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(Mark One)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________________________
FORM 10-K
______________________________________________
R
£
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2018
______________________________________________
OR
TRANSITION PERIOD PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
Commission File Number: 001-33584
______________________________________________
DHI Group, Inc.
(Exact name of Registrant as specified in its Charter)
______________________________________________
Delaware
(State or other jurisdiction of
incorporation or organization)
1450 Broadway, 29 th Floor
New York, New York
(Address of principal executive offices)
20-3179218
(I.R.S. Employer
Identification No.)
10018
(Zip Code)
(212) 725-6550
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
______________________________________________
Title of each class
Common Stock, par value $0.01 per share
Name of exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes £ No R
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 R
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 R 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 such files). Yes R No £
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. £
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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 definition of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company" and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer £ Accelerated filer R Non-accelerated filer £ Smaller Reporting Company R
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No R
The aggregate market value of common stock held by non-affiliates of the registrant was approximately $124,000,000 as of June 29, 2018, the last business day of
the registrant’s second fiscal quarter of 2018.
As of February 1, 2019, there were 53,193,270 shares of the registrant’s common stock, par value $.01 per share, outstanding.
Part III incorporates information from certain portions of the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission
within 120 days after the fiscal year end of December 31, 2018 .
DOCUMENTS INCORPORATED BY REFERENCE
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DHI GROUP, INC.
TABLE OF CONTENTS
PART I.
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II.
Item 5.
Item 6.
Item 7.
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV.
Item 15.
Item 16.
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
Controls and Procedures
Other Information
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 Accounting Fees and Services
Exhibits and Financial Statement Schedules
Form 10-K Summary
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NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Information contained herein contains forward-looking statements. You should not place undue reliance on those statements because they are subject to
numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our
control. Forward-looking statements include information concerning our possible or assumed future results of operations, and descriptions of our business strategy.
These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. These
statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions,
expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that these forward-looking statements are
based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual
results to differ materially from those in the forward-looking statements. These factors include, but are not limited to:
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a review of strategic alternatives may occur from time to time and the possibility that such review will not result in a transaction;
disruption resulting from unsolicited offers to purchase the company;
our ability to execute our tech-focused strategy;
loss of key executives and technical personnel and our ability to attract and retain key executives, including our CEO;
increases in the unemployment rate, cyclicality or downturns in the United States or worldwide economy or the industries we serve, labor shortages, or job
shortages;
competition from existing and future competitors;
changes in the recruiting and career services business and technologies, and the development of new products and services;
decreases or delays in business-to-business technology advertising spending could harm our ability to generate advertising revenue;
failure to develop and maintain our reputation and brand recognition;
failure to increase or maintain the number of customers who purchase recruitment packages;
failure to attract qualified professionals or grow the number of qualified professionals who use our websites;
failure to timely and efficiently scale and adapt our existing technology and network infrastructure;
capacity constraints, systems failures or breaches of network security;
compliance with laws and regulations concerning collection, storage and use of professionals’ professional and personal information;
our indebtedness;
inability to borrow funds under our Credit Agreement (as defined below) or refinance our debt;
results of operations fluctuate on a quarterly and annual basis;
periods of operating and net losses and history of bankruptcy;
covenants in our Credit Agreement;
inability to successfully integrate recent and future acquisitions or identify and consummate future acquisitions;
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• misappropriation or misuse of our intellectual property, claims against us for intellectual property infringement or the failure to enforce our ownership or
use of intellectual property;
compliance with changing corporate governance requirements and costs incurred in connection with being a public company;
compliance with the continued listing standards of the New York Stock Exchange (the “NYSE”);
volatility in our stock price;
failure to maintain internal controls over financial reporting;
U.S. and foreign government regulation of the internet and taxation;
changes in foreign currency exchange rates;
failure to realize the full potential of our network;
decrease in user engagement;
failure to halt the operations of websites that aggregate our data, as well as data from other companies;
failure of our businesses to attract, retain and engage users;
our foreign operations;
inability to expand into international markets;
unfavorable decisions in proceedings related to future tax assessments;
taxation risks in various jurisdictions for past or future sales;
write-offs of goodwill, tradename and intangible assets;
significant downturn not immediately reflected in our operating results; and
the UK’s impending departure from the EU.
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NON-GAAP FINANCIAL MEASURES
Information contained herein contains certain non-GAAP financial measures. These measures are not in accordance with, or an alternative for, generally
accepted accounting principles in the United States (“GAAP”). Such measures presented herein include adjusted earnings before interest, taxes, depreciation,
amortization, non-cash stock based compensation expense, impairment, gain or loss on sale of business, and other income or expense (“Adjusted EBITDA”), and
Adjusted EBITDA Margin. See Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for definitions of these
measures as well as reconciliations to the comparable GAAP measure.
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PART I
Item 1.
Business
Information Availability
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy and information statements and other material
information concerning us are available free of charge on the Investors page of our website at www.dhigroupinc.com. Our reports filed with the SEC are also
available by visiting http://www.sec.gov.
Introduction and Summary
This section provides an overview of DHI Group, Inc. (“Company” or “DHI”). Please see our consolidated financial statements included elsewhere in this
report for additional discussion regarding our results of operations for the year ended December 31, 2018.
(in thousands)
Revenues
Operating income (1)
Income before income taxes
Net income (2)
Diluted earnings per share (2)
Net cash provided by operating activities
Adjusted Revenues (3)
Adjusted EBITDA (3)
Adjusted EBITDA Margin (3)
FY 2018
FY 2017
Change
$
$
$
$
$
$
$
$
161,570
11,692
9,602
7,174
0.14
14,918
152,258
32,032
$
$
$
$
$
$
$
$
207,950
22,865
19,397
15,978
0.33
34,409
158,465
36,973
21%
23%
(22)%
(49)%
(50)%
(55)%
(58)%
(57)%
(4)%
(13)%
n.m.
(1) Operating income for the year ended December 31, 2018 includes gain of $3.4 million related to the sales of Rigzone and Hcareers and includes disposition related and
other costs of $7.6 million. Operating income for the year ended December 31, 2017 includes a gain of $6.7 million related to the sale of the Health eCareers business,
proceeds from restitution award of $3.3 million in the OilPro related legal matter, disposition related and other costs of $4.7 million and impairment of fixed assets of $2.2
million.
(2) Net income and diluted earnings per share for the year ended December 31, 2018 includes $4.7 million, net of tax, and $0.09 per share related to the items identified in
number 1 above as well as the impact of certain discrete tax items. Net income and diluted earnings per share for the year ended December 31, 2017 includes income of $4.5
million, net of tax, and $0.09 per share related to the items identified in number 1 above as well as the impact of certain discrete tax items.
(3) For a description of these non-GAAP measures and reasons why management believes they provide useful information to investors, please see “Management’s Discussion
and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources, and Non-GAAP Measures” located elsewhere in this report.
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Company Profile
DHI was incorporated in Delaware on June 28, 2005 and is a leading provider of data, insights and employment connections through specialized services for
technology professionals. Our mission is to empower technology professionals and organizations that hire them to compete and win through expert insights and
relevant employment connections by delivering three key value propositions:
•
•
•
Providing the best search and match solution for recruiters and employers;
Delivering the most relevant technology career related content; and
Aggregating and analyzing workforce intelligence data to deliver specialized insights.
The majority of our revenues today are generated through the sale of recruitment packages, which allow customers to post jobs on our websites and source
candidates through our resume databases. Recruitment packages are typically provided through contractual arrangements with annual, quarterly or monthly terms.
Our Products and Services
We help organizations find the best talent, and we help technology professionals find the best jobs and advance their careers. We do this through a number of
products individually or bundled in packages, including:
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•
•
•
Resume databases. Each of our brands provides powerful, detailed searches of a large number of candidate resumes, bolstered with social data at Dice.
Showing customers relevant talent makes their recruiting efforts more efficient.
Job postings. Our job collections are focused on specific verticals tailored to technology, making it easier for tech professionals to search for relevant
jobs. In turn, the applications received by our customers are more likely to be relevant and qualified compared to applications received from generalist
sites. Thus, showing professionals the right job postings benefits both the talent and the recruiting organization.
Unified Profile Index. The Unified Profile Index is a proprietary and unique index which gathers information about candidates from a large collection of
social and web sources, combining that information with Dice's owned and licensed data. The UPI allows our customers to build broader pools of talent
from across the web, giving them deeper career insights into the talent they discover.
Content and data. Each of our brands provides tailored content to help professionals manage their careers and provide employers insight into recruiting
strategies and trends.
Industry and Skill Focused Brands
During 2018 we offered our talent acquisition and career development products and tools through the following key brands:
Service
Dice
Dice Europe 2
ClearanceJobs
Targeted Job Fairs
eFinancialCareers
Rigzone 3
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16
16
30
18
20
Yrs. in Operation
Specialized Focus
Technology and engineering in the U.S.
Primary Source of Revenues
Recruitment packages¹
Technology and engineering in the U.K. and Germany
Job postings and advertising
Security-cleared professionals
Recruitment packages¹
Technology, energy and security-cleared professionals
Career fairs and open houses
Financial services
Oil and gas
Recruitment packages¹
and job postings
Recruitment packages¹
and advertising
33
21
Biotechnology
BioSpace 4
Hcareers 5
¹ Recruitment packages are a combination of job postings and access to our searchable database of candidates.
2 Dice Europe ceased operations on August 31, 2018.
3 Rigzone sold the RigLogix portion of the Rigzone business on February 20, 2018 and DHI transferred majority ownership of remaining Rigzone business to Rigzone management August 31,
2018.
