoing.
Unless otherwise stated, the term “Account,” when used herein, shall mean an Account of the Borrower.
“Acquisition”: purchases or other acquisitions by any Group Member of the Capital Stock in a Person that, upon the consummation
thereof, will be a Subsidiary (including as a result of a merger or consolidation) or all or substantially all of the assets of, or assets
constituting one or more business units.
“Adjusted Term SOFR”: for purposes of any calculation, the rate per annum equal to (a) Term SOFR for such calculation plus (b) the
Term SOFR Adjustment; provided that if Adjusted Term SOFR as so determined shall ever be less than the Floor, then Adjusted Term SOFR
shall be deemed to be the Floor.
“Administrative Agent”: SVB, as the administrative agent under this Agreement and the other Loan Documents, together with any of
its successors in such capacity.
“Affected Financial Institution”: (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affected Lender”: as defined in Section 2.23.
“Affiliate”: with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified; provided that, neither the Administrative Agent nor the Lenders
shall be deemed Affiliates of the Loan Parties as a result of the exercise of their rights and remedies under the Loan Documents.
“Agent Parties”: as defined in Section 10.2(c)(ii).
“Aggregate Exposure”: with respect to any Lender at any time, an amount equal to the sum of (a) the amount of such Lender’s
Revolving Commitment then in effect or, if the Revolving Commitments have been terminated, the amount of such Lender’s Revolving
Extensions of Credit then outstanding, and
2
(b) without duplication of clause (a), the L/C Commitment of such Lender then in effect (as a sublimit of the Revolving Commitment of such
Lender).
“Aggregate Exposure Percentage”: with respect to any Lender at any time, the ratio (expressed as a percentage) of such Lender’s
Aggregate Exposure at such time to the Aggregate Exposure of all Lenders at such time.
“Agreement”: as defined in the preamble hereto.
“Applicable Margin”: commencing on the first Business Day immediately following the date on which Holdings delivers a
Compliance Certificate pursuant to Section 6.2(b), the rate per annum set forth under the relevant column heading below based upon the
Consolidated Senior Secured Leverage Ratio in such Compliance Certificate:
Level
Consolidated Senior Secured
Leverage Ratio
Applicable Margin
for SOFR Loans and
Letters of Credit
III
II
I
> 2.50:1.00
< 2.50:1.00 but > 1.00:1.00
< 1.00:1.00
2.00%
1.75%
1.50%
Applicable Margin for
ABR Loans
Commitment Fee Rate
0.25%
0.00%
(0.25)%
0.25%
0.20%
0.15%
Notwithstanding the foregoing, (a) until the delivery of the first Compliance Certificate required to be delivered pursuant to Section
6.2(b) after the Closing Date, the Applicable Margin shall be the rates corresponding to Level I in the foregoing table, (b) if Holdings fails to
deliver the financial statements required by Section 6.1 and the related Compliance Certificate required by Section 6.2(b), by the respective
date required thereunder after the end of any related fiscal quarter of Holdings, the Applicable Margin shall be the rates corresponding to
Level III in the foregoing table until such financial statements and Compliance Certificate are delivered, and (c) no reduction to the
Applicable Margin shall become effective at any time when an Event of Default has occurred and is continuing.
If, as a result of any restatement of or other adjustment to the financial statements of the Loan Parties or for any other reason, (x) the
Consolidated Senior Secured Leverage Ratio as calculated by Holdings as of any applicable date was inaccurate and (y) a proper calculation
of the Consolidated Senior Secured Leverage Ratio would have resulted in different pricing for any period, then (i) if the proper calculation
of the Consolidated Senior Secured Leverage Ratio would have resulted in higher pricing for such period, the Borrower shall automatically
and retroactively be obligated to pay to the Administrative Agent, for the benefit of the applicable Lenders, promptly on demand by the
Administrative Agent, an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the
amount of interest and fees actually paid for such period; and (ii) if the proper calculation of the Consolidated Senior Secured Leverage Ratio
would have resulted in lower pricing for such period, neither the Administrative Agent nor any Lender shall have any obligation to repay any
interest or fees to the Borrower.
“Application”: an application, in such form as the Issuing Lender may specify from time to time, requesting the Issuing Lender to
issue a Letter of Credit.
“Approved Fund”: any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender, or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.
“Assignment and Assumption”: an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent
of any party whose consent is required by Section 10.6), and accepted by the Administrative Agent, in substantially the form of Exhibit E or
any other form approved by the Administrative Agent.
3
“Available Amount”: as of any date of determination, a cumulative amount equal to the sum of (without duplication):
(a)
$50,000,000; plus
(b)
to the extent greater than $0.00, 50% of the sum of Excess Cash Flow for each fiscal year of Holdings, commencing with the
fiscal year ending January 31, 2022; plus
(c)
the amount of any capital contribution in respect of Capital Stock (other than Disqualified Stock) or the proceeds of any
issuance of Capital Stock (other than Disqualified Stock), in each case, received in cash or Cash Equivalents by Holdings (other than any
amounts received from any other Group Member), in each case, during the period from and including the day immediately following the
Closing Date through and including such date; plus
(d)
the aggregate principal amount of any Indebtedness of any Group Member issued after the Closing Date (other than
Indebtedness issued to a Group Member), which has been converted into or exchanged for Capital Stock (other than Disqualified Stock) of
Holdings, during the period from and including the day immediately following the Closing Date through and including such date; plus
(e)
the cash net proceeds received by the Group Members during the period from and including the day immediately following
the Closing Date through and including such date in connection with the Disposition to any Person (other than a Group Member) of any
Investment made pursuant to Section 7.8(n) (in an amount not to exceed the original amount of such Investment); minus
(f)
an amount equal to the sum of (i) Restricted Payments made pursuant to Section 7.6(h), plus (ii) Investments made pursuant
to Section 7.8(n), and (iii) payments of Subordinated Indebtedness made pursuant to Section 7.22(b).
“Available Amount Certificate”: a certificate, reasonably satisfactory to the Administrative Agent, signed by a Responsible Officer
of the Borrower, evidencing calculation of the Available Amount.
“Available Revolving Commitment”: at any time, an amount equal to (a) the Total Revolving Commitments in effect at such time,
minus (b) the aggregate undrawn amount of all outstanding Letters of Credit at such time, minus (c) the aggregate amount of all L/C
Disbursements that have not yet been reimbursed or converted into Revolving Loans at such time, minus (d) the aggregate principal balance
of any Revolving Loans outstanding at such time.
“Available Revolving Increase Amount”: as of any date of determination, an amount equal to the result of (a) $250,000,000 minus
(b) the aggregate principal amount of Increases to the Revolving Commitments previously made pursuant to Section 2.27 after the Closing
Date.
“Available Tenor”: as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if such
Benchmark is a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an
interest period pursuant to this Agreement or (y) otherwise, any payment period for interest calculated with reference to such Benchmark (or
component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such
Benchmark, in each case, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed
from the definition of “Interest Period” pursuant to Section 2.17(b)(iv).
“Bail-In Action”: the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any
liability of an Affected Financial Institution.
“Bail-In Legislation”: (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the
European Parliament and of the Council of the European Union, the implementing law, regulation or requirement for such EEA Member
Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of
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the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United
Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than
through liquidation, administration or other Insolvency Proceedings).
“Bankruptcy Code”: Title 11 of the United States Code entitled “Bankruptcy.”
“Benchmark”: initially, the Term SOFR Reference Rate; provided that if a Benchmark Transition Event has occurred with respect to
the Term SOFR Reference Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the
extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2.17(b)(i).
“Benchmark Replacement”: with respect to any Benchmark Transition Event, the first alternative set forth in the order below that
can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:
(a) (i) Daily Simple SOFR and (ii) the related Benchmark Replacement Adjustment; or
(b) the sum of: (i) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower giving due
consideration to (A) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the
Relevant Governmental Body or (B) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement
to the then-current Benchmark for Dollar-denominated syndicated credit facilities and (ii) the related Benchmark Replacement Adjustment.
If the Benchmark Replacement as determined pursuant to clause (a) or (b) above would be less than the Floor, the Benchmark
Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment”: with respect to any replacement of the then current Benchmark with an Unadjusted
Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive
or negative value or zero) that has been selected by the Administrative Agent and the Borrower giving due consideration to (a) any selection
or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such
Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (b) any evolving or then-
prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the
replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities.
“Benchmark Replacement Date”: the earliest to occur of the following events with respect to the then-current Benchmark:
(a) in the case of clause (a) or (b) of the definition of “Benchmark Transition Event,” the later of (i) the date of the public statement
or publication of information referenced therein and (ii) the date on which the administrator of such Benchmark (or the published
component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark
(or such component thereof); or
(b) in the case of clause (c) of the definition of “Benchmark Transition Event”, the first date on which such Benchmark (or the
published component used in the calculation thereof) has been determined and announced by or on behalf of the administrator of
such Benchmark (or such component thereof) or the regulatory supervisor for the administrator of such Benchmark (or such
component thereof) to be non-representative, non-compliant or non-aligned with the International Organization of Securities
Commissions (IOSCO) Principles for Financial Benchmarks; provided that such non-representativeness, non-compliance or non-
alignment will be determined by reference to the most recent statement or publication referenced in such
5
clause (c) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such
date.
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with
respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available
Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event”: the occurrence of one or more of the following events with respect to the then-current Benchmark:
(a) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published
component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available
Tenors of such Benchmark (or such component thereof), permanently or indefinitely; provided that, at the time of such
statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such
Benchmark (or such component thereof);
(b) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the
published component used in the calculation thereof), the Board of Governors of the Federal Reserve System, the Federal
Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such
component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or
an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which
states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of
such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or
publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such
component thereof); or
(c) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published
component used in the calculation thereof) or the regulatory supervisor for the administrator of such Benchmark (or such
component thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a
specified future date will not be, representative or in compliance with or aligned with the International Organization of Securities
Commissions (IOSCO) Principles for Financial Benchmarks.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a
public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such
Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period”: the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to
clauses (a) or (b) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all
purposes hereunder and under any Loan Document in accordance with Section 2.17(b) and (y) ending at the time that a Benchmark
Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section
2.17(b).
“Beneficial Ownership Certification”: a certification regarding beneficial ownership required by the Beneficial Ownership
Regulation, which certification shall be substantially similar in form and substance to the form of Certification Regarding Beneficial Owners
of Legal Entity Customers published jointly, in May 2018, by the Loan Syndications and Trading Association and Securities Industry and
Financial Markets Association.
“Beneficial Ownership Regulation”: United States 31 C.F.R. § 1010.230.
6
“Benefit Plan”: any of (a) an “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA, (b) a
“plan” as defined in Section 4975 of the Code to which Section 4975 of the Code applies, and (c) any Person whose assets include (for
purposes of the Plan Asset Regulations or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such
“employee benefit plan” or “plan”.
“Benefitted Lender”: as defined in Section 10.7(a).
“Blocked Person”: as defined in Section 7.23.
“Board”: the Board of Governors of the Federal Reserve System of the United States (or any successor).
“Borrower”: as defined in the preamble hereto.
“Borrowing Date”: any Business Day specified by the Borrower in a Notice of Borrowing as a date on which the Borrower requests
the relevant Lenders to make Loans hereunder.
“Business”: as defined in Section 4.17(b).
“Business Day”: a day other than a Saturday, Sunday or other day on which commercial banks in the State of New York or the State
of California are authorized or required by law to close.
“Capital Lease Obligations”: as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the
amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP; provided,
that for all purposes hereunder, any obligations of such Person that would have been treated as operating leases in accordance with
Accounting Standards Codification 840 (regardless of whether or not then in effect) shall be treated as operating leases for purposes of all
financial definitions, calculations and covenants, without giving effect to Accounting Standards Codification 842 requiring operating leases
to be recharacterized or treated as capital leases.
“Capital Stock”: with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such
Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other
ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other
ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or
such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date
of determination; provided, however, that any Indebtedness convertible or exchangeable into Capital Stock that is not Disqualified Stock
shall not constitute Capital Stock.
“Cash Collateralize”: to pledge and deposit with or deliver to (a) with respect to Obligations in respect of Letters of Credit, the
Administrative Agent, for the benefit of the Issuing Lender and one or more of the Lenders, as applicable, as collateral for L/C Exposure or
obligations of the Lenders to fund participations in respect thereof, cash or deposit account balances or, if the Administrative Agent and the
Issuing Lender shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance
satisfactory to the Administrative Agent and such Issuing Lender; (b) with respect to Obligations arising under any Cash Management
Agreement in connection with Cash Management Services, the applicable Cash Management Bank, for its own or any of its applicable
Affiliate’s benefit, as provider of such Cash Management Services, cash or deposit account balances or, if the Administrative Agent and the
applicable Cash Management Bank shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form
and substance satisfactory to the Administrative Agent and such Cash Management Bank; or (c) with respect to Obligations in respect of any
Specified Swap Agreements, the applicable Qualified Counterparty, as Collateral for such
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Obligations, cash or deposit account balances or, if such Qualified Counterparty shall agree in its sole discretion, other credit support, in each
case pursuant to documentation in form and substance satisfactory to such Qualified Counterparty. “Cash Collateral” shall have a meaning
correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.
“Cash Equivalents”: (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date
of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of one year or
less from the date of acquisition issued by any Lender or by any commercial bank organized under the laws of the United States or any state
thereof having combined capital and surplus of not less than $250,000,000; (c) commercial paper of an issuer rated at least A-1 by S&P or P-
1 by Moody’s, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease
publishing ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition; (d) repurchase
obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more
than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (e) securities with maturities of
one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which
state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P
or A by Moody’s; (f) securities with maturities of one year or less from the date of acquisition backed by standby letters of credit issued by
any Lender or any commercial bank satisfying the requirements of clause (b) of this definition; (g) money market mutual or similar funds that
invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition; (h) money market funds that (i) comply
with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by
Moody’s and (iii) have portfolio assets of at least $5,000,000,000; (i) in the case of any Group Member organized or having its principal
place of business outside the United States, investments denominated in the currency of the jurisdiction in which such Group member is
organized or has its principal place of business which are similar and of comparable credit quality to the items specified in clauses (b)
through (i) above; or (j) investments permitted by the Borrower’s board-approved investment policy.
“Cash Management Agreement”: as defined in the definition of “Cash Management Services.”
“Cash Management Bank”: any Person that, at the time it enters into a Cash Management Agreement, is a Lender or an Affiliate of
a Lender, in its capacity as a party to such Cash Management Agreement.
“Cash Management Services”: cash management and other services provided to one or more of the Group Members by a Cash
Management Bank which may include treasury, depository, return items, overdraft, controlled disbursement, merchant store value cards, e-
payables services, electronic funds transfer, interstate depository network, automatic clearing house transfer (including the Automated
Clearing House processing of electronic funds transfers through the direct Federal Reserve Fedline system), merchant services, direct deposit
of payroll, business credit card (including so-called "purchase cards", "procurement cards" or "p-cards"), credit card processing services,
debit cards, stored value cards, and check cashing services identified in such Cash Management Bank’s various cash management services or
other similar agreements (each, a “Cash Management Agreement”).
“Casualty Event”: any damage to or any destruction of, or any condemnation or other taking by any Governmental Authority of any
property of the Loan Parties.
“Certificated Securities”: as defined in Section 4.19(a).
“Change of Control”: (a) at any time, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange
Act) shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in
Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of 35% or more of the ordinary voting power for
8
the election of directors of Holdings (determined on a fully diluted basis); or (b) except as permitted by Section 7.4, at any time, Holdings
shall cease to own and control, of record and beneficially, directly or indirectly, 100% of each class of outstanding Capital Stock of each
other Loan Party free and clear of all Liens other than Liens permitted by Section 7.3.
“Closing Date”: the date on which all of the conditions precedent set forth in Section 5.1 are satisfied or waived by the
Administrative Agent and, as applicable, the Lenders or the Required Lenders.
“Code”: the Internal Revenue Code of 1986, as amended from time to time.
“Collateral”: all property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any
Security Document. For the avoidance of doubt, no Excluded Asset shall constitute “Collateral.”
“Collateral Information Certificate”: the Collateral Information Certificate to be executed and delivered by Holdings pursuant to
Section 5.1, substantially in the form of Exhibit J.
“Collateral-Related Expenses”: all reasonable costs and expenses of the Administrative Agent paid or incurred in connection with
any sale, collection or other realization on the Collateral, including reasonable compensation to the Administrative Agent and its agents and
counsel, and reimbursement for all other reasonable costs, expenses and liabilities and advances made or incurred by the Administrative
Agent in connection therewith (including as described in Section 6.6 of the Guarantee and Collateral Agreement), and all amounts for which
the Administrative Agent is entitled to indemnification under the Security Documents and all advances made by the Administrative Agent
under the Security Documents for the account of any Loan Party.
“Commitment”: as to any Lender, its Revolving Commitment.
“Commitment Fee”: as defined in Section 2.9(b).
“Commitment Fee Rate”: the rate per annum set forth under the relevant column heading under the definition of “Applicable
Margin.”
“Commodity Exchange Act”: the Commodity Exchange Act (7 U.S.C. Section 1 et seq.), as amended from time to time, and any
successor statute.
“Communications”: as defined in Section 10.2(c)(ii).
“Compliance Certificate”: a certificate duly executed by a Responsible Officer of Holdings substantially in the form of Exhibit B.
“Conforming Changes”: with respect to either the use or administration of any Benchmark or the use, administration, adoption or
implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of
“ABR,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period” or
any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making
payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of
lookback periods, the applicability of Section 2.14 and other technical, administrative or operational matters) that the Administrative Agent
decides may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the
Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any
portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the
administration of any such rate exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in
connection with the administration of this Agreement and the other Loan Documents).
9
“Connection Income Taxes”: Other Connection Taxes that are imposed on or measured by net income (however denominated) or
that are franchise Taxes or branch profits Taxes.
“Consolidated Capital Expenditures”: for any period, with respect to Holdings and its consolidated Subsidiaries, the aggregate
amount of all expenditures (whether paid in cash or other consideration or accrued as a liability and including that portion of Capital Lease
Obligations which is capitalized on the consolidated balance sheet of Holdings) by such Group Members during such period for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized
repairs and improvements during such period) that, in conformity with GAAP, are included in “additions to property, plant or equipment” or
comparable items reflected in the consolidated statement of cash flows of Holdings; provided that “Consolidated Capital Expenditures”
shall not include expenditures (a) in respect of normal replacements and maintenance which are properly charged to current operations, (b)
made in connection with the replacement, substitution or restoration of assets to the extent financed (i) from insurance proceeds paid on
account of the loss of or damage to the assets being replaced or restored or (ii) with awards of compensation arising from the taking by
eminent domain or condemnation of the assets being replaced, or (c) made as a tenant as leasehold improvements during such period to the
extent reimbursed by the landlord during such period.
“Consolidated EBITDA”: for any period, with respect to Holdings and its consolidated Subsidiaries, Consolidated Net Income for such
period, plus (a) without duplication and to the extent deducted in determining Consolidated Net Income for such period, the sum of:
(i) Consolidated Interest Expense for such period;
(ii) provision for taxes based on income, profits, revenue or capital, including federal, foreign, state, provincial,
territorial, local, unitary, excise, property, franchise, value added and similar taxes and withholding taxes (including any future taxes
or other levies which replace or are intended to be in lieu of such taxes and any penalties and interest related to such taxes or arising
from tax examinations) and similar taxes of such Person paid or accrued during such period (including in respect of repatriated
funds);
(iii) all amounts attributable to depreciation and amortization expense for such period;
(iv) any extraordinary non-cash charges for such period (but excluding any lost earnings);
(v) any other non-cash charges for such period (but excluding any non-cash charge in respect of an item that was
included in Consolidated Net Income in a prior period, any lost earnings and any non-cash charge that relates to the write-down or
write-off of inventory in the ordinary course of business);
(vi) the amount of any non-cash expense as a result of any grant of Capital Stock to employees, for such period;
(vii) any fees, costs, expenses or charges related to any actual, proposed or contemplated issuance of Capital Stock,
Investment, acquisition, disposition outside of the ordinary course of business, recapitalization or the incurrence of Indebtedness
permitted to be incurred hereunder (including a refinancing thereof) (whether or not successful and including any such transaction
consummated prior to the Closing Date), including (i) such fees, expenses or charges (including rating agency fees, consulting fees
and other related expenses and/or letter of credit or similar fees) related to the offering or incurrence of, or ongoing administration, of
the Unsecured Notes, this Agreement, any other credit facilities and any Ratio Debt, and (ii) any amendment, waiver or other
modification of the Unsecured Notes, this Agreement, any Ratio Debt, any other Indebtedness or any issuance of Capital Stock, in
each case, whether or not consummated, to the extent deducted (and not added back) in computing Consolidated Net Income;
10
(viii) any losses realized upon a Disposition of property (including abandoned or discontinued operations or product lines
and extraordinary losses) outside of the ordinary course of business for such period;
(ix) the amount of pro forma “run rate” cost savings (including cost savings with respect to salary, benefit and other
direct savings resulting from workforce reductions and facility, benefit and insurance savings and any savings expected to result from
the elimination of a public target’s Public Company Costs) and operating expense reductions attributable to operating improvements,
strategic initiatives, synergies or other actions taken or expected to be taken (it is understood and agreed that “run rate” means the
full recurring benefit for a period that is associated with any action taken, committed to be taken or expected to be taken, net of the
amount of actual benefits realized during such period from such actions) that are projected by the Borrower in good faith to be
realized within 24 months of the last day of such period (including from any actions taken in whole or in part prior to such date),
which will be added to Consolidated EBITDA as so projected until fully realized and calculated on a pro forma basis as though such
cost savings (including cost savings with respect to salary, benefit and other direct savings resulting from workforce reductions and
facility, benefit and insurance savings and any savings expected to result from the elimination of a public target’s Public Company
Costs) and operating expense reductions had been realized on the first day of such period, in each case, net of the amount of actual
benefits realized prior to or during such period from such actions; provided that such cost savings are reasonably identifiable and
factually supportable (in the good faith determination of the Borrower); and provided further that (A) the aggregate amount added
back pursuant to this clause (ix) and clause (x) below shall not exceed for any period of four consecutive fiscal quarters, an amount
equal to 20% of Consolidated EBITDA for such period (calculated prior to giving effect to any such adjustments) and (B) no such
amounts added back pursuant to this clause (ix) shall be duplicative of any expense or charges otherwise added back to Consolidated
EBITDA, whether through a pro forma adjustment or otherwise, for such period;
(x)
the amount of any restructuring charge, accrual, reserve (and adjustments to existing reserves) or expense,
integration cost, inventory optimization programs or other business optimization expense or cost (including charges directly related
to the implementation of cost-savings initiatives and tax restructurings) that is deducted (and not added back) in such period in
computing Consolidated Net Income, including any such costs incurred in connection with acquisitions or divestitures after the
Closing Date, any severance, retention, signing bonuses, relocation, recruiting and other employee related costs, costs in respect of
strategic initiatives and curtailments or modifications to pension and post-retirement employment benefit plans (including any
settlement of pension liabilities), costs related to entry into new markets (including unused warehouse space costs) and new product
introductions (including labor costs, scrap costs and lower absorption of costs, including due to decreased productivity and greater
inefficiencies), systems development and establishment costs, operational and reporting systems, technology initiatives, contract
termination costs, future lease commitments and costs related to the opening and closure and/or consolidation of facilities (including
severance, rent termination, moving and legal costs) and to exiting lines of business and consulting fees incurred with any of the
foregoing, and fees, costs and expenses associated with acquisition related litigation and settlements thereof; provided that the
aggregate amount added back pursuant to this clause (x) and clause (ix) above shall not exceed for any period of four consecutive
fiscal quarters, an amount equal to 20% of Consolidated EBITDA for such period (calculated prior to giving effect to any such
adjustments);
(xi) proceeds from business interruption insurance received during such period (to the extent not reflected as revenue or
income in Consolidated Net Income and to the extent that the related loss was deducted in the determination of Consolidated Net
Income);
(xii) unusual or non-recurring expenses for such period; and
(xiii) any Public Company Costs paid in cash for such period;
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minus (b) without duplication and to the extent included in Consolidated Net Income,
any cash payments made during such period in respect of non-cash charges described in clause (a)(v) above taken in
(i)
a prior period;
(ii) any extraordinary gains and any non-cash items of Consolidated Net Income for such period;
(iii) interest income; and
(iv) unusual or non-recurring gains for such period;
minus (c), the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by Holdings and its consolidated
Subsidiaries during such period in respect of purchased software or internally developed software and software enhancements that, in
conformity with GAAP, are or are required to be reflected as capitalized costs on the consolidated balance sheet of Holdings and its
consolidated Subsidiaries;
plus (d), any net positive change (or minus any net negative change) in the deferred revenue for any period, as measured against the
same period for the prior fiscal year; and
minus (e), capitalized deferred contract acquisition costs for any period.
“Consolidated Intangible Assets”: on any date, the consolidated intangible assets of Holdings and its consolidated Subsidiaries, as
such amounts would appear on a consolidated balance sheet of Holdings prepared in accordance with GAAP. As used herein, “intangible
assets” means the value (net of any applicable reserves) as shown on such balance sheet of (i) all Intellectual Property and (ii) all other
intangible assets.
“Consolidated Interest Coverage Ratio”: as of the last day of any trailing four fiscal quarter period of Holdings, the ratio of (a)
Consolidated EBITDA for such period to (b) Consolidated Interest Expense for such period.
“Consolidated Interest Expense”: for any period, total interest expense (including that attributable to Capital Lease Obligations) of
Holdings and its consolidated Subsidiaries for such period with respect to all outstanding Indebtedness of such Persons (including all
commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs
under Swap Agreements in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP).
“Consolidated Net Income”: for any period, the consolidated net income (or loss) of Holdings and its consolidated Subsidiaries,
determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from the calculation of “Consolidated
Net Income” (a) the income (or deficit) of any such Person accrued prior to the date it becomes a Subsidiary of Holdings or is merged into or
consolidated with Holdings or one of its Subsidiaries (except to the extent required for any calculation of Consolidated EBITDA on a Pro
Forma Basis), (b) the income (or deficit) of any such Person (other than a Subsidiary of Holdings in which Holdings or one of its Subsidiaries
has an ownership interest), except to the extent that any such income is actually received by Holdings or such Subsidiary in the form of
dividends or similar distributions, and (c) the undistributed earnings (or loss to the extent that Holdings or any wholly-owned Subsidiary
thereof is not required to directly or indirectly fund such loss) of any Subsidiary of Holdings to the extent that the declaration or payment of
dividends or similar distributions (or loans constituting Subordinated Indebtedness in lieu of a distribution) by such Subsidiary is not at the
time permitted by the terms of any Contractual Obligation (other than under any Loan Document), any applicable Operating Document or
Requirement of Law applicable to such Subsidiary.
“Consolidated Senior Secured Leverage Ratio”: as of the last day of any trailing four fiscal quarter period of Holdings, the ratio of
(a) Secured Consolidated Debt other than Subordinated
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Indebtedness, minus Unrestricted Cash (as defined below) not to exceed $100,000,000 to (b) Consolidated EBITDA for such trailing four
fiscal quarter period.
“Consolidated Tangible Assets”: on any date, the excess of Consolidated Total Assets over the sum of (a) the Group Member’s cash
and Cash Equivalents and (b) Consolidated Intangible Assets.
“Consolidated Total Assets”: on any date, the consolidated total assets of Holdings and its consolidated Subsidiaries, as such
amounts would appear on a consolidated balance sheet of Holdings prepared as of such date in accordance with GAAP.
“Consolidated Total Debt”: Indebtedness for borrowed money, Capital Lease Obligations and purchase money debt as reflected on
the consolidated balance sheet of Holdings and its Subsidiaries
“Consolidated Total Leverage Ratio”: as of the last day of any trailing four fiscal quarter period of Holdings, the ratio of (a)
Consolidated Total Debt minus Unrestricted Cash (as defined below) not to exceed $100,000,000 to (b) Consolidated EBITDA for such
trailing four fiscal quarter period.
“Contractual Obligation”: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any of its property is bound.
“Control”: the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings
correlative thereto.
Daily Simple SOFR”: for any day (a “SOFR Rate Day”), a rate per annum equal to the greater of (a) SOFR for the day (such day
“i”) that is five (5) U.S. Government Securities Business Days prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business
Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities
Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the
SOFR Administrator’s Website, and (b) the Floor. If by 5:00 pm (New York City time) on the second (2 ) U.S. Government Securities
Business Day immediately following any day “i”, the SOFR in respect of such day “i” has not been published on the SOFR Administrator’s
Website and a Benchmark Replacement Date with respect to the Daily Simple SOFR has not occurred, then the SOFR for such day “i” will
be the SOFR as published in respect of the first preceding U.S. Government Securities Business Day for which such SOFR was published on
the SOFR Administrator’s Website; provided that any SOFR determined pursuant to this sentence shall be utilized for purposes of calculation
of Daily Simple SOFR for no more than three (3) consecutive SOFR Rate Days. Any change in Daily Simple SOFR due to a change in
SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.
nd
“CrowdStrike”: as defined in the preamble hereto.
“Debtor Relief Laws”: the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other
applicable jurisdictions from time to time in effect.
“Default”: any of the events specified in Section 8.1, whether or not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
“Default Rate”: as defined in Section 2.15(c).
“Defaulting Lender”: subject to Section 2.24(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two
(2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the
Borrower in writing that such failure is the result of such Lender’s reasonable determination that one or more conditions precedent to
13
funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not
been satisfied, or (ii) pay to the Administrative Agent, the Issuing Lender, the Swingline Lender or any other Lender any other amount
required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) within two (2) Business
Days of the date when due, (b) has notified the Borrower, the Administrative Agent, the Issuing Lender or the Swingline Lender in writing
that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or
public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s
reasonable determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be
specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written
request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply
with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause
(c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent
company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) become the subject of a Bail-In Action or (iii) had
appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with
reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal
regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or
acquisition of any Capital Stock in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such
ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from
the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject,
repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a
Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error,
and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.24(b)) upon delivery of written notice of such determination
to the Borrower, the Issuing Lender, the Swingline Lender and each Lender.
“Departing Lender”: each lender under the Existing Credit Agreement on the Closing Date that will no longer be a Lender
immediately after the Closing Date.
“Departing Lender Termination Letter”: each letter agreement between the Borrower, the Administrative Agent and each Departing
Lender confirming that the applicable Departing Lender shall no longer be party to this Agreement immediately after the Closing Date.
“Deposit Account”: any “deposit account” as defined in the UCC with such additions to such term as may hereafter be made.
“Designated Jurisdiction”: any country or territory to the extent that such country or territory itself is the subject of any Sanction.
“Determination Date”: as defined in the definition of “Pro Forma Basis”.
“Discharge of Obligations”: subject to Section 10.8, the satisfaction of the Obligations (including all such Obligations relating to
Cash Management Services) by the payment in full, in cash (or, as applicable, Cash Collateralization in accordance with the terms hereof) of
the principal of and interest on or other liabilities relating to each Loan and any previously provided Cash Management Services, all fees and
all other expenses or amounts payable under any Loan Document (other than inchoate indemnification obligations and any other obligations
which pursuant to the terms of any Loan Document specifically survive repayment of the Loans for which no claim has been made), and
other Obligations under or in respect of Specified Swap Agreements and Cash Management Services, to the extent (a) no default or
termination event shall have occurred and be continuing thereunder, (b) any such Obligations in respect of Specified Swap Agreements have,
if required by any applicable Qualified Counterparties, been Cash Collateralized, (c) no Letter of Credit shall be outstanding (or, as
applicable, each outstanding and undrawn Letter of Credit has been Cash Collateralized in accordance with the terms hereof), (d) no
14
Obligations in respect of any Cash Management Services are outstanding (or, as applicable, all such outstanding Obligations in respect of
Cash Management Services have been Cash Collateralized in accordance with the terms hereof), and (e) the aggregate Commitments of the
Lenders are terminated.
“Disclosure Letter”: the disclosure letter, dated as of the date hereof, delivered by each Loan Party to Administrative Agent for the
benefit of the Lenders.
“Disposition”: with respect to any property (including, without limitation, Capital Stock of any Subsidiary of Holdings), any sale,
lease, Sale Leaseback Transaction, assignment, conveyance, transfer, encumbrance or other disposition thereof (in one transaction or in a
series of transactions and whether effected pursuant to a Division or otherwise) and any issuance of Capital Stock of any of Holdings’
Subsidiaries. The terms “Dispose” and “Disposed of” shall have correlative meanings.
“Disqualified Stock”: any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it
is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the
date that is ninety-one (91) days after the date on which the Loans mature. The amount of Disqualified Stock deemed to be outstanding at any
time for purposes of this Agreement will be the maximum amount that Holdings and its Subsidiaries may become obligated to pay upon
maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock or portion thereof, plus accrued dividends.
Notwithstanding the preceding sentence, (i) any Capital Stock that would constitute Disqualified Stock solely because the holders of the
Capital Stock have the right to be paid upon liquidation, dissolution, winding up or pursuant to such other applicable statutory or regulatory
obligations of the issuer of such Capital Stock will not constitute Disqualified Stock if the terms of such Capital Stock provide that such
payments may not be made with respect to such Capital Stock unless such payments are made in accordance with Section 7.6 hereof and (ii)
if such Capital Stock is issued pursuant to a plan or agreement for the benefit of the Borrower’s or its Subsidiaries’ employees or by any such
plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the
Borrower or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination,
death, or disability.
“Division”: the division of the assets, liability and/or obligations of a Person (the “Dividing Person”) among two or more Persons
(whether pursuant to a “plan or division” or similar arrangement), which may or may not include the Dividing Person and pursuant to which
the Dividing Person may or may not survive.
“Dollars” and “$”: dollars in lawful currency of the United States.
“Domestic Subsidiary”: any Subsidiary of Holdings organized under the laws of any jurisdiction within the United States.
“EEA Financial Institution”: (a) any credit institution or investment firm established in any EEA Member Country which is subject
to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution
described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a Subsidiary of an
institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country”: any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority”: any public administrative authority or any person entrusted with public administrative authority of any
EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
15
“Eligible Assignee”: any Person that meets the requirements to be an assignee under Section 10.6(b)(iii), (v) and (vi) (subject to such
consents, if any, as may be required under Section 10.6(b)(iii)).
“Environmental Laws”: any and all foreign, federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to
or imposing liability or standards of conduct concerning protection of human health as it pertains to hazardous or toxic substances or the
environment, as now or may at any time hereafter be in effect.
“Environmental Liability”: any liability, contingent or otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Subsidiaries directly or
indirectly resulting from or based upon (a) a violation of an Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Materials of Environmental Concern, (c) exposure to any Materials of Environmental Concern, (d) the release or
threatened release of any Materials of Environmental Concern into the environment, or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“ERISA”: the Employee Retirement Income Security Act of 1974, as amended, including (unless the context otherwise requires) any
rules or regulations promulgated thereunder.
“ERISA Affiliate”: each business or entity which is, or within the last six years was, a member of a “controlled group of
corporations,” under “common control” or an “affiliated service group” with any Loan Party within the meaning of Section 414(b), (c), (m)
or (n) of the Code, required to be aggregated with any Loan Party under Section 414(o) of the Code, or is, or within the last six years was,
under “common control” with any Loan Party, within the meaning of Section 4001(a)(14) of ERISA.
“ERISA Event”: any of (a) a reportable event as defined in Section 4043 of ERISA with respect to a Pension Plan, excluding,
however, such events as to which the PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that it be notified within
30 days of the occurrence of such event; (b) the applicability of the requirements of Section 4043(b) of ERISA with respect to a contributing
sponsor, as defined in Section 4001(a)(13) of ERISA, to any Pension Plan where an event described in paragraph (9), (10), (11), (12) or (13)
of Section 4043(c) of ERISA is reasonably expected to occur with respect to such plan within the following 30 days; (c) a withdrawal by any
Loan Party or any ERISA Affiliate thereof from a Pension Plan or the termination of any Pension Plan resulting in liability under
Sections 4063 or 4064 of ERISA; (d) the withdrawal of any Loan Party or any ERISA Affiliate thereof in a complete or partial withdrawal
(within the meaning of Section 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefor, or the
receipt by any Loan Party or any ERISA Affiliate thereof of notice from any Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA; (e) the filing of a notice of intent to terminate, the treatment of a plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (f) the imposition of liability on any Loan Party or any ERISA Affiliate thereof pursuant to Sections 4062(e) or 4069 of
ERISA or by reason of the application of Section 4212(c) of ERISA; (g) the failure by any Loan Party or any ERISA Affiliate thereof to
make any required contribution to a Pension Plan, or the failure to meet the minimum funding standard of Section 412 of the Code with
respect to any Pension Plan (whether or not waived in accordance with Section 412(c) of the Code) or the failure to make by its due date a
required installment under Section 430 of the Code with respect to any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (h) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered to critical status within
the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; (i) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan or Multiemployer Plan; (j) the imposition of any liability under Title I or Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon any Loan Party or any ERISA Affiliate thereof; (k) an application for a
funding waiver under Section 303 of ERISA or an extension of any amortization period pursuant to Section 412 of the Code with respect to
any Pension Plan; (l) the occurrence of a non-exempt prohibited
16
transaction under Sections 406 or 407 of ERISA for which any Loan Party or any Subsidiary thereof may be directly or indirectly liable; (m)
a violation of the applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under Section 401(a) of the Code by
any fiduciary or disqualified person for which any Loan Party or any ERISA Affiliate thereof may be directly or indirectly liable; (n) the
occurrence of an act or omission which could give rise to the imposition on any Loan Party or any ERISA Affiliate thereof of fines, penalties,
taxes or related charges under Chapter 43 of the Code or under Sections 409, 502(c), (i) or (1) or 4071 of ERISA; (o) the assertion of a
material claim (other than routine claims for benefits) against any Plan or the assets thereof, or against any Loan Party or any Subsidiary
thereof in connection with any such Plan; (p) receipt from the IRS of notice of the failure of any Qualified Plan to qualify under Section
401(a) of the Code, or the failure of any trust forming part of any Qualified Plan to qualify for exemption from taxation under Section 501(a)
of the Code; (q) the imposition of any lien (or the fulfillment of the conditions for the imposition of any lien) on any of the rights, properties
or assets of any Loan Party or any ERISA Affiliate thereof, in either case pursuant to Title I or IV of ERISA, including Section 302(f) or
303(k) of ERISA or to Section 401(a)(29) or 430(k) of the Code; or (r) the establishment or amendment by any Loan Party or any Subsidiary
thereof of any “welfare plan” as such term is defined in Section 3(1) of ERISA, that provides post-employment welfare benefits in a manner
that could be reasonably likely to result in material liability of any Loan Party.
“ERISA Funding Rules”: the rules regarding minimum required contributions (including any installment payment thereof) to
Pension Plans, as set forth in Section 412 of the Code and Section 302 of ERISA, with respect to Plan years ending prior to the effective date
of the Pension Protection Act of 2006, and thereafter, as set forth in Sections 412, 430, 431, 432 and 436 of the Code and Sections 302, 303,
304 and 305 of ERISA.
“Erroneous Payment”: as defined in Section 9.14(a).
“Erroneous Payment Deficiency Assignment”: as defined in Section 9.14(d).
“Erroneous Payment Impacted Class”: as defined in Section 9.14(d).
“Erroneous Payment Return Deficiency”: as defined in Section 9.14(d).
“Erroneous Payment Subrogation Rights”: as defined in Section 9.14(d).
“EU Bail-In Legislation Schedule”: the EU Bail-In Legislation Schedule published by the Loan Market Association (or any
successor Person), as in effect from time to time.
“Event of Default”: any of the events specified in Section 8.1; provided that any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.
“Excess Cash Flow”: for any fiscal year (or other period) of Holdings, the excess, if any, of:
(a) the sum of (without duplication):
(i) Consolidated EBITDA for such fiscal year, plus
(ii) without duplication of any other amounts included in the calculation of Consolidated EBITDA, any decrease in
Working Capital (excluding the portion of such change in Working Capital resulting from changes in deferred revenue for the
same period in the prior fiscal year), minus
(b) the sum of (without duplication):
(i)
any taxes paid in cash on a consolidated basis during such period by the Group Members, plus
17
(ii)
the aggregate amount actually paid by the Group Members in cash during such fiscal year (or other period) on
account of (x) Consolidated Capital Expenditures (other than to the extent funded with Indebtedness or proceeds from the issuance or sale of
Capital Stock to any Person (other than a Group Member) in any Group Member) and (y) Investments permitted hereunder (excluding
intercompany Investments and excluding Investments deducted from the Available Amount pursuant to clause (f) of the definition thereof),
plus
the aggregate amount of all regularly principal payments of all Indebtedness of Group Members made in cash during
such period (other than in respect of any revolving credit facility to the extent there is not an equivalent permanent reduction in commitments
thereunder and other than payments deducted from the Available Amount pursuant to clause (f) of the definition thereof), plus
(iii)
without duplication of any other amounts included in the calculation of Consolidated EBITDA, increases in Working
Capital (excluding the portion of such change in Working Capital resulting from changes in deferred revenue for the same period in the prior
fiscal year), plus
(iv)
(v)
Consolidated Interest Expense actually paid in cash, plus
(vi)
cash payments constituting the purchase price, net working capital or purchase price adjustments, earn-outs, deferred
purchase price payments and similar obligations paid by the Group Members in respect of any permitted Investments (other than to the extent
funded with Indebtedness or proceeds from the issuance or sale of Capital Stock to any Person (other than a Group Member) in any Group
Member), plus
of Consolidated EBITDA, plus
(vii)
other items paid in cash during such period, in each case, to the extent included as an “add-back” in the calculation
Restricted Payments deducted from the Available Amount pursuant to clause (f) of the definition thereof).
(viii) Restricted Payments paid in cash (excluding Restricted Payments to another Group Member and excluding
“Exchange Act”: the Securities Exchange Act of 1934, as amended from time to time and any successor statute.
“Excluded Assets”: as defined in the Guarantee and Collateral Agreement; provided that, notwithstanding anything to the contrary
herein or in any other Loan Document, there shall be no control, lockbox or similar requirements nor any control agreements relating to
Holdings’ and its Subsidiaries’ bank accounts (including deposit, securities or commodities accounts).