4 Transferred majority ownership of BioSpace on January 31, 2018 to BioSpace management.
5 Hcareers was sold May 22, 2018.
Job postings and advertising
Job postings
Hospitality
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Dice has been a go-to destination for technology and engineering talent in the United States for the past 28 years. The job postings available on Dice, from
both technology and non-technology companies across many industries, include positions for software engineers, big data professionals, systems administrators,
database specialists, project managers, and a variety of other technology and engineering professionals. Dice had approximately 78,000 job postings as of
December 31, 2018. During 2018, Dice in North America had on average approximately 1.4 million monthly users.
Customers can purchase recruitment packages, job postings or advertisements. Approximately 91% of Dice revenue was derived from recruitment packages
in 2018. Recruitment packages, including utilizing Unified Profile Index, offer our customers the ability to access the candidate resume database and post up to a
specified number of jobs at a single time. Customers are incentivized to purchase our recruitment packages on an annual basis.
Professionals can post their resumes, search jobs and access our career-related content, news and tools. Skill Center, a tool implemented by Dice, uses data
aggregated from across the web to show skill trends, giving professionals insights into potential skills gaps and development areas. Salary Predictor and Salary
Calculator offer real-time salary tools leveraging predictive analysis to help tech professionals and employers discover tailored salary estimates based on skills, job
titles, years of experience and location.
Dice entered the European market in 2013 through the acquisition of The IT Job Board, a technology career site for the UK and Continental Europe. In 2015,
we rebranded The IT Job Board to Dice Europe, which ceased operations on August 31, 2018.
ClearanceJobs is a leading Internet-based career network dedicated to matching security-cleared professionals with the best hiring companies searching for
employees. Authorized U.S. government contractors, federal agencies, national laboratories and universities utilize The Cleared Network to quickly and easily find
candidates with specific, active security clearance requirements to fill open jobs in a range of disciplines. The majority of candidates with resumes in our database
have high-level security clearance. ClearanceJobs had approximately 48,000 job postings as of December 31, 2018. During 2018, ClearanceJobs had on average
556,000 unique monthly users.
eFinancialCareers is one of the world’s leading financial services careers website, operating websites in multiple markets in four languages mainly across
the United Kingdom, Continental Europe, Asia, Australia, the Middle East and North America. Professionals from across many sectors of the financial services
industry, including asset management, risk management, investment banking, and information technology, use eFinancialCareers to advance their careers.
eFinancialCareers extends its global footprint beyond its own sites through job posting distribution agreements with more than 30 finance and business websites
around the world, including well-known publications and organizations. eFinancialCareers had approximately 15,000 job postings as of December 31, 2018.
During 2018, eFinancialCareers had on average 2.2 million monthly users.
Rigzone is a leading website dedicated to delivering online content, data, and career services in the oil and gas industry in North America, Europe, the Middle
East, and Asia Pacific. Oil and gas companies, as well as companies that serve the energy industry, use Rigzone to find talent for roles such as petroleum engineers,
sales professionals with energy industry expertise and skilled tradesmen. In addition to recruitment packages and advertising, Rigzone provides a number of data
services products including Riglogix, RigEdge and RigOutlook. The RigLogix portion of the Rigzone business was sold on February 20, 2018 and a majority
ownership of the remaining Rigzone business was transferred to Rigzone management on August 31, 2018.
Hcareers is a leading source for hospitality jobs across North America and is one of the largest providers of job postings for the hotel, restaurant, food
service, casino and assisted living industries. Hospitality professionals like general managers, sales directors, and executive chefs use Hcareers to advance their
careers. The Hcareers business was sold on May 22, 2018.
BioSpace is a leading resource for biotechnology careers, news and resources and has helped recruitment, communication and discovery among business and
scientific leaders within the life sciences. In addition to recruitment packages, customers can purchase BioSpace’s HotBeds campaigns, a unique branding and
advertising product to assist regional clusters of companies with high demands for biotech talent. A majority ownership of the BioSpace business was transferred to
BioSpace management on January 31, 2018.
Our Industry
We primarily operate in the talent discovery and acquisition segment of the broader market for human capital management services through career sites for
technology professionals. There is a shortage of skilled professionals worldwide and we believe that the overall demand for talent acquisition and career
development products and services has significant long-term growth potential.
We also believe that certain industries that employ highly-skilled and highly-paid professionals will experience particularly strong demand for effective
recruiting solutions due to the scarcity of such professionals. For example, as of December 2018, the
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seasonally unadjusted U.S. unemployment rate was 2.1% for computer-related occupations and 2.4% in the finance sector, as compared to the overall national
average of 3.9%, seasonally adjusted. Historically, the unemployment rate for college graduates has been lower than the unemployment rate for the U.S. overall. As
of December 2018, the seasonally unadjusted unemployment rate for college graduates was 2.0%.
We believe that there are four major trends that will continue to shape demand for talent acquisition services:
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Greater competition for professional talent .
The candidate-employer relationship has changed, with the balance of power shifting towards the
candidates. As more companies leverage technology to advance their business, employers will increasingly need to hire tech talent to compete. According
to analysis of data from the Bureau of Labor statistics, Information technology jobs have grown to an average rate of 2.5% over the past 10 years,
compared to 0.9% for all industries, primarily driven by the emergence of big data, cloud computing and information security.
Continued professional interest in career brands specific to industry and skills. Our services focus on domains or industries that require specialized
skills and knowledge and, thus, customized content, profiles and search parameters. In addition, the technology professionals often share a sense of
personal identity and community that goes beyond the confines of their careers. We believe that both specialized skills and the sense of personal identity
and community lead professionals in our verticals to prefer specialized career brands over generalist ones.
Talent attraction and retention becoming more of a strategic priority for companies. The PWC
2018
US
CEO
Survey
found that 27% of U.S. CEOs are
‘extremely concerned’ about the availability of key skills as a threat to their organizations’ growth prospects. In this environment where top talent is hard
to find, organizations are increasingly prioritizing retention of talent. According to Deloitte’s Global
Human
Capital
Trends
2018
, 61% of human
resources respondents are actively redesigning jobs around artificial intelligence (AI), robotics and new business models, resulting in a disruptive change
in workforce needs, including skill development.
Increased use of data and analytics in human capital management and increased need for insights. As many companies prove the power of analytics in
marketing and other business domains, organizations are seeking to gain a competitive advantage by applying data-driven insights to improve their hiring,
retention and leadership capabilities. According to Deloitte’s Global
Human
Capital
Trends
2018
, 84% of surveyed companies believe that using people
analytics is ‘very important or important.’
In this environment, we believe there is an opportunity for career management and talent acquisition tools that leverage the common interests, goals and skills
of select professional communities. We believe that a focus on professional communities allows organizations to more efficiently identify talent, with more
complete data and insights about that talent.
Our Value Proposition
We are a leading provider of data, insights and employment connections through specialized online professional communities organized around common
professional interests and skill sets powered by technology. This specialized approach provides technology professionals with more relevant career related
information and opportunities, enhancing their ability to maximize their careers. Through engaging with professionals, we are able to build rich and unique data
sets around valuable talent pools. The combination of our focused online professional websites and rich data sets allows organizations to find and hire professional
talent more efficiently and effectively, and therefore incentivizes them to source talent through our online professional communities. The benefits our services
provide to both professionals and recruiting customers create a robust marketplace.
Benefits we provide to Professionals
Relevant employment connections . When professionals post their resumes or apply for jobs on our websites, they can make valuable connections with
organizations who prize their skills and expertise. Professionals can avoid having to “sort through the clutter” on generalist career sites and get the most out of their
time by using our more focused services.
Skills/industry-specific career management tools, information and insights . We provide professionals with targeted and relevant career development tools,
content and news. For example, Dice and ClearanceJobs provide professionals with market and salary information and local market trends. In addition, the Salary
Predictor allows professionals to evaluate their market value and map out which skills will increase their value. eFinancialCareers provides industry-specialized
online career content, as well as career guides targeted to college and graduate students. We believe our career development services and tools provide
professionals with the insights they need to propel their careers forward, and thus increase the engagement of professionals with our sites.
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Benefits we provide to our Customers
Large pools of qualified and hard-to-reach professionals . We seek to improve the efficiency of the recruiting process for our customers by providing
efficient access to large pools of highly qualified and hard-to-reach professionals. Because the communities of professionals who visit our websites are highly-
skilled and specialized within specific industries, we believe our customers who post jobs receive applications from candidates who are better qualified for the
positions, and that they receive fewer irrelevant applications than when using generalist sites. In addition, since our resume data and resume search functions are
highly tailored by specialty, we believe that our customers can more efficiently identify talent using our resume databases than by using broader services.
Relevant information on prospective candidates . We believe that the specialized nature of our job posting and resume search products makes them
inherently more relevant and efficient for recruiting. In addition, our Unified Profile Index creates an aggregated profile of a professional’s experience,
contributions, and capabilities as well as their passions and interests. Using all of these products together gives our customers the most complete view of a
prospective candidate, and allows them to not only identify the best talent but also tailor their recruiting approach to each individual.
Hyper-targeted candidate outreach and employer branding . We offer recruiting customers the ability to target hard-to-find professionals with messages in
the online forums they frequent. Our Lengo service leverages our social aggregation capabilities to assemble candidate target lists based on specific factors like
skill sets, work experience, location, or interests; then executes hyper-targeted employer branding or job search campaigns in online forums where specific
potential candidates spend time.