“Excluded Subsidiary”: any Subsidiary that is (a) not a Domestic Subsidiary of Holdings or another Loan Party, (b) a Foreign
Subsidiary Holding Company, (c) an Immaterial Subsidiary or (d) each Domestic Subsidiary that is not a wholly-owned Subsidiary of
Holdings (for so long as such Subsidiary remains a non-wholly-owned Subsidiary of Holdings) (provided that, no Guarantor shall be released
from its obligations under the Loan Documents solely because it is no longer a wholly-owned Subsidiary of Holdings unless it ceases to be a
wholly-owned Subsidiary of Holdings as a result of a bona fide transaction permitted under this Agreement and not undertaken for the
primary purpose of obtaining the release of such Guarantor from its obligations under the Loan Documents).
“Excluded Swap Obligations”: with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the
Guarantee Obligation of such Guarantor with respect to, or the grant by such Guarantor of a Lien to secure, such Swap Obligation (or any
guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures
Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to
constitute an “eligible contract participant” as defined in the Commodity Exchange Act at the time such Guarantee Obligation of such
Guarantor, or the grant by such Guarantor of such Lien, becomes effective with respect to such Swap Obligation. If such a Swap Obligation
arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion
18
of such Swap Obligation that is attributable to swaps for which such Guarantee Obligation or Lien is or becomes excluded in accordance with
the first sentence of this definition.
“Excluded Taxes”: any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from
a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits
Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of
any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are
Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of
such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender
acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 2.23) or
(ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.20, amounts with respect to such
Taxes were payable either to such Lender's assignor immediately before such Lender became a party hereto or to such Lender immediately
before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.20(f) and (d) any withholding
Taxes imposed under FATCA.
“Existing Credit Agreement”: as defined in the recitals hereto.
“Existing Letters of Credit”: the letters of credit described on Schedule 1.1B to the Disclosure Letter.
“Existing Revolving Loans”: the outstanding “Revolving Loans” under, and as defined in, the Existing Credit Agreement.
“Facility”: each of (a) the L/C Facility (which is a sub-facility of the Revolving Facility), (b) the Revolving Facility and (c) the
Swingline Facility (which is a sub-facility of the Revolving Facility).
“FATCA”: Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is
substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations
thereof, any agreement entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices
adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such
Sections of the Code.
“Federal Funds Effective Rate”: for any day, the greater of (a) 0.00% and (b) the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System, as published on the next succeeding Business Day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such
transactions received by SVB from three federal funds brokers of recognized standing selected by it.
“Fee Letter”: the letter agreement dated December 8, 2020, among the Borrower, Holdings, SVB and JPMorgan Chase Bank, N.A.
“First Amendment” means that certain First Amendment to Amended and Restated Credit Agreement dated as of January 6, 2022
by and among Holdings, the Borrower, the lenders party thereto and the Administrative Agent.
“Flood Laws”: the National Flood Insurance Reform Act of 1994 and related legislation (including the regulations of the Board of
Governors of the Federal Reserve System).
“Floor”: a rate of interest equal to 0.00%.
“Foreign Lender”: (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S.
Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax
purposes.
19
“Foreign Subsidiary”: any Subsidiary of Holdings that is not a Domestic Subsidiary.
“Foreign Subsidiary Holding Company”: any direct or indirect Domestic Subsidiary of Holdings, substantially all of the assets of
which consist of the Capital Stock (or Capital Stock and other securities) of one or more controlled foreign corporations (within the meaning
of Section 957 of the Code) or other Foreign Subsidiary Holding Companies.
“Fronting Exposure”: at any time there is a Defaulting Lender, as applicable, (a) with respect to the Issuing Lender, such Defaulting
Lender’s L/C Percentage of the outstanding L/C Exposure other than L/C Exposure as to which such Defaulting Lender’s participation
obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the
Swingline Lender, such Defaulting Lender’s Revolving Percentage of outstanding Swingline Loans made by the Swingline Lender other than
Swingline Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders.
“Fund”: any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing
in commercial loans, bonds and similar extensions of credit in the ordinary course of its activities.
“Funding Office”: the Revolving Loan Funding Office.
“GAAP”: generally accepted accounting principles in the United States as in effect from time to time, except that for purposes of
Section 7.1, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the
preparation of the most recent audited financial statements referred to in Section 4.1(b). In the event that any “Accounting Change” (as
defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this
Agreement, then the Borrower and the Administrative Agent agree to enter into negotiations to amend such provisions of this Agreement so
as to reflect equitably such Accounting Changes with the desired result that the criteria for evaluating the Borrower’s financial condition shall
be the same after such Accounting Changes as if such Accounting Changes had not been made. Until such time as such an amendment shall
have been executed and delivered by the Borrower, the Administrative Agent and the Required Lenders, all financial covenants, standards
and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred. “Accounting
Changes” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the
Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC, or the adoption of
IFRS.
“Governmental Approval”: any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation,
registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.
“Governmental Authority”: the government of the United States of America or any other nation, or of any political subdivision
thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-
national bodies such as the European Union or the European Central Bank), and any group or body charged with setting accounting or
regulatory capital rules or standards (including the Financial Standards Board, the Bank for International Settlements, the Basel Committee
on Banking Supervision and any successor or similar authority to any of the foregoing).
“Group Members”: the collective reference to Holdings and its Subsidiaries.
“Guarantee and Collateral Agreement”: the Amended and Restated Guarantee and Collateral Agreement dated as of the Closing
Date by and among the Loan Parties and the Administrative Agent.
“Guarantee Obligation”: as to any Person (the “guaranteeing person”), any obligation, including a reimbursement,
counterindemnity or similar obligation, of the guaranteeing person that guarantees or in effect guarantees, or which is given to induce the
creation of a separate obligation by
20
another Person (including any bank under any letter of credit) that guarantees or in effect guarantees, any Indebtedness, leases, dividends or
other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly,
including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation
or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided that the term Guarantee Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be
deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing
person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing
person’s maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.
“Guarantors”: a collective reference to Holdings and each Subsidiary of Holdings which has become a Guarantor pursuant to the
requirements of Section 6.12 hereof and the Guarantee and Collateral Agreement. Notwithstanding the foregoing or any contrary provision
herein or in any other Loan Document, no Excluded Subsidiary shall be required to be a Guarantor, and no Subsidiary shall be required to
become a Guarantor if, in the reasonable judgment of the Administrative Agent and the Borrower, the burden or cost of providing a guarantee
shall be excessive in view of the benefits to be obtained by the Secured Parties therefrom.
“Holdings”: has the meaning in the preamble hereto.
“IFRS”: international accounting standards within the meaning of IAS Regulation 1606/2002 to the extent applicable to the relevant
financial statements delivered under or referred to herein.
“Immaterial Subsidiary”: as of the last day of each fiscal quarter and at any other date of determination, any Subsidiary of any Loan
Party (other than a Borrower or a Guarantor) designated as such by the Borrower in writing and which as of such date (a) holds assets
representing 10% or less of Holdings’ consolidated total assets as of such date (determined in accordance with GAAP), (b) has generated
less than 10% of Holdings’ consolidated total revenues determined in accordance with GAAP for the four fiscal quarter period ending on the
last day of the most recent period for which financial statements have been delivered after the Closing Date pursuant to Section 6.1(b);
provided that all Subsidiaries that are individually “Immaterial Subsidiaries” shall not have aggregate consolidated total assets that would
represent 20% or more of Holdings’ consolidated total assets as of such date or have generated 20% or more of Holdings’ consolidated total
revenues for such four fiscal quarter period, in each case determined in accordance with GAAP, and (c) owns no material Intellectual
Property.
“Increase”: as defined in Section 2.27.
“Increase Joinder”: an instrument, in form and substance reasonably satisfactory to the Administrative Agent, by which a Lender
becomes a party to this Agreement pursuant to Section 2.27.
“Incurred”: as defined in the definition of “Pro Forma Basis”.
“Indebtedness”: of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property or services (other than (i) current trade payables incurred in the
ordinary course of such Person’s business, (ii) any earn-out obligation if such obligation is not paid after becoming due and payable or such
obligation is reflected on the balance sheet in accordance with GAAP and (iii) accruals for payroll and other liabilities, including deferred
compensation arrangements, in each case, accrued in the ordinary
21
course of business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though
the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations and all Synthetic Lease Obligations of such Person, (f) all obligations of such Person, contingent
or otherwise, as an account party or applicant under or in respect of acceptances, letters of credit, surety bonds or similar arrangements, (g)
all obligations of such Person with respect to Disqualified Stock, (h) all Guarantee Obligations of such Person in respect of obligations of the
kind referred to in clauses (a) through (g) above, (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for
which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts
and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation, and
(j) the net obligations of such Person in respect of Swap Agreements. The Indebtedness of any Person shall include the Indebtedness of any
other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of
such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly
provide that such Person is not liable therefor.
“Indemnified Taxes”: (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of
any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
“Indemnitee”: as defined in Section 10.5(b).
“Insolvency Proceeding”: (a) any case, action or proceeding before any court or other Governmental Authority relating to
bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment
for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of any Person’s creditors
generally or any substantial portion of such Person’s creditors, in each case undertaken under U.S. federal, state or foreign law, including any
Debtor Relief Law.
“Intellectual Property”: the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses, trademarks,
trademark licenses, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.
“Intellectual Property Security Agreement”: an intellectual property security agreement entered into between a Loan Party and the
Administrative Agent for filing at the USPTO or USCRO pursuant to the terms of the Guarantee and Collateral Agreement in form and
substance satisfactory to the Administrative Agent, together with each other intellectual property security agreement and supplement thereto
delivered pursuant to Section 6.12, in each case as amended, restated, supplemented or otherwise modified from time to time.
“Interest Payment Date”: (a) as to any ABR Loan (including any Swingline Loan), the first Business Day of each calendar month to
occur while such Loan is outstanding and the final maturity date of such Loan, (b) as to any SOFR Loan having an Interest Period of three (3)
months or less, the last Business Day of such Interest Period and the final maturity date of such Loan, (c) as to any SOFR Loan having an
Interest Period longer than three (3) months, each day that is three (3) months (or, if such date is not a Business Day, the Business Day next
succeeding such date) after the first day of such Interest Period and the last Business Day of such Interest Period and the final maturity date
of such Loan, and (d) as to any Loan (other than any Revolving Loan that is an ABR Loan and any Swingline Loan), the date of any
repayment or prepayment made in respect thereof.
“Interest Period”: as to any SOFR Loan, (a) initially, the period commencing on the borrowing or conversion date, as the case may
be, with respect to such SOFR Loan and ending on the numerically corresponding day in the month that is one (1), three (3) or six (6) months
thereafter, as selected by the Borrower in its Notice of Borrowing or Notice of Conversion/Continuation, as the case may be, given
22
with respect thereto; and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such
SOFR Loan and ending on the numerically corresponding day in the month that is one (1), three (3) or six (6) months thereafter, as selected
by the Borrower by irrevocable notice delivered to the Administrative Agent in a Notice of Conversion/Continuation not later than 12:00
P.M. on the date that is three (3) U.S. Government Securities Business Days prior to the last day of the then current Interest Period with
respect thereto; provided that all of the foregoing provisions relating to Interest Periods are subject to the following:
if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar
month in which event such Interest Period shall end on the immediately preceding Business Day;
(i)
Revolving Termination Date;
(ii)
the Borrower may not select an Interest Period under a particular Facility that would extend beyond the
any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar
month; and
(iii)
specification in any Notice of Borrower or Notice of Conversion/Continuation.
(iv)
no tenor that has been removed from this definition pursuant to Section 2.17(b) shall be available for
“Interest Rate Agreement”: any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate
hedging agreement or other similar agreement or arrangement, each of which is (a) for the purpose of hedging the interest rate exposure
associated with Holdings’ and its Subsidiaries’ operations, and (b) not for speculative purposes.
“Inventory”: all “inventory,” as such term is defined in the UCC, now owned or hereafter acquired by any Loan Party, wherever
located, and in any event including inventory, merchandise, goods and other personal property that are held by or on behalf of any Loan Party
for sale or lease or are furnished or are to be furnished under a contract of service, or that constitutes raw materials, work in process, finished
goods, returned goods, or materials or supplies of any kind used or consumed or to be used or consumed in such Loan Party’s business or in
the processing, production, packaging, promotion, delivery or shipping of the same, including all supplies and embedded software.
“Investments”: as defined in Section 7.8.
“IRS”: the Internal Revenue Service, or any successor thereto.
“ISP”: with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International
Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).
“Issuing Lender”: as the context may require, (a) SVB or any Affiliate thereof, in its capacity as issuer of any Letter of Credit
(including, without limitation, each Existing Letter of Credit), and (b) any other Lender or an Affiliate thereof that may become an Issuing
Lender pursuant to Section 3.11 or 3.12, with respect to Letters of Credit issued by such Lender or its Affiliate. The Issuing Lender may, in
its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Lender or other financial institutions, in
which case the term “Issuing Lender” shall include any such Affiliate or other financial institution with respect to Letters of Credit issued by
such Affiliate or other financial institution. For the avoidance of doubt, no Lender shall become an Issuing Lender unless it shall so agree.
“Issuing Lender Fees”: as defined in Section 3.3(a).
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“LCA Election”: as defined in Section 1.4.
“LCA Test Date”: as defined in Section 1.4.
“L/C Advance”: each L/C Lender’s funding of its participation in any L/C Disbursement in accordance with its L/C Percentage of the
L/C Commitment.
“L/C Commitment”: as to any L/C Lender, the obligation of such L/C Lender, if any, to purchase an undivided interest in the Issuing
Lenders’ obligations and rights under and in respect of each Letter of Credit (including to make payments with respect to draws made under
any Letter of Credit pursuant to Section 3.5(b)) in an aggregate principal amount not to exceed the amount set forth under the heading “L/C
Commitment” opposite such L/C Lender’s name on Schedule 1.1A or in the Assignment and Assumption or Increase Joinder pursuant to
which such L/C Lender becomes a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The L/C
Commitment is a sublimit of the Revolving Commitment and the aggregate amount of the L/C Commitments shall not exceed the amount of
the Total L/C Commitments at any time.
“L/C Disbursements”: a payment or disbursement made by the Issuing Lender pursuant to a Letter of Credit.
“L/C Exposure”: at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time, and (b)
the aggregate amount of all L/C Disbursements that have not yet been reimbursed or converted into Revolving Loans at such time. The L/C
Exposure of any L/C Lender at any time shall equal its L/C Percentage of the aggregate L/C Exposure at such time.
“L/C Facility”: the L/C Commitments and the extensions of credit made thereunder.
“L/C Fee Payment Date”: as defined in Section 3.3(a).
“L/C Lender”: a Lender with an L/C Commitment.
“L/C Percentage”: as to any L/C Lender at any time, the percentage of the Total L/C Commitments represented by such L/C
Lender’s L/C Commitment, as such percentage may be adjusted as provided in Section 2.24.
“L/C-Related Documents”: collectively, each Letter of Credit (including any Existing Letter of Credit), all applications for any
Letter of Credit (and applications for the amendment of any Letter of Credit) submitted by the Borrower to the Issuing Lender and any other
document, agreement and instrument relating to any Letter of Credit, including any of the Issuing Lender’s standard form documents for
letter of credit issuances.
“Lenders”: as defined in the preamble hereto; provided that unless the context otherwise requires, each reference herein to the
Lenders shall be deemed to include the Issuing Lender and the Swingline Lender. For the avoidance of doubt, the term “Lenders” excludes
the Departing Lenders.
“Letter of Credit”: as defined in Section 3.1(a); provided that such term shall include each Existing Letter of Credit.
“Letter of Credit Availability Period”: the period from and including the Closing Date to but excluding the Letter of Credit Maturity
Date.
“Letter of Credit Fees”: as defined in Section 3.3(a).
“Letter of Credit Fronting Fees”: as defined in Section 3.3(a).
“Letter of Credit Maturity Date”: the date occurring 15 days prior to the Revolving Termination Date then in effect (or, if such day is
not a Business Day, the next preceding Business Day).
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“Lien”: any mortgage, deed of trust, pledge, hypothecation, collateral assignment, deposit arrangement, encumbrance, lien (statutory
or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having substantially the same
economic effect as any of the foregoing).
“Limited Condition Acquisition”: any Acquisition, the consummation of which is not conditioned on the availability of, or on
obtaining, third party financing; provided, that, in the event the consummation of any such Acquisition shall not have occurred on or prior to
the date that is 120 days following the signing of the applicable Limited Condition Acquisition Agreement, such Acquisition shall no longer
constitute a Limited Condition Acquisition for any purpose.
“Limited Condition Acquisition Agreement”: any agreement providing for a Limited Condition Acquisition.
“Loan”: any loan made or maintained by any Lender pursuant to this Agreement.
“Loan Documents”: this Agreement, each Security Document, each Note, the Fee Letter, the each Assignment and Assumption, each
Compliance Certificate, each Increase Joinder, each Notice of Borrowing, each Notice of Conversion/Continuation, the Solvency Certificate,
the Collateral Information Certificate, each L/C-Related Document, the First Amendment, each subordination or intercreditor agreement and
any agreement creating or perfecting rights in cash collateral pursuant to the provisions of Section 3.10, or otherwise, and any amendment,
waiver, supplement or other modification to any of the foregoing.
“Loan Parties”: each Group Member that is a party to a Loan Document, as a Borrower or a Guarantor.
“Material Adverse Effect”: a material adverse effect on (a) the rights and remedies of the Administrative Agent under the Loan
Documents, taken as a whole, including the legality, validity, binding effect or enforceability of the Loan Documents; (b) the business,
operations, or financial condition of the Group Members, taken as a whole; or (c) the ability of the Loan Parties (taken as a whole) to perform
their payment obligations under any Loan Document.
“Materials of Environmental Concern”: any substance, material or waste that is defined, regulated, governed or otherwise
characterized under any Environmental Law as hazardous or toxic or as a pollutant or contaminant (or by words of similar meaning and
regulatory effect), any petroleum or petroleum products, asbestos, polychlorinated biphenyls, urea-formaldehyde insulation, molds or fungus,
and radioactivity, radiofrequency radiation at levels known to be hazardous to human health and safety.
“Minority Lender”: as defined in Section 10.1(b).
“Moody’s”: Moody’s Investors Service, Inc.
“Mortgaged Properties”: the real properties as to which, pursuant to Section 6.12(b) or otherwise, the Administrative Agent, for the
benefit of the Secured Parties, shall be granted a Lien pursuant to the Mortgages.
“Mortgages”: each of the mortgages, deeds of trust, deeds to secure debt or such equivalent documents hereafter entered into and
executed and delivered by one or more of the Loan Parties to the Administrative Agent, in each case, as such documents may be amended,
amended and restated, supplemented or otherwise modified, renewed or replaced from time to time and in form and substance reasonably
acceptable to the Administrative Agent.
“Multiemployer Plan”: a “multiemployer plan” (within the meaning of Section 3(37) of ERISA) to which any Loan Party or any
ERISA Affiliate thereof makes, is making, or is obligated or has ever been obligated to make, contributions.
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“Non-Consenting Lender”: any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of all
affected Lenders in accordance with the terms of Section 10.1 and (b) has been approved by the Required Lenders.
“Non-Defaulting Lender”: at any time, each Lender that is not a Defaulting Lender at such time.
“Note”: a Revolving Loan Note or a Swingline Loan Note.
“Notice of Borrowing”: a notice substantially in the form of Exhibit K.
“Notice of Conversion/Continuation”: a notice substantially in the form of Exhibit L.
“Obligations”: (a) the unpaid principal of and interest on (including interest accruing after the maturity of the Loans and interest
accruing after the filing of any petition in bankruptcy, or the commencement of any Insolvency Proceeding relating to any Loan Party,
whether or not a claim for post-filing or post-petition interest is allowed or allowable in such proceeding) the Loans and all other obligations
and liabilities (including any fees or expenses that accrue after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to any Loan Party, whether or not a claim for post-filing or post-petition interest is
allowed or allowable in such proceeding) of the Loan Parties (and the other Group Members in the case of obligations in respect of Cash
Management Services and Specified Swap Agreement) to the Administrative Agent, the Issuing Lender, any other Lender, any applicable
Cash Management Bank, and any Qualified Counterparty, whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, any Cash
Management Agreement, any Specified Swap Agreement or any other document made, delivered or given in connection herewith or
therewith, whether on account of principal, interest, reimbursement obligations, payment obligations, fees, indemnities, costs, expenses
(including all reasonable and documented out-of-pocket fees, charges and disbursements of counsel to the Administrative Agent, the Issuing
Lender, any other Lender, any applicable Cash Management Bank, to the extent that any applicable Cash Management Agreement requires
the reimbursement by any applicable Group Member of any such expenses, and any Qualified Counterparty) that are required to be paid by
any Group Member pursuant any Loan Document, Cash Management Agreement, Specified Swap Agreement or otherwise and (b)
Erroneous Payment Subrogation Rights. For the avoidance of doubt, the Obligations shall not include (1) any obligations arising under any
warrants or other equity instruments issued by any Loan Party to any Lender, or (2) solely with respect to any Guarantor that is not a
Qualified ECP Guarantor, any Excluded Swap Obligations of such Guarantor.
“OFAC”: the Office of Foreign Assets Control of the United States Department of the Treasury and any successor thereto.
“Operating Documents”: for any Person as of any date, such Person’s constitutional documents, formation documents and/or
certificate of incorporation (or equivalent thereof), and, (a) if such Person is a corporation, its bylaws or memorandum and articles of
association (or equivalent thereof) in current form, (b) if such Person is a limited liability company, its limited liability company agreement
(or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement), each of the foregoing with all
current amendments or modifications thereto.
“Original Loan Documents”: as define in Section 10.22
“Other Connection Taxes”: with respect to any Recipient, Taxes imposed as a result of a present or former connection between such
Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a
party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other
transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes”: all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any
payment made under, from the execution, delivery, performance,
26
enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document,
except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to
Section 2.23).
“Overadvance”: as defined in Section 2.8.
“Payment Conditions”: (a) immediately before and immediately after giving effect to the applicable payment or transaction, no
Event of Default shall have occurred and be continuing (other than in connection with a Limited Condition Acquisition, in which case there
shall be no Event of Default as of the LCA Test Date and no Event of Default under Section 8.1(a) or (f) as of the date of such payment or
transaction), (b) subject to Section 1.4, immediately after giving effect to the applicable payment or transaction, (i) the Borrower is in pro
forma compliance with the Consolidated Interest Coverage Ratio covenant set forth in Section 7.1 (or if such payment or transaction is made
or consummated prior to the date that financial statements for the fiscal year ending January 31, 2021 have been delivered, the same covenant
levels applicable to the trailing four quarter period ending on January 31, 2021 shall be tested as of October 31, 2020) and (ii) the pro forma
Consolidated Total Leverage Ratio does not exceed 3.50:1.00 as of the last day of the most recent fiscal quarter of Holdings for which
financial statements have been delivered hereunder (or October 31, 2020, as applicable) and (c) the Administrative Agent shall have received,
five (5) Business Days (or such shorter period as is acceptable to the Administrative Agent), prior to the applicable payment or transaction, a
certificate signed by a Responsible Officer of the Borrower certifying the conditions specified in the foregoing clauses (a) and (b) have been
satisfied and containing all information and calculations necessary for determining compliance with the foregoing clause (b).
“Payment Recipient”: as defined in Section 9.14(a).
“Participant”: as defined in Section 10.6(d).
“Participant Register”: as defined in Section 10.6(d).
“Patriot Act”: the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
(USA PATRIOT ACT) Act of 2001, Title III of Pub. L. 107-56, signed into law October 26, 2001.
“PBGC”: the Pension Benefit Guaranty Corporation, or any successor thereto.
“Pension Plan”: an employee benefit plan (as defined in Section 3(3) of ERISA) other than a Multiemployer Plan (a) that is or was
at any time maintained or sponsored by any Loan Party or any ERISA Affiliate thereof or to which any Loan Party or any ERISA Affiliate
thereof has ever made, or was obligated to make, contributions, and (b) that is or was subject to Section 412 of the Code, Section 302 of
ERISA or Title IV of ERISA.
“Periodic Term SOFR Determination Day”: as defined in the definition of “Term SOFR”.
“Permitted Refinancing”: Indebtedness (“Refinance Indebtedness”) which represents an extension, renewal, refinancing or
replacement of any Indebtedness permitted hereunder (such Indebtedness being referred to herein as the “Original Indebtedness”); provided
that (i) such Refinance Indebtedness does not increase the principal amount (other than for accrued interest, reasonable fees, premiums and
penalties thereon) of the Original Indebtedness, (ii) any Liens securing such Refinance Indebtedness are not extended to any additional
property of any Group Member, (iii) no Group Member that is not originally obligated with respect to repayment of such Original
Indebtedness becomes obligated with respect to such Refinance Indebtedness, (iv) such Refinance Indebtedness does not result in a
shortening of the average weighted maturity of such Original Indebtedness or the final maturity of such Original Indebtedness, (v) the terms
of such Refinance Indebtedness other than fees and interest are not, taken as a whole, less favorable to the obligor thereunder than the
original terms of such Original Indebtedness and (vi) if such Original Indebtedness was subordinated in right of payment or security to the
Obligations, then the terms and conditions of such Refinance Indebtedness must include subordination
27
terms and conditions that are at least as favorable to the Administrative Agent and the Lenders as those that were applicable to such Original
Indebtedness.
“Person”: any natural Person, corporation, limited liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
“Plan”: (a) an employee benefit plan (as defined in Section 3(3) of ERISA) other than a Multiemployer Plan which is or was at any
time maintained or sponsored by any Loan Party or any Subsidiary thereof or to which any Loan Party or any Subsidiary thereof has ever
made, or was obligated to make, contributions, (b) a Pension Plan, or (c) a Qualified Plan.
“Plan Asset Regulations”: 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA, as amended from time to time.
“Platform”: is any of Debt Domain, Intralinks, Syndtrak, Debtx or a substantially similar electronic transmission system.
“Prime Rate”: the rate of interest per annum published in the money rates section of the Wall Street Journal or any successor
publication thereto as the “prime rate” then in effect; provided that if such rate of interest, as set forth from time to time in the money rates
section of the Wall Street Journal, becomes unavailable for any reason as determined by the Administrative Agent, the “Prime Rate” shall
mean the rate of interest per annum announced by the Administrative Agent as its prime rate in effect at its principal office in the State of
California (such announced Prime Rate not being intended to be the lowest rate of interest charged by the Administrative Agent in
connection with extensions of credit to debtors).
“Pro Forma Basis”: with respect to any calculation or determination for any period, in making such calculation or determination on
the specified date of determination (the “Determination Date”):
(a)
pro forma effect will be given to any Indebtedness incurred by Holdings or any of its Subsidiaries (including by
assumption of then outstanding Indebtedness or by a Person becoming a Subsidiary) (“Incurred”) after the beginning of the applicable period
and on or before the Determination Date to the extent the Indebtedness is outstanding or is to be Incurred on the Determination Date, as if
such Indebtedness had been Incurred on the first day of such period;
pro forma calculations of interest on Indebtedness bearing a floating interest rate will be made as if the rate in effect
on the Determination Date (taking into account any Swap Agreement applicable to the Indebtedness) had been the applicable rate for the
entire reference period; and
(b)
(c)
Consolidated Interest Expense related to any Indebtedness no longer outstanding or to be repaid or redeemed on the
Determination Date, except for Consolidated Interest Expense accrued during the reference period under a revolving credit to the extent of
the commitment thereunder (or under any successor revolving credit) in effect on the Determination Date, will be excluded as if such
Indebtedness was no longer outstanding or was repaid or redeemed on the first day of such period;
(d)
pro forma effect will be given to: (A) the acquisition or disposition of companies, divisions or lines of businesses by
Holdings and its Subsidiaries, including any acquisition or disposition of a company, division or line of business since the beginning of the
reference period by a Person that became a Subsidiary after the beginning of the applicable period; and (B) the discontinuation of any
discontinued operations; in each case of clauses (A) and (B), that have occurred since the beginning of the applicable period and before the
Determination Date as if such events had occurred, and, in the case of any disposition, the proceeds thereof applied, on the first day of such
period. To the extent that pro forma effect is to be given to an acquisition or disposition of a company, division or line of business, the pro
forma calculation will be calculated in good faith by a responsible financial or accounting officer of Holdings in accordance with Regulation
S-X under the Securities Act based upon the most recent four full fiscal quarters for which the relevant financial information is available.
28
“Projected Pro Forma Financial Statements”: projected balance sheets, income statements and cash flow statements prepared by
Holdings and its consolidated Subsidiaries that give effect to (a) the Loans to be made on the Closing Date and the use of proceeds thereof
and (b) the payment of fees and expenses in connection with the foregoing, in each case prepared on a quarterly basis through the through the
fiscal year ending January 31, 2024 and annually thereafter through the Revolving Termination Date.
“Properties”: as defined in Section 4.17(a).
“PTE”: a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended
from time to time.
“Public Company Costs”: as to any Person, costs associated with, or in anticipation of, or preparation for, compliance with the
requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith and costs relating to
compliance with the provisions of the Securities Act of 1933 (as amended, and the rules and regulations of the SEC promulgated thereunder,
as amended) and the Securities Exchange Act of 1934 (as amended, and the rules and regulations of the SEC promulgated thereunder, as
amended) or any other comparable body of laws, rules or regulations, as companies with listed equity, directors’ compensation, fees and
expense reimbursement, costs relating to enhanced accounting functions and investor relations, stockholder meetings and reports to
stockholders, directors’ and officers’ insurance and other executive costs, legal and other professional fees, listing fees and other transaction
costs, in each case to the extent arising solely by virtue of the listing of such Person’s equity securities on a national securities exchange or
issuance of public debt securities.
“Qualified Acquisition”: an Acquisition for consideration in excess of $150,000,000, substantially all of which is financed with
Indebtedness.
“Qualified Counterparty”: with respect to any Specified Swap Agreement, any counterparty thereto that is a Lender or an Affiliate
of a Lender or, at the time such Specified Swap Agreement was entered into or as of the Closing Date, was the Administrative Agent or a
Lender or an Affiliate of the Administrative Agent or a Lender.
“Qualified ECP Guarantor”: in respect of any Swap Obligation, (a) each Guarantor that has total assets exceeding $10,000,000 at
the time the relevant Guarantee Obligation of such Guarantor provided in respect of, or the Lien granted by such Guarantor to secure, such
Swap Obligation (or guaranty thereof) becomes effective with respect to such Swap Obligation, and (b) any other Guarantor that
(i) constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder, or (ii) can
cause another Person (including, for the avoidance of doubt, any other Guarantor not then constituting a “Qualified ECP Guarantor”) to
qualify as an “eligible contract participant” at such time by entering into a “keepwell, support, or other agreement” as contemplated by
Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
“Qualified Plan”: an employee benefit plan (as defined in Section 3(3) of ERISA) other than a Multiemployer Plan (a) that is or was
at any time maintained or sponsored by any Loan Party or any ERISA Affiliate thereof or to which any Loan Party or any ERISA Affiliate
thereof has ever made, or was ever obligated to make, contributions, and (b) that is intended to be tax-qualified under Section 401(a) of the
Code.
“Ratio Debt”: unsecured Indebtedness of one or more Loan Parties; provided that such Indebtedness shall not (a) mature prior to the
date that is at least 180 days after the Revolving Termination Date (other than with respect to customary bridge loans that are convertible or
exchangeable into notes or other permanent financing), (b) have amortization that is greater than 10% per annum (other than a bullet payment
at maturity), (c) have mandatory prepayments (other than (x) in connection with a change of control or asset sale offers, (y) with respect to
customary bridge loans that are payable with the proceeds of permanent refinancing and (z) with respect to conversion or settlement of
convertible debt on customary terms), or (d) have financial maintenance covenants that are more restrictive than those applicable to the Loan
Documents.
29
“Recipient”: the (a) Administrative Agent, (b) any Lender or (c) the Issuing Lender, as applicable.
“Refunded Swingline Loans”: as defined in Section 2.7(b).
“Register”: as defined in Section 10.6(c).
“Regulation T”: Regulation T of the Board as in effect from time to time.
“Regulation U”: Regulation U of the Board as in effect from time to time.
“Regulation X”: Regulation X of the Board as in effect from time to time.
“Related Parties”: 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’s Affiliates.
“Relevant Governmental Body”: the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York,
or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of
New York, or any successor thereto.
“Replacement Lender”: as defined in Section 2.23.
“Required Lenders”: at any time, (a) if only one Lender holds the Total Revolving Commitments, such Lender; and (b) if more than
one Lender holds the Total Revolving Commitments, then at least two Lenders who together hold more than 50% of the Total Revolving
Commitments (including, without duplication, the L/C Commitments) then in effect or, if the Revolving Commitments have been terminated,
the Total Revolving Extensions of Credit then outstanding; provided that for the purposes of this clause (b), the Revolving Commitments of,
and the portion of the Revolving Loans and participations in L/C Exposure and Swingline Loans held or deemed held by, any Defaulting
Lender shall be excluded for purposes of making a determination of Required Lenders; provided further that a Lender and its Affiliates shall
be deemed one Lender.
“Requirement of Law”: as to any Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other
Governmental Authority (including, for the avoidance of doubt, the Basel Committee on Banking Supervision and any successor thereto or
similar authority or successor thereto), in each case applicable to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.
“Resolution Authority”: an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer”: with respect to any Person, the chief executive officer, president, vice president, chief financial officer,
treasurer, controller, vice president of strategic finance or comptroller of such Person, but in any event, with respect to financial matters, the
chief financial officer, treasurer, controller, vice president of strategic finance or comptroller of such Person.
“Restricted Payments”: as defined in Section 7.6.
“Revolving Commitment”: as to any Lender, the obligation of such Lender, if any, to make Revolving Loans and participate in
Swingline Loans and Letters of Credit in an aggregate principal amount not to exceed the amount set forth under the heading “Revolving
Commitment” opposite such Lender’s name on Schedule 1.1A or in the Assignment and Assumption or Increase Joinder pursuant to which
such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof (including in connection with
assignments and Increases permitted hereunder). The amount
30
of the Total Revolving Commitments as of the Closing Date is $750,000,000. The L/C Commitment and the Swingline Commitment are each
sublimits of the Total Revolving Commitments.
“Revolving Commitment Period”: the period from and including the Closing Date to the Revolving Termination Date.
“Revolving Extensions of Credit”: as to any Revolving Lender at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Loans held by such Lender then outstanding, plus (b) such Lender’s L/C Percentage of the aggregate undrawn
amount of all outstanding Letters of Credit (including the Existing Letter of Credit) at such time, plus (c) such Lender’s L/C Percentage of
the aggregate amount of all L/C Disbursements that have not yet been reimbursed or converted into Revolving Loans at such time, plus
(d) such Lender’s Revolving Percentage of the aggregate principal amount of Swingline Loans then outstanding.
“Revolving Facility”: the Revolving Commitments and the extensions of credit made thereunder.
“Revolving Lender”: each Lender that has a Revolving Commitment or that holds Revolving Loans.
“Revolving Loan Conversion”: as defined in Section 3.5(b).
“Revolving Loan Funding Office”: the office of the Administrative Agent specified in Section 10.2 or such other office as may be
specified from time to time by the Administrative Agent as its funding office by written notice to the Borrower and the Lenders.
“Revolving Loan Note”: a promissory note in the form of Exhibit H-1, as it may be amended, supplemented or otherwise modified
from time to time.
“Revolving Loans”: as defined in Section 2.4(a).
“Revolving Percentage”: as to any Revolving Lender at any time, the percentage which such Lender’s Revolving Commitment then
constitutes of the Total Revolving Commitments or, at any time after the Revolving Commitments of all Lenders shall have expired or
terminated, the percentage which the aggregate principal amount of such Lender’s Revolving Loans then outstanding constitutes of the
aggregate principal amount of all Revolving Loans then outstanding; provided that in the event that the Revolving Loans are paid in full prior
to the reduction to zero of the Total Revolving Commitments, the Revolving Percentages shall be determined in a manner designed to ensure
that the other outstanding Revolving Extensions of Credit shall be held by the Revolving Lenders on a comparable basis.
“Revolving Termination Date”: January 2, 2026.
“S&P”: Standard & Poor’s Ratings Services.
“Sale Leaseback Transaction”: any arrangement with any Person or Persons, whereby in contemporaneous or substantially
contemporaneous transactions a Loan Party sells substantially all of its right, title and interest in any property and, in connection therewith,
acquires, leases or licenses back the right to use all or a material portion of such property.
“Sanction(s)”: any international economic sanction administered or enforced by the United States Government (including OFAC),
the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority.
“SEC”: the Securities and Exchange Commission, any successor thereto and any analogous Governmental Authority.
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“Secured Consolidated Debt”: secured Indebtedness for borrowed money, Capital Lease Obligations and purchase money debt as
reflected on the consolidated balance sheet of Holdings and its Subsidiaries.
“Secured Parties”: the collective reference to the Administrative Agent, the Lenders (including any Issuing Lender in its capacity as
Issuing Lender and any Swingline Lender in its capacity as Swingline Lender), any Cash Management Bank (in its or their respective
capacities as providers of Cash Management Services), and any Qualified Counterparties.
“Securities Account”: any “securities account” as defined in the UCC with such additions to such term as may hereafter be made.
“Securities Act”: the Securities Act of 1933, as amended from time to time and any successor statute.
“Security Documents”: the collective reference to (a) the Guarantee and Collateral Agreement, (b) the Mortgages (if any), (c) each
Intellectual Property Security Agreement, (d) all other security documents hereafter delivered to the Administrative Agent granting a Lien on
any property of any Person to secure the Obligations of any Loan Party arising under any Loan Document, (e) each Pledge Supplement,
(f) each Assumption Agreement, and (g) all financing statements, fixture filings, assignments, acknowledgments and other filings, documents
and agreements made or delivered pursuant to any of the foregoing.
“Similar Business”: any Person the majority of the revenues of which are derived from a business that would be permitted by
Section 7.17.
“SOFR”: a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator”: the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing
rate).
“SOFR Administrator’s Website”: the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or
any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“SOFR Borrowing”: as to any Borrowing, the SOFR Loans comprising such Borrowing.
“SOFR Loan”: a Loan that bears interest at a rate based on Adjusted Term SOFR.
“SOFR Rate Day”: as defined in the definition of “Daily Simple SOFR”.
“SOFR Tranche”: the collective reference to SOFR Loans under a particular Facility (other than the L/C Facility), the then current
Interest Periods with respect to which begin on the same date and end on the same later date (whether or not such Loans shall originally have
been made on the same day).
“Solvency Certificate”: the Solvency Certificate, dated the Closing Date, delivered to the Administrative Agent pursuant to Section
5.1(p), which Solvency Certificate shall be in substantially the form of Exhibit D.
“Solvent”: when used with respect to any Person, as of any date of determination, (a) the amount of the “fair value” of the assets of
such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise,” as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b)
the “present fair saleable value” of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the
liability of such Person on its debts as such debts become absolute and matured, as such quoted terms are determined in accordance with
applicable federal and state laws
32
governing determinations of the insolvency of debtors, (c) such Person will not have, as of such date, an unreasonably small amount of
capital with which to conduct its business, and (d) such Person will be able to pay its debts generally as they mature. For purposes of this
definition, (i) “debt” means liability on a “claim,” and (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.
“Specified Acquisition Agreement Representations”: such of the representations and warranties made by the sellers and their
Affiliates in the Limited Condition Acquisition Agreement as are material to the interests of the Lenders, but only to the extent that Holdings
(or its applicable Affiliates) has the right (taking into account any applicable cure provisions) to terminate its (or such Affiliates’) obligations
under the Limited Condition Acquisition Agreement, or decline to consummate the acquisition (in each case, in accordance with the terms
thereof), as a result of a breach of such representations and warranties.
“Specified Representations”: those representations and warranties made in Sections 4.3(a) (with respect to the organizational
existence of the Loan Parties only after giving effect to the Limited Condition Acquisition), 4.4 (excluding the third sentence thereof), 4.5
(solely with respect to the first sentence and with respect to Operating Documents), 4.11, 4.14, 4.19, 4.20 (giving effect to the Limited
Condition Acquisition and the incurrence of the Increase loans in connection therewith), 4.28 and 4.29 (solely to the effect that the use of
proceeds of any Increase loans in connection with the Limited Condition Acquisition on the date of the acquisition will not violate the
Foreign Corrupt Practices Act, the USA PATRIOT Act or sanctions administered by OFAC).
“Specified Swap Agreement”: any Swap Agreement entered into by any Group Member and any Qualified Counterparty (or any
Person who was a Qualified Counterparty as of the Closing Date or as of the date such Swap Agreement was entered into).
“Subordinated Debt Document”: any agreement, certificate, document or instrument executed or delivered by any Group Member
and evidencing Indebtedness of such Group Member which is subordinated to the payment of the Obligations or the Liens securing such
Indebtedness is subordinated to the Administrative Agent’s Lien, in each case, in a manner approved in writing by the Administrative Agent,
and any renewals, modifications, or amendments thereof which are not prohibited by this Agreement or are approved in writing by the
Administrative Agent.
“Subordinated Indebtedness”: Indebtedness of one or more Loan Parties (and no other Group Members) subordinated to the
Obligations pursuant to subordination terms (including payment, lien and remedies subordination terms, as applicable) reasonably acceptable
to the Administrative Agent.
“Subsidiary”: as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of
the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity
are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary
or Subsidiaries of Holdings.
“Surety Indebtedness”: as of any date of determination, indebtedness (contingent or otherwise) owing to sureties arising from surety
bonds issued on behalf of any Loan Party or its respective Subsidiaries as support for, among other things, their contracts with customers,
whether such indebtedness is owing directly or indirectly by such Loan Party or any such Subsidiary.
“SVB”: as defined in the preamble hereto.
“Swap Agreement”: any agreement with respect to any swap, hedge, forward, future or derivative transaction or option or similar
agreement (including without limitation, any Interest Rate
33
Agreement) involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or
economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any
combination of these transactions; provided that the following shall not constitute “Swap Agreements”: (a) any phantom stock or similar plan
providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the
Borrower and its Subsidiaries, (b) any stock option or warrant agreement for the purchase of Capital Stock of the Borrower, (c) the purchase
of Capital Stock or Indebtedness (including securities convertible into Capital Stock) of the Borrower pursuant to delayed delivery contracts,
accelerated stock repurchase agreements, forward contracts or other similar agreements and (d) any of the items specified in the foregoing
clauses (a) through (c), to the extent the same constitutes a derivative embedded in a convertible security issued by the Borrower.
“Swap Obligation”: with respect to any Guarantor, any obligation of such Guarantor to pay or perform under any agreement, contract
or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.
“Swap Termination Value”: in respect of any one or more Swap Agreements, after taking into account the effect of any legally
enforceable netting agreement relating to such Swap Agreements, (a) for any date on or after the date any such Swap Agreement has been
closed out and termination value determined in accordance therewith, such termination value, and (b) for any date prior to the date referenced
in clause (a), the amount determined as the mark-to-market value for such Swap Agreement, as determined based upon one or more mid-
market or other readily available quotations provided by any recognized dealer in such Swap Agreements (which may include a Qualified
Counterparty).
“Swingline Commitment”: the obligation of the Swingline Lender to make Swingline Loans pursuant to Section 2.6 in an aggregate
principal amount at any one time outstanding not to exceed $50,000,000.
“Swingline Facility”: the Swingline Commitments and the Swingline Loans.
“Swingline Lender”: SVB, in its capacity as the lender of Swingline Loans or such other Lender as the Borrower may from time to
time select as the Swingline Lender hereunder pursuant to Section 2.7(f); provided that such Lender has agreed to be a Swingline Lender.
“Swingline Loan Note”: a promissory note in the form of Exhibit H-2, as it may be amended, supplemented or otherwise modified
from time to time.
“Swingline Loans”: as defined in Section 2.6.
“Swingline Participation Amount”: as defined in Section 2.7(c).
“Synthetic Lease Obligation”: the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention
lease or (b) an agreement for the use of property creating obligations that do not appear on the balance sheet of such Person but which, upon
the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting
treatment).
“Taxes”: all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments,
fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term SOFR”:
(a) for any calculation with respect to a SOFR Loan, the Term SOFR Reference Rate for a tenor comparable to the
applicable Interest Period on the day (such day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities
Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator; provided, however,
that
34
if as of 5:00 p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable
tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR
Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR
Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor
was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than
three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day; and
(b) for any calculation with respect to an ABR Loan on any day, the Term SOFR Reference Rate for a tenor of one month
on the day (such day, the “ABR Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to such
day, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any ABR
Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR
Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be
the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government
Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long
as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior
to such ABR SOFR Determination Day.
“Term SOFR Adjustment”: for any calculation with respect to a SOFR Loan, a percentage per annum as set forth below for the
applicable Type of such Loan and (if applicable) Interest Period therefor:
SOFR Loans:
Interest Period
One month
Three months
Six months
Percentage
0.11448 %
0.26161%
0.42826%
“Term SOFR Administrator”: the CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term
SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).
“Term SOFR Reference Rate”: the forward-looking term rate based on SOFR.
“Term SOFR Borrowing”: as to any Borrowing, the Loans bearing interest at a rate based on Adjusted Term SOFR comprising such
Borrowing.
“Total Credit Exposure”: as to any Lender at any time, the unused Commitments and Revolving Extensions of Credit of such Lender
at such time.
“Total L/C Commitments”: at any time, the sum of all L/C Commitments at such time, as the same may be reduced from time to time
pursuant to Section 2.10 or 3.5(b). The initial amount of the Total L/C Commitments on the Closing Date is $100,000,000.
“Total Revolving Commitments”: at any time, the aggregate amount of the Revolving Commitments then in effect.
“Total Revolving Extensions of Credit”: at any time, the aggregate amount of the Revolving Extensions of Credit outstanding at
such time.
“Trade Date”: as defined in Section 10.6(b)(i)(B).
35
“Transferee”: any Eligible Assignee or Participant.
“Type”: as to any Loan, its nature as an ABR Loan or a SOFR Loan.
“UK Financial Institution”: any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to
time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook
(as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions
and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority”: the Bank of England or any other public administrative authority having responsibility for the resolution
of any UK Financial Institution.
“Unadjusted Benchmark Replacement”: the applicable Benchmark Replacement excluding the related Benchmark Replacement
Adjustment.
“Unfriendly Acquisition”: any acquisition that has not, at the time of the first public announcement of an offer relating thereto, been
approved by the board of directors (or other legally recognized governing body) of the Person to be acquired; except that with respect to any
acquisition of a non-U.S. Person, an otherwise friendly acquisition shall not be deemed to be unfriendly if it is not customary in such
jurisdiction to obtain such approval prior to the first public announcement of an offer relating to a friendly acquisition.
“Uniform Commercial Code” or “UCC”: the Uniform Commercial Code (or any similar or equivalent legislation) as in effect from
time to time in the State of New York, or as the context may require, any other applicable jurisdiction.
“United States” and “U.S.”: the United States of America.
“Unrestricted Cash”: cash and Cash Equivalents of the Loan Parties that would not appear as “restricted” on a consolidated balance
sheet of the Group Members (other than as are restricted in favor of the Administrative Agent to secure the Obligations).
“Unsecured Notes”: up to $750,000,000 of principal amount of senior unsecured notes of the Loan Parties with a maturity date that
is at least 180 days after the Revolving Termination Date; provided that such indebtedness shall not (a) have any financial covenants, (b)
amortize or require mandatory prepayments (other than in connection with a change of control or asset sale offers) prior to such maturity
date, or (c) be the direct or contingent obligation of any Subsidiary of Holdings that is not a Loan Party.
“U.S. Government Securities Business Day”: any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities
Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for
purposes of trading in United States government securities.
“USCRO”: the U.S. Copyright Office.
“USPTO”: the U.S. Patent and Trademark Office.
“U.S. Person”: any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.
“U.S. Tax Compliance Certificate”: as defined in Section 2.20(f).
“Withholding Agent”: as applicable, any of any applicable Loan Party and the Administrative Agent, as the context may require.
36
“Working Capital”: with respect to the Group Members, consolidated current assets (which shall exclude any cash or Cash
Equivalents) minus consolidated current liabilities (which shall exclude any amount outstanding under the Revolving Facility and the current
portion of any Indebtedness, in each case, to the extent included in “consolidated current liabilities”), in each case, determined in accordance
with GAAP.
“Write-Down and Conversion Powers”: (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of
such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down
and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the
applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial
Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or
obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised
under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or
ancillary to any of those powers.
1.2
Other Definitional Provisions.
in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.
(a)
Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used
(b)
As used herein and in the other Loan Documents, and in any certificate or other document made or delivered
pursuant hereto or thereto, (i) accounting terms relating to any Group Member not defined in Section 1.1 and accounting terms partly defined
in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP, (ii) the words “include,” “includes”
and “including” shall be deemed to be followed by the phrase “without limitation,” (iii) the word “incur” shall be construed to mean incur,
create, issue, assume, become liable in respect of or suffer to exist (and the words “incurred” and “incurrence” shall have correlative
meanings), (iv) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible
and intangible assets and properties, including cash, Capital Stock, securities, revenues, accounts, leasehold interests and contract rights,
(v) references to a given time of day shall, unless otherwise specified, be deemed to refer to Pacific time, and (vi) references to agreements
(including this Agreement) or other Contractual Obligations shall, unless otherwise specified, be deemed to refer to such agreements or
Contractual Obligations as amended, supplemented, restated, amended and restated or otherwise modified from time to time.
(c)
The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any particular provision of this Agreement unless otherwise specified. The word “will” shall be
construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any reference herein to any
Person shall be construed to include such Person’s successors and assigns, (ii) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, and (iii) any reference to
any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from
time to time.
terms. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.
(d)
The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such
(e)
For all purposes under the Loan Documents, in connection with any Division: (a) if any asset, right, obligation or
liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred
from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have
been organized on the first date of its existence by the holders of its Capital Stock at such time.
37
1.3
Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by
dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such
ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
1.4
Limited Condition Acquisitions. In connection with any action being taken in connection with a Limited Condition
Acquisition, for purposes of determining compliance with any provision of this Agreement which requires the calculation of the Consolidated
Senior Secured Leverage Ratio, the Consolidated Total Leverage Ratio, the Consolidated Interest Coverage Ratio or any other financial ratio
or metric, at the option of the Borrower (and, if the Borrower elects to exercise such option, such option shall be exercised on or prior to the
date on which the definitive agreement for such Limited Condition Acquisition is executed) (the Borrower’s election to exercise such option
in connection with any Limited Condition Acquisition, an “LCA Election”), then notwithstanding anything else to the contrary contained in
this Agreement, the date of determination of whether any such action is permitted hereunder, shall be deemed to be the date the definitive
agreements for such Limited Condition Acquisition are entered into (the “LCA Test Date”), and if, after giving pro forma effect to the
Limited Condition Acquisition and the other transactions to be entered into in connection therewith (including any Incurrence of
Indebtedness and the use of proceeds thereof) as if they had occurred at the beginning of the most recent period of four fiscal quarters then
ended prior to the LCA Test Date for which consolidated financial statements of Holdings are available, the Borrower could have taken such
action on the relevant LCA Test Date in compliance with such ratio or basket, such ratio or basket shall be deemed to have been complied
with. If the Borrower has made an LCA Election for any Limited Condition Acquisition, then in connection with any subsequent calculation
of any basket availability with respect to the incurrence of Indebtedness, the grant of Liens, or the making of Investments, Restricted
Payments, Dispositions, mergers and consolidations or other transfer of all or substantially all of the assets of any Loan Party or any
Subsidiary on or following the relevant LCA Test Date and prior to the earlier of the date on which such Limited Condition Acquisition is
consummated or the definitive agreement for such Limited Condition Acquisition is terminated or expires without consummation of such
Limited Condition Acquisition, any such ratio or basket shall be calculated on a Pro Forma Basis assuming both that such Limited Condition
Acquisition and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) have
been consummated and have not been consummated.
1.5
Rates. The Administrative Agent does not warrant or accept responsibility for, and shall
not have any liability with respect to, (a) the continuation of, administration of, submission of, calculation of or any other matter related to
ABR, the Benchmark, Adjusted Term SOFR, any component definition thereof or rates referred to in the definition thereof, or any
alternative, successor or replacement rate thereto (including any Benchmark Replacement), including whether the composition or
characteristics of any such alternative, successor or replacement rate (including any Benchmark Replacement) will be similar to, or produce
the same value or economic equivalence of, or have the same volume or liquidity as, ABR, Adjusted Term SOFR, the Benchmark or any
other Benchmark prior to its discontinuance or unavailability, or (b) the effect, implementation or composition of any Conforming Changes.
The Administrative Agent and its affiliates or other related entities may engage in transactions that affect the calculation of ABR, the
Benchmark, Adjusted Term SOFR, any alternative, successor or replacement rate (including any Benchmark Replacement) or any relevant
adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services
in its reasonable discretion to ascertain ABR, Adjusted Term SOFR or the Benchmark, in each case, pursuant to the terms of this Agreement,
and shall have no liability to the Borrower, any Lender or any other Person for damages of any kind, including direct or indirect, special,
punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in
equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.
1.6
Re-Classification and Incurrence Testing. Notwithstanding anything to the contrary herein, (a) if any incurrence-based
financial ratios or tests (“Financial Incurrence Tests”) would be satisfied in any subsequent fiscal quarter following the utilization of either
(i) fixed baskets, exceptions or thresholds (including any related builder or grower component) that do not require compliance with a
38
financial ratio or test (“Fixed Amounts”) (it being understood that any provision of this Agreement that is expressly limited by a fixed-dollar
limitation (including any related builder or grower component) and that includes, as a condition to utilization thereof or to entering into or
consummating applicable amounts or transactions in reliance on such provision limited by a fixed-dollar limitation, a requirement of
compliance with a Financial Incurrence Test, shall constitute a “Fixed Amount” hereunder) or (ii) baskets, exceptions and thresholds that
require compliance with a financial ratio or test (any such amounts, “Incurrence Based Amounts”), then the reclassification of actions or
transactions (or portions thereof), including the reclassification of utilization of any Fixed Amounts as incurred under any available
Incurrence Based Amounts, shall be deemed to have automatically occurred even if not elected by the Borrower (unless the Borrower
otherwise notifies the Administrative Agent) and (b) in calculating any Incurrence Based Amounts (including any Financial Incurrence
Tests), any amounts incurred, or transactions entered into or consummated, in reliance on a Fixed Amount in a concurrent transaction, a
single transaction or a series of related transactions with the amount incurred, or transaction entered into or consummated, under the
applicable Incurrence Based Amount, shall not be given effect in calculating the applicable Incurrence Based Amount (but shall be calculated
on a Pro Forma Basis to give effect to all applicable and related transactions (including the use of proceeds of all Indebtedness (but without
netting the cash proceeds of any such Indebtedness) to be incurred and any repayments, repurchases and redemptions of Indebtedness)).
SECTION 2
AMOUNT AND TERMS OF COMMITMENTS
2.1
2.2
2.3
2.4
[Reserved].
[Reserved].
[Reserved].
Revolving Commitments.
(a)
Prior to the Closing Date, Existing Revolving Loans were made to the Borrower under the Existing Credit
Agreement which remain outstanding as of the date of this Agreement. Subject to the terms and conditions set forth in this Agreement, the
Borrower and each of the Lenders agree that on the Closing Date but subject to the reallocation and other transactions described in Section
10.22, the Existing Revolving Loans shall be reevidenced as Loans under this Agreement and the terms of the Existing Revolving Loans
shall be restated in their entirety and shall be evidenced by this Agreement. Subject to the terms and conditions hereof, each Revolving
Lender severally agrees to make revolving credit loans in Dollars (each, a “Revolving Loan” and, collectively, the “Revolving Loans”) to the
Borrower from time to time during the Revolving Commitment Period in an aggregate principal amount at any one time outstanding which,
when added to the aggregate outstanding amount of the Swingline Loans, the aggregate undrawn amount of all outstanding Letters of Credit,
and the aggregate amount of all L/C Disbursements that have not yet been reimbursed or converted into Revolving Loans, incurred on behalf
of the Borrower and owing to such Lender, does not exceed the amount of such Lender’s Revolving Commitment. In addition, such
aggregate obligations shall not at any time exceed the Total Revolving Commitments in effect at such time. During the Revolving
Commitment Period the Borrower may use the Revolving Commitments by borrowing, prepaying the Revolving Loans in whole or in part,
and reborrowing, all in accordance with the terms and conditions hereof. The Revolving Loans may from time to time be SOFR Loans or
ABR Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.5 and 2.13.
(b)
Termination Date.
The Borrower shall repay all outstanding Revolving Loans (including all Overadvances) on the Revolving
2.5
Procedure for Revolving Loan Borrowing. The Borrower may borrow under the Revolving Commitments during the
Revolving Commitment Period on any Business Day; provided that the Borrower shall give the Administrative Agent an irrevocable Notice
of Borrowing (which must be received by the Administrative Agent prior to 12:00 P.M. (a) three (3) U.S. Government Securities
39
Business Days prior to the requested Borrowing Date, in the case of SOFR Loans, or (b) one (1) Business Day prior to the requested
Borrowing Date, in the case of ABR Loans) (provided that any such Notice of Borrowing of ABR Loans under the Revolving Facility to
finance payments under Section 3.5(a) may be given not later than 12:00 P.M. on the date of the proposed borrowing), in each such case
specifying (i) the amount and Type of Revolving Loans to be borrowed, (ii) the requested Borrowing Date, (iii) in the case of SOFR Loans,
the respective lengths of the initial Interest Period therefor, and (iv) instructions for remittance of the proceeds of the applicable Loans to be
borrowed. If no Interest Period is specified with respect to any requested SOFR Loan, the Borrower shall be deemed to have selected an
Interest Period of one month’s duration. Unless otherwise agreed by the Administrative Agent in its sole discretion, no Revolving Loan may
be made as, converted into or continued as a SOFR Loan having an Interest Period in excess of one month prior to the date that is 30 days
after the Closing Date. Each borrowing under the Revolving Commitments shall be in an amount equal to in the case of ABR Loans,
$1,000,000 or a whole multiple of $100,000 in excess thereof (or, if the then aggregate Available Revolving Commitments are less than
$1,000,000, such lesser amount); provided that the Swingline Lender may request, on behalf of the Borrower, borrowings under the
Revolving Commitments that are ABR Loans in other amounts pursuant to Section 2.7. Upon receipt of any such Notice of Borrowing from
the Borrower, the Administrative Agent shall promptly notify each Revolving Lender thereof. Each Revolving Lender will make the amount
of its pro rata share of each such borrowing available to the Administrative Agent for the account of the Borrower at the Revolving Loan
Funding Office prior to 12:00 P.M. on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative
Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent crediting such account as is designated in
writing to the Administrative Agent by the Borrower with the aggregate of the amounts made available to the Administrative Agent by the
Revolving Lenders and in like funds as received by the Administrative Agent.
2.6
Swingline Commitment. Subject to the terms and conditions hereof, the Swingline Lender agrees to make available a
portion of the credit accommodations otherwise available to the Borrower under the Revolving Commitments from time to time during the
Revolving Commitment Period by making swing line loans in Dollars (each a “Swingline Loan” and, collectively, the “Swingline Loans”) to
the Borrower; provided that (a) the aggregate principal amount of Swingline Loans outstanding at any time shall not exceed the Swingline
Commitment then in effect, (b) the Borrower shall not request, and the Swingline Lender shall not make, any Swingline Loan if, after giving
effect to the making of such Swingline Loan, the aggregate amount of the Available Revolving Commitments would be less than zero, and
(c) the Borrower shall not use the proceeds of any Swingline Loan to refinance any then outstanding Swingline Loan. During the Revolving
Commitment Period, the Borrower may use the Swingline Commitment by borrowing, repaying and reborrowing, all in accordance with the
terms and conditions hereof. Swingline Loans shall be ABR Loans only. The Borrower shall repay to the Swingline Lender the then unpaid
principal amount of each Swingline Loan on the Revolving Termination Date. The Swingline Lender shall not make a Swingline Loan during
the period commencing at the time it has received notice (by telephone or in writing) from the Administrative Agent at the request of any
Lender, acting in good faith, that one or more of the applicable conditions specified in Section 5.2 (other than Section 5.2(d)) is not then
satisfied and has had a reasonable opportunity to react to such notice and ending when such conditions are satisfied or duly waived.
2.7
Procedure for Swingline Borrowing; Refunding of Swingline Loans.
(a)
Whenever the Borrower desires that the Swingline Lender make Swingline Loans the Borrower shall give the
Swingline Lender irrevocable telephonic notice (which telephonic notice must be received by the Swingline Lender not later than 12:00 P.M.
on the proposed Borrowing Date) confirmed promptly in writing by a Notice of Borrowing, specifying (i) the amount to be borrowed, (ii) the
requested Borrowing Date (which shall be a Business Day during the Revolving Commitment Period), and (iii) instructions for the remittance
of the proceeds of such Loan. Each borrowing under the Swingline Commitment shall be in an amount equal to $500,000 or a whole multiple
of $100,000 in excess thereof. Promptly thereafter, on the Borrowing Date specified in a notice in respect of Swingline Loans, the Swingline
Lender shall make available to the Borrower an amount in immediately available funds equal to the amount of the Swingline Loan to be
made by depositing such amount in the account designated in writing to the Administrative Agent by the Borrower. Unless a Swingline Loan
is sooner
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refinanced by the advance of a Revolving Loan pursuant to Section 2.7(b), such Swingline Loan shall be repaid by the Borrower no later than
five (5) Business Days after the advance of such Swingline Loan.
(b)
The Swingline Lender, at any time and from time to time in its sole and absolute discretion may, on behalf of the
Borrower (which hereby irrevocably directs the Swingline Lender to act on its behalf), on one Business Day’s telephonic notice given by the
Swingline Lender no later than 12:00 P.M. and promptly confirmed in writing, request each Revolving Lender to make, and each Revolving
Lender hereby agrees to make, a Revolving Loan, in an amount equal to such Revolving Lender’s Revolving Percentage of the aggregate
amount of such Swingline Loan (each a “Refunded Swingline Loan”) outstanding on the date of such notice, to repay the Swingline Lender.
Each Revolving Lender shall make the amount of such Revolving Loan available to the Administrative Agent at the Revolving Loan Funding
Office in immediately available funds, not later than 12:00 P.M. one Business Day after the date of such notice. The proceeds of such
Revolving Loan shall immediately be made available by the Administrative Agent to the Swingline Lender for application by the Swingline
Lender to the repayment of the Refunded Swingline Loan. The Borrower irrevocably authorizes the Swingline Lender to charge the
Borrower’s accounts with the Administrative Agent (up to the amount available in each such account) immediately to pay the amount of any
Refunded Swingline Loan to the extent amounts received from the Revolving Lenders are not sufficient to repay in full such Refunded
Swingline Loan.
(c)
If prior to the time that the Borrower has repaid the Swingline Loans pursuant to Section 2.7(a) or a Revolving Loan
has been made pursuant to Section 2.7(b), one of the events described in Section 8.1(f) shall have occurred or if for any other reason, as
determined by the Swingline Lender in its sole discretion, Revolving Loans may not be made as contemplated by Section 2.7(b), each
Revolving Lender shall, on the date such Revolving Loan was to have been made pursuant to the notice referred to in Section 2.7(b) or on the
date requested by the Swingline Lender (with at least one (1) Business Days’ notice to the Revolving Lenders), purchase for cash an
undivided participating interest in the then outstanding Swingline Loans by paying to the Swingline Lender an amount (the “Swingline
Participation Amount”) equal to (i) such Revolving Lender’s Revolving Percentage times (ii) the sum of the aggregate principal amount of
the outstanding Swingline Loans that were to have been repaid with such Revolving Loans.
(d)
Whenever, at any time after the Swingline Lender has received from any Revolving Lender such Lender’s Swingline
Participation Amount, the Swingline Lender receives any payment on account of the Swingline Loans, the Swingline Lender will distribute
to such Lender its Swingline Participation Amount (appropriately adjusted, in the case of interest payments, to reflect the period of time
during which such Lender’s participating interest was outstanding and funded and, in the case of principal and interest payments, to reflect
such Lender’s pro rata portion of such payment if such payment is not sufficient to pay the principal of and interest on all Swingline Loans
then due); provided that in the event that such payment received by the Swingline Lender is required to be returned, such Revolving Lender
will return to the Swingline Lender any portion thereof previously distributed to it by the Swingline Lender.
(e)
Each Revolving Lender’s obligation to make the Loans referred to in Section 2.7(b) and to purchase participating
interests pursuant to Section 2.7(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff,
counterclaim, recoupment, defense or other right that such Revolving Lender or the Borrower may have against the Swingline Lender, the
Borrower or any other Person for any reason whatsoever, (ii) the occurrence of a Default or an Event of Default or the failure to satisfy any of
the other conditions specified in Section 5, (iii) any adverse change in the condition (financial or otherwise) of the Borrower, (iv) any breach
of this Agreement or any other Loan Document by the Borrower, any other Loan Party or any other Revolving Lender, or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.
(f)
The Swingline Lender may resign at any time by giving 30 days’ prior notice to the Administrative Agent, the
Lenders and the Borrower. Following such notice of resignation from the Swingline Lender, the Swingline Lender may be replaced at any
time by written agreement among the Borrower, the Administrative Agent, the Required Lenders and the successor Swingline Lender. After
the resignation or replacement of the Swingline Lender hereunder, the retiring Swingline Lender shall
41
remain a party hereto and shall continue to have all the rights and obligations of the Swingline Lender under this Agreement and the other
Loan Documents with respect to Swingline Loans made by it prior to such resignation or replacement, but shall not be required or permitted
to make any additional Swingline Loans.
2.8
Overadvances.
(a)
If at any time or for any reason the aggregate amount of the Total Revolving Extensions of Credit exceeds the
amount of the Total Revolving Commitments then in effect (any such excess, an “Overadvance”), the Borrower shall, if the amount of such
Overadvance is (a) equal or greater than $500,000, immediately pay the full amount of such Overadvance to the Administrative Agent,
without notice or demand, or (b) less than $500,000, within one (1) Business Day after the receipt of a request by the Administrative Agent
therefore, pay the full amount of such Overadvance to the Administrative Agent, in each case, for application against the Revolving
Extensions of Credit in accordance with the terms hereof. Any prepayment of any Revolving Loan that is a SOFR Loan hereunder shall be
subject to Borrower’s obligation to pay any amounts owing pursuant to Section 2.21.
2.9
Fees.
forth in the Fee Letter and to perform any other obligations contained therein.
(a)
Fee Letter. The Borrower agrees to pay to the Administrative Agent the fees in the amounts and on the dates as set
(b)
Commitment Fee. As additional compensation for the Revolving Commitments, the Borrower shall pay to the
Administrative Agent for the account of the Lenders, in arrears, on the first day of each calendar quarter of the Borrower prior to the
Revolving Termination Date and on the Revolving Termination Date, a fee (the “Commitment Fee”) for the Borrower’s non-use of available
funds in an amount equal to the Commitment Fee Rate per annum multiplied by the difference between (x) the Total Revolving
Commitments (as they may be reduced or increased from time to time) and (y) the sum of (A) the average for the period of the daily closing
balance of the Revolving Loans outstanding, excluding the aggregate principal amount of Swingline Loans which shall be deemed to be zero
for purposes hereof, (B) the aggregate undrawn amount of all Letters of Credit outstanding at such time and (C) the aggregate amount of all
L/C Disbursements that have not yet been reimbursed or converted into Revolving Loans at such time.
nonrefundable.
(c)
Fees Nonrefundable. All fees payable under this Section 2.9 shall be fully earned on the date paid and
of any of the foregoing fees due under subsection (b) shall be increased by adding 2.0% per annum thereto.
(d)
Increase in Fees. At any time that an Event of Default exists, upon the request of the Required Lenders, the amount
2.10
Termination or Reduction of Revolving Commitments; Prepayments.
The Borrower shall have the right, without penalty or premium, upon not less than three (3) Business Days’ notice to the
Administrative Agent, to terminate the Revolving Commitments or, from time to time, to reduce the amount of the Revolving Commitments;
provided that no such termination or reduction of the Revolving Commitments shall be permitted if, after giving effect thereto and to any
prepayments of the Revolving Loans and Swingline Loans made on the effective date thereof (which prepayments may be made without
penalty or premium other than any amounts owing (if any) pursuant to Section 2.21), the Total Revolving Extensions of Credit then
outstanding would exceed the Total Revolving Commitments then in effect; provided that if such notice indicates that such termination or
reduction is conditioned on the occurrence of a transaction it may be revoked if such transaction is not consummated. Any such reduction
shall be in an amount equal to $1,000,000, or a whole multiple thereof (or, if the then Total Revolving Commitments are less than
$1,000,000, such lesser amount), and shall reduce permanently the Revolving Commitments then in effect; provided further, if in connection
with any such reduction or termination of the Revolving Commitments a SOFR Loan is prepaid on any day other than the last day of the
Interest Period applicable thereto, the Borrower shall also pay any amounts
42
owing (if any) pursuant to Section 2.21. The Borrower shall have the right, without penalty or premium, upon not less than three (3) Business
Days’ notice to the Administrative Agent, to terminate the L/C Commitments or, from time to time, to reduce the amount of the L/C
Commitments; provided that no such termination or reduction of L/C Commitments shall be permitted if, after giving effect thereto, the Total
L/C Commitments shall be reduced to an amount that would result in the aggregate L/C Exposure exceeding the Total L/C Commitments (as
so reduced). Any such reduction shall be in an amount equal to $1,000,000, or a whole multiple thereof (or, if the then Total L/C
Commitments are less than $1,000,000, such lesser amount), and shall reduce permanently the L/C Commitments then in effect. The
Borrower shall have the right, without penalty or premium other than any amounts owing (if any) pursuant to Section 2.21, at any time and
from time to time to prepay any Loan in whole or in part, upon not less than three (3) Business Days’ notice to the Administrative Agent;
provided that if such notice indicates that such prepayment is conditioned on the occurrence of a transaction it may be revoked if such
transaction is not consummated. Upon receipt of any such notice, the Administrative Agent shall promptly notify each relevant Lender
thereof.
2.11
[Reserved].
2.12
[Reserved].
2.13
Conversion and Continuation Options.
(a)
The Borrower may elect from time to time to convert SOFR Loans to ABR Loans by giving the Administrative
Agent prior irrevocable notice in a Notice of Conversion/Continuation of such election no later than 12:00 P.M. one (1) Business Day prior to
the proposed conversion date; provided that any such conversion of SOFR Loans may only be made on the last day of an Interest Period with
respect thereto. The Borrower may elect from time to time to convert ABR Loans to SOFR Loans by giving the Administrative Agent prior
irrevocable notice in a Notice of Conversion/Continuation of such election no later than 12:00 P.M. three (3) U.S. Government Securities
Business Days prior to the proposed conversion date (which notice shall specify the length of the initial Interest Period therefor); provided
that no ABR Loan may be converted into a SOFR Loan when any Event of Default has occurred and is continuing. Upon receipt of any such
notice, the Administrative Agent shall promptly notify each relevant Lender thereof. If no Interest Period is specified with respect to any
SOFR Loan in a Notice of Conversion/Continuation delivered by the Borrower to the Administrative Agent, the Borrower shall be deemed to
have selected an Interest Period of one month’s duration.
(b)
The Borrower may elect from time to time to continue any SOFR Loan by giving the Administrative Agent prior
notice of such election in a Notice of Conversion/Continuation, in accordance with the applicable provisions of the term “Interest Period” set
forth in Section 1.1, of the length of the next Interest Period to be applicable to such SOFR Loan; provided that no SOFR Loan may be
continued as such when any Event of Default has occurred and is continuing; provided further that (x) if the Borrower shall fail to give any
required notice as described above in this paragraph, upon the expiration of the then current Interest Period, such SOFR Loans shall be
automatically continued as SOFR Loans bearing interest at a rate based upon Adjusted Term SOFR and with an Interest Period of the same
length as then expiring Interest Period or (y) if such continuation is not permitted pursuant to the preceding proviso, such SOFR Loans shall
be automatically converted to ABR Loans on the last day of such then expiring Interest Period. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.
(c)
After the occurrence and during the continuance of an Event of Default, (i) the Borrower may not elect to have a
Loan be made or continued as, or converted to, a SOFR Loan after the expiration of any Interest Period then in effect for such Loan and (ii),
any Notice of Conversion/Continuation given by the Borrower with respect to a requested conversion/continuation that has not yet occurred
shall, at the Administrative Agent’s option, be deemed to be rescinded by the Borrower and be deemed a request to convert or continue Loans
referred to therein as ABR Loans.
2.14
Limitations on SOFR Tranches. Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions
and continuations of SOFR Loans and all selections of Interest Periods shall be in such amounts and be made pursuant to such elections so
that, (a) after giving effect
43
thereto, the aggregate principal amount of the SOFR Loans comprising each SOFR Tranche shall be equal to $1,000,000 or a whole multiple
of $100,000 in excess thereof, and (b) no more than seven (7) SOFR Tranches shall be outstanding at any one time.
2.15
Interest Rates and Payment Dates.
equal to (i) Adjusted Term SOFR for the Interest Period therefor plus (ii) the Applicable Margin.
(a)
Each SOFR Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum
the Applicable Margin.
(b)
Each ABR Loan (including any Swingline Loan) shall bear interest at a rate per annum equal to (i) the ABR plus (ii)
(c)
During the continuance of an Event of Default, at the request of the Required Lenders, all outstanding Loans shall
bear interest at a rate per annum equal to the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this
Section plus 2.00% (the “Default Rate”); provided that the Default Rate shall apply to all outstanding Loans automatically and without any
Required Lender consent therefor upon the occurrence of any Event of Default arising under Section 8.1(a) or (f).
(d)
Interest shall be payable in arrears on each Interest Payment Date; provided that (x) interest accruing pursuant to
Section 2.15(c) shall be payable from time to time on demand and (y) in the event of any conversion of any SOFR Loan prior to the end of
the Interest Period therefor, accrued interest on such SOFR Loan and any amounts owing pursuant to Section 2.21 shall be payable on the
effective date of such conversion.
2.16
Computation of Interest and Fees.
(a)
Interest and fees payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days
elapsed, except that, with respect to ABR Loans the rate of interest on which is calculated on the basis of the Prime Rate, the interest thereon
shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. All interest hereunder on any
Loan shall be computed on a daily basis based upon the outstanding principal amount of such Loan as of the applicable date of determination.
Any change in the interest rate on a Loan resulting from a change in the ABR shall become effective as of the opening of business on the day
on which such change becomes effective. The Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders
of the effective date and the amount of each such change in interest rate.
(b)
Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall
be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request
of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest
rate pursuant to Section 2.16(a).
(c)
In connection with the use or administration of any Benchmark, the Administrative Agent shall have the right to
make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any
amendments implementing such Conforming Changes shall become effective without any further action or consent of any other party to this
Agreement or any other Loan Document. The Administrative Agent will promptly notify the Borrower and the Lenders of the effectiveness
of any Conforming Changes in connection with the use or administration of such Benchmark.
2.17
Inability to Determine Interest Rate; Benchmark Replacement Setting.
(a)
Inability to Determine Interest Rate. Subject to Section 2.17(b), if.
44
error) that “Adjusted Term SOFR” cannot be determined pursuant to the definition thereof, or
(i)
the Administrative Agent determines (which determination shall be conclusive and binding absent manifest
the Required Lenders determine that for any reason, in connection with any request for a SOFR Loan or a
conversion thereto or a continuation thereof that “Adjusted Term SOFR” for any requested Interest Period with respect to a proposed SOFR
Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, and the Required Lenders have provided notice of
such determination to the Administrative Agent,
(ii)
the Administrative Agent will promptly so notify the Borrower and each Lender. Upon notice thereof by the Administrative Agent to the
Borrower, any obligation of the Lenders to make and any right of the Borrower to continue SOFR Loans or to convert ABR Loans to SOFR
Loans shall be suspended (to the extent of the affected SOFR Loans or, in the case of a Term SOFR Borrowing, the affected Interest Periods)
until the Administrative Agent (with respect to clause (ii), at the instruction of the Required Lenders) revokes such notice. Upon receipt of
such notice, (i) the Borrower may revoke any pending request for a borrowing of, conversion to or continuation of SOFR Loans (to the extent
of the affected SOFR Loans or, in the case of a Term SOFR Borrowing, the affected Interest Periods) or, failing that, the Borrower will be
deemed to have converted any such request into a request for a borrowing of or conversion to ABR Loans in the amount specified therein and
(ii) any outstanding affected SOFR Loans will be deemed to have been converted into ABR Loans immediately or, in the case of a Term
SOFR Borrowing, at the end of the applicable Interest Period. Upon any such conversion, the Borrower shall also pay accrued interest on the
amount so converted, together with any additional amounts required pursuant to Section 2.21. Subject to Section 2.17(b), if the
Administrative Agent determines (which determination shall be conclusive and binding absent manifest error) that “Term SOFR” cannot be
determined pursuant to the definition thereof, in each case on any given day, the interest rate on ABR Loans shall be determined by the
Administrative Agent without reference to clause (c) of the definition of “ABR” until the Administrative Agent revokes such determination.
(b)
Benchmark Replacement Setting.
(i)
Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document,
if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to any setting of the then-current
Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (a) of the definition of “Benchmark Replacement”
for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under
any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action
or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in
accordance with clause (b) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark
Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at
or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to
the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so
long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders
comprising the Required Lenders.
Benchmark Replacement Conforming Changes. In connection with the use, administration, adoption or
implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Conforming Changes from time to time
and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming
Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.
(ii)
Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the
Borrower and the Lenders of (i) the implementation of any Benchmark Replacement and (ii) the effectiveness of any Conforming Changes in
connection with the
(iii)
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use, administration, adoption or implementation of a Benchmark Replacement. The Administrative Agent will promptly notify the Borrower
of the removal or reinstatement of any tenor of a Benchmark pursuant to Section 2.17(b)(iv). Any determination, decision or election that
may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.17(b), including any
determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any
decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in
its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as
expressly required pursuant to this Section 2.17(b).
(iv)
Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan
Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is
a term rate (including Term SOFR Reference Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other
information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the
administrator of such Benchmark or the regulatory supervisor for the administrator of such Benchmark has provided a public statement or
publication of information announcing that any tenor for such Benchmark is not or will not be representative or in compliance with or aligned
with the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks, then the Administrative Agent
may modify the definition of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to
remove such unavailable, non-representative, non-compliant or non-aligned tenor and (ii) if a tenor that was removed pursuant to clause (i)
above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B)
is not, or is no longer, subject to an announcement that it is not or will not be representative or in compliance with or aligned with the
International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks for a Benchmark (including a
Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous
definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(v)
Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a
Benchmark Unavailability Period, the Borrower may revoke any pending request for a SOFR Borrowing of, conversion to or continuation of
SOFR Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, (i) the Borrower will be
deemed to have converted any such request into a request for a Borrowing of or conversion to ABR Loans and (ii) any outstanding affected
SOFR Loans will be deemed to have been converted into ABR Loans at the end of the applicable Interest Period. During any Benchmark
Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of ABR based
upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of ABR.
2.18
Pro Rata Treatment and Payments.
Each borrowing by the Borrower from the Lenders hereunder, each payment by the Borrower on account of any
commitment fee and any reduction of the Commitments shall be made pro rata according to the respective L/C Percentages or Revolving
Percentages, as the case may be, of the relevant Lenders.
(a)
(b)
[Reserved]
Each payment (including each prepayment) by the Borrower on account of principal of and interest on the Revolving
Loans shall be made pro rata according to the respective outstanding principal amounts of the Revolving Loans then held by the Revolving
Lenders.
(c)
(d)
All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal,
interest, fees or otherwise, shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff and shall be
made prior to 12:00 P.M. on the due date thereof to the Administrative Agent, for the account of the Lenders, at the applicable Funding
Office, in
46
Dollars and in immediately available funds. The Administrative Agent shall distribute such payments to the Lenders promptly upon receipt in
like funds as received. Any payment received by the Administrative Agent after 12:00 P.M. shall be deemed received on the next succeeding
Business Day and any applicable interest or fee shall continue to accrue. If any payment hereunder (other than payments on the SOFR Loans)
becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day. If any
payment on a SOFR Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event
such payment shall be made on the immediately preceding Business Day. In the case of any extension of any payment of principal pursuant
to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension.
(e)
Unless the Administrative Agent shall have been notified in writing by any Lender prior to the proposed date of any
borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative
Agent, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such date in
accordance with Section 2, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not in fact made available to the Administrative Agent by the required time on the Borrowing Date
therefor, such Lender and the Borrower severally agree to pay to the Administrative Agent forthwith, on demand, such corresponding amount
with interest thereon, for each day from and including the date on which such amount is made available to the Borrower but excluding the
date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, a rate equal to the greater of (A) the
Federal Funds Effective Rate and (B) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank
compensation, and (ii) in the case of a payment to be made by the Borrower, the rate per annum applicable to ABR Loans under the relevant
Facility. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the
Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender
pays its share of the applicable borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included
in such borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall
have failed to make such payment to the Administrative Agent.
(f)
Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any
payment is due to the Administrative Agent for the account of the Lenders or the Issuing Lender hereunder that the Borrower will not make
such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and
may, in reliance upon such assumption, distribute to the Lenders or the Issuing Lender, as the case may be, the amount due. In such event, if
the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Lender, as the case may be, severally agrees to
repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Lender, with interest thereon, for
each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on
interbank compensation. Nothing herein shall be deemed to limit the rights of Administrative Agent or any Lender against any Loan Party.
(g)
If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as
provided in the foregoing provisions of this Section 2, and such funds are not made available to the Borrower by the Administrative Agent
because the conditions to the applicable extension of credit set forth in Section 5.1 or Section 5.2 are not satisfied or waived in accordance
with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without
interest.
(h)
The obligations of the Lenders hereunder to (i) make Revolving Loans, (ii) fund its participations in L/C
Disbursements in accordance with its respective L/C Percentage, (iii) fund its respective Swingline Participation Amount of any Swingline
Loan, and (iv) make payments pursuant to Section 9.7, as applicable, are several and not joint. The failure of any Lender to make any such
Loan, to fund any such participation or to make any such payment under Section 9.7 on any date required
47
hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the
failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 9.7.
Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or
manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or
manner.
(i)
(j)
If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of
principal, interest and fees then due hereunder, such funds shall be applied (i) first, toward payment of interest and fees and Overadvances
then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees and Overadvances then due
to such parties, and (ii) second, toward payment of principal then due hereunder, ratably among the parties entitled thereto in accordance with
the amounts of principal then due to such parties.
(k)
If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the principal of or interest on any Loan made by it, its participation in the L/C Exposure or other obligations
hereunder, as applicable (other than pursuant to a provision hereof providing for non-pro rata treatment), in excess of its Revolving
Percentage or L/C Percentage, as applicable, of such payment on account of the Loans or participations obtained by all of the Lenders, such
Lender shall (a) notify the Administrative Agent of the receipt of such payment, and (b) within five (5) Business Days of such receipt
purchase (for cash at face value) from the other Revolving Lenders or L/C Lenders, as applicable (through the Administrative Agent),
without recourse, such participations in the Revolving Loans made by them and/or participations in the L/C Exposure held by them, as
applicable, or make such other adjustments as shall be equitable, as shall be necessary to cause such purchasing Lender to share the excess
payment ratably with each of the other Lenders in accordance with their respective Revolving Percentages or L/C Percentages, as applicable;
provided, however, that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered,
such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest and (ii) the provisions of
this clause (k) shall not be construed to apply to (x) any payment made by the Borrower pursuant to and in accordance with the express terms
of this Agreement (including the application of funds arising from the existence of a Defaulting Lender) or (y) any payment obtained by a
Lender as consideration for the assignment or sale of a participation in any of its Loans or participations in L/C Disbursements to any
assignee or participant, other than to the Borrower or any of its Affiliates (as to which the provisions of this clause (k) shall apply). The
Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.18(k) may exercise all its rights
of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation. No documentation other than notices and the like referred to in this Section 2.18(k) shall be
required to implement the terms of this Section 2.18(k). The Administrative Agent shall keep records (which shall be conclusive and binding
in the absence of manifest error) of participations purchased pursuant to this Section 2.18(k) and shall in each case notify the Revolving
Lenders or the L/C Lenders, as applicable, following any such purchase. The provisions of this Section 2.18(k) shall not be construed to
apply to (i) any payment made by or on behalf of the Borrower pursuant to and in accordance with the express terms of this Agreement
(including the application of funds arising from the existence of a Defaulting Lender), (ii) the application of Cash Collateral provided for in
Section 3.10, or (iii) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or
sub-participations in any L/C Exposure to any assignee or participant, other than an assignment to the Borrower or any Affiliate thereof (as to
which the provisions of this Section 2.18(k) shall apply). The Borrower consents on behalf of itself and each other Loan Party to the
foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against each Loan Party rights of setoff and counterclaim with respect to such participation as fully as
if such Lender were a direct creditor of each Loan Party in the amount of such participation. For the avoidance of doubt, no amounts received
by the Administrative Agent or any Lender from any Guarantor that is not a Qualified ECP Guarantor shall be applied in partial or complete
satisfaction of any Excluded Swap Obligations.