Our Strategic Goals
Our company undertook a comprehensive strategic review that began in 2017 and continued into 2018, that resulted in deeper focus and execution of our
tech-focused growth strategy designed to reinvigorate our core business and broaden our market opportunity. Our goal has been to further the mission of being the
leading technology talent acquisition resource serving and engaging tech professionals across all industries. In addition, we have executed a plan to leverage our
tech talent acquisition franchise to expand our next-generation talent acquisition solutions to the broader talent acquisition market, across industries and geographic
markets. There are four components to our tech-focused strategy:
Focus resources behind our core tech talent brands. We believe that focusing on technology talent acquisition provides us with the best opportunity to win
in our increasingly competitive industry. Moreover, to capture the technology market opportunity we need to move quickly, so we plan to focus incremental
investments behind the businesses that fall within our tech-focused portfolio - Dice, eFinancialCareers, and ClearanceJobs.
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Deepen the integration of Unified Profile Index through enhanced data analytic capabilities and new go-to-market strategies;
Improve performance attribution for tech-focused talent acquisition brands by accelerating integration with customers’ applicant tracking systems (ATS);
Launch a suite of new value-add Dice recruitment products, such as matching capabilities and products which build deeper trust with the tech community;
and
Leverage eFinancialCareers finance franchise and global footprint to capitalize on the Fintech evolution in financial services.
Increase engagement with professional talent. In today's evolving digital media ecosystem, it is critical for our success to be an indispensable career
marketplace for talent to connect with the right opportunities in order to gain insights and information about professionals that are valuable to our recruiting
customers.
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Offer technology professionals a comprehensive career management platform that provides skill specific insights that help align professionals' goals and
careers; and
Increase the adoption and utility of the Dice products to increase engagement with technology professionals.
Develop next-generation talent acquisition solutions. As our industry continues to evolve, the talent acquisition ecosystem is becoming more complex and
recruiters are pursuing more sophisticated search strategies. This environment creates demand for next-generation recruitment solutions, such as social sourcing,
targeted employer branding, and candidate relationship management, among others, that are likely to gain share within the online and broader talent acquisition
market in the coming years. We own a suite of next-generation solutions that are well positioned to benefit from this trend, which we believe will be a key source
of growth for our company.
•
Further leverage our data aggregation and analysis capabilities through services like Lengo with our tech-focused talent acquisition brands to offer
customers more comprehensive solutions.
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Acquire complementary assets to accelerate growth. The ongoing evolution and fragmentation of our market provides us with the opportunity to launch or
acquire new services to enhance our offering to professionals and recruiting customers.
Marketing and Sales
We focus our long-term marketing efforts on growing the number of professionals who visit and engage with our websites, which we believe increases the
attractiveness of our websites to our customers. We use a combination of direct marketing, branding and communications initiatives, including content, to increase
our brand awareness, traffic, new resumes posted and applications to job postings. We primarily engage in search engine marketing, online advertising, and
participation in industry events, social media marketing and content marketing. Many of our brands use strategic alliances with relevant publishers, trade
associations and industry groups to increase reach and traffic. Some of our brands have also invested in broader awareness campaigns that include outdoor
advertising in select cities where competition for their respective specializations is high.
Our customer marketing efforts are primarily focused on lead generation activities, such as email campaigns and participation in industry events. We also use
marketing communications, such as media relations, social media, and thought leadership content, to enhance brand awareness and client relationships.
We sell our products primarily through our direct sales force. We have a number of direct sales teams organized by brand, market segment, and geography.
Our field sales groups target Fortune 1000 companies, large staffing and recruiting firms and other large and mid-size businesses. Our in-house sales teams focus
on generating new business from recruiters and small and mid-size companies, renewing customer contracts, increasing the service levels customers’ purchase and
servicing the needs of our largest clients. As of December 31, 2018, we employed approximately 88 sales personnel in the United States and approximately 39 in
the rest of the world. In addition to our internal sales organization, we also use ad networks to help generate ad sales.
We also maintain teams of account managers and customer support specialists who work to ensure customers get the most from our products and services by
providing training and assistance. In addition, our customer support departments perform some compliance functions, such as reviewing the websites for false or
inaccurate job postings.
Customers
We currently serve a diversified customer base consisting of approximately 12,000 customers in total. No one customer accounted for more than 10% of our
revenues in 2018. Our customers include small, mid-sized and large direct employers, staffing companies, recruiting agencies, consulting firms and marketing
departments of companies. As of December 31, 2018, notable customers of the Dice and ClearanceJobs included AT&T, Adecco, Amazon, Apple, Cisco, Dell,
IBM, Kforce, Manpower, Microsoft, NCI, Oracle, and Samsung. Notable customers of eFinancialCareers included Barclays, Bank of China, BlackRock,
Bloomberg, BNY Mellon, Citibank, Credit Suisse, Ernst & Young, Goldman Sachs, HSBC, Moody's, Morgan Stanley, Qatar National Bank, Societe Generale,
State Street, and UBS AG.
Technology
We use a variety of open source and proprietary technologies to support our website services. Our websites provide a multitenancy technology platform with
multiple application services developed to perform at scale. We primarily utilize Amazon Web Services (AWS) as our cloud infrastructure platform, which enables
us to scale our compute, network, and storage capacity on an as-needed basis. Our application services and data connections are continually monitored 24/7 for
performance and stability. Our application and infrastructure architecture enable us to ensure global reach, as well as advantages in resiliency and cloud delivery.
Job seekers and customers can access our websites with any standard web browser, mobile web browsers, and iOS and Android applications. Our websites also
utilize AWS disaster recovery, redundancy, and resiliency services, including multi-availability zone, multi-region, redundant storage and networking solutions,
and self-healing capabilities.
Competition
The market for talent acquisition services is highly competitive with multiple online and offline competitors. With the evolution of the online recruiting
model, there has been an increasing need to provide ease-of-use and relevance to professionals, as well as an efficient and cost-effective recruitment method for
direct employers, recruiters and staffing companies. Additionally, further technological advancements have made it easier for new competitors to emerge with
minimal barriers to entry, and advertisers have many alternatives available to reach their target audiences. Our ability to maintain our existing customer base and
generate new customers depends to a significant degree on the quality of our candidate databases and audiences, the quality of our services, our ability to enhance
our websites and the underlying technology of our websites to meet the needs of a rapidly-evolving marketplace, our pricing strategy and ability to introduce value-
added products and services, contracting alternatives such as
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subscription or consumption based models, and our reputation among our customers and potential customers, who are increasingly sophisticated and demanding.
Our competitors include:
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social and professional networking sites, such as LinkedIn, Facebook, Twitter and Google;
niche or specialist professional networking sites such as GitHub and Stack Overflow;
generalist job boards, some of which have substantially greater resources and brand recognition than we do, such as CareerBuilder, Monster, StepStone,
and Seek which, unlike specialized job boards, permit customers to enter into a single contract to find professionals across multiple occupational
categories and attempt to fill all of their hiring needs through a single website;
aggregators and distributors of job postings and profiles, including Indeed (owned by Recruit), TalentBin (owned by Monster Worldwide), Entelo,
ZipRecruiter, Google and Craigslist;
career-focused community sites such as Glassdoor;
newspaper and magazine publishers, national and regional advertising agencies, executive search firms and search and selection firms that carry classified
advertising, many of whom have developed, begun developing or acquired new media capabilities, such as recruitment websites, or have partnered with
generalist job boards;
specialized services focused specifically on the industries we service, such as FT.com, Doximity, Upwork and JobServe;
new and emerging competitors with new business models and products;
our customers, who seek to recruit candidates directly by using their own resources, including corporate websites; and
general business sites and print publications, as well as technology news and information community sites, such as Google News, Digg.com and
Reddit.com.
Intellectual Property
We seek to protect our intellectual property through a combination of service marks, trademarks, copyrights and other methods of restricting disclosure of our
proprietary or confidential information. As we continue to develop and improve our technology, patents may become a more significant part of our intellectual
property in the foreseeable future. We generally enter into confidentiality agreements with our employees, consultants and vendors. We also seek to control access
to and distribution of our technology, documentation and other proprietary information.
We generally pursue the registration of the material service marks we own in the United States and internationally, as applicable. We own a number of
registered, applied for and/or unregistered trademarks and service marks that we use in connection with our businesses. Our trademarks and registered trademarks
in the United States and other countries include DICE, CLEARANCEJOBS.COM, and EFINANCIALCAREERS. Registrations for trademarks may be maintained
indefinitely, as long as the trademark owner continues to use and police the trademarks and timely renews registrations with the applicable governmental office.
Although we generally pursue the registration of our material service marks and other material intellectual property we own, where applicable, we have trademarks
and/or service marks that have not been registered in the United States and/or other jurisdictions. We have not registered the copyrights in the content of our
websites and do not intend to register such copyrights.
The steps we have taken to protect our copyrights, trademarks, service marks and other intellectual property may not be adequate, and third parties could
infringe, misappropriate or misuse our intellectual property. If this were to occur, it could harm our reputation and affect our competitive position. See Item 1A.
“Risk Factors-Misappropriation or misuse of our intellectual property could harm our reputation, affect our competitive position and cost us money.”
Investments
DHI has made investments through the following acquisitions during the past five years:
Date Acquired
Description
Brands Included
Strategic Rationale
Purchase Price
Oil Careers Ltd. (1)
March 2014
A leading recruitment site for oil and gas professionals in Europe and included in our Rigzone
brand
OilCareers.com; subsequently merged into Rigzone brand
Expansion of Rigzone’s presence in non-U.S. markets
$26.1 mm in cash at closing and $0.3 mm paid for working capital
(1) DHI transferred majority ownership of the Rigzone business to Rigzone management on August 31, 2018.
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Regulation and Legislation
User Privacy
We collect, store and use a variety of information about both professionals and customers on our website properties. Within the websites, the information that
is collected, stored and used has been provided by the professionals or customers with the intent of making it publicly available. We do not ask professionals or
customers to supply social security numbers. Our business data is separated from website operations by a variety of security layers including network
segmentation, physical and logical access controls, firewalls, and many industry-accepted, best-practice information security controls.