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(l)
Notwithstanding anything to the contrary in this Agreement, the Administrative Agent may, in its discretion at any
time or from time to time, without the Borrower’s request and even if the conditions set forth in Section 5.2 would not be satisfied, make a
Revolving Loan in an amount equal to the portion of the Obligations constituting overdue interest and fees and Swingline Loans from time to
time due and payable to itself, any Revolving Lender, the Swingline Lender or the Issuing Lender, and apply the proceeds of any such
Revolving Loan to those Obligations; provided that after giving effect to any such Revolving Loan, the aggregate outstanding Revolving
Loans will not exceed the Total Revolving Commitments then in effect.
2.19
Illegality; Requirements of Law.
(a)
Illegality. If any Lender determines that any Requirement of Law has made it unlawful, or that any Governmental
Authority has asserted that it is unlawful, for any Lender or its applicable lending office to make, maintain or fund Loans whose interest is
determined by reference to SOFR, Term SOFR, Adjusted Term SOFR or Term SOFR Reference Rate, or to determine or charge interest rates
based upon SOFR, Term SOFR, Adjusted Term SOFR or Term SOFR Reference Rate, then, upon notice thereof by such Lender to the
Borrower (through the Administrative Agent), (i) any obligation of the Lenders to make or the right of the Borrower to continue SOFR Loans
or to convert ABR Loans to SOFR Loans shall be suspended, and (ii) the interest rate on which ABR Loans shall, if necessary to avoid such
illegality, be determined by the Administrative Agent without reference to SOFR component of the definition of “ABR”, in each case until
such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist.
Upon receipt of such notice, (x) the Borrower shall, if necessary to avoid such illegality, upon demand from any Lender (with a copy to the
Administrative Agent), prepay or, if applicable, convert all SOFR Loans to ABR Loans (the interest rate on which ABR Loans of such
Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to SOFR component of the
definition of “ABR”), on the last day of the Interest Period therefor, if all affected Lenders may lawfully continue to maintain such SOFR
Loans to such day, or immediately, if any Lender may not lawfully continue to maintain such SOFR Loans to such day and (y) if necessary to
avoid such illegality, the Administrative Agent shall during the period of such suspension compute the ABR without reference to SOFR
component of the definition of “ABR” in each case, until the Administrative Agent is advised in writing by each affected Lender that it is no
longer illegal for such Lender to determine or charge interest rates based upon, Term SOFR, Adjusted Term SOFR or Term SOFR Reference
Rate. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted, together
with any additional amounts required pursuant to Section 2.21.
Requirements of Law. If the adoption of or any change in any Requirement of Law or in the administration,
interpretation, implementation or application thereof by any Governmental Authority, or the making or issuance of any request, rule,
guideline or directive (whether or not having the force of law) by any Governmental Authority made subsequent to the date hereof:
(b)
shall subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses
(b) through (d) of the definition of Excluded Taxes, and (C) Connection Income Taxes) on its Loans, loan principal, letters of credit,
commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto;
(i)
(ii)
shall impose, modify or deem applicable any reserve (including pursuant to regulations issued from time to
time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, special, supplemental or
other marginal reserve requirement) with respect to eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation
D)), special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of or credit
extended or participated in by, any Lender; or
Loans made by such Lender or any Letter of Credit or participation therein;
(iii)
impose on any Lender any other condition, cost or expense (other than Taxes) affecting this Agreement or
49
and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing
or maintaining Loans or of maintaining its obligation to make such Loans, or to increase the cost to such Lender or such other Recipient of
issuing, maintaining or participating in Letters of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or
to reduce the amount of any sum receivable or received by such Lender or other Recipient hereunder in respect thereof (whether of principal,
interest or any other amount), then, in any such case, upon the request of such Lender or other Recipient, the Borrower will promptly pay
such Lender or other Recipient, as the case may be, any additional amount or amounts necessary to compensate such Lender or other
Recipient, as the case may be, for such additional costs incurred or reduction suffered. If any Lender becomes entitled to claim any additional
amounts pursuant to this paragraph, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of
which it has become so entitled.
(c)
If any Lender determines that any change in any Requirement of Law affecting such Lender or any lending office of
such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing
the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement,
the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Swingline Loans held by, such Lender, or the
Letters of Credit issued by the Issuing Lender, to a level below that which such Lender or such Lender’s holding company could have
achieved but for such change in such Requirement of Law (taking into consideration such Lender’s policies and the policies of such Lender’s
holding company with respect to capital adequacy or liquidity), then from time to time the Borrower will pay to such Lender or the Issuing
Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender or such Lender’s or
Issuing Lender’s holding company for any such reduction suffered.
(d)
For purposes of this Agreement, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all
requests, rules, guidelines, or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives
promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority)
or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case (i) and (ii) be deemed to be a
change in any Requirement of Law, regardless of the date enacted, adopted or issued.
(e)
A certificate as to any additional amounts payable pursuant to paragraphs (b), (c), or (d) of this Section submitted by
any Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the absence of manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. Failure or delay on the part of
any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such
compensation. Notwithstanding anything to the contrary in this Section 2.19, the Borrower shall not be required to compensate a Lender
pursuant to this Section 2.19 for any amounts incurred more than nine months prior to the date that such Lender notifies the Borrower of the
change in the Requirement of Law giving rise to such increased costs or reductions, and of such Lender’s intention to claim compensation
therefor; provided that if the circumstances giving rise to such claim have a retroactive effect, then such nine-month period shall be extended
to include the period of such retroactive effect. The obligations of the Borrower arising pursuant to this Section 2.19 shall survive the
Discharge of Obligations and the resignation of the Administrative Agent.
2.20
Taxes.
For purposes of this Section 2.20, the term “Lender” includes the Issuing Lender and the term “applicable law” includes FATCA.
(a)
Payments Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Loan
Document shall be made without deduction or withholding for any Taxes, except as required by applicable law, and the Borrower shall, and
shall cause each other Loan Party, to comply with the requirements set forth in this Section 2.20. If any applicable law (as determined in the
good faith discretion of an applicable Withholding Agent) requires the deduction or
50
withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make
such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in
accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased
as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional
sums payable under this Section 2.20) the applicable Recipient receives an amount equal to the sum it would have received had no such
deduction or withholding been made.
Payment of Other Taxes. Each of Holdings and the Borrower shall, and each of Holdings and the Borrower shall
cause each other Loan Party to, timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the
Administrative Agent timely reimburse it for the payment of, any Other Taxes applicable to such Loan Party.
(b)
(c)
Evidence of Payments. As soon as practicable after any payment of Taxes by any Loan Party to a Governmental
Authority pursuant to this Section 2.20, the Borrower shall, or shall cause such other Loan Party to, deliver to the Administrative Agent the
original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such
payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(d)
Indemnification by Loan Parties. The Borrower shall, and shall cause each other Loan Party to, jointly and severally
indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified
Taxes imposed or asserted on or attributable to amounts payable under this Section 2.20) payable or paid by such Recipient or required to be
withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent
on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(e)
Indemnification by Lenders. Each Lender shall severally indemnify the Administrative Agent, within ten (10) days
after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already
indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any
Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.6 relating to the maintenance of a Participant Register
and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection
with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to
any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent
to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this Section 2.20(e).
(f)
Status of Lenders.
(i)
Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments
made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the
Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the
Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any
Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent
to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything
to the contrary in the preceding two sentences, the completion,
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execution and submission of such documentation (other than such documentation set forth in Sections 2.20(f)(ii)(A), (ii)(B) and (ii)(D)
below) shall not be required if the Lender is not legally entitled to complete, execute or deliver such documentation or, in the Lender’s
reasonable judgment, such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or
would materially prejudice the legal or commercial position of such Lender.
(ii)
Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person,
any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or
prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request
of the Borrower or the Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal
backup withholding tax;
(A)
any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the
Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative
Agent), whichever of the following is applicable:
(B)
in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the
United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN or IRS
Form W-8BEN-E, as applicable (or any successor form) establishing an exemption from, or reduction of, U.S. federal withholding Tax
pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS
Form W-8BEN or IRS Form W-8BEN-E, as applicable (or any successor form) establishing an exemption from, or reduction of, U.S. federal
withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(1)
(2)
executed copies of IRS Form W-8ECI;
in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest
under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit F-1 to the effect that such Foreign Lender is not a
“bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section
881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance
Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or any successor form); or
(3)
to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-
8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or any successor form), a U.S. Tax
Compliance Certificate substantially in the form of Exhibit F-2 or Exhibit F-3, IRS Form W-9, and/or other certification documents from
each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such
Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate
substantially in the form of Exhibit F-4 on behalf of each such direct and indirect partner;
(4)
(C)
any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the
Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative
Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal
withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the
Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and
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(D)
if a payment made to a Lender under any Loan Document would be subject to U.S. federal
withholding Tax 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 the Borrower and the Administrative
Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative 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 Administrative Agent as may be necessary for the Borrower and the
Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s
obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D),
“FATCA” shall include any amendments made to FATCA after the date of this Agreement.
(iii)
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or
inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing
of its legal inability to do so. Each Foreign Lender shall promptly notify the Borrower at any time it determines that it is no longer in a
position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing
authorities for such purpose).
(g)
Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has
received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.20 (including by the payment of additional
amounts pursuant to this Section 2.20), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of
indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses
(including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with
respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the
amount paid over pursuant to this Section 2.20(g) (plus any penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding
anything to the contrary in this Section 2.20(g), in no event will the indemnified party be required to pay any amount to an indemnifying
party pursuant to this Section 2.20(g) the payment of which would place the indemnified party in a less favorable net after-Tax position than
the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted,
withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This
paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its
Taxes that it deems confidential) to the indemnifying party or any other Person.
Administrative Agent or any assignment of rights by, or the replacement of, a Lender and the Discharge of Obligations.
(h)
Survival. Each party’s obligations under this Section 2.20 shall survive the resignation or replacement of the
2.21
Indemnity. In the event of (a) the payment of any principal of any SOFR Loan other than on the last day of the Interest
Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any SOFR Loan other than on the last day of the
Interest Period applicable thereto (including as a result of an Event of Default), (c) the failure to borrow, convert, continue or prepay any
SOFR Loan on the date specified in any notice delivered pursuant hereto, or (d) the assignment of any SOFR Loan other than on the last day
of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.23), then, in any such event, the
Borrower shall compensate each Lender for any loss, cost and expense attributable to such event, including any loss, cost or expense arising
from the liquidation or redeployment of funds. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such
Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof. This covenant shall survive the Discharge
of Obligations.
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2.22
Change of Lending Office. Each Lender agrees that, upon the occurrence of any event giving rise to the operation of
Section 2.19(b), Section 2.19(c), Section 2.20(a), Section 2.20(b) or Section 2.20(d) with respect to such Lender, it will, if requested by the
Borrower, use reasonable efforts to designate a different lending office for funding or booking its Loans affected by such event or to assign its
rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.19 or 2.20, as the case may be, in the future, and (ii) would
not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender; provided that
nothing in this Section shall affect or postpone any of the obligations of the Borrower or the rights of any Lender pursuant to Section 2.19(b),
Section 2.19(c), Section 2.20(a), Section 2.20(b) or Section 2.20(d). The Borrower hereby agrees to pay all reasonable and documented costs
and expenses incurred by any Lender in connection with any such designation or assignment made at the request of the Borrower.
2.23
Substitution of Lenders. Upon the receipt by the Borrower of any of the following (or in the case of clause (a) below, if the
Borrower is required to pay any such amount), with respect to any Lender (any such Lender described in clauses (a) through (c) below being
referred to as an “Affected Lender” hereunder):
a request from a Lender for payment of Indemnified Taxes or additional amounts under Section 2.20 or of increased
costs pursuant to Section 2.19(b) or Section 2.19(c) (and, in any such case, such Lender has declined or is unable to designate a different
lending office in accordance with Section 2.22 or is a Non-Consenting Lender);
(a)
agree to an amendment or other modification approved by the Required Lenders and the Administrative Agent; or
(b)
a notice from the Administrative Agent under Section 10.1(b) that one or more Minority Lenders are unwilling to
(c)
a notice from the Administrative Agent that a Lender is a Defaulting Lender;
then the Borrower may, at its sole expense and effort, upon notice to the Administrative Agent and such Affected Lender: (i) request that one
or more of the other Lenders acquire and assume all or part of such Affected Lender’s Loans and Commitment; or (ii) designate a
replacement lending institution (which shall be an Eligible Assignee) to acquire and assume all or a ratable part of such Affected Lender’s
Loans and Commitment (the replacing Lender or lender in (i) or (ii) being a “Replacement Lender”); provided, however, that the Borrower
shall be liable for the payment upon demand of all costs and other amounts arising under Section 2.21 that result from the acquisition of any
Affected Lender’s Loan and/or Commitment (or any portion thereof) by a Lender or Replacement Lender, as the case may be, on a date other
than the last day of the applicable Interest Period with respect to any SOFR Loans then outstanding. The Affected Lender replaced pursuant
to this Section 2.23 shall be required to assign and delegate, without recourse, all of its interests, rights and obligations under this Agreement
and the related Loan Documents to one or more Replacement Lenders that so agree to acquire and assume all or a ratable part of such
Affected Lender’s Loans and Commitment upon payment to such Affected Lender of an amount (in the aggregate for all Replacement
Lenders) equal to 100% of the outstanding principal of the Affected Lender’s Loans, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder and under the other Loan Documents from such Replacement Lenders (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all other amounts, including amounts under Section 2.21 hereof). Any
such designation of a Replacement Lender shall be effected in accordance with, and subject to the terms and conditions of, the assignment
provisions contained in Section 10.6 (with the assignment fee to be paid by the Borrower in such instance), provided that if such Affected
Lender does not comply with Section 10.6 within ten (10) Business Days after the Borrower’s request, the Administrative Agent is
authorized to execute the Assignment and Assumption on behalf of such Affected Lender. Notwithstanding the foregoing, with respect to any
assignment pursuant to this Section 2.23, (a) in the case of any such assignment resulting from a claim for compensation under Section 2.19
or payments required to be made pursuant to Section 2.20, such assignment shall result in a reduction in such compensation or payments
thereafter; (b) such assignment shall not conflict with applicable law and (c) in the case of any assignment resulting from a Lender being a
Minority Lender referred to in clause (b) of this Section 2.23, the applicable assignee shall have consented to the applicable amendment,
waiver or consent. Notwithstanding the foregoing, an Affected Lender shall not be required
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to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Affected Lender or otherwise, the circumstances
entitling the Borrower to require such assignment and delegation cease to apply.
2.24
Defaulting Lenders.
Defaulting Lender Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any
Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by
applicable law:
(a)
consent with respect to this Agreement shall be restricted as set forth in Section 10.1 and in the definition of Required Lenders.
(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or
(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the
Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 8 or
otherwise, and including any amounts made available to the Administrative Agent by such Defaulting Lender pursuant to Section 10.7), shall
be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by
such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such
Defaulting Lender to the Issuing Lender or to the Swingline Lender hereunder; third, to be held as Cash Collateral for the funding obligations
of such Defaulting Lender of any participation in any Letter of Credit; fourth, as the Borrower may request (so long as no Default or Event of
Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by
this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held
in a Deposit Account and released pro rata to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans
under this Agreement, and (y) be held as Cash Collateral for the future funding obligations of such Defaulting Lender of any participation in
any future Letter of Credit; sixth, to the payment of any amounts owing to any L/C Lender, Issuing Lender or Swingline Lender as a result of
any judgment of a court of competent jurisdiction obtained by any L/C Lender, Issuing Lender or Swingline Lender against such Defaulting
Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of
Default has occurred and is continuing, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of
competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its
obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction;
provided that if (A) such payment is a payment of the principal amount of any Loans or L/C Advances in respect of which such Defaulting
Lender has not fully funded its appropriate share and (B) such Loans or L/C Advances were made at a time when the conditions set forth in
Section 5.2 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Advances owed to, all Non-
Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Advances owed to, such Defaulting
Lender until such time as all Loans and funded and unfunded participations in L/C Advances and Swingline Loans are held by the Lenders
pro rata in accordance with the Commitments under the applicable Facility without giving effect to Section 2.24(a)(iv). Any payments,
prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender
or to post Cash Collateral pursuant to this Section 2.24(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each
Lender irrevocably consents hereto.
(iii) Certain Fees.
No Defaulting Lender shall be entitled to receive any fee pursuant to Section 2.9(b) for any period
during which such Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been
required to have been paid to such Defaulting Lender).
(A)
Section 3.3(d).
(B)
Each Defaulting Lender shall be limited in its right to receive Letter of Credit Fees as provided in
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(C)
With respect to any Letter of Credit Fee not required to be paid to any Defaulting Lender pursuant to
clause (A) or (B) above, the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such
Defaulting Lender with respect to such Defaulting Lender’s participation in Letters of Credit or Swingline Loans that has been reallocated to
such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to the Issuing Lender and the Swingline Lender, as applicable, the amount
of any such fee otherwise payable to such Defaulting Lender to the extent allocable to the Issuing Lender’s or the Swingline Lender’s
Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.
(iv) Reallocation of Pro Rata Share to Reduce Fronting Exposure. During any period in which there is a Defaulting
Lender, for purposes of computing the amount of the obligation of each Non-Defaulting Lender to acquire, refinance or fund participations in
Letters of Credit pursuant to Section 3.4 or in Swingline Loans pursuant to Section 2.7(c), the L/C Percentage of each Non-Defaulting Lender
of any such Letter of Credit and the Revolving Percentage of each Non-Defaulting Lender of any such Swingline Loan, as the case may be,
shall be computed without giving effect to the Revolving Commitment of such Defaulting Lender; provided that the aggregate obligations of
each Non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit and Swingline Loans shall not exceed the
positive difference, if any, of (A) the Revolving Commitment of that Non-Defaulting Lender minus (B) the aggregate outstanding amount of
the Revolving Loans of that Lender plus the aggregate amount of that Lender’s L/C Percentage of then outstanding Letters of Credit. Subject
to Section 10.21, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting
Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such
Non-Defaulting Lender’s increased exposure following such reallocation.
(v) Cash Collateral, Repayment of Swingline Loans. If the reallocation described in clause (iv) above cannot, or
can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, (x) first,
prepay Swingline Loans in an amount equal to the Swingline Lender’s Fronting Exposure and (y) second, Cash Collateralize the Issuing
Lender’s Fronting Exposure in accordance with the procedures set forth in Section 3.10.
(b)
Defaulting Lender Cure. If the Borrower, the Administrative Agent, the Swingline Lender and the Issuing Lender
agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of
the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any
Cash Collateral), such Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take
such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in
Letters of Credit and Swingline Loans to be held on a pro rata basis by the Lenders in accordance with their respective Revolving
Percentages and L/C Percentages, as applicable (without giving effect to Section 2.24(a)(iv)), whereupon such Lender will cease to be a
Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of
the Borrower while such Lender was a Defaulting Lender; and provided further that, except to the extent otherwise expressly agreed by the
affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party
hereunder arising from such Lender having been a Defaulting Lender.
(c)
New Swingline Loans/Letters of Credit. So long as any Lender is a Defaulting Lender, (i) the Swingline Lender shall
not be required to fund any Swingline Loans unless it is satisfied that it will have no Fronting Exposure after giving effect to such Swingline
Loan, and (ii) the Issuing Lender shall not be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will
have no Fronting Exposure in respect of Letters of Credit after giving effect thereto.
(d)
Termination of Defaulting Lender. The Borrower may terminate the unused amount of the Revolving Commitment
of any Revolving Lender that is a Defaulting Lender upon not less than ten Business Days’ prior notice to the Administrative Agent (which
shall promptly notify the Lenders thereof), and in such event the provisions of Section 2.24(a)(ii) will apply to all amounts thereafter paid by
the Borrower for the account of such Defaulting Lender under this Agreement (whether
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on account of principal, interest, fees, indemnity or other amounts); provided that (i) no Event of Default shall have occurred and be
continuing, and (ii) such termination shall not be deemed to be a waiver or release of any claim the Borrower, the Administrative Agent, the
Issuing Lender, the Swingline Lender or any other Lender may have against such Defaulting Lender.
2.25
[Reserved].
2.26
Notes. If so requested by any Lender by written notice to the Borrower (with a copy to the Administrative Agent), the
Borrower shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee
of such Lender pursuant to Section 10.6) (promptly after the Borrower’s receipt of such notice) a Note or Notes to evidence such Lender’s
Loans.
2.27
Incremental Facility.
(a)
At any time during the Revolving Commitment Period, the Borrower may request from time to time from one or
more existing Lenders or from other Eligible Assignees reasonably acceptable to the Administrative Agent, the Issuing Lender, the Swingline
Lender and the Borrower (but subject to the conditions set forth in clause (b) below) that the Total Revolving Commitments be increased by
an amount not to exceed the Available Revolving Increase Amount (each such increase, an “Increase”); provided that the Borrower may not
request an Increase on more than five occasions during the Revolving Commitment Period. No Lender shall be obligated to increase its
Revolving Commitments in connection with a proposed Increase. The Administrative Agent shall invite each Lender to provide a portion of
the Increase ratably in accordance with its Revolving Percentage of each requested Increase (it being agreed that no Lender shall be obligated
to provide an Increase and that any Lender may elect to participate in such Increase in an amount that is less than its Revolving Percentage of
such requested Increase or more than its Revolving Percentage of such requested Increase if other Lenders have elected not to participate in
any applicable requested Increase in accordance with their Revolving Percentage) and to the extent, five (5) Business Days after receipt of
invitation, sufficient Lenders do not agree to provide the full amount of such Increase, then the Administrative Agent may invite any
prospective lender that satisfies the criteria of being an “Eligible Assignee” to become a Lender in connection with the proposed Increase.
Any Increase shall be in an amount of at least $5,000,000 (or, if the Available Revolving Increase Amount is less than $5,000,000, such
remaining Available Revolving Increase Amount) and integral multiples of $1,000,000 in excess thereof. Additionally, for the avoidance of
doubt, it is understood and agreed that in no event shall the aggregate amount of the Increases to the Revolving Commitments exceed the
Available Revolving Increase Amount during the term of the Agreement. Each request for an Increase delivered by the Borrower to the
Administrative Agent shall set forth the amount and proposed terms of the Increase.
therewith:
(b)
Each of the following shall be conditions precedent to any Increase of the Revolving Commitments in connection
(i)
any Increase shall be on the same terms (including the interest rate, and maturity date), as applicable, as, and
pursuant to documentation applicable to, the Revolving Facility then in effect; provided that any such Increase may provide for terms
(including interest rate) more favorable to such Increase lenders, if any existing Revolving Loans and existing Commitment at the time of
such Increase are also provided the benefit of such more favorable terms (and the consent of any existing Revolving Lender shall not be
required to implement such terms); provided, further, that any fees shall be agreed between the Borrower and the lenders providing such
Increase;
the Borrower shall have delivered a written request for such Increase at least ten (10) Business Days prior to
the requested establishment of such Increase (or such later date as may be reasonably approved by the Administrative Agent), which request
shall set forth the amount and proposed terms of the Increase;
(ii)
each lender agreeing to such Increase, the Borrower and the Administrative Agent shall have signed an
Increase Joinder (any Increase Joinder may, with the consent of the Administrative Agent, the Borrower and the lenders agreeing to such
Increase, effect such
(iii)
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amendments to this Agreement and the other Loan Documents as may be necessary or appropriate to effectuate the provisions of this Section
2.27 (including the preceding clause (ii)) and the Borrower shall have executed any Notes requested by any Lender in connection with the
making of the Increase. Notwithstanding anything to the contrary in this Agreement or in any other Loan Document, an Increase Joinder
reasonably satisfactory to the Administrative Agent, and the amendments to this Agreement effected thereby, shall not require the consent of
any Lender other than the Lender(s) agreeing to establish such Increase;
(iv)
immediately after giving pro forma effect to such Increase and the use of proceeds thereof, each of the
conditions precedent in Section 5.2(a) are satisfied (other than in connection with Limited Condition Acquisitions, in which case (i) Section
5.2(a) shall be satisfied only in connection with the Specified Representations and (ii) the Specified Acquisition Agreement Representations
shall be true and correct on the date Loans are made under the Increase, but only to the extent that the Borrower (or any of its Affiliates) has
the right (taking into account any applicable cure provisions) to terminate its (or such Affiliates’) obligations under the Limited Condition
Acquisition, or to decline to consummate the Limited Condition Acquisition Agreement (in each case, in accordance with the terms thereof)
as a result of a breach of such Specified Acquisition Agreement Representations);
(v)
immediately after giving pro forma effect to such Increase and the use of proceeds thereof, (A) no Default or
Event of Default shall have occurred and be continuing at the time of such Increase (other than in connection with Limited Condition
Acquisitions, in which case there shall be no Default or Event of Default as of the LCA Test Date and no Event of Default under Section
8.1(a) or (f) at the time of such Increase,) and (B) the Borrower shall be in compliance with the then applicable financial covenants set forth
in Section 7.1 hereof as of the end of the most recently ended quarter for which financial statements are required to be delivered prior to such
Increase (and assuming that the Increase was fully drawn), and the Borrower shall have delivered to the Administrative Agent a Compliance
Certificate evidencing compliance with the requirements of this clause (v) (provided that in the case of a Limited Condition Acquisition, such
calculation shall be made in compliance with Section 1.4);
each Loan Party shall have delivered to the Administrative Agent (i) a certificate signed by a Responsible
Officers certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such Incremental Facility, and (ii)
unless waived by the Administrative Agent, legal opinions substantially consistent with those delivered on the Closing Date (subject to
changes in law);
(vi)
in connection with such Increase, the Borrower shall pay to the Administrative Agent, for the benefit of the
Administrative Agent or the Increase lenders, as applicable, all fees that the Borrower has agreed to pay in connection with such Increase;
and
(vii)
upon each Increase in accordance with this Section 2.27, all outstanding Loans, participations hereunder in
Letters of Credit and participations hereunder in Swingline Loans held by each Lender shall be reallocated among the Lenders (including any
newly added Lenders) in accordance with the Lenders’ respective revised Revolving Percentages and L/C Percentages, pursuant to
procedures reasonably determined by the Administrative Agent in consultation with the Borrower.
(viii)
(c)
Upon the effectiveness of any Increase, (i) all references in this Agreement and any other Loan Document to the
Revolving Loans shall be deemed, unless the context otherwise requires, to include such Increase advanced pursuant to this Section 2.27 and
any amendments effected through the Increase Joinder and (ii) all references in this Agreement and any other Loan Document to the
Revolving Commitment shall be deemed, unless the context otherwise requires, to include the commitment to advance an amount equal to
such Increase pursuant to this Section 2.27.
(d)
The Revolving Loans and Revolving Commitments established pursuant to this Section 2.27 shall constitute
Revolving Loans and Revolving Commitments under, and shall be entitled to all the benefits afforded by, this Agreement and the other Loan
Documents, and shall, without limiting the foregoing, benefit equally and ratably from any guarantees and the security interests created by
the Loan Documents. The Borrower shall take any actions reasonably required by Administrative Agent to ensure
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and demonstrate that the Liens and security interests granted by the Loan Documents continue to be perfected under the UCC or otherwise
after giving effect to the establishment of any such new Revolving Commitments.
3.1
L/C Commitment.
SECTION 3
LETTERS OF CREDIT
(a)
Subject to the terms and conditions hereof, the Issuing Lender agrees to issue letters of credit (“Letters of Credit”)
for the account of the Borrower on any Business Day during the Letter of Credit Availability Period in such form as may reasonably be
approved from time to time by the Issuing Lender; provided that the Issuing Lender shall have no obligation to issue any Letter of Credit if,
after giving effect to such issuance, the L/C Exposure would exceed either the Total L/C Commitments or the Available Revolving
Commitment at such time. Unless otherwise agreed to by the Administrative Agent in its sole discretion, each Letter of Credit shall (i) be
denominated in Dollars and (ii) expire no later than the earlier of (x) the first anniversary of its date of issuance and (y) the Letter of Credit
Maturity Date, provided that any Letter of Credit with a one-year term may provide for the renewal thereof for additional one-year periods
(which shall in no event extend beyond the date referred to in clause (y) above).
(b)
The Issuing Lender shall not at any time be obligated to issue any Letter of Credit if:
(i)
imposed by, any applicable Requirement of Law;
such issuance would conflict with, or cause the Issuing Lender or any L/C Lender to exceed any limits
(ii)
any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to
enjoin or restrain the Issuing Lender from issuing, amending or reinstating such Letter of Credit, or any law, rule or regulation applicable to
the Issuing Lender or any request, guideline or directive (whether or not having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Lender shall prohibit, or request that the Issuing Lender refrain from, the issuance, amendment, renewal or
reinstatement of letters of credit generally or such Letter of Credit in particular or shall impose upon the Issuing Lender with respect to such
Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Lender is not otherwise compensated) not in effect on
the Closing Date, or shall impose upon the Issuing Lender any unreimbursed loss, cost or expense which was not applicable on the Closing
Date and which the Issuing Lender in good faith deems material to it;
the Issuing Lender has received written notice from any Lender, the Administrative Agent or the Borrower,
at least one (1) Business Day prior to the requested date of issuance, amendment, renewal or reinstatement of such Letter of Credit, that one
or more of the applicable conditions contained in Section 5.2 shall not then be satisfied;
(iii)
amendment or renewal of a Letter of Credit shall violate any applicable laws or regulations or any applicable policies of the Issuing Lender;
(iv)
any requested Letter of Credit is not in form and substance acceptable to the Issuing Lender, or the issuance,
after any drawing thereunder;
(v)
such Letter of Credit contains any provisions providing for automatic reinstatement of the stated amount
an initial face amount less than $250,000; or
(vi)
except as otherwise agreed by the Administrative Agent and the Issuing Lender, such Letter of Credit is in
any Lender is at that time a Defaulting Lender, unless the Issuing Lender has entered into arrangements,
including the delivery of Cash Collateral pursuant to Section 3.10, satisfactory to the Issuing Lender (in its sole discretion) with the Borrower
or such Defaulting Lender to eliminate the Issuing Lender’s actual or potential Fronting Exposure (after giving effect to
(vii)
59
Section 2.24(a)(iv)) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or such Letter of
Credit and all other L/C Exposure as to which the Issuing Lender has actual or potential Fronting Exposure, as it may elect in its sole
discretion.
3.2
Procedure for Issuance of Letters of Credit. The Borrower may from time to time request that the Issuing Lender issue a
Letter of Credit for the account of the Borrower by delivering to the Issuing Lender at its address for notices specified herein an Application
therefor, completed to the satisfaction of the Issuing Lender, and such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender will process such Application and the certificates,
documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall the Issuing Lender be required to issue any Letter of Credit earlier
than three (3) Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and
information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower promptly following the
issuance thereof. The Issuing Lender shall promptly furnish to the Administrative Agent, which shall in turn promptly furnish to the Lenders,
notice of the issuance of each Letter of Credit (including the amount thereof).
3.3
Fees and Other Charges.
(a)
The Borrower agrees to pay, with respect to each Existing Letter of Credit and each outstanding Letter of Credit
issued for the account of (or at the request of) the Borrower, (i) a fronting fee of 0.125% per annum on the daily amount available to be
drawn under each such Letter of Credit to the Issuing Lender for its own account (a “Letter of Credit Fronting Fee”), and (ii) a letter of
credit fee equal to the Applicable Margin relating to Letters of Credit multiplied by the daily amount available to be drawn under each such
Letter of Credit on the drawable amount of such Letter of Credit to the Administrative Agent for the ratable account of the L/C Lenders
(determined in accordance with their respective L/C Percentages) (a “Letter of Credit Fee”), in each case payable quarterly in arrears on the
last Business Day of each calendar quarter and on the Letter of Credit Maturity Date (each, an “L/C Fee Payment Date”) after the issuance
date of such Letter of Credit, and (iii) the Issuing Lender’s standard and reasonable fees with respect to the issuance, amendment, renewal or
extension of any Letter of Credit issued for the account of (or at the request of) the Borrower or processing of drawings thereunder (the fees
in this clause (iii), collectively, the “Issuing Lender Fees”). All Letter of Credit Fronting Fees and Letter of Credit Fees shall be computed on
the basis of the actual number of days elapsed in a year of 360 days. During the continuance of an Event of Default, at the request of the
Required Lenders, Letter of Credit Fees shall accrue a rate per annum equal to the rate that would otherwise be applicable thereto pursuant to
the foregoing provisions of this Section plus 2.00%; provided that such increased fee rate shall apply to all outstanding Letters of Credit
automatically and without any Required Lender consent therefor upon the occurrence of any Event of Default arising under Section 8.1(a) or
(f).
In addition to the foregoing fees, the Borrower shall pay or reimburse the Issuing Lender for such normal and
customary costs and expenses as are incurred or charged by the Issuing Lender in issuing, negotiating, effecting payment under, amending or
otherwise administering any Letter of Credit.
(b)
(c)
The Borrower shall furnish to the Issuing Lender and the Administrative Agent such other documents and
information pertaining to any requested Letter of Credit issuance, amendment or renewal, including any L/C-Related Documents, as the
Issuing Lender or the Administrative Agent may require. This Agreement shall control in the event of any conflict with any L/C-Related
Document (other than any Letter of Credit).
Any letter of credit fees otherwise payable for the account of a Defaulting Lender with respect to any Letter of Credit
as to which such Defaulting Lender has not provided Cash Collateral satisfactory to the Issuing Lender pursuant to Section 3.10 shall be
payable, to the maximum extent permitted by applicable law, to the other L/C Lenders in accordance with the upward adjustments in their
(d)
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respective L/C Percentages allocable to such Letter of Credit pursuant to Section 2.24(a)(iv), with the balance of such fee, if any, payable to
the Issuing Lender for its own account.
(e)
All fees payable under this Section 3.3 shall be fully earned on the date paid and nonrefundable.
3.4
L/C Participations; Existing Letters of Credit.
(a)
L/C Participations. The Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Lender, and, to
induce the Issuing Lender to issue Letters of Credit, each L/C Lender irrevocably agrees to accept and purchase and hereby accepts and
purchases from the Issuing Lender, on the terms and conditions set forth below, for such L/C Lender’s own account and risk an undivided
interest equal to such L/C Lender’s L/C Percentage in the Issuing Lender’s obligations and rights under and in respect of each Letter of
Credit and the amount of each draft paid by the Issuing Lender thereunder. Each L/C Lender agrees with the Issuing Lender that, if a draft is
paid under any Letter of Credit for which the Issuing Lender is not reimbursed in full by the Borrower pursuant to Section 3.5(a), such L/C
Lender shall pay to the Issuing Lender upon demand at the Issuing Lender’s address for notices specified herein an amount equal to such L/C
Lender’s L/C Percentage of the amount of such draft, or any part thereof, that is not so reimbursed. Each L/C Lender’s obligation to pay such
amount shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any setoff, counterclaim, recoupment,
defense or other right that such L/C Lender may have against the Issuing Lender, the Borrower or any other Person for any reason
whatsoever, (ii) the occurrence of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Section 5.2,
(iii) any adverse change in the condition (financial or otherwise) of the Borrower, (iv) any breach of this Agreement or any other Loan
Document by the Borrower, any other Loan Party or any other L/C Lender, or (v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
(b)
Existing Letters of Credit. On and after the Closing Date, the Existing Letters of Credit shall be deemed for all
purposes, including for purposes of the fees to be collected pursuant to Sections 3.3(a) and (b), reimbursement of costs and expenses to the
extent provided herein and for purposes of being secured by the Collateral, a Letter of Credit outstanding under this Agreement and entitled
to the benefits of this Agreement and the other Loan Documents, and shall be governed by the applications and agreements pertaining thereto
and by this Agreement (which shall control in the event of a conflict).
3.5
Reimbursement.
(a)
If the Issuing Lender shall make any L/C Disbursement in respect of a Letter of Credit, the Issuing Lender shall
notify the Borrower and the Administrative Agent thereof and the Borrower shall pay or cause to be paid to the Issuing Lender an amount
equal to the entire amount of such L/C Disbursement not later than the immediately following Business Day. Each such payment shall be
made to the Issuing Lender at its address for notices referred to herein in Dollars and in immediately available funds; provided that the
Borrower may, subject to the satisfaction of the conditions to borrowing set forth herein, request in accordance with Section 2.5 or Section
2.7(a) that such payment be financed with a Revolving Loan or a Swingline Loan, as applicable, in an equivalent amount and, to the extent so
financed, the Borrower’s obligations to make such payment shall be discharged and replaced by the resulting Revolving Loan or Swingline
Loan.
(b)
If the Issuing Lender shall not have received from the Borrower the payment that it is required to make pursuant to
Section 3.5(a) with respect to a Letter of Credit within the time specified in such Section, the Issuing Lender will promptly notify the
Administrative Agent of the L/C Disbursement and the Administrative Agent will promptly notify each L/C Lender of such L/C
Disbursement and its L/C Percentage thereof, and each L/C Lender shall pay to the Issuing Lender upon demand at the Issuing Lender’s
address for notices specified herein an amount equal to such L/C Lender’s L/C Percentage of such L/C Disbursement (and the Administrative
Agent may apply Cash Collateral provided for this purpose); upon such payment pursuant to this paragraph to reimburse the Issuing Lender
for any L/C Disbursement, the Borrower shall be required to reimburse the L/C Lenders for such
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payments (including interest accrued thereon from the date of such payment until the date of such reimbursement at the rate applicable to
Revolving Loans that are ABR Loans plus 2% per annum) on demand; provided that if at the time of and after giving effect to such payment
by the L/C Lenders, the conditions to borrowings and Revolving Loan Conversions set forth in Section 5.2 are satisfied, the Borrower may,
by written notice to the Administrative Agent certifying that such conditions are satisfied and that all interest owing under this paragraph has
been paid, request that such payments by the L/C Lenders be converted into Revolving Loans (a “Revolving Loan Conversion”), in which
case, if such conditions are in fact satisfied, the L/C Lenders shall be deemed to have extended, and the Borrower shall be deemed to have
accepted, a Revolving Loan in the aggregate principal amount of such payment without further action on the part of any party, and the Total
L/C Commitments shall be permanently reduced by such amount; any amount so paid pursuant to this paragraph shall, on and after the
payment date thereof, be deemed to be Revolving Loans for all purposes hereunder; provided that the Issuing Lender, at its option, may
effectuate a Revolving Loan Conversion regardless of whether the conditions to borrowings and Revolving Loan Conversions set forth in
Section 5.2 are satisfied.
3.6
Obligations Absolute. The Borrower’s obligations under this Section 3 shall be absolute and unconditional under any and
all circumstances and irrespective of any setoff, counterclaim or defense to payment that the Borrower may have or have had against the
Issuing Lender, any beneficiary of a Letter of Credit or any other Person. The Borrower also agrees with the Issuing Lender that the Issuing
Lender shall not be responsible for, and the Borrower’s obligations hereunder shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or
forged, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee.
The Issuing Lender shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Issuing Lender. The
Borrower agrees that any action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit or the related drafts
or documents, if done in the absence of gross negligence or willful misconduct, shall be binding on the Borrower and shall not result in any
liability of the Issuing Lender to the Borrower.
In addition to amounts payable as elsewhere provided in the Agreement, the Borrower hereby agrees to pay and to protect,
indemnify, and save Issuing Lender harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys’ fees) that the Issuing Lender may incur or be subject to as a consequence, direct or indirect, of (A)
the issuance of any Letter of Credit, or (B) the failure of Issuing Lender or of any L/C Lender to honor a demand for payment under any
Letter of Credit thereof as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto
government or Governmental Authority, in each case other than to the extent solely as a result of the gross negligence or willful misconduct
of Issuing Lender or such L/C Lender (as finally determined by a court of competent jurisdiction).
3.7
Letter of Credit Payments. If any draft shall be presented for payment under any Letter of Credit, the Issuing Lender shall
promptly notify the Borrower and the Administrative Agent of the date and amount thereof. The responsibility of the Issuing Lender to the
Borrower in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation
expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are substantially in conformity with such Letter of Credit.
3.8
Applications. To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the
provisions of this Section 3, the provisions of this Section 3 shall apply.
3.9
Interim Interest. If the Issuing Lender shall make any L/C Disbursement in respect of a Letter of Credit, then, unless either
the Borrower shall have reimbursed such L/C Disbursement in full within the time period specified in Section 3.5(a) or the L/C Lenders shall
have reimbursed such L/C Disbursement in full on such date as provided in Section 3.5(b), in each case the unpaid amount thereof
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shall bear interest for the account of the Issuing Lender, for each day from and including the date of such L/C Disbursement to but excluding
the date of payment by the Borrower, at the rate per annum that would apply to such amount if such amount were a Revolving Loan that is an
ABR Loan; provided that the provisions of Section 2.15(c) shall be applicable to any such amounts not paid when due.
3.10
Cash Collateral.
(a)
Certain Credit Support Events. Upon the request of the Administrative Agent or the Issuing Lender (i) if the Issuing
Lender has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Advance by all the
L/C Lenders that is not reimbursed by the Borrower or converted into a Revolving Loan or Swingline Loan pursuant to Section 3.5(b), or
(ii) if, as of the Letter of Credit Maturity Date, any L/C Exposure for any reason remains outstanding, the Borrower shall, in each case,
immediately Cash Collateralize the then effective L/C Exposure in an amount equal to 105% of such L/C Exposure.
At any time that there shall exist a Defaulting Lender, within one (1) Business Day following the request of the Administrative Agent
or the Issuing Lender (with a copy to the Administrative Agent), the Borrower shall deliver to the Administrative Agent Cash Collateral in an
amount sufficient to cover 105% of the Fronting Exposure relating to the Letters of Credit (after giving effect to Section 2.24(a)(iv) and any
Cash Collateral provided by such Defaulting Lender).