We post our privacy policies on our websites so that our users can access and understand the terms and conditions applicable to the collection, storage and use
of information collected from users. Our privacy policies also disclose the types of information we gather, how we use it and how a user can correct or change their
information. Our privacy policies also explain the circumstances under which we share this information and with whom. Professionals who register for our
websites have the option of indicating specific areas of interest in which they are willing to receive offers via email or postal mail. These offers contain content
created either by us or our third-party partners.
To protect confidential information and to comply with our obligations to our users, we impose constraints on our customers to whom we provide user data,
which are consistent with our commitments to our users. Additionally, when we provide lists to third parties, including to our advertiser customers, it is under
contractual terms that are consistent with our obligations to our users and with applicable laws and regulations.
U.S. and Foreign Government Regulation
We are subject to a number of government regulations, both domestic and foreign, that regulate our products and online service offerings, including content,
copyright infringement, user privacy, advertising and promotional activities, taxation, access charges, liability for third-party activities and jurisdiction. In addition,
federal, state, local and foreign governmental organizations have enacted and also are considering, and may consider in the future, other legislative and regulatory
proposals that would regulate the Internet. Areas of potential regulation include, but are not limited to, libel, electronic contracting, pricing, quality of products and
services and intellectual property ownership.
There are a number of U.S. and foreign laws and regulations that affect companies conducting business online. Certain laws regulate commercial electronic
messages. Such laws frequently provide a right on the part of the recipient to request the sender to stop sending messages, and establish penalties for the sending of
email messages that are not compliant with such laws, including messages that are intended to deceive the recipient as to source or content or that do not provide an
electronic method of informing the sender of the recipient’s decision not to receive further commercial emails.
We are subject to domestic and foreign laws and regulations regarding privacy and protection of data. Our privacy policies and terms of use agreements
describe our practices concerning the use, storage, transmission and disclosure of user data. Any failure by us to comply with our privacy policies or terms of use
agreements, or privacy-related laws and regulations, could result in proceedings against us by governmental authorities or others, which could harm our business.
The interpretation of these privacy and data protection laws and various regulators’ approach to their enforcement, as well as our products and services, continue to
evolve over time. We face the risk that these laws may be interpreted and applied in conflicting ways in different jurisdictions or in a manner that is not consistent
with our current data protection practices, or that new and unclear laws will be enacted. There currently are a number of proposals pending before federal, state,
and foreign legislative and regulatory bodies. In addition, the European General Data Protection Regulation (“GDPR”) took effect in May 2018 and applies to all of
our European operations. The GDPR includes operational requirements for companies that receive or process personal data of residents of the European Union that
are different than those previously in place in the European Union, and include significant penalties for non-compliance. Similarly, there are a number of legislative
proposals in the United States, at both the federal and state level, that could impose new obligations in areas affecting our business. In addition, some countries are
considering or have passed legislation implementing data protection requirements or requiring local storage and processing of data or similar requirements.
Complying with these varying domestic and foreign requirements could cause us to incur additional costs and change our business practices. Further, any
failure by us to adequately protect our users’ privacy and data could result in a loss of confidence in our products and services and, ultimately, in a loss of
customers, which could have an adverse effect on our business.
Furthermore, favorable laws may change, including for example in the United States where the FCC voted to repeal net neutrality regulations. Given
uncertainty around these rules, including changing interpretations, amendments or repeal, coupled with potentially significant political and economic power of
local network operators, we could experience discriminatory or anti-competitive practices that could impede our growth, cause us to incur additional expense or
otherwise negatively affect our business.
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The application of laws and regulations affecting online business to our products and services is often unclear, and these laws and how various jurisdictions
interpret these laws continue to evolve. Compliance with these laws may be expensive and could harm our business. Any failure by the Company to comply with
these laws and regulations could result in actions against us by governmental authorities or other entities, which could harm our business, including governmental
or court orders that we cease certain activities.
See Item 1A. Risk Factors "Our business is subject to U.S. and foreign government regulation of the Internet and taxation, which may have a material adverse
effect on our business” and “Capacity constraints, systems failures or breaches of our network security could materially and adversely affect our business. If we fail
to manage our technical operations infrastructure, our existing customers may experience services outages, and our new customers may experience delays in the
deployment of our solution.”
Employees
As of December 31, 2018, we had 484 employees. Our employees are not represented by any union and are not the subject of a collective bargaining
agreement. We believe that we have a good relationship with our employees.
Item 1A. Risk Factors
We may from time to time consider strategic alternatives that may enhance stockholder value, which may result in the use of a significant amount of our
management resources or significant costs, and we may not be able to fully realize the potential benefits of any such transaction.
We may consider from time to time strategic alternatives to ensure the Company’s ownership structure optimizes the Company’s ability to achieve growth
initiatives through its strategic plan and to maximize stockholder value. The consideration of strategic alternatives could result in, among other things, a sale,
merger, consolidation or business combination, asset divestiture, partnering or other collaboration agreements, or potential acquisitions or recapitalizations, in one
or more transactions, or continuing to operate with our current business plan and strategy. There can be no assurance that any review of strategic alternatives will
result in the identification or consummation of any transaction. Although there would be uncertainty that considering any possible transaction would result in
definitive agreements or the completion of such transaction, we may devote a significant amount of our management resources to analyzing and pursuing such a
transaction, which could negatively impact our operations. In addition, we may incur significant costs in connection with seeking such transactions or other
strategic alternatives regardless of whether the transaction is completed. In the event that we consummate a strategic alternative in the future, we cannot be certain
that we would fully realize the potential benefit of such a transaction and cannot predict the impact that such strategic transaction might have on our operations or
stock price. We do not undertake to provide updates or make further comments regarding the evaluation of strategic alternatives, unless otherwise required by law.
We may not be successful in executing our tech-focused strategy which could have a material adverse effect on our results of operations.
We may not be successful in pursing our tech-focused strategy, which includes narrowing priorities to initiatives related to connecting technology
professionals with employers. There can be no assurance that the allocation of resources behind our Tech-focused business and sales and marketing efforts will
result in the strengthening of our competitive position, the failure of which could have a material adverse effect on our financial condition and results of
operations. As a result of our strategic focus on the tech sector and divesting our businesses operating in different sectors, we have an increased dependence on the
economic health of that sector and may not have the mitigating benefits of exposure to a portfolio of diverse industries in the event of a tech sector downturn.
If we fail to attract or retain key executives and personnel, there could be a material adverse effect on our business.
Our performance is substantially dependent on the performance of senior management and key technical personnel. We have employment agreements, which
include non-compete provisions, with all members of senior management and certain key technical personnel. However, we cannot assure you that any of these
senior managers or others will remain with us or that they will not compete with us in the event they cease to be employees, which could have a material adverse
effect on our business, results of operations, financial condition and liquidity. In addition, we have not purchased key person life insurance on any members of our
senior management. Our future success also depends upon our continuing ability to identify, attract, hire and retain highly qualified personnel, including skilled
technical, management, product and technology, and sales and marketing personnel, all of whom are in high demand and are often subject to competing offers.
There has in the past been, and there may in the future be, a shortage of qualified personnel in the career services market. We also compete for qualified personnel
with other companies. A loss of a substantial number of qualified employees, or an inability to attract, retain and motivate additional highly skilled employees
required for expansion of our business, could have a material adverse effect on our business. In addition, the recent significant
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decline in our stock price may undermine the use of our equity as a retention tool and may make it more difficult to retain key personnel.
We may be adversely affected by cyclicality, volatility or an extended downturn in the United States or worldwide economy, or in or related to the
industries we serve.
Our revenues are generated primarily from servicing customers seeking to hire qualified professionals in the technology and finance sectors. Demand for
these professionals tends to be tied to economic and business cycles. Increases in the unemployment rate, specifically in the technology industry, cyclicality or an
extended downturn in the economy could cause our revenues to decline. For example, during the recession in 2001, employers reduced or postponed their
recruiting efforts, including their recruitment of professionals in the technology industry. The 2001 economic recession, coupled with the substantial indebtedness
incurred by our predecessor, Dice Inc., resulted in Dice Inc. filing for Chapter 11 protection in 2003. As of December 2018, the seasonally unadjusted U.S.
unemployment rate was 2.1% for computer-related occupations, and 2.4% in the finance sector, as compared to the overall national average of 3.9%, seasonally
adjusted. The increase in unemployment and decrease in recruitment activity experienced during 2008 and 2009 resulted in decreased demand for our services.
During 2009, we experienced a 29% decline in revenues compared to 2008. If the economic environment experienced during 2008 and 2009 returns, our ability to
generate revenue may be adversely affected.
In addition, the general level of economic activity in the regions and industries in which we operate significantly affects demand for our services. When
economic activity slows, many companies hire fewer employees. Therefore, our operating results, business and financial condition could be significantly harmed
by an extended economic downturn or future downturns, especially in regions or industries where our operations are heavily concentrated. Further, we may face
increased pricing pressures during such periods as customers seek to use lower cost or fee services. Additionally, the labor market and certain of the industries we
serve have historically experienced short-term cyclicality. It is difficult to estimate the total number of passive or active job seekers or available job openings in the
United States or abroad during any given period. If there is a labor shortage, qualified professionals may be less likely to seek our services, which could cause our
customers to look elsewhere for attractive employees. Such labor shortages would require us to intensify our marketing efforts toward professionals so that
professionals who post their resumes on our websites remain relevant to our customers, which would increase our expenses. Furthermore, if there is a shortage of
available job openings in a particular region or sector we serve, the number of job postings on our websites could decrease, causing our business to be adversely
affected. For example, the continued depression of oil prices led to decreased demand for energy professionals worldwide. Oil prices reached decade lows in 2016
and remained depressed. This decline in demand significantly decreased the sales of energy industry job postings and the use of related services and adversely
impacted the results of Rigzone, a business we disposed of in 2018. As a result, we recorded a $24.6 million impairment of goodwill and intangible assets and
$34.8 million impairment of goodwill at our Corporate & Other segment for the fiscal years ended December 31, 2016 and 2015, respectively.