(b)
Grant of Security Interest. All Cash Collateral (other than credit support not constituting funds subject to deposit)
shall be maintained in blocked, non-interest bearing deposit accounts with the Administrative Agent. The Borrower, and to the extent
provided by any Lender or Defaulting Lender, such Lender or Defaulting Lender, hereby grants to (and subjects to the control of) the
Administrative Agent, for the benefit of the Administrative Agent, the Issuing Lender and the L/C Lenders, and agrees to maintain, a first
priority security interest and Lien in all such Cash Collateral and in all proceeds thereof, as security for the Obligations to which such Cash
Collateral may be applied pursuant to Section 3.10(c). If at any time the Administrative Agent determines that Cash Collateral is subject to
any right or claim of any Person other than the Administrative Agent or any Issuing Lender as herein provided, or that the total amount of
such Cash Collateral is less than 105% of the applicable L/C Exposure, Fronting Exposure and other Obligations secured thereby, the
Borrower or the relevant Lender or Defaulting Lender, as applicable, will, promptly upon demand by the Administrative Agent, pay or
provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any
Cash Collateral provided by such Defaulting Lender).
(c)
Application. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under
any of this Section 3.10, Section 2.24 or otherwise in respect of Letters of Credit shall be held and applied to the satisfaction of the specific
L/C Exposure, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest
accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such
property as may otherwise be provided for herein.
(d)
Termination of Requirement. Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting
Exposure in respect of Letters of Credit or other Obligations shall no longer be required to be held as Cash Collateral pursuant to this Section
3.10 following (i) the elimination of the applicable Fronting Exposure and other Obligations giving rise thereto (including by the termination
of the Defaulting Lender status of the applicable Lender), or (ii) a determination by the Administrative Agent and the Issuing Lender that
there exists excess Cash Collateral; provided, however, (A) that Cash Collateral furnished by or on behalf of a Loan Party shall not be
released during the continuance of an Event of Default, and (B) that, subject to Section 2.24, the Person providing such Cash Collateral and
the Issuing Lender may agree that such Cash Collateral shall not be released but instead shall be held to support future anticipated Fronting
Exposure or other obligations, and provided further, that to the extent that such Cash Collateral was provided by the Borrower or any other
Loan Party, such Cash Collateral shall remain subject to any security interest and Lien granted pursuant to the Loan Documents including any
applicable Cash Management Agreement.
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3.11
Additional Issuing Lenders. The Borrower may, at any time and from time to time with the consent of the Administrative
Agent (which consent shall not be unreasonably withheld) and such Lender, designate one or more additional Lenders to act as an issuing
bank under the terms of this Agreement. Any Lender designated as an issuing bank pursuant to this paragraph shall be deemed to be an
“Issuing Lender” (in addition to being a Lender) in respect of Letters of Credit issued or to be issued by such Lender, and, with respect to
such Letters of Credit, such term shall thereafter apply to the other Issuing Lender and such Lender.
3.12
Resignation of the Issuing Lender. The Issuing Lender may resign at any time by giving at least 30 days’ prior written
notice to the Administrative Agent, the Lenders and the Borrower. Subject to the next succeeding paragraph, upon the acceptance of any
appointment as the Issuing Lender hereunder by a Lender that shall agree to serve as successor Issuing Lender, such successor shall succeed
to and become vested with all the interests, rights and obligations of the retiring Issuing Lender and the retiring Issuing Lender shall be
discharged from its obligations to issue additional Letters of Credit hereunder without affecting its rights and obligations with respect to
Letters of Credit previously issued by it. At the time such resignation shall become effective, the Borrower shall pay all accrued and unpaid
fees pursuant to Section 3.3. The acceptance of any appointment as the Issuing Lender hereunder by a successor Lender shall be evidenced
by an agreement entered into by such successor, in a form satisfactory to the Borrower and the Administrative Agent, and, from and after the
effective date of such agreement, (i) such successor Lender shall have all the rights and obligations of the previous Issuing Lender under this
Agreement and the other Loan Documents and (ii) references herein and in the other Loan Documents to the term “Issuing Lender” shall be
deemed to refer to such successor or to any previous Issuing Lender, or to such successor and all previous Issuing Lenders, as the context
shall require. After the resignation of the Issuing Lender hereunder, the retiring Issuing Lender shall remain a party hereto and shall continue
to have all the rights and obligations of an Issuing Lender under this Agreement and the other Loan Documents with respect to Letters of
Credit issued by it prior to such resignation, but shall not be required to issue additional Letters of Credit or to extend, renew or increase any
existing Letter of Credit.
3.13
Applicability of UCP and ISP. Unless otherwise expressly agreed by the Issuing Lender and the Borrower when a Letter of
Credit is issued and subject to applicable laws, the Letters of Credit shall be governed by and subject to (a) with respect to standby Letters of
Credit, the rules of the ISP, and (b) with respect to commercial Letters of Credit, the rules of the Uniform Customs and Practice for
Documentary Credits, as published in its most recent version by the International Chamber of Commerce on the date any commercial Letter
of Credit is issued.
REPRESENTATIONS AND WARRANTIES
SECTION 4
To induce the Administrative Agent and the Lenders to enter into this Agreement and to make the Loans and issue the Letters of
Credit, Holdings and the Borrower hereby jointly and severally represent and warrant to the Administrative Agent and each Lender, as to
themselves and each of their respective Subsidiaries, that:
4.1
Financial Condition.
(a)
The Projected Pro Forma Financial Statements have been prepared based on the best information available to the
Borrower as of the date of delivery thereof and are based upon good faith estimates and assumptions believed by management of Holdings to
be reasonable at the time made, it being recognized by the Lenders that such financial information as it relates to future events is not to be
viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results
set forth therein by a material amount.
(b)
The audited consolidated balance sheets of Holdings and its Subsidiaries as of January 31, 2018, January 31, 2019
and January 31, 2020 and the related consolidated statements of income and of cash flows for the fiscal years ended on such dates, reported
on by and accompanied by an unqualified report from PricewaterhouseCoopers, LLP, present fairly in all material respects the consolidated
financial condition of Holdings and its Subsidiaries as at such date, and the consolidated
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results of its operations and its consolidated cash flows for the respective fiscal years then ended. The unaudited consolidated balance sheet
of Holdings and its Subsidiaries as at October 31, 2020, and the related unaudited consolidated statements of income and cash flows for the
nine-month period ended on such date, present fairly in all material respects the consolidated financial condition of Holdings and its
Subsidiaries as at such date, and the consolidated results of its operations and its consolidated cash flows for the trailing nine-month period
then ended (subject to the absence of footnotes and normal year end audit adjustments). All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as
approved by the aforementioned firm of accountants and disclosed therein). No Group Member has, as of the Closing Date, any material
Guarantee Obligations, contingent liabilities and past due liabilities for taxes, or any long term leases or unusual forward or long term
commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that
are not reflected in the most recent financial statements referred to in this paragraph to the extent required by GAAP. During the period from
January 31, 2020 to and including the date hereof, there has been no Disposition by any Group Member of any material part of its business or
property and not disclosed in the financial statements referred to in this paragraph.
4.2
No Change. Since January 31, 2020, there has been no development or event that has had or could reasonably be expected to
have a Material Adverse Effect.
4.3
Existence; Compliance with Law. Each Group Member (a) is duly organized, validly existing and in good standing (if
applicable) under the laws of the jurisdiction of its organization, (b) has the power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a
foreign corporation or other organization and in good standing (if applicable) under the laws of each jurisdiction where the failure to be so
qualified or in good standing could reasonably be expected to have a Material Adverse Effect and (d) is in material compliance with all
Requirements of Law except in such instances in which (i) such Requirement of Law is being contested in good faith by appropriate
proceedings diligently conducted and the prosecution of such contest would not reasonably be expected to result in a Material Adverse
Effect, or (ii) the failure to comply therewith, either individually or in the aggregate, would not reasonably be expected to have a Material
Adverse Effect.
4.4
Power, Authorization; Enforceable Obligations. Each Loan Party has the power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case of the Borrower, to obtain extensions of credit hereunder.
Each Loan Party has taken all necessary organizational action to authorize the execution, delivery and performance of the Loan Documents to
which it is a party and, in the case of the Borrower, to authorize the extensions of credit on the terms and conditions of this Agreement. No
Governmental Approval or consent or authorization of, filing with, notice to or other act by or in respect of, any other Person is required in
connection with the extensions of credit hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement
or any of the Loan Documents, except (i) Governmental Approvals, consents, authorizations, filings and notices described on Schedule 4.4 to
the Disclosure Letter, which Governmental Approvals, consents, authorizations, filings and notices have been obtained or made and are in
full force and effect, and (ii) the filings referred to in Section 4.19. Each Loan Document has been duly executed and delivered on behalf of
each Loan Party party thereto. This Agreement constitutes, and each other Loan Document upon execution will constitute, a legal, valid and
binding obligation of each Loan Party party thereto, enforceable against each such Loan Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).
4.5
No Legal Bar. The execution, delivery and performance of this Agreement and the other Loan Documents, the issuance of
Letters of Credit, the borrowings hereunder and the use of the proceeds thereof will not violate any Requirement of Law, any Operating
Document of any Loan Party, or any material Contractual Obligation of any Group Member and will not result in, or require, the creation or
imposition of any Lien on any of their respective properties or revenues pursuant to any Requirement of Law or any such Contractual
Obligation (other than the Liens created by the Security Documents). No Group Member has violated any Requirement of Law or violated or
failed to comply with any Contractual
65
Obligation applicable to Holdings or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect.
4.6
Litigation. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or
threatened in writing by or against any Group Member or against any of their respective properties or revenues (a) with respect to any of the
Loan Documents or any of the transactions contemplated hereby or thereby, or (b) that could reasonably be expected to have a Material
Adverse Effect.
4.7
No Default. No Group Member is in default under or with respect to any of its Contractual Obligations in any respect that
could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing, nor shall
either result from the making of a requested credit extension.
4.8
Ownership of Property; Liens; Investments. Each Group Member has title in fee simple to, or a valid leasehold interest in,
all of its real property, and good title to, or a valid leasehold interest in, all of its other property, and none of such property is subject to any
Lien except as permitted by Section 7.3. No Loan Party owns any Investment except as permitted by Section 7.8. Section 10 of the Collateral
Information Certificate sets forth a complete and accurate list of all real property owned by each Loan Party as of the Closing Date, if any.
4.9
Intellectual Property. Except as could not reasonably be expected to have a Material Adverse Effect, (a) each Group
Member owns, or has the right to use, all Intellectual Property necessary for the conduct of its business as currently conducted; (b) no claim
has been asserted in writing and is pending by any Person challenging or questioning any Group Member’s use of any Intellectual Property or
the validity or effectiveness of any Group Member’s Intellectual Property, nor does any Loan Party know of any valid basis for any such
claim; and (c) to the knowledge of any Loan Party, the use of Intellectual Property by each Group Member, and the conduct of such Group
Member’s business, as currently conducted, does not infringe on or otherwise violate the rights of any Person, and there are no claims
pending or threatened in writing to such effect.
4.10
Taxes. Except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect, each
Group Member has filed or caused to be filed all Federal, state and other tax returns that are required to be filed and has paid all taxes shown
to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority (other than any the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the
books of the relevant Group Member). No tax Lien has been filed, other than Liens permitted hereunder.
4.11
Federal Regulations. The Borrower is not engaged and will not engage, principally or as one of its important activities, in
the business of “buying” or “carrying” “margin stock” (within the respective meanings of each of the quoted terms under Regulation U as
now and from time to time hereafter in effect) or extending credit for the purpose of purchasing or carrying margin stock. No part of the
proceeds of any Loans, and no other extensions of credit hereunder, will be used for buying or carrying any such margin stock or for
extending credit to others for the purpose of purchasing or carrying margin stock in violation of Regulations T, U or X of the Board. If any
margin stock directly or indirectly constitutes Collateral securing the Obligations, if requested by any Lender or the Administrative Agent,
the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in Regulation U.
4.12
Labor Matters. Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect: (a) there
are no strikes or other labor disputes against any Group Member pending or, to the knowledge of the Loan Parties, threatened; (b) hours
worked by and payment made to employees of each Group Member have not been in violation of the Fair Labor Standards Act or any other
applicable Requirement of Law dealing with such matters; and (c) all payments due from any Group
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Member on account of employee health and welfare insurance have been paid or accrued as a liability on the books of the relevant Group
Member.
4.13
ERISA.
(a)
[reserved];
except as in the aggregate could not reasonably be expected to have a Material Adverse Effect, the Borrower and its
ERISA Affiliates are in compliance with all applicable provisions and requirements of ERISA with respect to each Plan, and have performed
all their obligations under each Plan;
(b)
occurred or is reasonably expected to occur;
(c)
except as in the aggregate could not reasonably be expected to have a Material Adverse Effect, no ERISA Event has
except as in the aggregate could not reasonably be expected to have a Material Adverse Effect, the Borrower and
each of its ERISA Affiliates have met all applicable requirements under the ERISA Funding Rules with respect to each Pension Plan, and no
waiver of the minimum funding standards under the ERISA Funding Rules has been applied for or obtained;
(d)
as of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in
Section 430(d)(2) of the Code) is at least 60%, and neither the Borrower nor any of its ERISA Affiliates knows of any facts or circumstances
that could reasonably be expected to cause the funding target attainment percentage to fall below 60% as of the most recent valuation date;
(e)
except as in the aggregate could not reasonably be expected to have a Material Adverse Effect and except to the
extent required under Section 4980B of the Code, no Plan provides health or welfare benefits (through the purchase of insurance or
otherwise) for any retired or former employee of the Borrower or any of its ERISA Affiliates;
(f)
as of the most recent valuation date for any Pension Plan, the amount of outstanding benefit liabilities (as defined in
Section 4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans (excluding for purposes of such computation any
Pension Plans with respect to which assets exceed benefit liabilities), does not exceed $25,000,000;
(g)
(h)
except as in the aggregate could not reasonably be expected to have a Material Adverse Effect, the execution and
delivery of this Agreement and the consummation of the transactions contemplated hereunder will not involve any transaction that is subject
to the prohibitions of Section 406 of ERISA or in connection with which taxes could be imposed pursuant to Section 4975(c)(1)(A)-(D) of
the Code;
(i)
all liabilities under each Plan are (i) funded to at least the minimum level required by law or, if higher, to the level
required by the terms governing the Plans, except as in the aggregate could not reasonably be expected to have a Material Adverse Effect,
(ii) insured with a reputable insurance company, except as in the aggregate could not reasonably be expected to have a Material Adverse
Effect, or (iii) (A) provided for or recognized in all material respects in the financial statements most recently delivered to the Administrative
Agent and the Lenders pursuant hereto or (B) estimated in the formal notes to the financial statements most recently delivered to the
Administrative Agent and the Lenders pursuant hereto;
except as in the aggregate could not reasonably be expected to have a Material Adverse Effect, there are no
circumstances which may give rise to a liability in relation to any Plan which is not funded, insured, provided for, recognized or estimated in
the manner described in clause (i); and
(j)
the Borrower do not and will not constitute “plan assets” within the
(k)
(i) the Borrower is not and will not be a “plan” within the meaning of Section 4975(e) of the Code; (ii) the assets of
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meaning of the United States Department of Labor Regulations set forth in 29 C.F.R. §2510.3-101 as modified by ERISA Section 3(42);
(iii) the Borrower is not and will not be a “governmental plan” within the meaning of Section 3(32) of ERISA; and (iv) transactions by or
with the Borrower are not and will not be subject to state statutes applicable to the Borrower regulating investments of fiduciaries with
respect to governmental plans.
4.14
Investment Company Act; Other Regulations. No Loan Party is required to register as an “investment company” within
the meaning of the Investment Company Act of 1940, as amended. No Loan Party is subject to regulation under any Requirement of Law
(other than Regulation X of the Board) that limits its ability to incur Indebtedness or which may otherwise render all or any portion of the
Obligations unenforceable.
4.15
Subsidiaries.
(a)
As of the Closing Date, (a) Schedule 4.15 to the Disclosure Letter sets forth the name and jurisdiction of
organization of each Subsidiary of Holdings and, as to each such Subsidiary, the percentage of each class of Capital Stock owned by any
Loan Party, and (b) there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than
equity awards granted to employees, consultants or directors and directors’ qualifying shares) of any nature relating to any Capital Stock of
any Subsidiary of Holdings, except as may be created by the Loan Documents.
(b)
No Immaterial Subsidiary (a) holds assets representing more than 10% of Holdings’ consolidated total assets
(determined in accordance with GAAP), (b) has generated more than 10% of Holdings’ consolidated total revenues determined in accordance
with GAAP for the four fiscal quarter period ending on the last day of the most recent period for which financial statements have been
delivered after the Closing Date pursuant to Section 6.1(b); provided that all Subsidiaries that are individually an Immaterial Subsidiary do
not have aggregate consolidated total assets that would represent 20% or more of Holdings’ consolidated total assets nor have generated 20%
or more of Holdings’ consolidated total revenues for such four fiscal quarter period, in each case, determined in accordance with GAAP, or
(c) owns any material Intellectual Property.
4.16
Use of Proceeds. The proceeds of the Revolving Loans, Swingline Loans and Letters of Credit shall be used to refinance
existing Indebtedness, to pay related fees and expenses and for general corporate purposes (including Restricted Payments, Investments,
Acquisitions and other transactions permitted hereunder).
4.17
Environmental Matters. Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect:
(a)
except as disclosed on Schedule 4.17 to the Disclosure Letter, the facilities and properties owned, leased or operated
by any Group Member (the “Properties”) do not contain, and, to the knowledge of the Loan Parties, have not previously contained, any
Materials of Environmental Concern in amounts or concentrations or under circumstances that constitute or have constituted a violation of, or
could reasonably be expected to give rise to liability under, any Environmental Law;
(b)
no Group Member has received or is aware of any notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Properties or the
business operated by any Group Member (the “Business”), nor does any Loan Party have knowledge or reason to believe that any such
notice will be received or is being threatened;
(c)
no Group Member has transported or disposed of Materials of Environmental Concern from the Properties in
violation of, or in a manner or to a location that could reasonably be expected to give rise to liability under, any Environmental Law, nor has
any Group Member generated, treated, stored or disposed of Materials of Environmental Concern at, on or under any of the Properties in
violation of, or in a manner that could be reasonably expected to give rise to liability under, any applicable Environmental Law;
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(d)
no judicial proceeding or governmental or administrative action is pending or, to the knowledge of any Loan Party,
threatened, under any Environmental Law to which any Group Member is or will be named as a party with respect to the Properties or the
Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to the Properties or the Business;
there has been no release or threat of release of Materials of Environmental Concern at or from the Properties arising
from or related to the operations of any Group Member or otherwise in connection with the Business, in violation of or in amounts or in a
manner that could reasonably be expected give rise to liability under Environmental Laws;
(e)
(f)
the Properties and all operations of the Group Members at the Properties are in compliance, and have in the last five
years been in compliance, with all applicable Environmental Laws, and except as set forth on Schedule 4.17 to the Disclosure Letter, to the
knowledge of the Borrower, there is no contamination at, under or about the Properties or violation of any Environmental Law with respect to
the Properties or the Business; and
(g)
no Group Member has assumed any liability of any other Person under Environmental Laws.
4.18
Accuracy of Information, etc. No statement or information contained in this Agreement, any other Loan Document or any
other document, certificate or statement furnished by or on behalf of any Loan Party to the Administrative Agent or the Lenders, or any of
them, for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, contained as of the date such
statement, information, document or certificate was so furnished, any untrue statement of a material fact or omitted to state a material fact
necessary to make the statements contained herein or therein not misleading. The projections and pro forma financial information contained
in the materials referenced above are based upon good faith estimates and assumptions believed by management of the Borrower to be
reasonable at the time made, it being recognized by the Lenders that such financial information as it relates to future events is not to be
viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results
set forth therein by a material amount. As of the Closing Date there is no fact known to any Loan Party that could reasonably be expected to
have a Material Adverse Effect that has not been expressly disclosed herein, in the other Loan Documents or in any other documents,
certificates and statements furnished to the Administrative Agent and the Lenders for use in connection with the transactions contemplated
hereby and by the other Loan Documents.
4.19
Security Documents.
(a)
The Guarantee and Collateral Agreement is effective to create in favor of the Administrative Agent, for the benefit of
the Secured Parties, a legal, valid and enforceable security interest in the Collateral described therein and proceeds thereof. In the case of the
Pledged Stock (as defined in the Guarantee and Collateral Agreement) that are securities represented by stock certificates or otherwise
constituting certificated securities within the meaning of Section 8-102(a)(15) of the UCC or the corresponding code or statute of any other
applicable jurisdiction (“Certificated Securities”), when certificates representing such Pledged Stock (which, in the case of a certificated
securities in registered form, are indorsed to the Administrative Agent or in blank by an effective indorsement) are delivered to the
Administrative Agent, and in the case of the other Collateral constituting personal property described in the Guarantee and Collateral
Agreement, when financing statements and other filings specified on Schedule 4.19(a) to the Disclosure Letter in appropriate form are filed
in the offices specified on Schedule 4.19(a) to the Disclosure Letter, the Administrative Agent, for the benefit of the Secured Parties, shall
have a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral and the proceeds
thereof, as security for the Obligations, to the extent a security interest may be perfected by such filings, in each case prior and superior in
right to any other Person (except, in the case of Collateral other than Pledged Stock, Liens permitted by Section 7.3). As of the Closing Date,
none of the Loan Parties that is a limited liability company or partnership has any Capital Stock that is a Certificated Security.
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(b)
Each of the Mortgages delivered after the Closing Date will be, upon execution, effective to create in favor of the
Administrative Agent, for the benefit of the Secured Parties, a legal, valid and enforceable Lien on the Mortgaged Properties described
therein and proceeds thereof, and when the Mortgages are filed in the offices for the applicable jurisdictions in which the Mortgaged
Properties are located, each such Mortgage shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the
Loan Parties in the Mortgaged Properties and the proceeds thereof, as security for the Obligations (as defined in the relevant Mortgage), in
each case prior and superior in right to any other Person.
4.20
Solvency; Voidable Transaction. The Loan Parties (taken as a whole) are, and after giving effect to the incurrence of all
Indebtedness, Obligations and obligations being incurred in connection herewith, will be, Solvent. No transfer of property is being made by
any Loan Party and no obligation is being incurred by any Loan Party in connection with the transactions contemplated by this Agreement or
the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of such Loan Party.
4.21
Regulation H. No Mortgage encumbers improved real property that is located in an area that has been identified by the
Secretary of Housing and Urban Development as an area having special flood hazards and in which flood insurance has not been made
available under the National Flood Insurance Act of 1968.
4.22
Designated Senior Indebtedness. The Loan Documents and all of the Obligations have been deemed “Designated Senior
Indebtedness” or a similar concept thereto, if applicable, for purposes of any other Indebtedness of the Loan Parties.
4.23
[Reserved].
4.24
Insurance. All insurance maintained by the Loan Parties is in full force and effect, all premiums have been duly paid, no
Loan Party has received notice of violation or cancellation thereof, and there exists no default under any requirement of such insurance. Each
Loan Party maintains insurance with financially sound and reputable insurance companies on all its property in at least such amounts and
against at least such risks (but including in any event public liability, product liability, and business interruption) as are usually insured
against in the same general area by companies engaged in the same or a similar business.
4.25
No Casualty. No Loan Party has received any notice of, nor does any Loan Party have any knowledge of, the occurrence or
pendency or contemplation of any Casualty Event affecting all or any material portion of its property.
4.26
[Reserved].
4.27
[Reserved].
4.28 OFAC. Neither Holdings, nor any of its Subsidiaries, nor, to the knowledge of Holdings or any such Subsidiary, any director,
officer, employee, agent, affiliate, advisor or representative thereof, is an individual or an entity that is, or is owned or controlled by an
individual or entity that is (a) currently the subject of any Sanctions, or (b) located, organized or resident in a Designated Jurisdiction.
4.29
Anti-Corruption Laws. Each of Holdings and its Subsidiaries has conducted its business in compliance in all material
respects with applicable anti-corruption laws and have instituted and maintained policies and procedures designed to promote and achieve
compliance with such laws.
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5.1
Conditions to Initial Extension of Credit. The effectiveness of this Agreement and the obligation of each Lender to make
its initial extension of credit hereunder shall be subject to the satisfaction or waiver, prior to or concurrently with the making of such
extension of credit on the Closing Date, of the following conditions precedent:
SECTION 5
CONDITIONS PRECEDENT
form and substance satisfactory to the Administrative Agent:
(a)
Loan Documents. The Administrative Agent shall have received each of the following, each of which shall be in
Lender listed on Schedule 1.1A;
(i)
this Agreement, executed and delivered by the Administrative Agent, Holdings, the Borrower and each
Holdings;
Revolving Lender;
Swingline Lender;
Party;
thereto.
(ii)
the Collateral Information Certificate and the Disclosure Letter, each executed by a Responsible Officer of
(iii)
if required by any Revolving Lender, a Revolving Loan Note executed by the Borrower in favor of such
(iv)
if required by the Swingline Lender, the Swingline Loan Note executed by the Borrower in favor of such
(v)
the Guarantee and Collateral Agreement, executed and delivered by the Administrative Agent and each Loan
(vi)
supplements to each Intellectual Property Security Agreement, executed by the applicable Loan Party related
(b)
[Reserved].
(c)
Approvals. Except for the Governmental Approvals described on Schedule 4.4 to the Disclosure Letter, all
Governmental Approvals and consents and approvals of, or notices to, any other Person (including the holders of any Capital Stock issued by
any Loan Party) required in connection with the execution and performance of the Loan Documents, and the consummation of the
transactions contemplated hereby, shall have been obtained and be in full force and effect.
(d)
Secretary’s or Managing Member’s Certificates; Certified Operating Documents; Good Standing Certificates. The
Administrative Agent shall have received (i) a certificate of each Loan Party, dated the Closing Date and executed by the Secretary,
Managing Member or equivalent officer of such Loan Party, substantially in the form of Exhibit C, with appropriate insertions and
attachments, including (A) the Operating Documents of such Loan Party certified, in the case of formation documents, as of a recent date by
the secretary of state or similar official of the relevant jurisdiction of organization of such Loan Party, (B) the relevant board resolutions or
written consents of such Loan Party adopted by such Loan Party for the purposes of authorizing such Loan Party to enter into and perform
the Loan Documents to which such Loan Party is party and (C) the names, titles, incumbency and signature specimens of those
representatives of such Loan Party who have been authorized by such resolutions and/or written consents to execute Loan Documents on
behalf of such Loan Party, (ii) a good standing certificate for each Loan Party from its respective jurisdiction of organization, and (iii)
certificates for foreign qualification from each jurisdiction where the failure of a Loan Party to be qualified could reasonably be expected to
have a Material Adverse Effect.
Responsible Officer’s Certificates. The Administrative Agent shall have received a certificate signed by a
Responsible Officer of Holdings, dated as of the Closing Date and in form and substance reasonably satisfactory to it, certifying (A) that the
conditions specified in Sections 5.2(a) and (d) have been satisfied, and (B) that there has been no event or circumstance since January 31,
(e)
71
2020, that has had or that could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.
(f)
Patriot Act, etc. The Administrative Agent and each Lender shall have received, to the extent requested five (5)
Business Days prior to the Closing Date, all documentation and other information requested to comply with applicable “know your
customer” and anti-money-laundering rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation (including
the Beneficial Ownership Certificate), and a properly completed and signed IRS Form W-8 or W-9, as applicable, for each Loan Party.
Existing Obligations. The Borrower shall have repaid in respect of the Existing Revolving Loans and obligations
under the Existing Credit Agreement, (i) all accrued and unpaid interest thereon, (ii) the accrued and unpaid Commitment Fee and (ii) the
accrued and unpaid Letter of Credit Fees.
(g)
(h)
(i)
(j)
[Reserved].
[Reserved].
Collateral Matters.
Lien Searches. The Administrative Agent shall have received the results of recent lien, judgment and
litigation searches in each of the jurisdictions reasonably required by the Administrative Agent, and such searches shall reveal no liens on any
of the assets of the Loan Parties except for Liens permitted by Section 7.3, or Liens to be discharged on or prior to the Closing Date.
(i)
(ii)
Pledged Stock; Stock Powers; Pledged Notes. The Administrative Agent shall have received (A) the
certificates representing the shares of Capital Stock pledged to the Administrative Agent (for the benefit of the Secured Parties) pursuant to
the Guarantee and Collateral Agreement, together with an undated stock power for each such certificate executed in blank by a duly
authorized officer of the pledgor thereof, and (B) each promissory note (if any) pledged to the Administrative Agent (for the benefit of the
Secured Parties) pursuant to the Guarantee and Collateral Agreement, endorsed (without recourse) in blank (or accompanied by an executed
transfer form in blank) by the pledgor thereof.
(iii)
Filings, Registrations, Recordings, Agreements, Etc. Each document (including any UCC financing
statements) required by the Security Documents or under law or reasonably requested by the Administrative Agent to be filed, registered or
recorded to create in favor of the Administrative Agent (for the benefit of the Secured Parties), a perfected Lien on the Collateral described
therein, prior and superior in right and priority to any Lien in the Collateral held by any other Person (other than with respect to Liens
expressly permitted by Section 7.3), shall have been executed and delivered to the Administrative Agent or, as applicable, be in proper form
for filing, registration or recordation.
Insurance. Except as set forth in Section 5.3, the Administrative Agent shall have received evidence of customary
insurance naming the Administrative Agent as an additional insured and/or lender loss payee, as the case may be, under all property and
liability insurance policies maintained with respect to the Collateral.
(k)
(l)
Fees. The Lenders and the Administrative Agent shall have received all fees required to be paid on or prior to the
Closing Date (including pursuant to the Fee Letter), and all reasonable and documented fees and expenses of the Administrative Agent for
which invoices have been presented at least one Business Day prior to the Closing Date (including the reasonable and documented fees and
expenses of legal counsel to the Administrative Agent) for payment on or before the Closing Date.
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LLP, counsel to the Loan Parties, in form and substance reasonably satisfactory to the Administrative Agent.
(m)
Legal Opinions. The Administrative Agent shall have received the executed legal opinion of Davis Polk & Wardwell
Borrowing Notices. The Administrative Agent shall have received, in respect of any Revolving Loans to be made on
the Closing Date, a completed Notice of Borrowing executed by the Borrower and otherwise complying with the requirements of Section 2.5.
(n)
officer or treasurer of Holdings.
(o)
Solvency Certificate. The Administrative Agent shall have received a Solvency Certificate from the chief financial
had or could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
(p)
No Material Adverse Effect. There shall not have occurred since January 31, 2020, any event or condition that has
pending or, to the knowledge of any Group Member, threatened, that could reasonably be expected to have a Material Adverse Effect.
(q)
No Litigation. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is
For purposes of determining compliance with the conditions specified in this Section 5.1, each Lender that has executed this
Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter either sent (or
made available) by the Administrative Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to such Lender, unless an officer of the Administrative Agent responsible for the
transactions contemplated by the Loan Documents shall have received notice from such Lender prior to the Closing Date specifying such
Lender’s objection thereto and either such objection shall not have been withdrawn by notice to the Administrative Agent to that effect on or
prior to the Closing Date or, if any extension of credit on the Closing Date has been requested, such Lender shall not have made available to
the Administrative Agent on or prior to the Closing Date such Lender’s Revolving Percentage of such requested extension of credit.
5.2
Conditions to Each Extension of Credit. The agreement of each Lender to make any extension of credit requested to be
made by it on any date (including its initial extension of credit, but excluding any Revolving Loan Conversion and any conversion or
continuation of Loans pursuant to Section 2.13) is subject to the satisfaction of the following conditions precedent:
(a)
Representations and Warranties. Each of the representations and warranties made by each Loan Party in or pursuant
to any Loan Document (i) that is qualified by materiality shall be true and correct, and (ii) that is not qualified by materiality, shall be true
and correct in all material respects, in each case, on and as of such date as if made on and as of such date, except to the extent any such
representation and warranty expressly relates to an earlier date, in which case such representation and warranty shall have been true and
correct in all material respects as of such earlier date, subject to the limitations set forth in Section 2.27.
Revolving Extension of Credit, the availability and borrowing limitations specified in Section 2.4 shall be complied with.
(b)
Availability. With respect to any requests for any Revolving Extensions of Credit, after giving effect to such
such request for extension of credit which complies with the requirements hereof.
(c)
Notices of Borrowing. The Administrative Agent shall have received a Notice of Borrowing in connection with any
(d)
No Default. No Default or Event of Default shall have occurred and be continuing as of or on such date or after
giving effect to the extensions of credit requested to be made on such date (other than in connection with Limited Condition Acquisitions as
set forth in Section 2.27, in which case there shall be no Default or Event of Default as of the LCA Test Date and no Event of Default under
Section 8.1(a) or (f) on the date of or after giving effect to such requested credit extension).
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Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower hereunder and each Revolving Loan Conversion
shall constitute a representation and warranty by the Borrower as of the date of such extension of credit, or Revolving Loan Conversion, as
applicable, that the conditions contained in this Section 5.2 have been satisfied.
5.3
Post-Closing Conditions . The Borrower shall satisfy each of the conditions subsequent to the Closing Date specified in this
Section 5.3 to the reasonable satisfaction of the Administrative Agent, in each case, by no later than the date specified for such condition
below (or such later date as the Administrative Agent shall agree in its sole discretion):
within 30 days after the Closing Date, the Administrative Agent shall have received evidence of customary insurance
naming the Administrative Agent as an additional insured and/or lender loss payee, as the case may be, under all property and liability
insurance policies maintained with respect to the Collateral, in form and substance reasonably satisfactory to the Administrative Agent; and
(a)
within 60 days after the Closing Date, the Administrative Agent shall have received Control Agreements with
respect to all Deposit Accounts and Securities Accounts to the extent necessary to comply with Section 6.10 and the Guarantee and Collateral
Agreement.
(b)
SECTION 6
AFFIRMATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, at all times prior to the Discharge of Obligations, each of the
Loan Parties shall, and, where applicable, shall cause each of its Subsidiaries to:
6.1
Financial Statements. Furnish to the Administrative Agent for distribution to each Lender:
(a)
as soon as available, but in any event within (i) 90 days after the end of each fiscal year of Holdings or (ii) if
Holdings has been granted an extension by the SEC with respect to any fiscal year of Holdings permitting the late filing by Holdings of any
annual report on form 10-K, the earlier of (x) 90 days after the end of such fiscal year of Holdings and (y) the last day of such extension
period, a copy of the audited consolidated balance sheet of Holdings and its consolidated Subsidiaries as at the end of such fiscal year and the
related audited consolidated statements of income and of cash flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous year, reported on without a “going concern” or like qualification or exception, or qualification arising out of the
scope of the audit, by PricewaterhouseCoopers LLP or other independent certified public accountants of nationally recognized standing and
reasonably acceptable to the Administrative Agent; and
(b)
as soon as available, but in any event within (i) 45 days after the end of each of the first three quarters occurring
during each fiscal year of Holdings or (ii) if Holdings has been granted an extension by the SEC with respect to any fiscal quarter of
Holdings permitting the late filing by Holdings of any quarterly report on form 10-Q, the earlier of (x) 45 days after the end of such fiscal
quarter of Holdings and (y) the last day of such extension period, the unaudited consolidated balance sheet of Holdings and its consolidated
Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and of cash flows for such month and
the trailing 12 months, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer of
Holdings as being fairly stated in all material respects (subject to normal year-end audit adjustments and the absence of year-end audit
footnotes).
All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in
accordance with GAAP applied (except as approved by such accountants or officer, as the case may be, and disclosed in reasonable detail
therein) consistently throughout the periods reflected therein and with prior periods.
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Additionally, documents required to be delivered pursuant to this Section 6.1 and Section 6.2(e) (to the extent any such documents are
included in materials otherwise filed with the SEC) may be delivered electronically and if so, shall be deemed to have been delivered on the
date on which the Borrower posts such documents, or provides a link thereto, either: (i) on the Borrower’s website on the Internet at the
website address listed in Section 10.2; or (ii) when such documents are posted electronically on the Borrower’s behalf on an internet or
intranet website to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether
sponsored by the Administrative Agent), if any; provided that the Borrower shall deliver paper copies of such documents to the
Administrative Agent or any Lender upon its request to the Borrower to deliver such paper copies until written request to cease delivering
paper copies is given by the Administrative Agent or such Lender. The Administrative Agent shall have no obligation to request the delivery
of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the
Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for requesting delivery to it or
maintaining its copies of such documents.
6.2
Certificates; Reports; Other Information. Furnish (or, in the case of clause (a), use commercially reasonable efforts to
furnish) to the Administrative Agent, for distribution to each Lender (or, in the case of clause (g), to the relevant Lender):
(a)
[reserved];
(b)
concurrently with the delivery of any financial statements pursuant to (i) Section 6.1, (x) a Compliance Certificate
containing all information and calculations necessary for determining compliance by each Loan Party with the provisions of this Agreement
referred to therein as of the last day of the applicable fiscal period of Holdings and (y) to the extent not previously disclosed to the
Administrative Agent, a description of any change in the jurisdiction of organization of any Loan Party, and (ii) Section 6.1(a), starting with
the financial statements to be delivered for fiscal year 2021, to the extent not previously disclosed to the Administrative Agent, a list of any
U.S. registered Intellectual Property issued to, applied for, or acquired by any Loan Party since the date of the most recent report delivered
pursuant to this clause (or, in the case of the first such report so delivered, since the Closing Date) (excluding any Excluded Assets and any
issuances or registrations of Intellectual Property on applications that were included in a previous Intellectual Property Security Agreement or
a previous report delivered pursuant to this clause);
(c)
[reserved];
(d)
promptly, and in any event within five (5) Business Days after receipt thereof by any Loan Party or any Subsidiary
thereof, copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction)
concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any
Loan Party or any Subsidiary thereof (other than routine comment letters from the staff of the SEC relating to Holdings’ filings with the
SEC);
(e)
within five days after the same are sent, copies of each annual report, proxy or financial statement or other material
report that Holdings or the Borrower sends to the holders of any class of any Group Member’s debt securities or public equity securities and,
within five days after the same are filed, copies of all annual, regular, periodic and special reports and registration statements which Holdings
or the Borrower may file with the SEC under Section 13 or 15(d) of the Exchange Act, or with any national securities exchange, and not
otherwise required to be delivered to the Administrative Agent pursuant hereto;
(f)
upon reasonable request by the Administrative Agent, within five days after the same are sent or received, copies of
all correspondence, reports, documents and other filings with any Governmental Authority regarding compliance with or maintenance of
Governmental Approvals or Requirements of Law that could reasonably be expected to have a Material Adverse Effect on any of the
Governmental Approvals or otherwise on the operations of the Group Members; and
75
request through the Administrative Agent may from time to time reasonably request with respect to Holdings and its Subsidiaries.
(g)
promptly, such additional financial and other information as the Administrative Agent or any Lender making such
6.3
[Reserved].
6.4
Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all its material obligations of whatever nature, except where the amount or validity thereof is currently being contested in good
faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the relevant
Group Member.
6.5
Maintenance of Existence; Compliance. (a)(i) Preserve, renew and keep in full force and effect its organizational existence
and (ii) take all reasonable action to maintain or obtain all Governmental Approvals and all other rights, privileges and franchises necessary
or desirable in the normal conduct of its business or necessary for the performance by such Person of its Obligations under any Loan
Document, except, in each case, as otherwise permitted by Section 7.4 and except, in the case of clause (ii) above, to the extent that failure to
do so could not reasonably be expected to have a Material Adverse Effect; (b) comply with all Contractual Obligations and Requirements of
Law except, in each case, to the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect; and (c) comply with all Governmental Approvals, and any term, condition, rule, filing or fee obligation, or other requirement
related thereto, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect. Without limiting
the generality of the foregoing, the Borrower shall, and shall cause each of its ERISA Affiliates to: (1) maintain each Plan in compliance in
all material respects with the applicable provisions of ERISA, the Code or other Federal or state law; (2) cause each Qualified Plan to
maintain its qualified status under Section 401(a) of the Code; (3) not become a party to any Multiemployer Plan; (4) ensure that all
liabilities under each Plan are either (x) funded to at least the minimum level required by law or, if higher, to the level required by the terms
governing such Plan; (y) insured with a reputable insurance company; or (z) provided for or recognized in the financial statements most
recently delivered to the Administrative Agent and the Lenders pursuant hereto; and (5) take commercially reasonable actions to ensure that
the contributions or premium payments to or in respect of each Plan are paid at no less than the rates required under the rules of such Plan
and in accordance with the most recent actuarial advice received in relation to such Plan and applicable law.
6.6
Maintenance of Property; Insurance. (a) Keep all property useful and necessary in its business in good working order and
condition, ordinary wear and tear and casualty excepted, (b) maintain with financially sound and reputable insurance companies insurance on
all its property in at least such amounts and against at least such risks (but including in any event public liability, product liability and
business interruption) as are usually insured against in the same general area by companies engaged in the same or a similar business, and (c)
maintain flood insurance on all real property subject to a Mortgage as required under Section 6.12(b).
6.7
Inspection of Books and Records; Discussions. (a) Keep proper books of records and account in which full, true and
correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its
business and activities and (b) on 5 Business Days’ notice (provided that no notice shall be required if an Event of Default has occurred and
is continuing) permit representatives and independent contractors of the Administrative Agent (who may be accompanied by any Lender) to
examine and make abstracts from any of its books and records at any reasonable time and as often as may reasonably be desired and to
discuss the business, operations, properties and financial and other condition of the Group Members with officers, directors and employees of
the Group Members and with their independent certified public accountants; provided that (i) such inspections shall not be undertaken more
frequently than once every 12 months unless an Event of Default has occurred and is continuing, and (ii) nothing in this Section 6.7 shall
require any Group Member to take any action that would violate a confidentiality agreement (to the extent not created in contemplation of
such Group Member’s obligations hereunder) or waive any attorney-client or similar privilege.