Any economic downturn or recession in the United States or abroad for an extended period of time could have a material adverse effect on our business,
financial condition, results of operations and liquidity. Based on historical trends, improvements in labor markets and the need for our services generally lag behind
overall economic improvements. Additionally, there has historically been a lag from the time customers begin to increase purchases of our services and the impact
to our revenues due to the recognition of revenue occurring over the length of the contract, which can be several months to a year.
Volatility in global financial markets may also limit our ability to access the capital markets at a time when we would like, or need, to raise capital, which
could have an impact on our ability to react to changing economic and business conditions. Accordingly, if the economy does not fully recover or worsens, our
business, results of operations and financial condition could be materially and adversely affected.
A write-off of all or a part of our goodwill and intangible assets would hurt our operating results and reduce our net worth.
We have significant intangible assets and goodwill. Goodwill represents the excess of the total purchase price of our acquisitions over the estimated fair
value of the net assets acquired. As of December 31, 2018 , we had $154.0 million and $39.0 million of goodwill and acquired intangible assets, respectively, on
our balance sheet, which represented approximately 60% and 15% , respectively, of our total assets. We do not amortize goodwill under U.S. GAAP and instead
are required to review goodwill at least annually for impairment. The indefinite-lived acquired intangible asset of $39.0 million is not amortized and instead is
reviewed annually for impairment. The fair value of the Dice tradename as of the most recent annual impairment testing date of October 1, 2018 resulted in the fair
value exceeding the carrying value by 2%. During 2016, goodwill and intangible assets of $24.6 million related to Rigzone were fully written off. During 2015,
goodwill of $34.8 million related to Rigzone was written off. During 2013, goodwill and intangible assets of $14.9 million related to Slashdot Media and Health
Callings was written off. During 2008, goodwill of $7.2 million related to eFinancialCareers’ North American operations was written off. In the event impairment
is identified again in the future for any of our reporting units, a charge to earnings would be recorded. Although it
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would not affect our cash flow or financial position, a write-off in future periods of all or a part of our goodwill or intangible assets would have a material adverse
effect on our overall results of operations. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical
Accounting Policies—Goodwill.”
Concerns regarding the global economic climate, the lingering effects of the European debt crisis, and market perceptions concerning the instability of
the Euro could adversely impact our business.
Concerns persist regarding the global economic climate, the recent debt burden of certain Eurozone countries and their ability to meet future financial
obligations, the overall stability of the euro and the suitability of the euro as a single currency given the diverse economic and political circumstances in individual
Eurozone countries. These concerns, or market perceptions concerning these and related issues, could adversely affect demand for our services in the European
market and our business, results of operations, financial condition and liquidity.
We operate in a highly competitive developing market and we may be unable to compete successfully against existing and future competitors.
The market for career services is highly competitive and barriers to entry in the market are relatively low. For example, there are tens of thousands of job
boards currently operating on the Internet, and new competitors may emerge. We do not own any patented technology that would preclude or inhibit competitors
from entering the recruiting and career development services market. We compete with other companies that direct all or portions of their websites toward certain
segments or sub- segments of the industries we serve. We compete with generalist job boards, some of which have substantially greater resources and brand
recognition than we do, such as CareerBuilder, Monster.com, Stepstone and Seek, which, unlike specialist job boards, permit customers to enter into a single
contract to find professionals across multiple occupational categories and attempt to fill all of their hiring needs through a single website, as well as job boards
focused specifically on the industries we service, such as FT.com, JobServe, Doximity, and Upwork. We also compete with newspaper and magazine publishers,
national and regional advertising agencies, executive search firms and search and selection firms that carry classified advertising, many of whom have developed,
begun developing or acquired new media capabilities, such as recruitment websites, or have recently partnered with generalist job boards. We also compete with
general business sites and print publications, as well as technology news and information community sites, such as Google News, Digg.com and Reddit.com. In
addition, we face competition from aggregators of classified advertising, including Indeed, TalentBin, Entelo, ZipRecruiter, Google, and Craigslist. Social and
professional networking sites, such as LinkedIn, Facebook, Twitter and Google compete with us in providing professional services. Our Unified Profile Index
service competes with Entelo, Gild and TalentBin. We also compete with new competitors, including career-focused community sites such as Glassdoor and talent
relationship management software providers such as Avature and SmashFly, and emerging competitors with new business models and products that customers are
more willing to trial during periods when talent is scarce.
We must adapt our business model to keep pace with rapid changes in the recruiting and career services business, including rapidly changing
technologies and the development of new products and services.
Providing online recruiting and career development services is a rapidly evolving business, and we will not be successful if our business model does not keep
pace with new trends and developments. The adoption of recruiting and job seeking, particularly among those who have historically relied on traditional recruiting
methods, requires acceptance of a new way of conducting business, exchanging information and applying for jobs. If we are unable to adapt our business model to
keep pace with changes in the recruiting business, or if we are unable to continue to demonstrate the value of our online services to our customers, our business,
results of operations, financial condition and liquidity could be materially adversely affected. Our success is also dependent on our ability to adapt to rapidly
changing technology and to make investments to develop new products and services. Accordingly, to maintain our competitive position and our revenue base, we
must continually modernize and improve the features, reliability and functionality of our service offerings and related products in response to our competitors.
Future technological advances in the career services industry may result in the availability of new recruiting and career development offerings. Some of our
competitors have longer operating histories, larger client bases, longer relationships with clients, greater brand or name recognition, or significantly greater
financial, technical, marketing and public relations resources than we do. As a result, they may be in a position to respond more quickly to new or emerging
technologies and changes in customer requirements, and to develop and promote their products and services more effectively than we can. We may not be able to
adapt to such technological changes or offer new products on a timely or cost-effective basis or establish or maintain competitive positions. If we are unable to
develop and introduce new products and services, or enhancements to existing products and services, in a timely and successful manner, our business, results of
operations, financial condition and liquidity could be materially and adversely affected.
Trends that could have a critical impact on our success include:
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rapidly changing technology in online recruiting;
evolving industry standards relating to online recruiting;
developments and changes relating to the Internet and mobile devices;
evolving government regulations;
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competing products and services that offer increased functionality;
changes in requirements for customers and professionals; and
privacy protection concerning data available and transactions conducted over the Internet.
If we fail to develop and maintain our reputation and brand recognition our business could be adversely affected.
We believe that establishing and maintaining the identity of our key brands, such as Dice, eFinancialCareers, and ClearanceJobs, is critical in attracting and
maintaining the number of professionals and customers using our services, and that the importance of brand recognition will increase due to the growing number of
Internet services similar to ours and relatively low barriers to entry. Promotion and enhancement of our brands will depend largely on our success in continuing to
provide high quality recruiting and career development services. If users do not perceive our existing career and recruiting services to be of high quality, or if we
introduce new services or enter into new business ventures that are not favorably received by users, the uniqueness of our brands could be diminished and
accordingly the attractiveness of our websites to professionals and customers could be reduced. We may also find it necessary to increase substantially our financial
commitment to creating and maintaining a distinct brand loyalty among users. If we cannot provide high quality career services, fail to protect, promote and
maintain our brands or incur excessive expenses in an attempt to improve our career services or promote or maintain our brands, our business, results of operations,
financial condition and liquidity could be materially adversely affected.
Our business is largely based on customers who purchase monthly or annual recruitment packages. Any failure to increase or maintain the number of
customers who purchase recruitment packages could adversely impact our revenues.
Our customers typically include recruiters, staffing firms, consulting firms and direct hiring companies. Customers can choose to purchase recruitment
packages, classified postings or advertisements. Most of our revenues are generated by the fees we earn from our customers who purchase monthly or long-term
recruitment packages. Our growth depends on our ability to retain our existing monthly and annual recruitment package customers and to increase the number of
customers who purchase recruitment packages, as well as introduce new pricing options. Any of our customers may decide not to continue to use our services in
favor of alternate services, lack of need, or because of budgetary constraints or other reasons. We cannot assure you that we will be successful in continuing to
attract new customers or retaining existing customers or that our future sales efforts in general will be effective. If our existing customers choose not to use our
services, decrease their use of our services, or change from being recruitment package customers to purchasing individual classified postings, our services, job
postings and resumes posted on our websites could be reduced, search activity on our websites could decline, the usefulness of our services to customers could be
diminished, and we could experience declining revenues and/or incur significant expenses. Dice U.S. recruitment package customers at December 31, 2018, 2017
and 2016 were 6,200, 6,450, and 7,050, respectively.
If we fail to attract qualified professionals to our websites or grow the number of qualified professionals who use our websites, our revenues could
decline.
The value of our websites to our customers is dependent on our ability to continuously attract professionals with the experience, education and skill-set our
customers seek. For example, the professionals who post their resumes on Dice.com are highly educated, with approximately 85% having a bachelor’s degree or
higher as of January 2019. Our online surveys indicate that almost 82% of professionals who use Dice.com have more than five years of experience, over half have
greater than 10 years of experience, and the majority are currently employed. To grow our businesses, we must continue to convince qualified professionals that
our services will assist them in finding employment, so that customers will choose to use our services to find employees. We do not know the extent to which we
have penetrated the market of qualified professionals in the industries we serve or the extent to which we will be able to grow the number of qualified professionals
who use our websites. If we are unable to increase the number of professionals using our websites, or if the professionals who use our websites are viewed as
unattractive by our customers, our customers could seek to list jobs and search for professionals elsewhere, which could cause our revenues to decline.
We may not timely and effectively scale and adapt our existing technology and network infrastructure to ensure that our websites are accessible within
an acceptable load time.
A key element to our continued growth is the ability of our users (whom we define as anyone who visits our website, regardless of whether or not they are a
customer), enterprises and professional organizations in all geographies to access our website within acceptable load times. We call this “website performance.”
We have experienced, and may in the future experience, website disruptions, outages and other performance problems due to a variety of factors, including
infrastructure changes, human or software errors, capacity constraints due to an overwhelming number of users accessing our website simultaneously, and denial of
service or fraud or security attacks. In some instances, we may not be able to identify the cause or causes of these website performance problems within an
acceptable period of time. It may become increasingly difficult to maintain and improve the performance of our websites, especially during peak usage times and as
our solutions become more complex and our user traffic increases. If our websites are unavailable when users attempt to access them or do not load as quickly as
they expect, users may seek other websites to obtain the information for which they are looking, and may not return to our websites as often in the future, or at all.
This would negatively impact our ability to attract customers, enterprises and professional organizations and increase engagement on our
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websites. We expect to continue to make significant investments to maintain and improve website performance and to enable rapid releases of new features and
products. To the extent that we do not effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and network
architecture to accommodate actual and anticipated changes in technology, our business and operating results may be harmed.
Capacity constraints, systems failures or breaches of our network security could materially and adversely affect our business. If we fail to manage our
technical operations infrastructure, our existing customers may experience services outages, and our new customers may experience delays in the deployment
of our solution.
We derive almost all of our revenues from the purchase of recruitment products and services and employment advertising offered on our Dice,
eFinancialCareers, and ClearanceJobs websites. As a result, our operations depend on our ability to maintain and protect our website services, most of which are
housed within Amazon Web Services. System failures, including network, software or hardware failures, which cause interruption or an increase in response time
of our services, could substantially decrease usage of our services and could reduce the attractiveness of our services to both our customers and professionals. An
increase in the volume of queries conducted through our services could strain the capacity of the software or hardware we employ. This could lead to slower
response times or system failures and prevent users from accessing our websites for extended periods of time, thereby decreasing usage and attractiveness of our
services. Our technology operations are dependent in part on our ability to protect our operating systems against:
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physical damage from acts of God;
terrorist attacks or other acts of war;
power loss;
telecommunications failures;
network, hardware or software failures;
physical and electronic break-ins;
cyber security attacks;
computer viruses or worms;
identity theft; and
similar events.
Although we maintain insurance against fires, floods and general business interruptions, the amount of coverage may not be adequate in any particular case.
Furthermore, the occurrence of any of these events could result in interruptions, delays or cessations in service to users of our services, which could materially
impair or prohibit our ability to provide our services and significantly impact our business.
Additionally, overall Internet usage could decline if any well-publicized compromise of security occurs or if there is a perceived lack of security of personal
and corporate information stored within our systems to facilitate hiring and recruitment business processes. “Hacking” involves efforts to gain unauthorized access
to information or systems or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and online job
boards, in particular, have been targeted by hackers who seek to gain unauthorized access to job seeker and customer data for purposes of implementing “phishing”
or other schemes. Despite our implementation of numerous security measures; including access controls, network security, information security risk management
processes, software development security, cryptography, operational security, business continuity and disaster recovery, and physical security, our websites,
servers, databases and other systems may be vulnerable to computer hackers, physical or electronic break-ins, sabotage, computer viruses, worms and similar
disruptions from unauthorized tampering with our computer systems. Our systems, like the systems of many other websites, have been targeted in the past in cyber
attacks and hacks and will continue to be subject to such attacks. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage
systems change frequently, such techniques often are not recognized until launched against a target and may originate from less regulated and remote areas around
the world, we may be unable to proactively address these techniques or to implement adequate preventative measures. We will continue to review and enhance our
security measures in an attempt to prevent unauthorized and unlawful intrusions, although in the future it is possible we may not be able to prevent all intrusions,
and such intrusions could result in our network security or computer systems being compromised and possibly result in the misappropriation or corruption of
proprietary or personal information or cause disruptions in our services. We might be required to expend significant capital and resources to protect against,
remediate or alleviate problems caused by such intrusions. We may also not have a timely remedy against a hacker who is able to penetrate our network security.
Our networks could also be affected by viruses or malware or other similar disruptive problems, and we could inadvertently transmit these viruses or malware to
our users or other third parties. Our hardware and back-up systems could fail causing our services to be interrupted. Any of these occurrences, and negative
publicity arising from any such occurrences, could harm our business or give rise to a cause of action against us. Our general business interruption insurance
policies have limitations with respect to covering interruptions caused by computer viruses or hackers. We have not added specific insurance coverage to protect
against these risks. Our activities and the activities of third party contractors involve the storage, use and transmission of proprietary and personal information,
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including personal information collected from professionals who use our websites. Accordingly, security breaches could expose us to a risk of loss or litigation and
possibly liabilities. We cannot assure that contractual provisions attempting to limit our liability in these areas will be successful or enforceable, or that other
parties will accept such contractual provisions as part of our agreements. Any security breaches or our inability to provide users with continuous access to our
networks could materially impact our ability to provide our services as well as materially impact the confidence of our customers in our services, either of which
could have a material adverse effect on our business.
We may be liable with respect to the collection, storage and use of the personal and professional information of the professionals, who use our websites
and our current practices may not be in compliance with proposed new laws and regulations.
Our business depends on our ability to collect, store, use and disclose personal and professional data from the professionals who use our websites. Our
policies concerning the collection, use and disclosure of personally identifiable information are described on our websites. In recent years, class action lawsuits
have been filed and the Federal Trade Commission and state agencies have commenced investigations with respect to the collection, use, sale and storage by
various Internet companies of users’ personal and professional information. While we believe we are in compliance with current law, we cannot ensure that we will
not be subject to lawsuits or investigations for violations of law. Moreover, our current practices regarding the collection, storage and use of user information may
not be in compliance with currently pending legislative and regulatory proposals by the United States federal government and various state and foreign
governments intended to limit the collection and use of user information. While we have implemented and intend to implement additional programs designed to
enhance the protection of the privacy of our users, these programs may not conform to all or any of these laws or regulations and we may consequently incur civil
or criminal liability for failing to conform. As a result, we may be forced to change our current practices relating to the collection, storage and use of user
information. Our failure or our perceived failure to comply with laws and regulations could also lead to adverse publicity and a loss of consumer confidence if it
were known that we did not take adequate measures to assure the confidentiality of the personally identifiable information that our users had given to us. This could
result in a loss of customers and revenue and materially adversely impact the success of our business. Concern among prospective customers and professionals
regarding our use of personal information collected on our websites, such as credit card numbers, email addresses, phone numbers and other personal information,
could keep prospective customers from using our career services websites. Internet-wide incidents or incidents with respect to our websites, including
misappropriation of our users’ personal information, penetration of our network security, or changes in industry standards, regulations or laws could deter people
from using the Internet or our websites to conduct transactions that involve confidential information, which could have a material adverse impact on our business.
We generally comply with industry standards and are subject to the terms of our privacy policies and privacy-related obligations to third parties (including
voluntary third-party certification bodies such as TRUSTe). We strive to comply with all applicable laws, policies, legal obligations and industry codes of conduct
relating to privacy and data protection, to the extent possible. However, it is possible that these obligations may be interpreted and applied in new ways and/or in a
manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices or that new regulations could be enacted.
In the past, we have relied on the U.S.-European Union Frameworks, as agreed to by the U.S. Department of Commerce and the European Union (“EU”), as
one of the means to legally transfer European personal information from Europe to the United States. However, on October 6, 2015, the European Court of Justice
invalidated the U.S.-EU Safe Harbor framework. On February 2, 2016, the U.S. and E.U. announced agreement on a new framework for transatlantic data flows
entitled the EU-US Privacy Shield. However, it is possible that Privacy Shield may be challenged in EU courts and there is some uncertainty regarding its future
validity and our ability to rely on it for EU to US data transfers.
Additionally, the EU has enacted the GDPR, which took effect on May 25, 2018. The GDPR implemented more stringent operational requirements for
processors and controllers of personal data, including, for example, expanded disclosures about how personal information is to be used, limitations on retention of
information, mandatory data breach notification requirements and higher standards for controllers to demonstrate that they have obtained valid consent for certain
data processing activities. The GDPR also provides for significant penalties for non-compliance. As a result of the GDPR, we expect regulatory and customer
attention surrounding data privacy continue to increase. Furthermore, outside of the EU, we continue to see increased regulation of data privacy and security,
including the adoption of more stringent subject matter specific state laws and national laws regulating the collection and use of data, as well as security and data
breach obligations. For example, California recently adopted the California Consumer Privacy Act of 2018, or CCPA, which will come into effect beginning in
January 2020. The CCPA has been characterized as the first "GDPR-like" privacy statute to be enacted in the United States because it mirrors a number of the key
provisions of the GDPR. The CCPA establishes a new privacy framework for covered businesses by, among other things, creating an expanded definition of
personal information, establishing new data privacy rights for consumers in the State of California and creating a new and potentially severe statutory damages
framework for violations of the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches.
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The uncertainty and changes in the requirements of multiple jurisdictions may increase the cost of compliance, reduce demand for our websites, restrict our
ability to offer services in certain locations or subject us to sanctions by national data protection regulators, all of which could harm our business, financial
condition, and results of operations. Failure to provide adequate privacy protections and maintain compliance with the new data privacy laws, including the EU-
U.S. Privacy Shield framework and the GDPR, could have a material adverse effect on our financial condition and results of operations.