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6.8
Notices. Give prompt written notice to the Administrative Agent of:
(a)
the occurrence of any Default or Event of Default;
any (i) default or event of default under any Contractual Obligation of any Group Member or (ii) litigation,
investigation or proceeding that may exist at any time between any Group Member and any Governmental Authority, that in either case, if
not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect;
(b)
Adverse Effect or (ii) relates to any Loan Document;
(c)
any litigation or proceeding affecting any Group Member which (i) could reasonably be expected to have a Material
(d)
(i) promptly after the Borrower has knowledge or becomes aware of the occurrence of any of the following ERISA
Events affecting the Borrower or any ERISA Affiliate (but in no event more than ten days after such event), the occurrence of any of the
following ERISA Events, and shall provide the Administrative Agent with a copy of any notice with respect to such event that may be
required to be filed with a Governmental Authority and any notice delivered by a Governmental Authority to the Borrower or any ERISA
Affiliate with respect to such event: (A) an ERISA Event, (B) the adoption of any new Pension Plan by the Borrower or any ERISA Affiliate,
(C) the adoption of any amendment to a Pension Plan, if such amendment will result in a material increase in contribution obligations or
unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA), or (D) the commencement of contributions by the Borrower or any
ERISA Affiliate to any Plan that is subject to Title IV of ERISA or Section 412 of the Code; and
(ii) (A) promptly after the giving, sending or filing thereof, or the receipt thereof, copies of (1) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by the Borrower or any of its ERISA Affiliates with the IRS with
respect to each Pension Plan, (2) all notices received by the Borrower or any of its ERISA Affiliates from a Multiemployer Plan sponsor
concerning an ERISA Event, and (3) copies of such other documents or governmental reports or filings relating to any Pension Plan or
Multiemployer Plan as the Administrative Agent shall reasonably request; and (B), without limiting the generality of the foregoing, such
certifications or other evidence of compliance with the provisions of Sections 4.13 and 7.9 as any Lender (through the Administrative Agent)
may from time to time reasonably request;
(e)
(f)
(g)
any material change in the information provided in the most recently delivered Beneficial Ownership Certification.
any material change in accounting policies or financial reporting practices by any Loan Party; and
any development or event that has had or could reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.8 shall be accompanied by a statement of a Responsible Officer of Holdings or the Borrower
setting forth details of the occurrence referred to therein and stating what action the relevant Group Member proposes to take with respect
thereto.
6.9
Environmental Laws.
(a)
Except as could not reasonably be expected to result in a Material Adverse Effect, comply with, and ensure
compliance by all tenants and subtenants, if any, with, all applicable Environmental Laws, and obtain and comply with and maintain, and
ensure that all tenants and subtenants obtain and comply with and maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws.
investigations, studies, sampling and testing, and all remedial, removal
(b)
Except as could not reasonably be expected to result in a Material Adverse Effect, conduct and complete all
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and other actions required under Environmental Laws and promptly comply with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws.
6.10
[Reserved].
6.11
[Reserved].
6.12
Additional Collateral, Etc.
(a)
With respect to any property (to the extent included in the definition of Collateral) acquired after the Closing Date by
any Loan Party (other than (x) any property described in paragraph (b), (c), (d) or (e) below, and (y) any property subject to a Lien expressly
permitted by Section 7.3(g)) as to which the Administrative Agent, for the benefit of the Secured Parties, does not have a perfected Lien,
promptly (and in any event within ten Business Days or such later date as the Administrative Agent may agree in its sole discretion) take all
actions necessary or advisable in the opinion of the Administrative Agent to grant to the Administrative Agent, for the benefit of the Secured
Parties, a perfected first priority (except as expressly permitted by Section 7.3) security interest and Lien in such property, including the filing
of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by
law or as may be requested by the Administrative Agent.
(b)
With respect to any fee interest in any real property having a fair market value (together with improvements thereof)
of at least $20,000,000 acquired after the Closing Date by any Loan Party (other than any such real property subject to a Lien expressly
permitted by Section 7.3(g)), promptly (and in any event within sixty (60) days (or such longer time period as the Administrative Agent may
agree in its sole discretion)) after such acquisition, to the extent requested by the Administrative Agent, (i) execute and deliver a first priority
Mortgage, in favor of the Administrative Agent, for the benefit of the Secured Parties, covering such real property, (ii) if requested by the
Administrative Agent, provide the Lenders with title and extended coverage insurance covering such real property in an amount not in excess
of the fair market value as reasonably estimated by the Borrower as well as a current ALTA survey thereof, together with a surveyor’s
certificate, each of the foregoing in form and substance reasonably satisfactory to the Administrative Agent and (iii) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the Administrative Agent. In connection with the foregoing, no later than
five (5) Business Days prior to the date on which a Mortgage is executed and delivered pursuant to this Section 6.12, in order to comply with
the Flood Laws, the Administrative Agent (for delivery to each Lender) shall have received the following documents (collectively, the
“Flood Documents”): (A) a completed standard “life of loan” flood hazard determination form (a “Flood Determination Form”) and such
other documents as any Lender may reasonably request to complete its flood due diligence, (B) if the improvement(s) to the applicable
improved real property is located in a special flood hazard area, a notification to the applicable Loan Party (if applicable) (“Loan Party
Notice”) that flood insurance coverage under the National Flood Insurance Program (“NFIP”) is not available because the community does
not participate in the NFIP, (C) documentation evidencing the applicable Loan Party’s receipt of any such Loan Party Notice (e.g.,
countersigned Loan Party Notice, return receipt of certified U.S. Mail, or overnight delivery), and (D) if the Loan Party Notice is required to
be given and, to the extent flood insurance is required by any applicable Requirement of Law or any Lenders’ written regulatory or
compliance procedures and flood insurance is available in the community in which the property is located, a copy of one of the following: the
flood insurance policy, the applicable Loan Party’s application for a flood insurance policy plus proof of premium payment, a declaration
page confirming that flood insurance has been issued, or such other evidence of flood insurance that complies with all applicable laws and
regulations reasonably satisfactory to the Administrative Agent and each Lender (any of the foregoing being “Evidence of Flood
Insurance”). Notwithstanding anything contained herein to the contrary, no Mortgage will be executed and delivered until each Lender has
confirmed to the Administrative Agent that such Lender has satisfactorily completed its flood insurance due diligence and compliance
requirements. Each of the parties hereto acknowledges and agrees that, if there are any Mortgaged Properties, any increase, extension or
renewal of any of the Revolving Commitments (including the provision of any Increase or any other incremental credit facilities hereunder,
but excluding (i) any continuation or conversion of
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borrowings, (ii) the making of any Revolving Loans or (iii) the issuance, renewal or extension of Letters of Credit) shall be subject to (and
conditioned upon): (A) the prior delivery of all applicable Flood Documents with respect to such Mortgaged Properties as required by the
Flood Laws and as otherwise reasonably required by the Lenders and (B) the Administrative Agent having received written confirmation
from each Lenders that such Lender has satisfactorily completed its flood insurance due diligence and compliance requirements.
(c)
With respect to any new Subsidiary (other than an Excluded Subsidiary) created or acquired after the Closing Date
by any Loan Party (including pursuant to an Acquisition) or if an Excluded Subsidiary ceases to qualify as an Excluded Subsidiary, then
except to the extent compliance with this Section 6.12 is prohibited by existing Contractual Obligations (so long as such prohibition is not
incurred in contemplation of such acquisition or the obligations hereunder) or Requirements of Law binding on such Subsidiary or its
properties, promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the
Administrative Agent reasonably deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a
perfected first priority security interest in the Capital Stock of such Subsidiary that is owned directly by such Loan Party, (ii) deliver to the
Administrative Agent such documents and instruments as may be required to grant, perfect, protect and ensure the priority of such security
interest, including but not limited to, the certificates representing such Capital Stock (if applicable), together with undated stock powers, in
blank, executed and delivered by a duly authorized officer of the relevant Loan Party, (iii) cause such Subsidiary (A) to become a party to the
Guarantee and Collateral Agreement, (B) to take such actions as are necessary or advisable in the opinion of the Administrative Agent to
grant to the Administrative Agent for the benefit of the Secured Parties a perfected first priority security interest in the Collateral described in
the Guarantee and Collateral Agreement, with respect to such Subsidiary, including the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be reasonably requested
by the Administrative Agent and (C) to deliver to the Administrative Agent a certificate of such Subsidiary, in a form reasonably satisfactory
to the Administrative Agent, with appropriate insertions and attachments, and (iv) if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.
(d)
With respect to any direct Foreign Subsidiary or direct Foreign Subsidiary Holding Company that is not an
Immaterial Subsidiary created or acquired after the Closing Date by any Loan Party or if any direct Foreign Subsidiary or direct Foreign
Subsidiary Holdings Company no longer qualifies as an Immaterial Subsidiary, then except to the extent compliance with this Section 6.12
(x) is prohibited by existing Contractual Obligations (so long as such prohibition is not incurred in contemplation of such acquisition or the
obligations hereunder) or Requirements of Law binding on such Subsidiary or its properties, or (y) could reasonably be expected to result in
liability to the directors or officers of any such Foreign Subsidiary under applicable Requirements of Law, promptly (i) execute and deliver to
the Administrative Agent such amendments to the Guarantee and Collateral Agreement, as the Administrative Agent deems necessary or
advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a perfected first priority security interest in the Capital
Stock of such Foreign Subsidiary or Foreign Subsidiary Holding Company that is directly owned by any such Loan Party (provided that in no
event shall more than 65% of the total outstanding voting Capital Stock of any such Foreign Subsidiary or Foreign Subsidiary Holding
Company be required to be so pledged) and (ii) deliver to the Administrative Agent the certificates representing such Capital Stock (if
certificated), together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the relevant Loan Party,
and take such other action as may be necessary or, in the opinion of the Administrative Agent, desirable to perfect the Administrative Agent’s
security interest therein.
(e)
With respect to any U.S. registered Intellectual Property requiring notification to the Administrative Agent pursuant
to Section 6.2(b), deliver within the time period specified in Section 6.2(b) intellectual property security agreements for filing with the
USPTO and/or USCRO (as applicable) pursuant to the terms of the Guarantee and Collateral Agreement in form and substance satisfactory to
the Administrative Agent.
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(f)
Notwithstanding anything herein to the contrary, no foreign law Security Documents or other action to perfect a Lien
in favor of the Administrative Agent under the laws of any foreign jurisdiction shall be required and there shall be no control, lockbox or
similar requirements nor any control agreements relating to Holdings’ and its Subsidiaries’ bank accounts (including deposit, securities or
commodities accounts).
6.13
[Reserved].
6.14
Use of Proceeds. Use the proceeds of each credit extension only for the purposes specified in Section 4.16.
6.15
Designated Senior Indebtedness. Cause the Loan Documents and all of the Obligations to be deemed “Designated Senior
Indebtedness” or a similar concept thereto, if applicable, for purposes of any Indebtedness of the Loan Parties.
6.16
Anti-Corruption Laws. Conduct its business in compliance in all material respects with all applicable anti-corruption laws
and maintain policies and procedures designated to promote and achieve compliance with such laws.
6.17
Further Assurances. Execute any further instruments and take such further action as the Administrative Agent reasonably
deems necessary to perfect, protect, ensure the priority of or continue the Administrative Agent’s Lien on the Collateral or to effect the
purposes of this Agreement.
SECTION 7
NEGATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agrees that, at all times prior to the Discharge of Obligations, no Loan Party
shall, nor shall any Loan Party permit any of its respective Subsidiaries to, directly or indirectly:
7.1
Financial Condition Covenants.
Minimum Consolidated Interest Coverage Ratio. Permit the Consolidated Interest Coverage Ratio, as at the last day
of any period of four consecutive trailing fiscal quarters of Holdings, commencing with the four consecutive trailing fiscal quarter period of
Holdings ending January 31, 2021, to be less than 3.00:1.00.
(a)
(b)
Maximum Consolidated Senior Secured Leverage Ratio. Permit the Consolidated Senior Secured Leverage Ratio, as
at the last day of any period of four consecutive trailing fiscal quarters of Holdings, commencing with the four consecutive trailing fiscal
quarter period ending January 31, 2021 and continuing through the four consecutive trailing fiscal quarter period ending January 31, 2023, to
be greater than 3.00:1.00.
any period of four consecutive trailing fiscal quarters of Holdings to be greater than the ratio set forth below opposite such period:
(c)
Maximum Consolidated Total Leverage Ratio. Permit the Consolidated Total Leverage Ratio, as at the last day of
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Four Fiscal Quarter Period Ending
Maximum Consolidated Total Leverage Ratio
January 31, 2021
April 30, 2021
July 31, 2021
October 31, 2021
January 31, 2022
April 30, 2022
July 31, 2022
October 31, 2022
January 31, 2023 and the last day of each fiscal quarter
thereafter
5.50:1.00
5.50:1.00
5.00:1.00
5.00:1.00
4.50:1.00
4.50:1.00
4.00:1.00
4.00:1.00
3.50:1.00
Notwithstanding the foregoing, if a Group Member consummates a Qualified Acquisition during any fiscal quarter (or, in the
case of any test hereunder calculated on a Pro Forma Basis, subsequent to the last day of such period and on or prior to the date of such test),
the Borrower may elect to increase each of the applicable Consolidated Senior Secured Leverage Ratio and Consolidated Total Leverage
Ratio covenant levels by 0.50:1.00 for the purposes of determining compliance with Section 7.1(b) and Section 7.1(c) as of the last day of
each fiscal quarter ending during the four quarters following such Qualified Acquisition (or, in the case of any test hereunder calculated on a
Pro Forma Basis, as of the last day of the fiscal quarter used in calculating such test) (an “Increased Leverage Threshold Period”); provided,
further, that the Borrower shall not be permitted to elect an Increased Leverage Threshold Period if, at the end of either of the two fiscal
quarters preceding the consummation of such Qualified Acquisition, an Increased Leverage Threshold Period was then in effect.
7.2
Indebtedness. Create, issue, incur, assume, become liable in respect of or suffer to exist any Indebtedness, except:
(a)
Indebtedness of any Loan Party pursuant to any Loan Document and under any Cash Management Agreement;
(b)
Indebtedness of (i) any Loan Party owing to any other Loan Party; (ii) any Group Member (which is not a Loan
Party) owing to any other Group Member (which is not a Loan Party); (iii) any Group Member (which is not a Loan Party) owing to any
Loan Party, which constitutes an Investment permitted by Section 7.8(f)(iii); provided, that, such Indebtedness owing to a Loan Party shall be
evidenced by a master promissory note and such promissory note shall be pledged as Collateral; and (iv) any Loan Party owing to any Group
Member (which is not a Loan Party); provided that such Indebtedness is subordinated to the Obligations on terms and conditions reasonably
acceptable to the Administrative Agent;
(c)
Guarantee Obligations (i) of any Loan Party of the Indebtedness of any other Loan Party; (ii) of any Group Member
(which is not a Loan Party) of the Indebtedness of any Loan Party (unless such Indebtedness is not permitted to be an obligation of a Group
Member that is not a Loan Party pursuant to the terms hereof); (iii) by any Group Member (which is not a Loan Party) of the Indebtedness of
any other Group Member (which is not a Loan Party) or (iv) of any Loan Party of the Indebtedness of any Group Member that is not a Loan
Party, so long as the aggregate amount of such Guarantee Obligations is an Investment permitted by Section 7.8(f)(iii); provided that, in any
case of clauses (i), (ii), (iii) or (iv), the underlying Indebtedness so guaranteed is otherwise permitted by the terms hereof;
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(d)
Indebtedness outstanding on the date hereof and listed on Schedule 7.2(d) and Permitted Refinancing thereof;
Indebtedness (including, without limitation, Capital Lease Obligations and purchase money financing) secured by
Liens permitted by Section 7.3(g) in an aggregate principal amount not to exceed $50,000,000 at any one time outstanding and any Permitted
Refinancing thereof;
(e)
days after the Revolving Termination Date;
(f)
Subordinated Indebtedness; provided that such Indebtedness shall not have a maturity date that is earlier than 180
arrangements, provided that the aggregate amount of any such Indebtedness outstanding at any time shall not exceed $10,000,000;
(g)
Surety Indebtedness and any other Indebtedness in respect of letters of credit, banker’s acceptances or similar
(h)
Unsecured Notes so long as (i) immediately prior to and after giving effect to the incurrence thereof, no Event of
Default has occurred and is continuing, and (ii) immediately after giving effect to the incurrence thereof, the Group Members shall be in
compliance with each of the covenants set forth in Section 7.1 (provided that each of the Consolidated Senior Secured Leverage Ratio and
the Consolidated Total Leverage Ratio shall be calculated without netting Unrestricted Cash constituting the proceeds of such Indebtedness
from the numerator of such definitions) giving pro forma effect to the incurrence of such Indebtedness and the application of the proceeds
thereof as of the most recent quarter for which financial statements were required to be delivered hereunder (or if such Indebtedness is
incurred prior to the date that financial statements for the fiscal year ending January 31, 2021 have been delivered, the same covenant levels
applicable to the trailing four quarter period ending on January 31, 2021 shall be tested as of October 31, 2020) and any Permitted
Refinancing thereof; and
obligations (contingent or otherwise) of Holdings or any of its Subsidiaries existing or arising under any Swap
Agreement, provided that such obligations are (or were) entered into by such Person in accordance with Section 7.13 and not for purposes of
speculation;
(i)
(j)
Indebtedness of a Person (other than a Loan Party or an existing Subsidiary) existing at the time such Person is
merged with or into a Loan Party or a Subsidiary or becomes a Subsidiary, provided that (i) such Indebtedness was not, in any case, incurred
by such other Person in connection with, or in contemplation of, such merger or acquisition, (ii) such merger or acquisition constitutes a
permitted Investment, (iii) with respect to any such Person who becomes a Subsidiary, (A) such Subsidiary and any of its Subsidiaries are the
only obligors in respect of such Indebtedness, and (B) to the extent such Indebtedness is permitted to be secured hereunder, only the assets of
such Subsidiary and any of its Subsidiaries secure such Indebtedness, and (iv) the aggregate amount of such Indebtedness does not exceed
$50,000,000 in the aggregate;
(k)
Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business;
(l)
Indebtedness in the form of purchase price adjustments, earn outs, deferred compensation, or other arrangements
representing acquisition consideration or deferred payments of a similar nature incurred in connection with Investments permitted by Section
7.8; provided that the amount of such obligation shall be deemed part of the cost of such Investment (the amount of which shall be deemed to
be the amount required to be accrued as a liability in accordance with GAAP or the amount actually paid);
(m)
Indebtedness consisting of the financing of insurance premiums;
outstanding;
(n)
Indebtedness incurred with corporate credit cards, in an aggregate amount not to exceed $5,000,000 at any one time
Ratio Debt so long as (i) immediately prior to and after giving effect to the incurrence thereof, no Event of Default
has occurred and is continuing, and (ii) immediately after giving effect to the incurrence thereof, the Group Members shall be in compliance
with each of the covenants set
(o)
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forth in Section 7.1 (provided that each of the Consolidated Senior Secured Leverage Ratio and the Consolidated Total Leverage Ratio shall
be calculated without netting Unrestricted Cash constituting the proceeds of such Indebtedness from the numerator of such definitions) giving
pro forma effect to the incurrence of such Indebtedness and the application of the proceeds thereof as of the most recent quarter for which
financial statements were required to be delivered hereunder (or if such Indebtedness is incurred prior to the date that financial statements for
the fiscal year ending January 31, 2021 have been delivered, the same covenant levels applicable to the trailing four quarter period ending on
January 31, 2021 shall be tested as of October 31, 2020) and any Permitted Refinancing thereof; and
outstanding.
(p)
Indebtedness not otherwise permitted by this Section in an aggregate amount not to $25,000,000 at any time
7.3
Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, whether now owned or hereafter acquired,
except:
adequate reserves with respect thereto are maintained on the books of the applicable Group Member in conformity with GAAP;
(a)
Liens for taxes not yet due or that are being contested in good faith by appropriate proceedings; provided that
ordinary course of business;
(b)
carriers’, warehousemen’s, landlord’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the
legislation;
(c)
pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security
deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business
(other than for Indebtedness or any Liens arising under ERISA) or deposits made in connection with permitted Investments;
(d)
easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business
that, in the aggregate, are not substantial in amount and that do not in any case materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the business of the applicable Group Member;
(e)
(f)
Liens in existence on the date hereof listed on Schedule 7.3(f) to the Disclosure Letter; provided that (i) no such Lien
is spread to cover any additional property after the Closing Date, (ii) the amount of Indebtedness or obligations secured or benefitted thereby
is not increased, (iii) the direct or any contingent obligor with respect thereto is not changed, and (iv) any renewal or extension of the
obligations secured thereby is permitted by Section 7.2(d);
(g)
Liens securing Indebtedness incurred pursuant to Section 7.2(e) to finance the acquisition of fixed or capital assets;
provided that (i) such Liens shall be created substantially simultaneously with, or within ninety (90) days after, the acquisition of such fixed
or capital assets, (ii) such Liens do not at any time encumber any property other than the property financed by such Indebtedness, and (iii) the
amount of Indebtedness secured thereby is not increased, except by an amount permitted by Section 7.2(e);
(h)
Liens created pursuant to the Security Documents;
(i)
(x) any interest or title of a lessor or licensor under any lease or license entered into by a Group Member in the
ordinary course of its business and covering only the assets so leased or licensed, (y) leases, licenses, subleases and sublicenses of real
property granted to others in the ordinary course of business and (z) non-exclusive licenses or sublicenses of Intellectual Property in the
ordinary course of business;
83
(j)
judgment Liens that do not constitute a Default or an Event of Default under Section 8.1(h) of this Agreement;
(k)
bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash, Cash Equivalents,
securities, commodities and other funds on deposit in one or more accounts maintained by a Group Member, in each case arising in the
ordinary course of business in favor of banks, other depositary institutions, securities or commodities intermediaries or brokerages with
which such accounts are maintained securing amounts owing to such banks or financial institutions with respect to cash management and
operating account management or are arising under Section 4-208 or 4-210 of the UCC on items in the course of collection;
(l)
(i) cash deposits and liens on cash and Cash Equivalents pledged to secure Indebtedness permitted under Section
7.2(g), (ii) Liens securing reimbursement obligations with respect to letters of credit permitted by Section 7.2(g) that encumber documents
and other property relating to such letters of credit, and (iii) Liens securing Obligations under any Specified Swap Agreements permitted by
Section 7.2(i);
(m)
Liens securing Subordinated Indebtedness incurrent pursuant to Section 7.2(f);
(n)
Liens on property of a Person existing at the time such Person is acquired by, merged into or consolidated with a
Group Member or becomes a Subsidiary of a Group Member or acquired by a Group Member; provided that (i) such Liens were not created
in contemplation of such acquisition, merger, consolidation or Investment, (ii) such Liens do not extend to any assets other than those of such
Person, and (iii) the applicable Indebtedness or obligation secured by such Lien is not prohibited under Section 7.2;
the replacement, extension or renewal of any Lien permitted by clause (m) above upon or in the same property
theretofore subject thereto or the replacement, extension or renewal (without increase in the amount or change in any direct or contingent
obligor) of the Indebtedness secured thereby;
(o)
Liens not otherwise permitted by this Section so long as neither (i) the aggregate outstanding principal amount of the
obligations secured thereby nor (ii) the aggregate fair market value (determined as of the date such Lien is incurred) of the assets subject
thereto exceeds (as to all Group Members) $25,000,000 at any one time;
(p)
premiums;
(q)
Liens on insurance proceeds in favor of insurance companies granted solely to secured financed insurance
Liens in favor of custom and revenue authorities arising as a matter of law to secure the payment of custom duties in
connection with the importation of goods;
(r)
(s)
money deposits required in connection with an acquisition of property not otherwise prohibited hereunder; and
Liens on any earnest money deposits required in connection with a permitted Investment or consisting of earnest
(t)
Liens securing Indebtedness permitted by Section 7.2(p).
7.4
Fundamental Changes. Consummate any merger, consolidation, amalgamation, division of or by a limited company, or an
allocation of assets to a series of a limited liability company (or the unwinding of such division or allocation), or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or Dispose of all or substantially all of its property or business, except that:
(a)
(i) any Group Member that is not a Loan Party may be merged, amalgamated or consolidated with or into (A) any
Loan Party (provided that a Loan Party shall be the continuing or surviving Person, or the continuing or surviving Person shall become a
Loan Party substantially contemporaneous with such merger, amalgamation or consolidation) or (B) any Group Member that is not a Loan
Party, and (ii) any Loan Party other than Holdings may be merged, amalgamated or consolidated
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with or into with any other Loan Party (provided that if such merger, amalgamation or consolidation involves the Borrower, the Borrower
shall be the continuing or surviving Person);
(b)
(i) any Group Member that is not a Loan Party may Dispose of any or all of its assets (including upon voluntary
liquidation, dissolution or otherwise) (A) to any other Group Member or (B) pursuant to a Disposition permitted by Section 7.5; and (ii) any
Loan Party (other than the Borrower or Holdings) may Dispose of any or all of its assets (including upon voluntary liquidation, dissolution or
otherwise) (A) to any other Loan Party or (B) pursuant to a Disposition permitted by Section 7.5;
and
(c)
any Investment expressly permitted by Section 7.8 may be structured as a merger, consolidation or amalgamation;
immediately upon the consummation of the Division, the assets of the applicable Dividing Person are held by one or more Loan Parties.
(d)
any Subsidiary that is a limited liability company may consummate a Division as the Dividing Person if,
7.5
Disposition of Property. Dispose of any of its property, whether now owned or hereafter acquired, or, in the case of any
Subsidiary of Holdings, issue or sell any shares of such Subsidiary’s Capital Stock to any Person, except:
(a)
(b)
(c)
Dispositions of obsolete, worn out or surplus property in the ordinary course of business;
Dispositions of Inventory in the ordinary course of business;
Dispositions permitted by Sections 7.4(b)(i)(A) and (b)(ii)(A);
the sale or issuance of the Capital Stock of a Subsidiary of Holdings (i) to the Borrower or any other Loan Party, or
(ii) by a Subsidiary that is not a Loan Party to another Subsidiary that is not a Loan Party or (iii) in connection with any transaction that does
not result in a Change of Control;
(d)
Agreement or the other Loan Documents;
(e)
the use or transfer of money, cash or Cash Equivalents in a manner that is not prohibited by the terms of this
(f)
in the ordinary course of business;
the non-exclusive licensing or sublicensing of patents, trademarks, copyrights, and other Intellectual Property rights
(g)
the Disposition of property (i) from any Loan Party to any other Loan Party, and (ii) from any Group Member
(which is not a Loan Party) to any other Group Member; provided that in each case in which there is a Lien over the relevant property in
favor of the Administrative Agent in advance of the Disposition, an equivalent Lien will be granted to the Administrative Agent by the Group
Member which acquires the property;
(h)
(i)
Dispositions of property subject to a Casualty Event;
leases or subleases of real property;
with the compromise or collection thereof;
(j)
the sale or discount without recourse of accounts receivable arising in the ordinary course of business in connection
any abandonment, lapse, cancellation, non-renewal or discontinuance of use or maintenance of Intellectual Property
(or rights relating thereto) of any Group Member that the Borrower determines in good faith is desirable in the conduct of its business and not
materially disadvantageous to the interests of the Lenders;
(k)
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(l)
Dispositions of other property, provided that (i) at the time of any such Disposition, no Event of Default shall have
occurred and be continuing or would result from such Disposition and (ii) in the case of Dispositions of other property having a book value
exceeding 5.0% of Consolidated Tangible Assets of Holdings and its consolidated Subsidiaries in the aggregate for any fiscal year of
Holdings (x) the Group Member shall have received at least 75% of the consideration for such Disposition in the form of cash or Cash
Equivalents, and (y) such Disposition shall be for fair market value of the assets Disposed of (as reasonably determined by the Loan Parties
in good faith); and
7.3.
(m)
Restricted Payments permitted by Section 7.6, Investments permitted by Section 7.8 and Liens permitted by Section
7.6
Restricted Payments. Declare or pay any dividend (other than dividends payable solely in Capital Stock (other than
Disqualified Stock) of the Person making such dividend) on, or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Capital Stock of any Group Member,
whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or
property or in obligations of any Group Member (collectively, “Restricted Payments”), except that:
any Group Member may make Restricted Payments to any Loan Party (including dividends to Holdings to pay any
taxes that are due and payable by Holdings, including by Holdings and the Borrower as part of a consolidated group) and any Group Member
that is not a Loan Party may make Restricted Payments to any other Group Member;
(a)
(b)
so long as no Event of Default shall have occurred and be continuing at the time of any such Restricted Payment or
would result therefrom, each Loan Party may (i) purchase Capital Stock from present or former officers, directors or employees of any Group
Member upon the death, disability or termination of employment of such officer, director or employee; provided that the aggregate amount of
payments made under this clause (i) shall not exceed $10,000,000 during any fiscal year of Holdings, and (ii) declare and make dividend
payments or other distributions payable solely in Capital Stock (other than Disqualified Stock) of Holdings;
each Group Member may purchase, redeem or otherwise acquire Capital Stock issued by it with the proceeds
received from the substantially concurrent issue of new shares of its Capital Stock (other than Disqualified Stock); provided that any such
issuance is otherwise permitted hereunder (including by Section 7.5(d));
(c)
(d)
(i) each Group Member may make repurchases of Capital Stock deemed to occur upon exercise of stock options or
warrants if such repurchased Capital Stock represents a portion of the exercise price of such options or warrants, and (ii) each Group Member
may make repurchases of Capital Stock deemed to occur upon the withholding of a portion of the Capital Stock issued, granted or awarded to
a current or former officer, director, employee or consultant to pay for the taxes payable by such Person upon such issuance, grant or award
(or upon vesting thereof);
been issued by Holding or the Borrower; provided that such Indebtedness is otherwise permitted by Section 7.2; and
(e)
each Group Member may deliver its common Capital Stock upon conversion of any convertible Indebtedness having
Section 7.22;
(f)
the Group Members may make payments in respect of Subordinated Indebtedness solely to the extent permitted by
(g)
[reserved];
(h)
Restricted Payments in an aggregate principal amount not to exceed the Available Amount, so long as (i) after giving
effect thereto on a Pro Forma Basis as if such Restricted Payment had been made on the last day of the most recent fiscal quarter of Holdings
for which financial statements have been delivered hereunder, the Borrower would have been in compliance with the covenants set forth in
Section 7.1 (or if such payment is made prior to the date that financial statements
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for the fiscal year ending January 31, 2021 have been delivered, the same covenant levels applicable to the trailing four quarter period ending
on January 31, 2021 shall be tested as of October 31, 2020), (ii) no Event of Default has occurred and is continuing or would immediately
result therefrom, and (iii) the Borrower shall have delivered five (5) Business Days prior to making such Restricted Payment (x) an Available
Amount Certificate and (y) a certificate signed by a Responsible Officer of the Borrower certifying the conditions specified in the foregoing
clauses (h)(i) and (ii) have been satisfied and containing all information and calculations necessary for determining compliance with the
foregoing clause (h)(i);
would result therefrom, Restricted Payments not to exceed $10,000,000 during any fiscal year of Holdings; and
(i)
so long as no Event of Default shall have occurred and be continuing at the time of any such Restricted Payment or
(j)
other Restricted Payments so long as immediately after giving effect thereto, the Payment Conditions are satisfied.
7.7
[Reserved].
7.8
Investments. Make any advance, loan, extension of credit (by way of guarantee or otherwise) or capital contribution to, or
purchase any Capital Stock, bonds, notes, debentures or other debt securities of, or any assets constituting a business unit of, or make any
other investment in, any Person (all of the foregoing, “Investments”; provided that, the amount of any Investment shall be the original cost of
such Investment, plus the cost of any addition thereto that otherwise constitutes an Investment, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect thereto, but giving effect to any repayments of principal in the case of
any Investment in the form of a loan and any return of capital or return on Investment in the case of any equity Investment (whether as a
distribution, dividend, redemption or sale)), except:
(a)
(b)
extensions of trade credit in the ordinary course of business;
Investments in cash and Cash Equivalents;
Indebtedness in the ordinary course of business;
(c)
Guarantee Obligations permitted by Section 7.2 and Guarantee Obligations of obligations not constituting
loans and advances to employees, officers, consultants and directors of any Group Member in the ordinary course of
business (including for travel, entertainment and relocation expenses) in an aggregate amount for all Group Members not to exceed
$5,000,000 at any one time outstanding;
(d)
(e)
Investments existing on the Closing Date and set forth on Schedule 7.8 to the Disclosure Letter;
intercompany Investments by (i) any Loan Party in any other Loan Party, (ii) any Group Member that is not a Loan
Party in any other Group Member, or (iii) any Loan Party in any Group Member that is not a Loan Party to the extent (x) no Default or Event
of Defaults exists or would result therefrom, and (y) such Investments do not exceed $25,000,000 at any time;
(f)
deposit;
(g)
Investments in the ordinary course of business consisting of endorsements of negotiable instruments for collection or
Investments received in settlement of amounts due to any Group Member effected in the ordinary course of business
or owing to such Group Member as a result of Insolvency Proceedings involving an Account Debtor or upon the foreclosure or enforcement
of any Lien in favor of such Group Member;
(h)
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(i)
Investments held by any Person as of the date such Person is acquired in connection with a permitted Investment,
provided that (A) such Investments were not made, in any case, by such Person in connection with, or in contemplation of, such permitted
Investment, and (B) with respect to any such Person which becomes a Subsidiary as a result of such permitted Investment, such Subsidiary
remains the only holder of such Investment (except in the case of Cash Equivalents);
(j)
Investments, if immediately after giving effect to such Investment, the Payment Conditions are satisfied;
deposits made in connection with the incurrence of Liens permitted under Section 7.3;
(k)
deposits made to secure the performance of leases, licenses or contracts in the ordinary course of business, and other
other Persons in the ordinary course of business;
(l)
the licensing or contribution of Intellectual Property pursuant to joint marketing or joint venture arrangements with
promissory notes and other non-cash consideration received in connection with Dispositions permitted by
Section 7.5, to the extent not exceeding the limits specified therein with respect to the receipt of non-cash consideration in connection with
such Dispositions; and
(m)
(n)
Investments in an aggregate principal amount not to exceed the Available Amount, so long as (i) after giving effect
thereto on a Pro Forma Basis as if such Investment had been made on the last day of the most recent fiscal quarter of Holdings for which
financial statements have been delivered hereunder, the Borrower would have been in compliance with the covenants set forth in Section 7.1
(or if such Investment is made prior to the date that financial statements for the fiscal year ending January 31, 2021 have been delivered, the
same covenant levels applicable to the trailing four quarter period ending on January 31, 2021 shall be tested as of October 31, 2020), (ii) no
Event of Default has occurred and is continuing or would immediately result therefrom (other than in connection with a Limited Condition
Acquisition, in which case there shall be no Event of Default as of the LCA Test Date and no Event of Default under Section 8.1(a) or (f) as
of the date of such acquisition) and (iii) the Borrower shall have delivered five (5) Business Days prior to making such Investment (x) an
Available Amount Certificate and (y) a certificate signed by a Responsible Officer of the Borrower certifying the conditions specified in the
foregoing clauses (n)(i) and (ii) have been satisfied and containing all information and calculations necessary for determining compliance
with the foregoing clause (n)(i);
Investments in any Similar Business in an aggregate amount not to exceed the greater of $132,000,000 and 25% of
Consolidated EBITDA as of the last day of the most recent trailing four fiscal quarter period of Holdings calculated on a Pro Forma Basis as
of such time;
(o)
(p)
purchases or other acquisitions by any Group Member of the Capital Stock in a Person that, upon the consummation
thereof, will be a wholly-owned Subsidiary (other than qualifying director shares pursuant to applicable Requirements of Law) (including as
a result of a merger or consolidation) or all or substantially all of the assets of, or assets constituting one or more business units of, any
Person; provided that, with respect to each such purchase or other acquisition:
the newly-created or acquired Subsidiary (or assets acquired in connection with such asset sale) shall be
(x) in the same or a related line of business as that conducted by the Borrower on the date hereof, or (y) in a business permitted by Section
7.17;
(i)
accordance with all Requirements of Law;
(ii)
all transactions related to such purchase or acquisition shall be consummated in all material respects in
(iii)
(x) immediately before and immediately after giving effect to any such purchase or other acquisition, no
Event of Default shall have occurred and be continuing (other than in connection with a Limited Condition Acquisition, in which case there
shall be no Default or Event of Default as of the LCA Test Date and no Event of Default under Section 8.1(a) or (f) on the date of such
purchase) and (y) immediately after giving effect to such purchase or other acquisition (other than in connection with a Limited Condition
Acquisition, in which case as of the LCA Test Date), Holdings and
88
the Borrower and its Subsidiaries shall on a pro forma basis be in compliance with each of the covenants set forth in Section 7.1 (or if such
purchase or acquisition is made or consummated prior to the date that financial statements for the fiscal year ending January 31, 2021 have
been delivered, the same covenant levels applicable to the trailing four quarter period ending on January 31, 2021 shall be tested as of
October 31, 2020); and
(iv)
such purchase or acquisition shall not constitute an Unfriendly Acquisition;
"cost-plus" arrangements) that are in the ordinary course of business; and
(q)
to the extent constituting Investments, advances in respect of transfer pricing and cost-sharing arrangements (i.e.
other Investments; provided that at the time any such Investment is made the aggregate amount of Investments made
in reliance on this clause (r) shall not exceed the greater of $238,000,000 and 45% of Consolidated EBITDA as of the last day of the most
recent trailing four fiscal quarter period of Holdings calculated on a Pro Forma Basis as of such time.
(r)
7.9
ERISA. The Borrower shall not, and shall not permit any of its ERISA Affiliates to: (a) terminate any Pension Plan so as to
result in any material liability to the Borrower or any ERISA Affiliate, (b) permit to exist any ERISA Event, or any other event or condition,
which presents the risk of a material liability to any ERISA Affiliate, (c) make a complete or partial withdrawal (within the meaning of
ERISA Section 4201) from any Multiemployer Plan so as to result in any material liability to the Borrower or any ERISA Affiliate, (d) enter
into any new Pension Plan or Multiemployer Plan or modify any existing Pension Plan or Multiemployer Plan so as to increase its
obligations thereunder which could be reasonably likely to result in material liability to any ERISA Affiliate or permit the present value of
all nonforfeitable accrued benefits under any Plan (using the actuarial assumptions utilized by the PBGC upon termination of a Plan)
materially to exceed the fair market value of Plan assets allocable to such benefits, all determined as of the most recent valuation date for
each such Plan, or (e) engage in any transaction which would cause any obligation, or action taken or to be taken, hereunder (or the exercise
by the Administrative Agent or any Lender of any of its rights under this Agreement, any Note or the other Loan Documents) to be a non-
exempt (under a statutory or administrative class exemption) prohibited transaction under Section 406 of ERISA or Section 4975 of the Code
with respect to a Plan.
7.10
[Reserved].
7.11
Transactions with Affiliates. Enter into any transaction, including any purchase, sale, lease or exchange of property, the
rendering of any service or the payment of any management, advisory or similar fees, with any Affiliate (other than any other Loan Party)
unless such transaction is (a) (i) otherwise permitted under this Agreement and (ii) upon fair and reasonable terms no less favorable to the
relevant Group Member than it would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate, (b) a Restricted
Payment permitted by Section 7.6, or (c) reasonable and customary indemnification arrangements, employee benefits, compensation
arrangements (including equity-based compensation and bonuses), and reimbursement of expenses of employees, consultants, officers, and
directors, in each case, approved by the board of directors or management of Holdings or its Subsidiaries.
7.12
Sale Leaseback Transactions. Enter into any Sale Leaseback Transaction, except in connection with transactions that would
be permitted under Sections 7.2(e) and 7.3(g).
7.13
Swap Agreements. Enter into any Swap Agreement, except Swap Agreements which are entered into by a Group Member
to (a) hedge or mitigate risks to which such Group Member has actual exposure, or (b) effectively cap, collar or exchange interest rates (from
fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment
of such Group Member.
7.14
(b) fiscal year.
Accounting Changes. Make any change in its (a) accounting policies or reporting practices, except as required by GAAP, or
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7.15
Negative Pledge Clauses. Enter into or suffer to exist or become effective any agreement that prohibits or limits the ability
of any Loan Party to create, incur, assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter
acquired, to secure its Obligations under the Loan Documents to which it is a party, other than (a) this Agreement and the other Loan
Documents, (b) any agreements governing any purchase money Liens or Capital Lease Obligations otherwise permitted hereby (in which
case, any prohibition or limitation shall only be effective against the assets financed thereby), (c) customary restrictions on the assignment of
leases, licenses and other agreements, (d) any agreement in effect at the time any Subsidiary becomes a Subsidiary of a Loan Party, so long as
such agreement was not entered into solely in contemplation of such Person becoming a Subsidiary or, in any such case, that is set forth in
any agreement evidencing any amendments, restatements, supplements, modifications, extensions, renewals and replacements of the
foregoing, so long as such amendment, restatement, supplement, modification, extension, renewal or replacement applies only to such
Subsidiary and does not otherwise expand in any material respect the scope of any restriction or condition contained therein, and (e) any
restriction pursuant to any document, agreement or instrument governing or relating to any Lien permitted under Sections 7.3(c), (d), (f), (g),
(l), (m), (n), (o), (s) and (t) or any agreement or option to Dispose any asset of any Group Member, the Disposition of which is permitted by
any other provision of this Agreements (in each case, provided that any such restriction relates only to the assets or property subject to such
Lien or being Disposed).
7.16
Clauses Restricting Subsidiary Distributions. Enter into or suffer to exist or become effective any consensual
encumbrance or restriction on the ability of any Subsidiary of Holdings to (a) make Restricted Payments in respect of any Capital Stock of
such Subsidiary held by, or to pay any Indebtedness owed to, any other Group Member, (b) make loans or advances to, or other Investments
in, any other Group Member, or (c) transfer any of its assets to any other Group Member, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan Documents, (ii) any restrictions with respect to a Subsidiary
imposed pursuant to an agreement that has been entered into in connection with a Disposition permitted hereby of all or substantially all of
the Capital Stock or assets of such Subsidiary, (iii) customary restrictions on the assignment of leases, licenses and other agreements, (iv)
restrictions of the nature referred to in clause (c) above under agreements governing purchase money liens or Capital Lease Obligations
otherwise permitted hereby which restrictions are only effective against the assets financed thereby, (v) any agreement in effect at the time
any Subsidiary becomes a Subsidiary of a Borrower, so long as such agreement applies only to such Subsidiary, was not entered into solely in
contemplation of such Person becoming a Subsidiary or, in each case that is set forth in any agreement evidencing any amendments,
restatements, supplements, modifications, extensions, renewals and replacements of the foregoing, so long as such amendment, restatement,
supplement, modification, extension, renewal or replacement is not as a whole materially less favorable to such Subsidiary, (vi) restrictions
under any Subordinated Debt Documents, (vii) restrictions on the transfer of any asset pending the close of the sale of such asset and
customary restrictions contained in purchase agreements and acquisition agreements (including by way of merger, acquisition or
consolidation), to the extent in effect pending the consummation of such transaction, (viii) customary net worth provisions or similar
financial maintenance provisions contained in real property leases entered into by a Foreign Subsidiary, so long as the Borrower has
determined in good faith that such net worth provisions could not reasonably be expected to impair the ability of Holdings and its
Subsidiaries to meet their ongoing obligations under the Loan Documents, (ix) applicable law, (x) restrictions on cash or other deposits or net
worth imposed under agreements entered into in the ordinary course of business, (xi) provisions in joint venture agreements and other similar
agreements (including equity holder agreements) relating to such joint venture or its members or entered into in the ordinary course of
business or (xii) any restriction pursuant to any document, agreement or instrument governing or relating to any Lien permitted under
Sections 7.3(c), (d), (f), (g), (l), (m), (n), (o), (s) and (t) (provided that any such restriction relates only to the assets or property subject to
such Lien or being Disposed).
7.17
Lines of Business. Enter into any business, either directly or through any Subsidiary, except for those businesses in which
Holdings and its Subsidiaries are engaged on the date of this Agreement or that are reasonably related, complementary, synergistic, ancillary
or incidental thereto.
7.18
Designation of other Indebtedness. Designate any Indebtedness or indebtedness other than the Obligations as “Designated
Senior Indebtedness” or a similar concept thereto, if applicable.
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7.19
[Reserved].
7.20
Amendments to Organizational Agreements . Amend or permit any amendments to any Loan Party’s organizational
documents, if such amendment could reasonably be expected to be materially adverse to Administrative Agent or the Lenders.
7.21
Use of Proceeds. Use the proceeds of any Loan or extension of credit hereunder, whether directly or indirectly, (a) to
purchase or carry margin stock (within the meaning of Regulation U of the Board) or to extend credit to others for the purpose of purchasing
or carrying margin stock or to refund indebtedness originally incurred for such purpose, in each case in violation of, or for a purpose which
violates, or would be inconsistent with, Regulation T, U or X of the Board; (b) to finance an Unfriendly Acquisition; (c) to fund any activities
of or business with any individual or entity, or in any Designated Jurisdiction, that, at the time of such funding, is the subject of Sanctions, or
in any other manner that will result in a violation by any individual or entity (including any individual or entity participating in the
transaction, whether as Lender, Arranger, Administrative Agent, Issuing Lender, Swingline Lender, or otherwise) of Sanctions (or lend,
contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other individual or entity in violation of the
foregoing); or (d) for any purpose which would breach the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, or
other similar legislation in other jurisdictions.
7.22
Subordinated Indebtedness.
Amendments. Amend, modify, supplement, waive compliance with, or consent to noncompliance with, any
Subordinated Debt Document (if any), unless the amendment, modification, supplement, waiver or consent is in compliance with the
subordination provisions therein and any subordination agreement with respect thereto in favor of the Administrative Agent and the Lenders.
(a)
(b)
Payments. Make any payment, prepayment or repayment on, redemption, exchange or acquisition for value of, or
any sinking fund or similar payment with respect to, any Subordinated Indebtedness, except as expressly permitted by the subordination
provisions in the applicable Subordinated Debt Documents and any subordination agreement with respect thereto in favor of the
Administrative Agent and the Lenders; provided that the foregoing limitation shall not apply if either (i) such payment does not exceed the
Available Amount and (A) after giving effect thereto on a Pro Forma Basis as if such payment had been made on the last day of the most
recent fiscal quarter of Holdings for which financial statements have been delivered hereunder, the Borrower would have been in compliance
with the covenants set forth in Section 7.1 (or if such payment is made prior to the date that financial statements for the fiscal year ending
January 31, 2021 have been delivered, the same covenant levels applicable to the trailing four quarter period ending on January 31, 2021
shall be tested as of October 31, 2020), (B) no Event of Default has occurred and is continuing or would immediately result therefrom, and
(C) the Borrower shall have delivered five (5) Business Days prior to making such payment (x) an Available Amount Certificate and (y) a
certificate signed by a Responsible Officer of the Borrower certifying the conditions specified in the foregoing clauses (b)(i)(A) and (B) have
been satisfied and containing all information and calculations necessary for determining compliance with the foregoing clause (b)(i)(A), (ii)
the Payment Conditions have been satisfied, (iii) such payment is made in connection with a Permitted Refinancing of the applicable
Subordinated Indebtedness, or (iv) such payment is made in connection with a refinancing of such Subordinated Indebtedness with the
proceeds of the issuance of Subordinated Indebtedness or Capital Stock (other than Disqualified Stock).
7.23
Anti-Terrorism Laws. Conduct, deal in or engage in or permit any Affiliate or agent of any Loan Party within its control to
conduct, deal in or engage in any of the following activities: (a) conduct any business or engage in any transaction or dealing with any person
blocked pursuant to Executive Order No. 13224 (a “Blocked Person”), including the making or receiving of any contribution of funds, goods
or services to or for the benefit of any Blocked Person; (b) deal in, or otherwise engage in any transaction relating to, any property or
interests in property blocked pursuant to Executive Order No. 13224; or (c) engage in or conspire to engage in any transaction that evades or
avoids, or has the
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purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224 or the Patriot Act.
SECTION 8
EVENTS OF DEFAULT
8.1
Events of Default. The occurrence of any of the following shall constitute an Event of Default:
the Borrower shall fail to pay any amount of principal of any Loan when due in accordance with the terms hereof; or
the Borrower shall fail to pay any amount of interest on any Loan, or any other amount payable hereunder or under any other Loan
Document, within five (5) Business Days after any such interest or other amount becomes due in accordance with the terms hereof; or
(a)
(b)
any representation or warranty made or deemed made by any Loan Party herein or in any other Loan Document or
that is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this
Agreement or any such other Loan Document (i) if qualified by materiality, shall be incorrect or misleading when made or deemed made, or
(ii) if not qualified by materiality, shall be incorrect or misleading in any material respect when made or deemed made; provided that if such
breach of a representation or warranty is capable of being cured, an Event of Default under this clause (b) with respect to such representation
or warranty shall not occur unless such representation or warranty remains incorrect or misleading in any material respect (or all respects, as
applicable) for 30 days after the making of such representation or warranty; or
(i) any Loan Party shall default in the observance or performance of any agreement contained in, clause (i) of
Section 6.5(a), Section 6.8(a) and such default shall continue unremedied three (3) Business Days thereafter, or (ii) Section 7 of this
Agreement; or
(c)
any Loan Party shall default in the observance or performance of any other agreement contained in this Agreement
or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue
unremedied for a period of 30 days thereafter; or
(d)
(e)
any Group Member shall (i) default in making any payment of any principal of any Indebtedness (including any
Guarantee Obligation, but excluding the Loans) on the scheduled or original due date with respect thereto; (ii) default in making any payment
of any interest on any such Indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such
Indebtedness was created; (iii) default in making any payment or delivery under any such Indebtedness constituting a Swap Agreement
beyond the period of grace, if any, provided in such Swap Agreement; or (iv) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to (A) cause, or to permit
the holder or beneficiary of, or, in the case of any such Indebtedness constituting a Swap Agreement, counterparty under, such Indebtedness
(or a trustee or agent on behalf of such holder, beneficiary, or counterparty) to cause, with the giving of notice if required, such Indebtedness
to become due prior to its stated maturity or (in the case of any such Indebtedness constituting a Guarantee Obligation) to become payable or
(in the case of any such Indebtedness constituting a Swap Agreement) to be terminated, or (B) to cause, with the giving of notice if required,
any Group Member to purchase, redeem, mandatorily prepay or make an offer to purchase, redeem or mandatorily prepay such Indebtedness
prior to its stated maturity; provided that this clause (iv) shall not apply to secured Indebtedness that becomes due as a result of the voluntary
sale or transfer of the property or assets securing such Indebtedness if such sale or transfer is permitted hereunder and under the documents
providing for such Indebtedness; provided further, that a default, event or condition described in clauses (i), (ii), (iii), or (iv) of this Section
8.1(e) shall not at any time constitute an Event of Default unless, at such time, one or more defaults, events or conditions of the type
described in any of clauses (i), (ii), (iii), or (iv) of this Section 8.1(e) shall have occurred with respect to Indebtedness, the outstanding
principal amount (and, in the case of Swap Agreements, the Swap Termination Value) of which, individually or in the aggregate for all such
Indebtedness, exceeds $50,000,000; or
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(f)
(i) any Group Member shall commence any case, proceeding or other action (a) under any Debtor Relief Law
seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (b) seeking
appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or any
Group Member shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against any Group Member
any case, proceeding or other action of a nature referred to in clause (i) above that (x) results in the entry of an order for relief or any such
adjudication or appointment or (y) remains undismissed, undischarged or unbonded for a period of 60 days (provided that, during such 60
day period, no Loan shall be advanced or Letters of Credit issued hereunder); or (iii) there shall be commenced against any Group Member
any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any
substantial part of its assets that results in the entry of an order for any such relief that shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof (provided that, during such 60 day period, no Loan shall be advanced or Letters
of Credit issued hereunder); or (iv) any Group Member shall take any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) any Group Member shall generally not, or shall be unable to,
or shall admit in writing its inability to, pay its debts as they become due; or
(g)
there shall occur one or more ERISA Events which individually or in the aggregate results in or otherwise is
associated with liability of any Loan Party or any ERISA Affiliate thereof in excess of $50,000,000 during the term of this Agreement; or
there exists an amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for all
Pension Plans (excluding for purposes of such computation any Pension Plans with respect to which assets exceed benefit liabilities) which
exceeds $50,000,000; or
(h)
there is entered against any Group Member (i) one or more final judgments or orders for the payment of money
involving in the aggregate a liability (not paid or fully covered by insurance as to which the relevant insurance company has acknowledged
coverage) of $50,000,000 or more, or (ii) one or more non-monetary final judgments that have, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor
upon such judgment or order, or (B) all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal
within 45 days from the entry thereof; or
any of the Security Documents shall cease, for any reason, to be in full force and effect (other than pursuant to the
terms thereof), or any Loan Party shall so assert, or any Lien created by any of the Security Documents shall cease to be enforceable and of
the same effect and priority purported to be created thereby; or
(i)
business; or
(ii)
any court order enjoins, restrains or prevents a Loan Party from conducting all or any material part of its
full force and effect or any Loan Party shall so assert; or
(j)
the guarantee contained in Section 2 of the Guarantee and Collateral Agreement shall cease, for any reason, to be in
(k)
a Change of Control shall occur; or
(l)
any Loan Document (including the subordination provisions of any subordination agreement or intercreditor
agreement governing Subordinated Indebtedness) not otherwise referenced in Section 8.1(i) or (j), at any time after its execution and delivery
and for any reason other than as expressly permitted hereunder or thereunder or the Discharge of Obligations, ceases to be in full force and
effect; or any Loan Party contests in any manner the validity or enforceability of any Loan Document; or any Loan Party denies that it has
any liability or obligation under any Loan Document to which it is a party, or purports to revoke, terminate or rescind any such Loan
Document.
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8.2
Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the Administrative Agent shall, at the
request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:
if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) of Section 8.1 with respect to the
Borrower, the Commitments shall immediately terminate automatically and the Loans (with accrued interest thereon) and all other amounts
owing under this Agreement and the other Loan Documents shall automatically immediately become due and payable, and
(a)
(b)
if such event is any other Event of Default, any of the following actions may be taken: (i) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower declare the Revolving Commitments, the Swingline Commitments and the L/C Commitments to be terminated forthwith,
whereupon the Revolving Commitments, the Swingline Commitments and the L/C Commitments shall immediately terminate; (ii) with the
consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall,
by notice to the Borrower, declare the Loans (with accrued interest thereon) and all other amounts owing under this Agreement and the other
Loan Documents to be due and payable forthwith, whereupon the same shall immediately become due and payable; (iii) any Cash
Management Bank may terminate any Cash Management Agreement then outstanding and declare all Obligations then owing by the Loan
Parties under any such Cash Management Agreements then outstanding to be due and payable forthwith, whereupon the same shall
immediately become due and payable; and (iv) the Administrative Agent may exercise on behalf of itself, any Cash Management Bank, the
Lenders and the Issuing Lender all rights and remedies available to it, any such Cash Management Bank, the Lenders and the Issuing Lender
under the Loan Documents.
With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to this paragraph, the Borrower shall Cash Collateralize an amount equal to 105% of the aggregate then undrawn and
unexpired amount of such Letters of Credit. Amounts so Cash Collateralized shall be applied by the Administrative Agent to the payment of
drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully
drawn upon, if any, shall be applied to repay other Obligations of the Borrower hereunder and under the other Loan Documents in accordance
with Section 8.3.
In addition, (x) the Borrower shall also cash collateralize the full amount of any Swingline Loans then outstanding, and (y) to
the extent elected by any applicable Cash Management Bank, the Borrower shall also Cash Collateralize the amount of any Obligations in
respect of Cash Management Services then outstanding, which Cash Collateralized amounts shall be applied by the Administrative Agent to
the payment of all such outstanding Cash Management Services, and any unused portion thereof remaining after all such Cash Management
Services shall have been fully paid and satisfied in full shall be applied by the Administrative Agent to repay other Obligations of the Loan
Parties hereunder and under the other Loan Documents in accordance with the terms of Section 8.3.
(c)
After all such Letters of Credit and Cash Management Agreements shall have been terminated, expired or fully
drawn upon, as applicable, and all amounts drawn under any such Letters of Credit shall have been reimbursed in full and all other
Obligations of the Borrower and the other Loan Parties (including any such Obligations arising in connection with Cash Management
Services) shall have been paid in full, the balance, if any, of the funds having been so Cash Collateralized shall be returned to the Borrower
(or such other Person as may be lawfully entitled thereto). Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived by the Borrower.
8.3
Application of Funds. After the exercise of remedies provided for in Section 8.2, any amounts received by the
Administrative Agent on account of the Obligations shall be applied by the Administrative Agent in the following order:
First, to the payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (other than
principal and interest but including any Collateral-Related Expenses, fees, charges and disbursements of counsel to the Administrative Agent
and amounts payable
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under Sections 2.19, 2.20 and 2.21 (including interest thereon)) payable to the Administrative Agent, in its capacity as such;
Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal,
interest, and Letter of Credit Fees) payable to the Lenders, the Issuing Lender ((including any Letter of Credit Fronting Fees and Issuing
Lender Fees), and any Qualified Counterparty and any applicable Cash Management Bank (in its respective capacity as a provider of Cash
Management Services), and the reasonable and documented out-of-pocket fees, charges and disbursements of counsel to the respective
Lenders and the Issuing Lender, and amounts payable under Sections 2.19, 2.20 and 2.21), in each case, ratably among them in proportion to
the respective amounts described in this clause Second payable to them;
Third, to the extent that the Swingline Lender has advanced any Swingline Loans that have not been refunded by each
Lender’s Swingline Participation Amount, payment to the Swingline Lender of that portion of the Obligations constituting the unpaid
principal of and interest upon the Swingline Loans advanced by the Swingline Lender;
Fourth, to the payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest in
respect of any Cash Management Services and on the Loans and L/C Disbursements which have not yet been converted into Revolving
Loans, and to payment of premiums and other fees (including any interest thereon) under any Specified Swap Agreements and any Cash
Management Agreements, in each case, ratably among the Lenders, any applicable Cash Management Bank (in its respective capacity as a
provider of Cash Management Services), and any Qualified Counterparties, in each case, ratably among them in proportion to the respective
amounts described in this clause Fourth payable to them;
Fifth, to payment of that portion of the Obligations constituting unpaid principal of the Loans, L/C Disbursements which
have not yet been converted into Revolving Loans, and settlement amounts, payment amounts and other termination payment obligations
under any Specified Swap Agreements and Cash Management Agreements, in each case, ratably among the Lenders, any applicable Cash
Management Bank (in its respective capacity as a provider of Cash Management Services), and any applicable Qualified Counterparties, in
each case, ratably among them in proportion to the respective amounts described in this clause Fifth and payable to them;
Exposure comprised of the aggregate undrawn amount of Letters of Credit pursuant to Section 3.10;
Sixth, to the Administrative Agent for the account of the Issuing Lender, to Cash Collateralize that portion of the L/C
Seventh, for the account of any applicable Qualified Counterparty and any applicable Cash Management Bank, to any
settlement amounts, payment amounts and other termination payment obligations under any Specified Swap Agreements and Cash
Management Agreements not paid pursuant to clause Fifth and to cash collateralize Obligations arising under any then outstanding Specified
Swap Agreements and Cash Management Services, in each case, ratably among them in proportion to the respective amounts described in
this clause Seventh payable to them;
Eighth, to the payment of all other Obligations of the Loan Parties that are then due and payable to the Administrative Agent
and the other Secured Parties on such date, in each case, ratably among them in proportion to the respective aggregate amounts of all such
Obligations described in this clause Eight and payable to them;
Last, the balance, if any, after the Discharge of Obligations, to the Borrower or as otherwise required by Law.
Subject to Sections 2.24(a), 3.4, 3.5 and 3.10, amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit
pursuant to clause Sixth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on
deposit as Cash Collateral for Letters of Credit after all Letters of Credit have either been fully drawn or expired, such remaining amount
shall be applied to the other Obligations, if any, in the order set forth above.
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Notwithstanding the foregoing, no Excluded Swap Obligation of any Guarantor shall be paid with amounts received from such
Guarantor or from any Collateral in which such Guarantor has granted to the Administrative Agent a Lien (for the benefit of the Secured
Parties) pursuant to the Guarantee and Collateral Agreement; provided, however, that each party to this Agreement hereby acknowledges and
agrees that appropriate adjustments shall be made by the Administrative Agent (which adjustments shall be controlling in the absence of
manifest error) with respect to payments received from other Loan Parties to preserve the allocation of such payments to the satisfaction of
the Obligations in the order otherwise contemplated in this Section 8.3.
9.1
Appointment and Authority.
THE ADMINISTRATIVE AGENT
SECTION 9
(a)
Each of the Lenders hereby irrevocably appoints SVB to act on its behalf as the Administrative Agent hereunder and
under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as
are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental
thereto.
(b)
The provisions of Section 9 are solely for the benefit of the Administrative Agent, the Lenders, the Issuing Lender,
and the Swingline Lender, and neither the Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such
provisions. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or
obligations, except those expressly set forth herein and in the other Loan Documents, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document
or otherwise exist against the Administrative Agent. It is understood and agreed that the use of the term “agent” herein or in any other Loan
Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law. Instead such term is used as a matter of market custom, and is
intended to create or reflect only an administrative relationship between contracting parties.
(c)
The Administrative Agent shall also act as the collateral agent under the Loan Documents, and each of the Lenders
(in their respective capacities as a Lender and, as applicable, Qualified Counterparty and provider of Cash Management Services) hereby
irrevocably (i) authorizes the Administrative Agent to enter into all other Loan Documents, as applicable, including the Guarantee and
Collateral Agreement and any subordination or intercreditor agreements contemplated hereby, and (ii) appoints and authorizes the
Administrative Agent to act as the agent of the Secured Parties for purposes of acquiring, holding and enforcing any and all Liens on
Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably
incidental thereto. The Administrative Agent, as collateral agent and any co-agents, sub-agents and attorneys-in-fact appointed by the
Administrative Agent pursuant to Section 9.2 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted
under the Security Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent, shall be
entitled to the benefits of all provisions of this Section 9 and Section 10 (including Section 9.7, as though such co-agents, sub-agents and
attorneys-in-fact were the collateral agent under the Loan Documents) as if set forth in full herein with respect thereto. Without limiting the
generality of the foregoing, the Administrative Agent is further authorized on behalf of all the Lenders, without the necessity of any notice to
or further consent from the Lenders, from time to time to take any action, or permit the any co-agents, sub-agents and attorneys-in-fact
appointed by the Administrative Agent to take any action, with respect to any Collateral or the Loan Documents which may be necessary to
perfect and maintain perfected the Liens upon any Collateral granted pursuant to any Loan Document.
9.2
Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers
hereunder or under any other Loan Document by or through any one or
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more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its
duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Section shall apply
to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the Facilities provided for herein as well as activities as the Administrative Agent. The
Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of
competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with bad faith, gross negligence
or willful misconduct in the selection of such sub agents.
9.3
Exculpatory Provisions. The Administrative Agent shall have no duties or obligations except those expressly set forth
herein and in the other Loan Documents, and its duties hereunder and thereunder shall be administrative in nature. Without limiting the
generality of the foregoing, the Administrative Agent shall not:
occurred and is continuing;
(a)
be subject to any fiduciary or other implied duties, regardless of whether any Default or any Event of Default has
(b)
have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and
powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in
writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other
Loan Documents), as applicable; provided that the Administrative Agent shall not be required to take any action that, in its opinion or the
opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law,
including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect
a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and
except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and the
Administrative Agent shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is
communicated to or obtained by any Person serving as the Administrative Agent or any of its Affiliates in any capacity.
(c)
The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in
good faith shall be necessary, under the circumstances as provided in Sections 8.2 and 10.1), or (ii) in the absence of its own gross negligence
or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment.
The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of Default, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or
document or (v) the satisfaction of any condition set forth in Section 5.1, Section 5.2 or elsewhere herein, other than to confirm receipt of
items expressly required to be delivered to the Administrative Agent.
9.4
Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability
for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic
message, internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise
authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and
believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with
any condition hereunder to the making
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of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a
Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have
received notice to the contrary from such Lender prior to the making of such Loan or the issuance of such Letter of Credit. The
Administrative Agent may consult with legal counsel (who may be counsel for any of the Loan Parties), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel,
accountants or experts. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive
such advice or concurrence of the Required Lenders (or such other number or percentage of Lenders as shall be provided for herein or in the
other Loan Documents) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability
and expense that may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of
the Required Lenders (or such other number or percentage of Lenders as shall be provided for herein or in the other Loan Documents), and
such request and any action taken or failure to act pursuant thereto shall be binding upon the Lenders and all future holders of the Loans.
9.5
Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default unless the Administrative Agent has received notice in writing from a Lender, Holdings, or the Borrower
referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default.” In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent
shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so
specified by this Agreement, all Lenders); provided that unless and until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action or refrain from taking such action with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the Lenders.
9.6
Non-Reliance on Administrative Agent and Other Lenders. Each Lender expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors, employees, agents, attorneys in fact or affiliates has made any representations or
warranties to it and that no act by the Administrative Agent hereafter taken, including any review of the affairs of a Group Member or any
Affiliate of a Group Member, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other
Lender or any of their Related Parties, and based on such documents and information as it has deemed appropriate, made its own appraisal of,
and investigation into, the business, operations, property, financial and other condition and creditworthiness of the Group Members and their
Affiliates and made its own credit analysis and decision to make its Loans hereunder and enter into this Agreement. Each Lender also agrees
that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties, and based
on such documents and information as it shall from time to time deem appropriate, continue to make its own credit analysis, appraisals and
decisions in taking or not taking action under or based upon this Agreement, the other Loan Documents or any related agreement or any
document furnished hereunder or thereunder, and to make such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the Group Members and their Affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative
Agent shall have no duty or responsibility to provide any Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of any Group Member or any Affiliate of a Group Member that
may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys in fact or affiliates.
9.7
Indemnification. Each of the Lenders agrees to indemnify each of the Administrative Agent, the Issuing Lender and the
Swingline Lender and each of its Related Parties in its capacity as such
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(to the extent not reimbursed by Holdings, the Borrower or any other Loan Party and without limiting the obligation of Holdings, the
Borrower or any other Loan Party to do so) according to its Aggregate Exposure Percentage in effect on the date on which indemnification is
sought under this Section 9.7 (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the
Loans shall have been paid in full, in accordance with its Aggregate Exposure Percentage immediately prior to such date), from and against
any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against the
Administrative Agent or such other Person in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Administrative Agent or such other Person under or in connection with any of the foregoing and any other
amounts not reimbursed by Holdings, the Borrower or such other Loan Party; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found
by a final and nonappealable decision of a court of competent jurisdiction to have resulted primarily from the Administrative Agent’s or such
other Person’s bad faith, gross negligence or willful misconduct, and that with respect to such unpaid amounts owed to any Issuing Lender or
Swingline Lender solely in its capacity as such, only the Revolving Lenders shall be required to pay such unpaid amounts, such payment to
be made severally among them based on such Revolving Lenders’ Revolving Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought). The agreements in this Section shall survive the payment of the Loans and all other
amounts payable hereunder.
9.8
Agent in Its Individual Capacity. The Person serving as the Administrative Agent hereunder shall have the same rights and
powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the
term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as
the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own
securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the
Borrower, Holdings or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without
any duty to account therefor to the Lenders.
9.9
Successor Administrative Agent.
(a)
The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower. Upon
receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor.
If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the
retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the
“Resignation Effective Date”), then the retiring Administrative Agent may (but shall not be obligated to), on behalf of the Lenders, appoint a
successor Administrative Agent meeting the qualifications set forth above; provided that in no event shall any such successor Administrative
Agent be a Defaulting Lender. Whether or not a successor has been appointed, such resignation shall become effective in accordance with
such notice on the Resignation Effective Date.
(b)
If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof,
the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Borrower and such Person remove such
Person as Administrative Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the
Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on
the Removal Effective Date.
With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (i) the retiring or
removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except
that in the case of any collateral security held by the Administrative Agent on behalf of the Secured Parties under any of the Loan
(c)
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Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor
Administrative Agent is appointed and such collateral security is assigned to such successor Administrative Agent) and (ii) except for any
indemnity payments owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be
made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required
Lenders appoint a successor Administrative Agent as provided for above in this Section. Upon the acceptance of a successor’s appointment
as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of
the retiring or removed Administrative Agent (other than any rights to indemnity payments owed to the retiring or removed Administrative
Agent), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the
other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrower to a
successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the
provisions of Section 9 and Section 10.5 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-
agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed
Administrative Agent was acting as the Administrative Agent.
9.10
Collateral and Guaranty Matters.
(a)
The Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion,
(i)
to release any Lien on any Collateral or other property granted to or held by the Administrative Agent under
any Loan Document (A) upon the Discharge of Obligations (other than contingent indemnification obligations) and the expiration or
termination of all Letters of Credit (other than Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and
the applicable Issuing Lender shall have been made), (B) that is sold or otherwise disposed of or to be sold or otherwise disposed of as part of
or in connection with any sale or other disposition permitted hereunder or under any other Loan Document, or (C) subject to Section 10.1, if
approved, authorized or ratified in writing by the Required Lenders;
under any Loan Document to the holder of any Lien on such property that is permitted by Sections 7.3 (g) and (i); and
(ii)
to subordinate any Lien on any Collateral or other property granted to or held by the Administrative Agent
ceases to be a Subsidiary as a result of a transaction permitted under the Loan Documents.
(iii)
to release any Guarantor from its obligations under the Guarantee and Collateral Agreement if such Person
Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s
authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under
the guaranty pursuant to this Section 9.10.
(b)
The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation
or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Administrative
Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Administrative Agent be
responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.
(c)
Notwithstanding anything contained in any Loan Document, no Secured Party shall have any right individually to
realize upon any of the Collateral or to enforce any guaranty of the Obligations (including any such guaranty provided by the Guarantors
pursuant to the Guarantee and Collateral Agreement), it being understood and agreed that all powers, rights and remedies under the Loan
Documents may be exercised solely by the Administrative Agent on behalf of the Secured Parties in accordance with the terms thereof;
provided that, for the avoidance of doubt, in no event shall a Secured
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Party be restricted hereunder from filing a proof of claim on its own behalf during the pendency of a proceeding relative to any Loan Party
under any Debtor Relief Law or any other judicial proceeding. In the event of a foreclosure by the Administrative Agent on any of the
Collateral pursuant to a public or private sale or other disposition, the Administrative Agent or any Secured Party may be the purchaser or
licensor of any or all of such Collateral at any such sale or other disposition, and the Administrative Agent, as agent for and representative of
such Secured Party (but not any Lender or Lenders in its or their respective individual capacities unless the Required Lenders shall otherwise
agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of
the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any
Collateral payable by the Administrative Agent on behalf of the Secured Parties at such sale or other disposition. Each Secured Party,
whether or not a party hereto, will be deemed, by its acceptance of the benefits of the Collateral and of the guarantees of the Obligations
provided by the Loan Parties under the Guarantee and Collateral Agreement, to have agreed to the foregoing provisions. In furtherance of the
foregoing, and not in limitation thereof, no Specified Swap Agreement and no Cash Management Agreement, the Obligations under which
constitute Obligations, will create (or be deemed to create) in favor of any Secured Party that is a party thereto any rights in connection with
the management or release of any Collateral or of the Obligations of any Loan Party under any Loan Document except as expressly provided
herein or in the Guarantee and Collateral Agreement. By accepting the benefits of the Collateral and of the guarantees of the Obligations
provided by the Loan Parties under the Guarantee and Collateral Agreement, any Secured Party that is a Cash Management Bank or a
Qualified Counterparty shall be deemed to have appointed the Administrative Agent to serve as administrative agent and collateral agent
under the Loan Documents and to have agreed to be bound by the Loan Documents as a Secured Party thereunder, subject to the limitations
set forth in this paragraph.
9.11
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 relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or
Obligation in respect of any Letter of Credit shall then be due and payable as herein expressed or by declaration or otherwise and irrespective
of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated), by
intervention in such proceeding or otherwise:
(a)
to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans,
Obligations in respect of any Letter of Credit and all other Obligations that are owing and unpaid and to file such other documents as may be
necessary or advisable to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other
amounts due the Lenders and the Administrative Agent under Sections 2.9 and 10.5) allowed in such judicial proceeding; and
same;
(b)
to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby
authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent
to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative
Agent under Sections 2.9 and 10.5.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on
behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any
Lender to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.
9.12
No Other Duties, etc. Anything herein to the contrary notwithstanding, the Lead Arrangers and Co-Syndication Agents
listed on the cover page hereof shall not have any powers, duties or
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responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent,
a Lender, the Issuing Lender or the Swingline Lender hereunder.
9.13
Cash Management Bank and Qualified Counterparty Reports. Each Cash Management Bank and each Qualified
Counterparty agrees to furnish to the Administrative Agent, as frequently as the Administrative Agent may reasonably request, with a
summary of all Obligations in respect of Cash Management Services and/or Specified Swap Agreements, as applicable, due or to become due
to such Cash Management Bank or Qualified Counterparty, as applicable. In connection with any distributions to be made hereunder, the
Administrative Agent shall be entitled to assume that no amounts are due to any Cash Management Bank or Qualified Counterparty (in its
capacity as a Cash Management Bank or Qualified Counterparty and not in its capacity as a Lender) unless the Administrative Agent has
received written notice thereof from such Cash Management Bank or Qualified Counterparty and if such notice is received, the
Administrative Agent shall be entitled to assume that the only amounts due to such Cash Management Bank or Qualified Counterparty on
account of Cash Management Services or Specified Swap Agreements are set forth in such notice.
9.14
Erroneous Payments.
(a)
If the Administrative Agent notifies a Lender, Issuing Lender, Swingline Lender or Secured Party, or any Person
who has received funds on behalf of a Lender, Issuing Lender, Swingline Lender or Secured Party (any such Lender, Issuing Lender,
Swingline Lender, Secured Party or other recipient, a “Payment Recipient”) that the Administrative Agent has determined in its sole
discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds received by such Payment
Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly
received by, such Payment Recipient (whether or not known to such Lender, Issuing Lender, Swingline Lender, Secured Party or other
Payment Recipient on its behalf) (any such funds, whether received as a payment, prepayment or repayment of principal, interest, fees,
distribution or otherwise, individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a
portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the
Payment Recipient and held in trust for the benefit of the Administrative Agent, and such Lender, Issuing Lender, Swingline Lender or
Secured Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient
to) promptly, but in no event later than two (2) Business Days thereafter, return to the Administrative Agent the amount of any such
Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with
interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such
Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation
from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent
manifest error.
(b)
Without limiting immediately preceding clause (a), each Lender, Issuing Lender, Swingline Lender or Secured Party,
or any Person who has received funds on behalf of a Lender, Issuing Lender, Swingline Lender or Secured Party, hereby further agrees that if
it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees,
distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date
from, that specified in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect
to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent
by the Administrative Agent (or any of its Affiliates), or (z) that such Lender, Issuing Lender, Swingline Lender or Secured Party, or other
such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part) in each case:
(absent written confirmation from the Administrative Agent to the
(i)
(A) in the case of immediately preceding clauses (x) or (y), an error shall be presumed to have been made
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contrary) or (B) an error has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment,
prepayment or repayment; and
such Lender, Issuing Lender, Swingline Lender or Secured Party shall (and shall cause any other recipient
that receives funds on its respective behalf to) promptly (and, in all events, within one (1) Business Day of its knowledge of such error) notify
the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so
notifying the Administrative Agent pursuant to this Section 9.14(b).
(ii)
(c)
Each Lender, Issuing Lender, Swingline Lender or Secured Party hereby authorizes the Administrative Agent to set
off, net and apply any and all amounts at any time owing to such Lender, Issuing Lender, Swingline Lender or Secured Party under any Loan
Document, or otherwise payable or distributable by the Administrative Agent to such Lender, Issuing Lender, Swingline Lender or Secured
Party from any source, against any amount due to the Administrative Agent under clause (a) hereof or under the indemnification provisions
of this Agreement.
(d)
In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any
reason, after demand therefor by the Administrative Agent in accordance with clause (a) hereof, from any Lender, Issuing Lender or
Swingline Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such
Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”),
upon the Administrative Agent’s notice to such Lender, Issuing Lender or Swingline Lender at any time, (i) such Lender, Issuing Lender or
Swingline Lender shall be deemed to have assigned its Loans (but not its Commitments) with respect to which such Erroneous Payment was
made (the “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as
the Administrative Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Class, the
“Erroneous Payment Deficiency Assignment”) at par plus any accrued and unpaid interest (with the assignment fee to be waived by the
Administrative Agent in such instance), and is hereby (together with the Borrower) deemed to execute and deliver an Assignment and
Assumption (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an approved
electronic platform as to which the Administrative Agent and such parties are participants) with respect to such Erroneous Payment
Deficiency Assignment, and such Lender, Issuing Lender or Swingline Lender shall deliver any Notes evidencing such Loans to the
Borrower or the Administrative Agent, (ii) the Administrative Agent as the assignee Lender shall be deemed to acquire the Erroneous
Payment Deficiency Assignment, (iii) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a
Lender, Issuing Lender or Swingline Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and
the assigning Lender, assigning Issuing Lender or assigning Swingline Lender shall cease to be a Lender, Issuing Lender or Swingline
Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its
obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning
Lender, assigning Issuing Lender or Swingline Lender and (iv) the Administrative Agent may reflect in the Register its ownership interest in
the Loans subject to the Erroneous Payment Deficiency Assignment. The Administrative Agent may, in its discretion, sell any Loans
acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment
Return Deficiency owing by the applicable Lender, Issuing Lender or Swingline Lender shall be reduced by the net proceeds of the sale of
such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender, Issuing
Lender or Swingline Lender (and/or against any recipient that receives funds on its respective behalf). For the avoidance of doubt, no
Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender, Issuing Lender or Swingline Lender and such
Commitments shall remain available in accordance with the terms of this Agreement. In addition, each party hereto agrees that, except to the
extent that the Administrative Agent has sold a Loan (or portion thereof) acquired pursuant to an Erroneous Payment Deficiency Assignment,
and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually
subrogated to all the rights and interests of the applicable Lender, Issuing Lender, Swingline Lender or Secured Party under the Loan
Documents with respect to each Erroneous Payment Return Deficiency (the “Erroneous Payment Subrogation Rights”).
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(e)
The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any
Obligations owed by the Borrower or any other Loan Party, except, in each case, to the extent such Erroneous Payment is, and solely with
respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower or any
other Loan Party for the purpose of making such Erroneous Payment.
(f)
To the extent permitted by applicable law, no Payment Recipient shall assert any right or claim to an Erroneous
Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any
demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including without limitation
any defense based on “discharge for value” or any similar doctrine.
(g)
Each party’s obligations, agreements and waivers under this Section 9.14 shall survive the resignation or
replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender, Issuing Lender or
Swingline Lender, the termination of the Commitments and/or the repayment, satisfaction or discharge of all Obligations (or any portion
thereof) under any Loan Document.
9.15
Certain ERISA Matters.
(a)
Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y)
covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit
of, the Administrative Agent, and the Lead Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit
of the Borrower or any other Loan Party, that at least one of the following is and will be true:
such Lender is not using “plan assets” (within the meaning of the Plan Asset Regulations or otherwise for
purposes of Title I of ERISA or Section 4975 of the Code) of one or more Benefit Plans in connection with the Loans, the Letters of Credit or
the Commitments,
(i)
(ii)
the prohibited transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption
for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain
transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance
company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or
PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s
entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,
(iii)
(A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the
meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to
enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance
into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies
the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of
subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and
performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or
Agent, in its sole discretion, and such Lender.
(iv)
such other representation, warranty and covenant as may be agreed in writing between the Administrative
In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender
has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such
Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, and (y) covenants, from
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the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the
Administrative Agent, and the Lead Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the
Borrower or any other Loan Party, that none of the Administrative Agent, or the Lead Arrangers or any of their respective Affiliates is a
fiduciary with respect to the Collateral or the assets of such Lender (including in connection with the reservation or exercise of any rights by
the Administrative Agent under this Agreement, any Loan Document or any documents related to hereto or thereto).
(b) The Administrative Agent and the Lead Arrangers hereby inform the Lenders that each such Person is not undertaking to
provide investment advice or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such
Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or
other payments with respect to the Loans, the Letters of Credit, the Commitments, this Agreement and any other Loan Documents, (ii) may
recognize a gain if it extended the Loans, the Letters of Credit or the Commitments for an amount less than the amount being paid for an
interest in the Loans, the Letters of Credit or the Commitments by such Lender or (iii) may receive fees or other payments in connection with
the transactions contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees,
facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or collateral agent fees, utilization fees, minimum
usage fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums,
banker’s acceptance fees, breakage or other early termination fees or fees similar to the foregoing.
9.16
Survival. This Section 9 shall survive the Discharge of Obligations.
SECTION 10
MISCELLANEOUS
10.1
Amendments and Waivers.
(a)
Neither this Agreement, any other Loan Document (other than any L/C-Related Document and the Fee Letter), nor
any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may, or, with the written consent of the Required Lenders, the
Administrative Agent and each Loan Party party to the relevant Loan Document may, from time to time, (i) enter into written amendments,
supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (ii) waive, on
such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of
the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided that no
such waiver and no such amendment, supplement or modification shall (A) forgive the principal amount or extend the final scheduled date of
maturity of any Loan, reduce the stated rate of any interest or fee payable hereunder (except that no amendment or modification of defined
terms used in the financial covenants in this Agreement or waiver of any Default or Event of Default or the right to receive the Default Rate
shall constitute a reduction in the rate of interest or fees for purposes of this clause (A)) or extend the scheduled date of any payment thereof,
increase the amount or extend the expiration date of any Lender’s Revolving Commitment, or amend, modify or waive the requirements of
Section 3.1(a)(ii), in each case, without the written consent of each Lender directly affected thereby; (B) eliminate or reduce the voting rights
of any Lender under this Section 10.1 without the written consent of such Lender; (C) reduce any percentage specified in the definition of
Required Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the
other Loan Documents, release all or substantially all of the Collateral or release all or substantially all the value of the guarantees (taken as a
whole) of the Guarantors from their obligations under the Guarantee and Collateral Agreement, in each case without the written consent of all
Lenders; (D) amend, modify or waive the definition of “Revolving Percentage,” the pro rata requirements of Section 2.18 or any other
provision of the Loan Documents requiring pro rata treatment of the Lenders in a manner that adversely affects Revolving Lenders without
the written consent of each Lender; (E) contractually subordinate the
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Obligations (including any guarantee thereof), or the Liens on all or substantially all of the Collateral granted under the Loan Documents, to
any other Indebtedness or Lien (including, without limitation, any other Indebtedness or Lien issued under the Credit Agreement or any other
agreement), in each case, without the written consent of all Lenders; (F) amend, modify or waive any provision of Section 9 without the
written consent of the Administrative Agent; (G) amend, modify or waive any provision of Section 2.6 or 2.7 without the written consent of
the Swingline Lender; (H) amend, modify or waive any provision of Section 3 without the written consent of the Issuing Lender; or
(I) amend or modify the application of payments set forth in Section 8.3 without the written consent of all Lenders. Any such waiver and any
such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Loan Parties, the
Lenders, the Administrative Agent, the Issuing Lender, each Cash Management Bank, each Qualified Counterparty, and all future holders of
the Loans. In the case of any waiver, the Loan Parties, the Lenders and the Administrative Agent shall be restored to their former position and
rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured during the
period such waiver is effective; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right
consequent thereon. Notwithstanding the foregoing, the Issuing Lender may amend any of the L/C Documents without the consent of the
Administrative Agent or any other Lender and the Issuing Lender, Administrative Agent and the Borrower may make customary technical
amendments if any Letter of Credit shall be issued hereunder in a currency other than U.S. Dollars. Notwithstanding the foregoing, the
Issuing Lender may amend any of the L/C-Related Documents without the consent of the Administrative Agent or any other Lender.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver
or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender
may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Revolving Commitment of any
Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification
requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely
relative to other affected Lenders shall require the consent of such Defaulting Lender.
(b)
Notwithstanding anything to the contrary contained in Section 10.1(a) above, in the event that the Borrower requests
that this Agreement or any of the other Loan Documents be amended or otherwise modified in a manner which would require the consent of
all of the Lenders and such amendment or other modification is agreed to by the Borrower, the Required Lenders and the Administrative
Agent, then, with the consent of the Borrower, the Administrative Agent and the Required Lenders, this Agreement or such other Loan
Document may be amended without the consent of the Lender or Lenders who are unwilling to agree to such amendment or other
modification (each, a “Minority Lender”), to provide for:
(i)
the termination of the Commitment of each such Minority Lender;
Lenders pursuant to the provisions of Section 2.23; and
(ii)
the assumption of the Loans and Commitment of each such Minority Lender by one or more Replacement
the payment of all interest, fees and other obligations payable or accrued in favor of each Minority Lender
and such other modifications to this Agreement or to such Loan Documents as the Borrower, the Administrative Agent and the Required
Lenders may determine to be appropriate in connection therewith.