We have indebtedness which could affect our financial condition, and, if adverse changes in the credit markets occur, we may not be able to borrow
funds under our revolving credit facility or refinance our indebtedness.
As of December 31, 2018 , we had $18.0 million of outstanding indebtedness under our credit agreement dated November 14, 2018 (the “Credit Agreement”)
and we had the ability to borrow an additional $72.0 million . If we cannot generate sufficient cash flow from operations to service our debt, we may need to
further refinance our debt, dispose of assets or issue equity to obtain necessary funds. We do not know whether we will be able to take any of these actions, if
necessary, on a timely basis or on terms satisfactory to us or at all.
Our Credit Agreement consists of a revolving facility and matures in November 2023. The funding of the revolving facility is dependent on a number of
financial institutions. It is possible that one or more of the lenders will refuse or be unable to satisfy their commitment to lend to us should we need to borrow funds
under the revolving credit facility. If borrowings are unavailable to us and we cannot generate sufficient revenues to fund our operations, our business will be
adversely affected. In addition, the inability to borrow could hinder growth if we need funds to complete an acquisition.
Our indebtedness could limit our ability to:
obtain necessary additional financing for working capital, capital expenditures or other purposes in the future;
plan for, or react to, changes in our business and the industries in which we operate;
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react in an extended economic downturn.
The terms of our Credit Agreement may restrict our current and future operations, which would adversely affect our ability to respond to changes in
our business and to manage our operations.
Our Credit Agreement contains, and any future indebtedness of ours would likely contain, a number of restrictive covenants that impose significant operating
and financial restrictions on us, including restrictions on our ability to, among other things:
incur additional debt;
pay dividends and make other restricted payments;
repurchase our own shares;
create liens;
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• make investments and acquisitions;
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engage in sales of assets and subsidiary stock;
enter into sale-leaseback transactions;
enter into transactions with affiliates;
transfer all or substantially all of our assets or enter into merger or consolidation transactions; and
Our Credit Agreement also requires us to maintain certain financial ratios. A failure by us to comply with the covenants or financial ratios contained in our
Credit Agreement could result in an event of default under our Credit Agreement which could adversely affect our ability to respond to changes in our business and
manage our operations. In the event of any default under our Credit Agreement, the lenders under our Credit Agreement will not be required to lend any additional
amounts to us. Our lenders also could elect to declare all amounts outstanding to be due and payable and require us to apply all of our available cash to repay these
amounts. If the indebtedness under our Credit Agreement were to be accelerated, there can be no assurance that our assets would be sufficient to repay this
indebtedness in full.
We expect our operating results to fluctuate on a quarterly and annual basis.
Our revenue and operating results could vary significantly from quarter-to-quarter and year-to-year and may fail to match our past performance because of a
variety of factors, some of which are outside of our control. Any of these events could cause the market price of our common stock to fluctuate. Factors that may
contribute to the variability of our operating results include:
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the size and seasonal variability of our customers’ recruiting and marketing budgets;
the emergence of new competitors in our market whether by established companies or the entrance of new companies;
the cost of investing in our technology infrastructure may be greater than we anticipate;
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our ability to increase our customer base and customer and professional engagement;
disruptions or outages in the availability of our websites, actual or perceived breaches of privacy and compromises of our customers’ or professionals’
data;
changes in our pricing policies or those of our competitors;
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• macroeconomic changes, in particular, deterioration in labor markets, which would adversely impact sales of our hiring solutions, or economic growth
that does not lead to job growth, for instance increases in productivity;
costs associated with data security which is becoming increasingly complex;
the timing and costs of expanding our organization and delays or inability in achieving expected productivity;
the timing of certain expenditures, including hiring of employees and capital expenditures;
our ability to increase sales of our products and solutions to new customers and expand sales of additional products and solutions to our existing
customers;
the extent to which existing customers renew their agreements with us and the timing and terms of those renewals; and
general industry and macroeconomic conditions.
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Our history of operations includes periods of operating and net losses, and we may incur operating and net losses in the future. Our significant net losses
in periods prior to 2003 and the significant amount of indebtedness incurred by our predecessor led us to declare bankruptcy in early 2003.
Our history of operations includes periods of operating and net losses. Our significant net losses in periods prior to 2003 and the significant amount of
indebtedness incurred by our predecessor led us to declare bankruptcy in early 2003. Although we have managed to achieve an increase in revenues since Dice Inc.
emerged from bankruptcy, we have also increased our operating expenses significantly, expanded our net sales and marketing operations, made significant
acquisitions and have continued to develop and extend our online career services with the expectation that our revenues will grow in the future. We may not
generate sufficient revenues to pay for all of these operating or other expenses, which could have a material adverse effect on our business, results of operations
and financial condition.
If we are not able to successfully identify or integrate recent or future acquisitions our management’s attention could be diverted, and our efforts to
integrate future acquisitions could consume significant resources.
An important component of our tech-focused strategy is developing new capabilities that strengthen and expand our position in the global technology talent
acquisition market and broaden the talent solutions through the acquisition of other complementary businesses and technologies (such as the 2013 acquisition of
The IT Job Board, the 2012 WorkDigital acquisition, and the 2006 eFinancialGroup acquisition). Our further growth may depend in part on our ability to identify
additional suitable acquisition opportunities or consummate such acquisitions on terms that are beneficial to us. We may not be able to identify suitable acquisition
opportunities or consummate such acquisitions on favorable terms or at all. In addition, the anticipated results or operational benefits of any businesses we acquire
may not be realized and we may not be successful in integrating other acquired businesses into our operations. Failure to manage and successfully integrate
acquired businesses could harm our business. Even if we are successful in making an acquisition, we may encounter numerous risks, including the following:
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expenses, delays and difficulties in integrating the operations, technologies and products of acquired companies;
potential disruption of our ongoing operations;
diversion of management’s attention from normal daily operations of our business;
inability to maintain key business relationships and the reputations of acquired businesses;
the difficulty of integrating acquired technology and rights into our services and unanticipated expenses related to such integration;
the impairment of relationships with customers and partners of the acquired companies or our customers and partners as a result of the integration of
acquired operations;
the impairment of relationships with employees of the acquired companies or our employees as a result of integration of new management personnel;
entry into markets in which we have limited or no prior experience and in which our competitors have stronger market positions;
dependence on unfamiliar employees, affiliates and partners;
the amortization of acquired companies’ intangible assets;
insufficient revenues to offset increased expenses associated with the acquisition;
inability to maintain our internal standards, controls, procedures and policies;
reduction or replacement of the sales of existing services by sales of products and services from acquired business lines;
potential loss of key employees of the acquired companies;
difficulties integrating the personnel and cultures of the acquired companies into our operations;
in the case of foreign acquisitions, uncertainty regarding foreign laws and regulations and difficulty integrating operations and systems as a result of
cultural, systems and operational differences; and
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the impact of potential liabilities or unknown liabilities of the acquired businesses.
If any of these risks materialize, they could have a material adverse effect on our business, results of operations, financial condition and liquidity.
In addition, any acquisition of other businesses or technologies may require us to seek debt or equity financing. Such financing might not be available to us
on acceptable terms or at all. The global financial markets have recently experienced declining equity valuations and disruptions in the credit markets due to
liquidity imbalances and repricing of risk, which may impact our ability to obtain additional financing on reasonable terms or at all.
Misappropriation or misuse of our intellectual property could harm our reputation, affect our competitive position and cost us money.
Our success and ability to compete are dependent in part on the strength of our intellectual property rights, the content included on our websites, the goodwill
associated with our trademarks, trade names and service marks, and on our ability to use U.S. and foreign laws to protect them. Our intellectual property includes,
among other things, the content included on our websites, our logos, brands, domain names, the technology that we use to deliver our products and services, the
various databases of information that we maintain and make available and the appearance of our websites. We claim common law protection on certain names and
marks that we have used in connection with our business activities and the content included on our websites. We also own a number of registered or applied-for
trademarks and service marks that we use in connection with our business, including DICE, CLEARANCEJOBS.COM, and EFINANCIALCAREERS some of
which we have acquired through business acquisitions. Although we generally pursue the registration of material service marks and other material intellectual
property we own, where applicable, we have copyrights, trademarks and/or service marks that have not been registered in the United States and/or other
jurisdictions. We generally enter into confidentiality and work-for-hire agreements with our employees, consultants, and vendors to protect our intellectual property
rights. We also seek to control access to and distribution of our technology, documentation and other proprietary information as well as proprietary information
licensed from third parties. Policing our intellectual property rights worldwide is a difficult task, and we may not be able to identify infringing users. The steps we
have taken to protect our proprietary rights may not be adequate, and third parties could infringe, misappropriate or misuse our intellectual property rights. If this
were to occur, it could harm our reputation and affect our competitive position. It could also require us to spend significant time and money in litigation. In
addition, the laws of foreign countries do not necessarily protect intellectual property rights to the same extent as the laws of the United States. We have licensed in
the past (on a royalty free basis), and expect to license in the future, various elements of our distinctive trademarks, service marks, trade dress, content and similar
proprietary rights to third parties. We enter into strategic marketing arrangements with certain third-party web site operators pursuant to which we license our
trademarks, service marks and content to such third parties in order to promote our brands and services and to generate leads to our websites. While we attempt to
ensure that the quality of our brands is maintained by these licensees, we cannot assure you that third-party licensees of our proprietary rights will always take
actions to protect the value of our intellectual property and reputation, and if they fail to do so, such failure could adversely affect our business and reputation.
We could be subject to infringement and other claims relating to our services or the content on our websites that may result in costly litigation, the
payment of damages or the need to revise the way we conduct business.