(iii)
(c)
Notwithstanding any provision herein to the contrary, this Agreement may be amended (or amended and restated)
with the written consent of the Required Lenders, the Administrative Agent, and the Borrower, (i) to add one or more additional credit or
term loan facilities to this Agreement and to permit all such additional extensions of credit and all related obligations and liabilities arising in
connection therewith and from time to time outstanding thereunder to share ratably (or on a basis subordinated to the existing facilities
hereunder) in the benefits of this Agreement and the other Loan Documents with the obligations and liabilities from time to time outstanding
in respect of the existing facilities hereunder, and (ii) in connection with the foregoing, to permit, as deemed appropriate by the
Administrative Agent and approved by the Required Lenders, the Lenders providing such additional
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credit facilities to participate in any required vote or action required to be approved by the Required Lenders.
Notwithstanding any provision herein to the contrary, any Cash Management Agreement may be amended or
otherwise modified by the parties thereto in accordance with the terms thereof without the consent of the Administrative Agent or any
Lender.
(d)
(e)
Notwithstanding any provision herein or in any other Loan Document to the contrary, no Cash Management Bank
and no Qualified Counterparty shall have any voting or approval rights hereunder (or be deemed a Lender) solely by virtue of its status as the
provider or holder of Cash Management Services or Specified Swap Agreements or Obligations owing thereunder, nor shall the consent of
any such Cash Management Bank or Qualified Counterparty, as applicable, be required for any matter, other than in their capacities as
Lenders, to the extent applicable.
Notwithstanding any other provision herein to the contrary, no consent of any Lender (or other Secured Party other
than the Administrative Agent) shall be required to effectuate any amendment to implement any Increase permitted by Section 2.27 or to
effect an alternate interest rate in a manner consistent with Section 2.17.
(f)
Agreement or any of the Loan Documents to cure any omission, mistake or defect.
(g)
The Administrative Agent may, with the consent of the Loan Parties only, amend, modify or supplement this
10.2
Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing
(including by facsimile or electronic mail), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of facsimile or electronic mail
notice, when received, addressed as follows in the case of the Borrower, Holdings and the Administrative Agent, and as set forth in an
administrative questionnaire delivered to the Administrative Agent in the case of the Lenders, or to such other address as may be hereafter
notified by the respective parties hereto:
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Borrower/Holdings:
Administrative Agent:
c/o CrowdStrike Holdings, Inc.
150 Mathilda Place, Suite 300
Sunnyvale, CA 94086
Attention: Legal Department and CFO
Telephone No.: (888) 512-8906
E-Mail: legal@crowdstrike.com
with a copy to:
David Polk &Wardwell LLP
1600 El Camino Real
Menlo Park, CA 94025
Attention: Alan Denenberg
E-Mail: adenenberg@davispolk.com
Silicon Valley Bank
505 Howard St Floor 3,
San Francisco, CA 94105
Attn: Dipika Sharda
E-Mail: DSolanki@svb.com
with a copy (which shall not constitute notice) to:
Morrison & Foerster LLP
200 Clarendon Street
Boston, Massachusetts 02116
Attention: Charles W. Stavros, Esq.
E-Mail: Cstavros@mofo.com
provided that any notice, request or demand to or upon the Administrative Agent or the Lenders shall not be effective until received.
(a)
Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic
communications (including email and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided
that the foregoing shall not apply to notices to any Lender pursuant to Section 2 unless otherwise agreed by the Administrative Agent and the
applicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to
particular notices or communications. Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an
email address shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return
receipt requested” function, as available, return email or other written acknowledgment); and (ii) notices or communications posted to an
Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its email address as described in
the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided
that, for both clauses (i) and (ii), if such notice or other communication is not sent during the normal business hours of the recipient, such
notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient.
notice to the other parties hereto.
(b)
Any party hereto may change its address or facsimile number for notices and other communications hereunder by
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Communications (as defined below) available to the Issuing Lender and the other Lenders by posting the Communications on the Platform.
(c)
(i) Each Loan Party agrees that the Administrative Agent may, but shall not be obligated to, make the
(ii) The Platform is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant the
adequacy of the Platform and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express,
implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of
third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or the
Platform. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the
Borrower or the other Loan Parties, any Lender or any other Person for damages of any kind, including direct or indirect, special, incidental
or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of the Borrower’s, any Loan Party’s or the
Administrative Agent’s transmission of communications through the Platform. “Communications” means, collectively, any notice, demand,
communication, information, document or other material provided by or on behalf of any Loan Party pursuant to any Loan Document or the
transactions contemplated therein which is distributed to the Administrative Agent, any Lender or the Issuing Lender by means of electronic
communications pursuant to this Section, including through the Platform.
10.3
No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative
Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
10.4
Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Loan
Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the making of the Loans and other extensions of credit hereunder.
10.5
Expenses; Indemnity; Damage Waiver.
(a)
Costs and Expenses. The Borrower shall pay (i) all reasonable and documented out-of-pocket expenses incurred by
the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of one counsel for the Administrative
Agent (and of such other counsel in the event of a conflict and, if reasonably necessary, one local counsel in any relevant jurisdiction)), in
connection with the syndication of the Facilities, the preparation, negotiation, execution, delivery and administration of this Agreement and
the other Loan Documents, or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Lender in
connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, and (iii) all
out-of-pocket expenses incurred by the Administrative Agent or any Lender (including the fees, charges and disbursements of one counsel
for the Administrative Agent and the Lenders and, if reasonably necessary, one local counsel for the Administrative Agent and the Lenders in
any relevant jurisdiction (and of such other counsel in the event of a conflict)), in connection with the enforcement or protection of its rights
(A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the
Loans made or Letters of Credit issued or participated in hereunder, including all such documented out-of-pocket expenses incurred during
any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.
(b)
Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent (and any sub-agent
thereof), each Lender (including the Issuing Lender), and each Related Party of any of the foregoing Persons (each such Person being called
an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses
(including the fees, charges and disbursements of any counsel for any Indemnitee), incurred by
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any Indemnitee or asserted against any Indemnitee by any Person (including the Borrower or any other Loan Party) other than such
Indemnitee and its Related Parties arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any
other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their
respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or
Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Issuing Lender to honor a demand for
payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such
Letter of Credit), (iii) any actual or alleged presence or release of Materials of Environmental Concern on or from any property owned or
operated by Holdings or any of its Subsidiaries, or any Environmental Liability related in any way to Holdings or any of its Subsidiaries, or
(iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted
from the bad faith, gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower or any other
Loan Party against an Indemnitee for a material breach of such Indemnitee's obligations hereunder or under any other Loan Document, if the
Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of
competent jurisdiction. This Section 10.5(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages,
etc. arising from any non-Tax claim.
(c)
Reimbursement by Lenders. To the extent that the Borrower for any reason fails indefeasibly to pay any amount
required under paragraph (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the Issuing Lender,
the Swingline Lender or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any
such sub-agent), the Issuing Lender, the Swingline Lender or such Related Party, as the case may be, such Lender’s pro rata share
(determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the
Total Credit Exposure at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such
Lender); provided that with respect to such unpaid amounts owed to the Issuing Lender or the Swingline Lender solely in its capacity as such,
only the Revolving Lenders shall be required to pay such unpaid amounts, such payment to be made severally among them based on such
Revolving Lenders’ Revolving Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is
sought); provided further, 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 Administrative Agent (or any such sub-agent), the Issuing Lender or the Swingline Lender in its
capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent), the
Issuing Lender or the Swingline Lender in connection with such capacity. The obligations of the Lenders under this paragraph (c) are subject
to the provisions of Sections 2.1, 2.4 and 2.20(e).
(d)
Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against the Administrative Agent (and any sub-agent thereof), each Lender (including the Issuing
Lender), and each Related Party of any of the foregoing Persons (each such Person being called an “Applicable Party”), on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with,
or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions
contemplated hereby or thereby, any Loan or Letter of Credit, or the use of the proceeds thereof. No Applicable Party shall be liable for any
damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications,
electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby.
(e)
Payments. All amounts due under this Section shall be payable promptly after demand therefor.
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(f)
Survival. Each party’s obligations under this Section shall survive the Discharge of Obligations.
10.6
Successors and Assigns; Participations and Assignments.
(a)
Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns permitted hereby (which, for purposes of this Section 10.6, shall include any
Cash Management Bank and any Qualified Counterparty, except that neither the Borrower nor any other Loan Party may assign or otherwise
transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender, and no
Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions
of paragraph (b) of this Section, (ii) by way of participation in accordance with the provisions of Section 10.6(d), or (iii) by way of pledge or
assignment of a security interest subject to the restrictions of Section 10.6(e) (and any other attempted assignment or transfer by any party
hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the
parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in paragraph (d) of this Section
and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that (in
each case with respect to any Facility) any such assignment shall be subject to the following conditions:
(b)
(i)
Minimum Amounts.
in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment
and/or the Loans at the time owing to it (in each case with respect to any Facility) or contemporaneous assignments to related Approved
Funds (determined after giving effect to such assignments) that equal at least the amount specified in paragraph (b)(i)(B) of this Section in
the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be
assigned; and
(A)
(B)
in any case not described in paragraph (b)(i)(A) of this Section, the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the
Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000, unless each of the Administrative Agent and, so long as
no Default or Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably
withheld or delayed).
Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Agreement with respect to the Loan or the Commitment assigned, except that this
clause (ii) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate Facilities on a non-pro
rata basis.
(ii)
(iii)
paragraph (b)(i)(B) of this Section and, in addition:
Required Consents. No consent shall be required for any assignment except to the extent required by
the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be
required unless (x) an Event of Default under Section 8.1(a) or (f) has occurred and is continuing at the time of such assignment, or (y) such
assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have
(A)
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consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten Business Days after
having received notice thereof;
the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed)
shall be required for assignments in respect of the Revolving Facility if such assignment is to a Person that is not a Lender with a Revolving
Commitment, an Affiliate or an Approved Fund thereof; and
(B)
withheld or delayed) shall be required for any assignment in respect of the Revolving Facility.
(C)
the consent of the Issuing Lender and the Swingline Lender (such consent not to be unreasonably
Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; provided that the Administrative Agent
may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a
Lender, shall deliver to the Administrative Agent any such administrative questionnaire as the Administrative Agent may request.
(iv)
No Assignment to Certain Persons. No such assignment shall be made to (A) the Borrower or any of the
Borrower’s Affiliates or Subsidiaries or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender
hereunder, would constitute any of the foregoing Persons described in this clause (B).
(v)
company, investment vehicle or trust established for, or owned and operated for the primary benefit of, a natural Person).
(vi)
No Assignment to Natural Persons. No such assignment shall be made to a natural Person (or a holding
(vii)
Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting
Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the
parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon
distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other
compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of
Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby
irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent,
the Issuing Lender, the Swingline Lender and each other Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as
appropriate) its full pro rata share of all Loans and participations in Letters of Credit and Swingline Loans in accordance with its Revolving
Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting 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 compliance occurs.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c) of this Section, from and after the
effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of
the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.19, 2.20, 2.21 and
10.5 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent
otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of
any party hereunder arising from that Lender’s having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall be treated for
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purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (d) of this
Section.
(c)
Register. The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall
maintain at one of its offices in California a copy of each Assignment and Assumption delivered to it and a register for the recordation of the
names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the
Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any
Lender, at any reasonable time and from time to time upon reasonable prior notice.
(d)
Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative
Agent, sell participations to any Person (other than a natural Person, a holding company, investment vehicle or trust established for, or owned
and operated for the primary benefit of, a natural Person, or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a
“Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its
Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) the Borrower, the
Administrative Agent, the Issuing Lender and the other Lenders shall continue to deal solely and directly with such Lender in connection
with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the
indemnities under Sections 2.20(e) and 9.7 with respect to any payments made by such Lender to its Participant(s).
Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that
such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver which affects such Participant and for which the consent of such Lender is required (as described in Section 10.1).
The Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.19, 2.20 and 2.21 (subject to the requirements and
limitations therein, including the requirements under Section 2.20(f) (it being understood that the documentation required under
Section 2.20(f) shall be delivered by such Participant to the Lender granting such participation)) to the same extent as if it were a Lender and
had acquired its interest by assignment pursuant to Section 10.6(b); provided that such Participant (A) agrees to be subject to the provisions
of Sections 2.23 as if it were an assignee under Section 10.6(b); and (B) shall not be entitled to receive any greater payment under Sections
2.19 or 2.20, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such
entitlement to receive a greater payment results from a change in any Requirement of Law that occurs after the Participant acquired the
applicable participation. Each Lender that sells a participation agrees, at the Borrower's request and expense, to use reasonable efforts to
cooperate with the Borrower to effectuate the provisions of Section 2.23 with respect to any Participant. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.7 as though it were a Lender; provided that such Participant agrees to be subject
to Section 2.18(k) as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary
agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated
interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that
no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any
information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document)
to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation
is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of
such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the
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Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(e)
Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights
under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such
pledgee or assignee for such Lender as a party hereto.
to any Lender requiring Notes to facilitate transactions of the type described in Section 10.6.
(f)
Notes. The Borrower, upon receipt by the Borrower of written notice from the relevant Lender, agrees to issue Notes
(g)
Representations and Warranties of Lenders. Each Lender, upon execution and delivery hereof or upon succeeding to
an interest in the Commitments or Loans, as the case may be, represents and warrants as of the Closing Date or as of the effective date of the
applicable Assignment and Assumption that (i) it is an Eligible Assignee; (ii) it has experience and expertise in the making of or investing in
commitments, loans or investments such as the Commitments and Loans; and (iii) it will make or invest in its Commitments and Loans for its
own account in the ordinary course of its business and without a view to distribution of such Commitments and Loans within the meaning of
the Securities Act or the Exchange Act, or other federal securities laws (it being understood that, subject to the provisions of this
Section 10.6, the disposition of such Commitments and Loans or any interests therein shall at all times remain within its exclusive control).
10.7
Adjustments; Set-off.
(a)
Except to the extent that this Agreement expressly provides for payments to be allocated to a particular Lender or to
the Lenders under a particular Facility, if any Lender (a “Benefitted Lender”) shall receive any payment of all or part of the Obligations
owing to it, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 8.1(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other
Lender, if any, in respect of the Obligations owing to such other Lender, such Benefitted Lender shall purchase for cash from the other
Lenders a participating interest in such portion of the Obligations owing to each such other Lender, or shall provide such other Lenders with
the benefits of any such collateral, as shall be necessary to cause such Benefitted Lender to share the excess payment or benefits of such
collateral ratably with each of the Lenders; provided that if all or any portion of such excess payment or benefits is thereafter recovered from
such Benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but
without interest.
(b)
(i) Upon the occurrence and during the continuance of any Event of Default and (ii) after providing at least 3
Business Days’ (or such shorter amount of time as the Administrative Agent may agree) prior written notice to the Administrative Agent,
each Lender and each of its Affiliates is hereby authorized at any time and from time to time, without prior notice to Holdings, the Borrower
or any other Loan Party, any such notice being expressly waived by Holdings, the Borrower and each Loan Party, to the fullest extent
permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final), in any
currency, at any time held or owing, and any other credits, indebtedness, claims or obligations, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender, its Affiliates or any branch or agency
thereof to or for the credit or the account of Holdings, the Borrower or any other Loan Party, as the case may be, against any and all of the
obligations of Holdings, the Borrower or such other Loan Party now or hereafter existing under this Agreement or any other Loan Document
to such Lender or its Affiliates, irrespective of whether or not such Lender or Affiliate shall have made any demand under this Agreement or
any other Loan Document and although such obligations of Holdings, the Borrower or such other Loan Party may be contingent or
unmatured or are owed to a branch, office or Affiliate of such Lender different from the branch, office or Affiliate holding such deposit or
obligated on such indebtedness; provided, that in the event that any Defaulting Lender or any of its Affiliates shall exercise any such right of
setoff, (x) all amounts so set off shall be paid over immediately to the
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Administrative Agent for further application in accordance with the provisions of Section 2.23 and, pending such payment, shall be
segregated by such Defaulting Lender or Affiliate thereof from its other funds and deemed held in trust for the benefit of the Administrative
Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in
reasonable detail the Obligations owing to such Defaulting Lender or Affiliate thereof as to which it exercised such right of setoff. Each
Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application made by such Lender or
any of its Affiliates; provided that the failure to give such notice shall not affect the validity of such setoff and application. The rights of each
Lender and its Affiliates under this Section 10.7 are in addition to other rights and remedies (including other rights of set-off) which such
Lender or its Affiliates may have.
10.8
Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent or
any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any
part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement
entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection
with any Insolvency Proceeding or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and
(b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made
at a rate per annum equal to the Federal Funds Effective Rate from time to time in effect. The obligations of the Lenders under clause (b) of
the preceding sentence shall survive the Discharge of Obligations.
10.9
Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or
agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable law (the
“Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess
interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether
the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the
extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, 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 Obligations hereunder.
10.10 Counterparts; Electronic Execution of Assignments.
(a)
This Agreement may be executed by one or more of the parties to this Agreement on any number of separate
counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed
signature page of this Agreement by facsimile or other electronic mail transmission shall be effective as delivery of an original executed
counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative
Agent.
(b)
The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be
deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity
or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State
Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
10.11 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any
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other jurisdiction. Without limiting the foregoing provisions of this Section 10.11, if and to the extent that the enforceability of any provisions
in this Agreement relating to Defaulting Lenders shall be limited under or in connection with any Insolvency Proceeding, as determined in
good faith by the Administrative Agent or the Issuing Lender, as applicable, then such provisions shall be deemed to be in effect only to the
extent not so limited.
10.12
Integration. This Agreement and the other Loan Documents represent the entire agreement of Holdings, the Borrower, the
other Loan Parties, the Administrative Agent and the Lenders with respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any Lender relative to the subject matter hereof not expressly set
forth or referred to herein or in the other Loan Documents.
10.13 GOVERNING LAW. THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, AND ANY CLAIM,
CONTROVERSY, DISPUTE, CAUSE OF ACTION, OR PROCEEDING (WHETHER BASED IN CONTRACT, TORT, OR
OTHERWISE) BASED UPON, ARISING OUT OF, CONNECTED WITH, OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN)
AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO AND THERETO, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. This Section 10.13 shall survive the Discharge of Obligations.
10.14 Submission to Jurisdiction; Waivers. Each party hereto hereby irrevocably and unconditionally:
(a)
agrees that all disputes, controversies, claims, actions and other proceedings involving, directly or indirectly, any
matter in any way arising out of, related to, or connected with, this Agreement, any other Loan Document, any contemplated transactions
related hereto or thereto, or the relationship between any Loan Party, on the one hand, and the Administrative Agent or any Lender or any
other Secured Party, on the other hand, and any and all other claims of the Borrower or any other Group Member against the Administrative
Agent or any Lender or any other Secured Party of any kind, shall be brought only in a state court located in the Borough of Manhattan, or, to
the extent permitted by law, in a federal court sitting in the Borough of Manhattan; provided that nothing in this Agreement shall be deemed
to operate to preclude the Administrative Agent or any Lender or any other Secured Party from bringing suit or taking other legal action in
any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in
favor of Administrative Agent or such Lender or any other Secured Party, to the extent permitted by law. Holdings and the Borrower, on
behalf of themselves and each other Loan Party (i) expressly submits and consents in advance to such jurisdiction in any action or suit
commenced in any such court and to the selection of any referee referred to below, (ii) hereby waives any objection that it may have based
upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable
relief as is deemed appropriate by such court, and (iii) agrees that it shall not file any motion or other application seeking to change the venue
of any such suit or other action. Holdings and the Borrower, on behalf of themselves and each other Loan Party, hereby waives personal
service of any summons, complaints, and other process issued in any such action or suit and agrees that service of any such summons,
complaints, and other process may be made by registered or certified mail addressed to the Borrower at the address set forth in Section 10.2
of this Agreement and that service so made shall be deemed completed upon the earlier to occur of the Borrower’s actual receipt thereof or
three days after deposit in the U.S. mails, proper postage prepaid;
(b)
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ITS RIGHT TO A JURY TRIAL OF
ANY CLAIM, CAUSE OF ACTION, OR PROCEEDING (WHETHER BASED IN CONTRACT, TORT, OR OTHERWISE)
BASED UPON, ARISING OUT OF, CONNECTED WITH, OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, OR ANY TRANSACTION CONTEMPLATED HEREBY AND THEREBY, AMONG ANY OF THE PARTIES
HERETO AND THERETO. THIS WAIVER IS A MATERIAL INDUCEMENT FOR THE PARTIES HERETO TO ENTER INTO
THIS
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AGREEMENT AND THE OTHER LOAN DOCUMENTS. HOLDINGS AND THE BORROWER HAS REVIEWED THIS
WAIVER WITH ITS COUNSEL; and
waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or
proceeding referred to in this Section any special, exemplary, punitive or consequential damages; provided that nothing contained herein shall
limit the right of any Indemnitee to be indemnified as provided in this Agreement and the other Loan Documents.
(c)
This Section 10.14 shall survive the Discharge of Obligations.
10.15 Acknowledgements. Each of Holdings and the Borrower hereby acknowledges that:
Documents;
(a)
it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan
(b)
in connection with all aspects of each transaction contemplated hereby (including in connection with any
amendment, waiver or other modification hereof or of any other Loan Document), Holdings and the Borrower, on behalf of each Group
Member, acknowledges and agrees that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative
Agent and any Affiliate thereof, and the Lenders and any Affiliate thereof are arm’s-length commercial transactions between the Borrower,
each other Loan Party and their respective Affiliates, on the one hand, and the Administrative Agent, the Lenders and their respective
applicable Affiliates (collectively, solely for purposes of this Section, the “Lenders”), on the other hand, (B) each of the Borrower and the
other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the
Borrower and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent, its Affiliates, each Lender and their Affiliates is
and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not
be acting as an advisor, agent or fiduciary for Borrower, any other Loan Party or any of their respective Affiliates, or any other Person and
(B) neither the Administrative Agent, its Affiliates, any Lender nor any of their Affiliates has any obligation to the Borrower, any other Loan
Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth
herein and in the other Loan Documents; and (iii) the Administrative Agent, its Affiliates, the Lenders and their Affiliates may be engaged in
a broad range of transactions that involve interests that differ from those of the Borrower, the other Loan Parties and their respective
Affiliates, and neither the Administrative Agent, its Affiliates, any Lender nor any of their Affiliates has any obligation to disclose any of
such interests to the Borrower, any other Loan Party or any of their respective Affiliates. To the fullest extent permitted by law, each of the
Borrower and each other Loan Party hereby agrees not to assert any claims it may have against the Administrative Agent, its Affiliates, each
Lender and any of their Affiliates with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of
any transactions contemplated hereby; and
contemplated hereby among the Lenders or among the Group Members and the Lenders.
(c)
no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions
10.16 Releases of Guarantees and Liens.
(a)
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the Administrative Agent
is hereby irrevocably authorized by each Lender (without requirement of notice to or consent of any Lender except as expressly required by
Section 10.1) to take any action requested by the Borrower having the effect of releasing any Collateral or guarantee obligations (1) to the
extent necessary to permit consummation of any transaction not prohibited by any Loan Document or that has been consented to in
accordance with Section 10.1 or (2) under the circumstances described in Section 10.16(b) below.
Agreements, any Cash Management Services or outstanding Letters of
(b)
Upon the Discharge of Obligations, the Collateral (other than any cash collateral securing any Specified Swap
117
Credit) shall be released from the Liens created by the Security Documents and Cash Management Agreements (other than any Cash
Management Agreements used to Cash Collateralize any Obligations arising in connection with Cash Management Agreements), and all
obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Loan Party under the
Security Documents and Cash Management Agreements (other than any Cash Management Agreements used to cash collateralize any
Obligations arising in connection with Cash Management Agreements) shall terminate, all without delivery of any instrument or performance
of any act by any Person.
10.17 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent and each Lender agrees to maintain
the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its Related
Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information
and instructed to keep such Information confidential); (b) to the extent required or requested by any regulatory authority purporting to have
jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance
Commissioners); (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other
party hereto; (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder; (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights and obligations under this Agreement, or (ii) any actual or prospective party (or its Related Parties) to any
swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement
or payments hereunder; (g) on a confidential basis to (i) any rating agency in connection with rating Holdings or its Subsidiaries or the
Facilities or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with
respect to the Facilities; (h) with the consent of the Borrower; or (i) to the extent such Information (x) becomes publicly available other than
as a result of a breach of this Section, or (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates
on a non-confidential basis from a source other than the Borrower. In addition, the Administrative Agent, the Lenders, and any of their
respective Related Parties, may (A) disclose the existence of this Agreement and information about this Agreement to market data collectors,
similar service providers to the lending industry and service providers to the Administrative Agent or the Lenders in connection with the
administration of this Agreement, the other Loan Documents, and the Commitments; and (B) use any information (not constituting
Information subject to the foregoing confidentiality restrictions) related to the syndication and arrangement of the credit facilities
contemplated by this Agreement in connection with marketing, press releases, or other transactional announcements or updates provided to
investor or trade publications, including the placement of “tombstone” advertisements in publications of its choice at its own expense.
Notwithstanding anything herein to the contrary, any party to this Agreement (and any employee, representative, or other agent of
any party to this Agreement) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the
transactions contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to it
relating to such tax treatment and tax structure. However, any such information relating to the tax treatment or tax structure is required to be
kept confidential to the extent necessary to comply with any applicable federal or state securities laws, rules, and regulations.
For purposes of this Section, “Information” means all information received from Holdings or any of its Subsidiaries relating to
Holdings or any of its Subsidiaries or any of their respective businesses, other than any such information that is available to the
Administrative Agent or any Lender on a non-confidential basis prior to disclosure by Holdings or any of its Subsidiaries; provided that, in
the case of information received from Holdings or any of its Subsidiaries after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality
of such Information as such Person would accord to its own confidential information.
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10.18 Automatic Debits. With respect to any principal, interest, fee, or any other cost or expense (including attorney costs of the
Administrative Agent or any Lender payable by the Borrower hereunder) due and payable to the Administrative Agent or any Lender under
the Loan Documents, the Borrower hereby irrevocably authorizes the Administrative Agent to debit any deposit account of the Borrower
maintained with the Administrative Agent in an amount such that the aggregate amount debited from all such deposit accounts does not
exceed such principal, interest, fee or other cost or expense. If there are insufficient funds in such deposit accounts to cover the amount then
due, such debits will be reversed (in whole or in part, in the Administrative Agent’s sole discretion) and such amount not debited shall be
deemed to be unpaid. No such debit under this Section 10.18 shall be deemed a set-off.
10.19
Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder
or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with
normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day
preceding that on which final judgment is given. The obligation of the Borrower and each other Loan Party in respect of any such sum due
from it to the Administrative Agent or any Lender hereunder or under any other Loan Document shall, notwithstanding any judgment in a
currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this
Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative
Agent or such Lender, as the case may be, of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or such
Lender, as the case may be, may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment
Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or any
Lender from the Borrower or any other Loan Party in the Agreement Currency, the Borrower and each other Loan Party agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender, as the case may be, against such
loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or any Lender
in such currency, the Administrative Agent or such Lender, as the case may be, agrees to return the amount of any excess to the Borrower or
other Loan Party, as applicable (or to any other Person who may be entitled thereto under applicable law).
10.20 Patriot Act; Other Regulations. Each Lender and the Administrative Agent (for itself and not on behalf of any other party)
hereby notifies Holdings and the Borrower and each other Loan Party that, pursuant to the requirements of “know your customer” and anti-
money-laundering rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation, it is required to obtain, verify
and record information that identifies Holdings and the Borrower and each other Loan Party, which information includes the names and
addresses and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party and
certain of their beneficial owners and other officers in accordance with the Patriot Act and 31 C.F.R. § 1010.230. Each of Holdings and the
Borrower and each other Loan Party will, and will cause each of its respective Subsidiaries to, to the extent commercially reasonable or
required by any Requirement of Law, furnish or deliver such information and documents and take such actions as are reasonably requested by
the Administrative Agent or any Lender to assist the Administrative Agent and the Lenders in maintaining compliance with “know your
customer” requirements under the PATRIOT Act, 31 C.F.R. § 1010.230 or other applicable anti-money laundering laws.
10.21
Acknowledgement and Consent to Bail-In of Affected Financial Institutions.
Notwithstanding anything to the contrary in this Agreement or in any other Loan Document or in any other agreement, arrangement
or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising
under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the
applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a)
the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities
arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and
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(b)
the effects of any Bail-In Action on any liability, including, if applicable:
(i)
(ii)
a reduction in full or in part of cancellation of any such liability;
a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected
Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on
it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to
any such liability under this Agreement or any other Loan Document; or
(iii)
the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers
of the applicable Resolution Authority.
10.22 Amendment and Restatement of Existing Credit Agreement; Acknowledgement of Prior Obligations; No Novation.
(a) The parties to this Agreement agree that, upon (i) the execution and delivery by each of the parties hereto of this Agreement
and (ii) satisfaction of the conditions set forth in Section 5.1, the terms and provisions of the Existing Credit Agreement
shall be and hereby are amended, superseded and restated in their entirety by the terms and provisions of this Agreement.
Upon the effectiveness of this Agreement, (A) the Administrative Agent shall make such reallocations, sales, assignments
or other relevant actions in respect of each Lender’s credit exposure under the Existing Credit Agreement as are necessary
in order that each such Lender’s Aggregate Exposure and outstanding Loans hereunder reflects such Lender’s Aggregate
Exposure Percentage of the outstanding Aggregate Exposure on the Closing Date, (B) the Existing Revolving Loans of each
Departing Lender shall be re-evidenced as Revolving Loans hereunder (and any accrued and unpaid interest and fees
thereon shall be repaid in full pursuant to Section 5.1(g)), each Departing Lender’s “Commitment” under the Existing
Credit Agreement shall be terminated and no Departing Lender shall be a Lender hereunder (provided, however, that each
Departing Lender shall continue to be entitled to the benefits of Sections 2.19, 2.20, 2.21 and 10.5) and (C) the Borrower
hereby agrees to compensate each Lender (and each Departing Lender) for any and all losses, costs and expenses incurred
by such Lender (and such Departing Lender) in connection with the sale and assignment of any eurodollar loans (including
the “Eurodollar Loans” under the Existing Credit Agreement) and such reallocation (and any repayment or prepayment of
any Departing Lender’s Existing Revolving Loans) described above, in each case on the terms and in the manner set forth in
Section 2.21 hereof.
(b) Each of the Borrower and Holdings, on behalf of itself and each other Loan Party, (i) acknowledges and agrees that the prior
grant or grants of security interests in favor of any of the Administrative Agent or any other Secured Party (as defined in the
Existing Credit Agreement) in its properties and assets, under each “Loan Document” as defined in the Existing Credit
Agreement (the “Original Loan Documents”) to which it is a party shall be in respect of the Obligations of such Person
under this Agreement and the other Loan Documents; (ii) reaffirms (A) all of the Obligations (as defined in the Existing
Credit Agreement) owing to the Administrative Agent and the other Secured Parties (as defined in the Existing Credit
Agreement), and (B) all prior or concurrent grants of security interests in favor of any of the Administrative Agent or any
other Secured Party (as defined in the Existing Credit Agreement) under each Original Loan Document and each Loan
Document; and (iii) agrees that, except as expressly amended hereby or unless being amended and restated concurrently
herewith, each of the Original Loan Documents to which it is a party is and shall remain in full force and effect. The
Borrower hereby confirms and agrees that all outstanding principal, interest and fees and other “Obligations” (as defined in
the Existing Credit Agreement) under the Existing Credit Agreement immediately prior to the Closing Date shall, to the
extent not paid on the Closing Date, from and after the Closing Date, be, without duplication, Obligations
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pursuant to this Agreement and the other Loan Documents as in effect from time to time, shall accrue interest thereon as
specified in this Agreement, and shall be secured by the Loan Documents.
(c) This Agreement does not extinguish the obligations for the payment of money outstanding under the Existing Credit
Agreement or discharge or release the obligations or the Liens or priority of any Liens or any other security therefor.
Nothing herein contained shall be construed as a substitution or novation of the obligations outstanding under the Existing
Credit Agreement, the other Original Loan Documents or instruments securing the same, which shall remain in full force
and effect, except as modified hereby or by instruments executed concurrently herewith. Nothing expressed or implied in
this Agreement shall be construed as a release or other discharge of the Borrower or any Guarantor from any of its
obligations or liabilities under the Existing Credit Agreement or any of the security agreements, pledge agreements,
mortgages, guaranties or other loan documents executed in connection therewith. Each of the Borrower and Holdings, on
behalf of itself and each other Loan Party, hereby (i) confirms and agrees that each Original Loan Document to which it is a
party that is not being amended and restated concurrently herewith is, and shall continue to be, in full force and effect and is
hereby ratified and confirmed in all respects except that on and after the Closing Date, all references in any such Original
Loan Document to “the Credit Agreement,” “thereto,” “thereof,” “thereunder” or words of like import referring to the
Existing Credit Agreement shall mean the Existing Credit Agreement as amended and restated by this Agreement; and
(ii) confirms and agrees that to the extent that any such Original Loan Document purports to assign or pledge to any
Secured Party a security interest in or Lien on, any collateral as security for all or any portion of any of the Obligations of
the Borrower or any other Loan Party, as the case may be, from time to time existing in respect of the Existing Credit
Agreement or the Original Loan Document, such pledge or assignment or grant of the security interest or Lien is hereby
ratified and confirmed in all respects with respect to this Agreement and the Loan Documents.
10.23 Acknowledgment Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a
guarantee or otherwise, for any Swap Agreements or any other agreement or instrument that is a QFC (such support, “QFC Credit Support”,
and each such QFC, a “Supported QFC”), the parties hereto hereby acknowledge and agree as follows with respect to the resolution power of
the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such
Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported
QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United
States):
(i)
In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject
to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit
Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property
securing such Supported QFC) from such Covered Party will be effective to the same extent as the transfer would be effective under
the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights
in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC
Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the
Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such
Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special
Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the
United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a
Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit
Support.
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(ii)
As used in this Section 10.23, the following terms have the following meanings:
accordance with, 12 U.S.C. 1841(k)) of such party.
(A)
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in
(B)
“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and
interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in
accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with,
12 C.F.R. § 382.2(b).
with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
(C)
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance
interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
(D)
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above written.
HOLDINGS:
CROWDSTRIKE HOLDINGS, INC.
By:
/s/ Burt Podbere
Name: Burt Podbere
Title: Chief Financial Officer
BORROWER:
CROWDSTRIKE, INC.
/s/ Burt Podbere
By:
Name: Burt Podbere
Title: Chief Financial Officer
ADMINISTRATIVE AGENT:
SILICON VALLEY BANK
By:
/s/ Amy Grotevant
Name: Amy Grotevant
Title: Vice President
[Signature Page – CRWD First Amendment]
LENDERS:
SILICON VALLEY BANK
as Issuing Lender, Swingline Lender and as a
Lender
By:
/s/ Amy Grotevant
Name: Amy Grotevant
Title: Vice President
[Signature Page – CRWD First Amendment]
BARCLAYS BANK, PLC
as a Lender
By:
/s/ Sean Duggan
Name: Sean Duggan
Title: Vice President
[Signature Page – CRWD First Amendment]
BANK OF AMERICA, N.A.,
as a Lender
By:
/s/ Molly Daniello
Name: Molly Daniello
Title: Director
[Signature Page – CRWD First Amendment]
CITIBANK, N.A.,
as a Lender
By:
/s/ Robert Shaw
Name: Robert Shaw
Title: Vice President
[Signature Page – CRWD First Amendment]
Comerica Bank, Inc.,
as a Lender
By:
/s/ Elizabeth McDonald
Name: Elizabeth McDonald
Title: Vice President
[Signature Page – CRWD First Amendment]
CREDIT SUISSE AG, CAYMAN
ISLANDS BRANCH,
as a Lender
/s/ Mikhail Faybusovich
By:
Name: Mikhail Faybusovich
Title: Authorized Signatory
By:
/s/ D. Andrew Maletta
Name: D. Andrew Maletta
Title: Authorized Signatory
[Signature Page – CRWD First Amendment]
GOLDMAN SACHS BANK
USA,
as a Lender
By:
/s/ Mahesh Mohan
Name: Mahesh Mohan
Title: Authorized Signatory
[Signature Page – CRWD First Amendment]
HSBC Bank USA, National
Association
as a Lender
By:
/s/ Kevin Tang
Name: Kevin Tang
Title: Vice President
[Signature Page – CRWD First Amendment]
RESTRICTED
JP MORGAN CHASE BANK,
N.A.,
as a Lender
/s/ Timothy Lee
By:
Name: Timothy Lee
Title: Executive Director
[Signature Page – CRWD First Amendment]
MIZUHO BANK, LTD.
as a Lender
By:
/s/ Raymond Ventura
Name: Raymond Ventura
Title: Managing Director
[Signature Page – CRWD First Amendment]
PNC BANK, NATIONAL
ASSOCIATION,
as a Lender
/s/ Dana Kerpsack
By:
Name: Dana Kerpsack
Title: Vice President
[Signature Page – CRWD First Amendment]
Truist Bank
as a Lender
By:
/s/ Alfonso Brigham
Name: Alfonso Brigham
Title: Vice President
[Signature Page – CRWD First Amendment]
WELLS FARGO BANK, N.A.,
as a Lender
By:
/s/ Nick Tsiagkas
Name: Nick Tsiagkas
Title: Senior Vice President
SCHEDULE 1.1A
COMMITMENTS
AND AGGREGATE EXPOSURE PERCENTAGES
REVOLVING COMMITMENTS
Lender
Revolving Commitment
Revolving Percentage
Silicon Valley Bank
JPMorgan Chase Bank, N.A.
Bank of America, N.A.
Barclays Bank PLC
Citibank, N.A.
Wells Fargo Bank, N.A.
Goldman Sachs Bank USA
Mizuho Bank, Ltd.
BBVA USA
Comerica Bank
Credit Suisse AG
HSBC Bank USA, National Association
Truist Bank
Total
$97,500,000.00
$97,500,000.00
$70,000,000.00
$70,000,000.00
$70,000,000.00
$70,000,000.00
$50,000,000.00
$50,000,000.00
$35,000,000.00
$35,000,000.00
$35,000,000.00
$35,000,000.00
$35,000,000.00
$750,000,000.00
13.000000000%
13.000000000%
9.333333333%
9.333333333%
9.333333333%
9.333333333%
6.666666667%
6.666666667%
4.666666667%
4.666666667%
4.666666667%
4.666666667%
4.666666667%
100.000000000%
Lender
L/C Commitment
L/C Percentage
L/C COMMITMENT
Silicon Valley Bank
JPMorgan Chase Bank, N.A.
Bank of America, N.A.
Barclays Bank PLC
Citibank, N.A.
Wells Fargo Bank, N.A.
Goldman Sachs Bank USA
Mizuho Bank, Ltd.
BBVA USA
Comerica Bank
Credit Suisse AG
HSBC Bank USA, National Association
Truist Bank
Total
$12,999,999.99
$13,000,000.00
$9,333,333.33
$9,333,333.33
$9,333,333.33
$9,333,333.33
$6,666,666.67
$6,666,666.67
$4,666,666.67
$4,666,666.67
$4,666,666.67
$4,666,666.67
$4,666,666.67
$100,000,000.00
13.000000000%
13.000000000%
9.333333333%
9.333333333%
9.333333333%
9.333333333%
6.666666667%
6.666666667%
4.666666667%
4.666666667%
4.666666667%
4.666666667%
4.666666667%
100.000000000%
SWINGLINE COMMITMENT
Lender
Swingline Commitment
Exposure Percentage
Silicon Valley Bank
Total
$50,000,000.00
$50,000,000.00
100.000000000%
100.000000000%
2
Name of Subsidiary
CrowdStrike, Inc.
CrowdStrike UK LTD
Humio ApS
LIST OF SUBSIDIARIES
OF
CROWDSTRIKE HOLDINGS, INC.
Jurisdiction of Incorporation
Delaware
United Kingdom
Denmark
Exhibit 21.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-252007) and on Form S-8 (Nos. 333-254460,
333-237343, and 333-232084) of CrowdStrike Holdings, Inc. of our report dated March 16, 2022 relating to the financial statements and the effectiveness
of internal control over financial reporting, which appears in this Form 10-K.
Exhibit 23.1
/s/ PricewaterhouseCoopers LLP
San Jose, California
March 16, 2022
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.1
I, George Kurtz, certify that:
1. I have reviewed this Annual Report on Form 10-K of CrowdStrike Holdings, 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 the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial 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 in
Exchange 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, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, 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 our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external 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 the
effectiveness 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 most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially 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, to
the 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 are
reasonably 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 internal
control over financial reporting.
Date: March 16, 2022
CROWDSTRIKE HOLDINGS, INC.
By:
/s/ George Kurtz
Name: George Kurtz
Title:
President, Chief Executive Officer, and Director
(Principal Executive Officer)
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.2
I, Burt W. Podbere, certify that:
1.
I have reviewed this Annual Report on Form 10-K of CrowdStrike Holdings, 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 the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial 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 in
Exchange 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, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, 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 our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external 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 the
effectiveness 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 most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially 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, to
the 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 are
reasonably 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 internal
control over financial reporting.
Date: March 16, 2022
CROWDSTRIKE HOLDINGS, INC.
/s/ Burt W. Podbere
By:
Name: Burt W. Podbere
Title:
Chief Financial Officer
(Principal Financial Officer)
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, George Kurtz, the President and Chief Executive Officer of CrowdStrike Holdings, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of CrowdStrike Holdings, Inc. for the fiscal year ended
January 31, 2022 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in
such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of CrowdStrike Holdings, Inc.
Date: March 16, 2022
Exhibit 32.1
By:
Name:
Title:
/s/ George Kurtz
George Kurtz
President, Chief Executive Officer, and Director
(Principal Executive Officer)
I, Burt W. Podbere, the Chief Financial Officer of CrowdStrike Holdings, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of CrowdStrike Holdings, Inc. for the fiscal year ended January 31, 2022
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Annual
Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of CrowdStrike Holdings, Inc.
Date: March 16, 2022
By:
Name:
Title:
/s/ Burt W. Podbere
Burt W. Podbere
Chief Financial Officer
(Principal Financial Officer)