We cannot be certain that our technology, offerings, services or content do not or will not infringe upon the intellectual property or other proprietary rights of
third parties, or otherwise violate laws. From time to time we receive notices alleging potential infringement of intellectual property or other proprietary rights of
third parties or non-compliance with applicable laws. In seeking to protect our marks, copyrights, domain names and other intellectual property rights, or in
defending ourselves against claims of infringement or non-compliance that may or may not be without merit, we could face costly litigation and the diversion of
our management’s attention and resources. Claims against us could result in the need to develop alternative trademarks, content, technology or other intellectual
property or enter into costly royalty or licensing agreements, or substantially modify or cease to offer one or more of our services, which could have a material
adverse effect on our business, results of operations, financial condition and liquidity. If we were found to have infringed on a third party’s intellectual property or
other proprietary rights, or failed to comply with applicable laws, among other things, the value of our brands and our business reputation could be impaired, and
our business could suffer.
If we are unable to enforce or defend our ownership or use of intellectual property, our business, competitive position and operating results could be
harmed.
The success of our business depends in large part on our intellectual property rights, including existing and future trademarks and copyrights, which are and
will continue to be valuable and important assets of our business. Our business could be harmed if we are not able to protect the content of our databases and our
other intellectual property. We have taken measures to protect our intellectual property, such as requiring our employees and consultants with access to our
proprietary information to execute confidentiality agreements. In the future, we may sue competitors or other parties who we believe to be infringing our
intellectual property. We may in the future also find it necessary to assert claims regarding our intellectual property. These measures may not be sufficient or
effective to protect our intellectual property. We also rely on laws, including those regarding copyrights and
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trademarks to protect our intellectual property rights. Current laws, or the enforceability of such laws, specifically in foreign jurisdictions, may not adequately
protect our intellectual property or our databases and the data contained in them. In addition, legal standards relating to the validity, enforceability and scope of
protection of intellectual property rights in Internet related businesses are uncertain and evolving, and we cannot assure you of the future viability or value of any
of our proprietary rights. Others may develop technologies similar or superior to our technology. A significant impairment of our intellectual property rights could
require us to develop alternative intellectual property, incur licensing or other expenses or limit our product and service offerings.
We have incurred increased costs and will continue to incur these costs as a result of being a public company.
As a public company, we have incurred and will continue to incur significant levels of legal, accounting and other expenses. In addition, the Sarbanes Oxley
Act of 2002 (“Sarbanes Oxley”), the Dodd-Frank Act and related rules of the Securities and Exchange Commission (the “SEC”) and the NYSE regulate corporate
governance practices of public companies and impose significant requirements relating to disclosure controls and procedures and internal control over financial
reporting. Compliance with these public company requirements has increased our costs, required additional resources and made some activities more time
consuming. We are required to expend considerable time and resources complying with public company regulations.
Actions of activist shareholders could cause us to incur substantial costs, divert management's attention and resources, and have an
adverse effect on our business.
We have been the subject of activity by activist shareholders in the past and shareholder activism generally is increasing. Responding to shareholder activism
can be costly and time-consuming, disrupt our operations, and divert the attention of management and our employees from our strategic initiatives. Activist
campaigns can create perceived uncertainties as to our future direction, strategy, or leadership and may result in the loss of potential business opportunities, harm
our ability to attract new employees, investors, customers, and other partners, and cause our stock price to experience periods of volatility.
If we do not meet the continued listing requirements of the NYSE our common stock may be delisted.
Our common stock is listed on the NYSE. The NYSE requires us to continue to meet certain listing standards, including standards related to the trading price
of our common stock, as well as our global market capitalization. While we are currently in compliance with the NYSE continued listing requirements, we cannot
assure you that we will remain in compliance. If we do not meet the NYSE’s continued listing standards, we will be notified by the NYSE and we will be required
to take corrective action to meet the continued listing standards; otherwise our common stock will be delisted from the NYSE. A delisting of our common stock on
the NYSE would reduce the liquidity and market price of our common stock and the number of investors willing to hold or acquire our common stock, which could
negatively impact our ability to access the public capital markets. A delisting would also reduce the value of our equity compensation plans, which could
negatively impact our ability to retain key employees.
Our stock price has been volatile in the past and may be subject to volatility in the future.
The trading price of our common stock has been volatile in the past, including recent significant declines, and could be subject to fluctuations in response to
various factors, some of which are beyond our control. Factors such as announcements of variations in our quarterly financial results and fluctuations in revenue
could cause the market price of our common stock to fluctuate. Fluctuations in the valuation of companies perceived by investors to be comparable to us or in
valuation metrics, such as our price to earnings ratio, could impact our stock price. Additionally, the stock markets have at times experienced price and volume
fluctuations that have affected and might in the future affect the market prices of equity securities of many companies. These fluctuations have, in some cases, been
unrelated or disproportionate to the operating performance of these companies. Further, the trading prices of publicly traded shares of companies in our industry
have been particularly volatile and may be very volatile in the future. These broad market and industry fluctuations, as well as general economic, political and
market conditions such as recessions, interest rate changes, international currency fluctuations or political unrest, may negatively impact the market price of our
common stock.
Failure to maintain effective internal control over financial reporting could have a material adverse effect on our business, operating results and stock
price.
Maintaining effective internal control over financial reporting is necessary for us to produce reliable financial reports and is important in helping to prevent
financial fraud. If we are unable to maintain adequate internal controls, our business and operating results could be harmed. We are required to satisfy the
requirements of Section 404 of Sarbanes Oxley and the related rules of the SEC, which require, among other things, our management to assess annually the
effectiveness of our internal control over financial reporting and our independent registered public accounting firm to issue a report on that assessment. We may be
unable to remedy deficiencies before the requisite deadlines for those reports. Any failure to remediate deficiencies noted by our independent registered public
accounting firm or to implement required new or improved controls or difficulties encountered in their implementation could cause us to fail to meet our reporting
obligations or result in material misstatements in our financial statements.
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If our management or our independent registered public accounting firm were to conclude in their reports that our internal control over financial reporting was not
effective, investors could lose confidence in our reported financial information, and the trading price of our stock could drop significantly.
Our business is subject to U.S. and foreign government regulation of the Internet and taxation, which may have a material adverse effect on our
business.
Congress and various state and local governments, as well as the EU, have passed legislation that regulates various aspects of the Internet, including content,
copyright infringement, user privacy, taxation, access charges, liability for third-party activities and jurisdiction. In addition, federal, state, local and foreign
governmental organizations are also considering legislative and regulatory proposals that would regulate the Internet. Areas of potential regulation include libel,
pricing, quality of products and services and intellectual property ownership. A number of proposals have been made at the state and local level that would impose
taxes on the sale of goods and services through the Internet. Such proposals, if adopted, could substantially impair the growth of commerce over the Internet and
could adversely affect our business, future results of operations, financial condition and liquidity. We may be subject to restrictions on our ability to communicate
with our customers through email and phone calls. Several jurisdictions have proposed or adopted privacy related laws that restrict or prohibit unsolicited email or
“spam.” These laws may impose significant monetary penalties for violations. For example, the CAN-SPAM Act of 2003, or “CAN-SPAM,” imposes complex and
often burdensome requirements in connection with sending commercial email. Key provisions of CAN-SPAM have yet to be interpreted by the courts. Depending
on how it is interpreted, CAN-SPAM may impose burdens on our email marketing practices or services we offer or may offer. Although CAN-SPAM is thought to
have preempted state laws governing unsolicited email, the effectiveness of that preemption is likely to be tested in court challenges. If any of those challenges are
successful, our business may be subject to state laws and regulations that may further restrict our email marketing practices and the services we may offer. The
scope of those regulations is unpredictable. Because a number of these laws are relatively new and still in the process of being implemented, we do not know how
courts will interpret these laws. Therefore, we are uncertain as to how new laws or the application of existing laws will affect our business.
Changes in laws or regulations that adversely affect the growth, popularity or use of the internet, including laws impacting net neutrality, could decrease the
demand for our service and increase our cost of doing business. Certain laws intended to prevent network operators from discriminating against the legal traffic that
traverse their networks have been implemented in many countries, including across the E.U. In others, the laws may be nascent or non-existent. Furthermore,
favorable laws may change, including for example in the United States where the FCC voted to repeal existing net neutrality regulations. Given uncertainty around
these rules, including changing interpretations, amendments or repeal, coupled with potentially significant political and economic power of local network
operators, we could experience discriminatory or anti-competitive practices that could impede our growth, cause us to incur additional expense or otherwise
negatively affect our business.
Due to the global nature of the Internet, it is possible that the governments of other states and foreign countries might attempt to regulate its transmissions or
prosecute us for violations of their laws. We might unintentionally violate such laws or such laws may be modified and new laws may be enacted in the future. Any
such developments (or developments stemming from enactment or modification of other laws) may significantly harm our business, operating results and financial
condition.
If our users or customers do not find our candidate profiles useful, it could adversely impact demand for our products and services and the growth of our
business.
Our product integrates publicly available data on the internet to create aggregated profiles of prospective candidates’ professional experience and other
employment-related data. These profiles are made available to our customers through our TalentSearch product to help them identify prospective technical
candidates in a way that reduces their need to search multiple websites, while delivering more relevant candidates and useful employment information to recruiters
and employers that use it. While we have invested substantial resources into the development of our Unified Profile Index product, there can be no assurance that
we will continue to be able to access the data that is necessary to create the candidate profiles used in this product. Technology companies, social and professional
networking websites or other companies may develop technology which competes with our Unified Profile Index product or we may be prevented from
aggregating the data we need to make this product useful, which could decrease the demand for this product. Moreover, candidates sought out through the socially
aggregated profiles may not be interested in the opportunities presented to them by the recruiters and employers who use the product, which could decrease its
demand. Any decrease in demand for our Unified Profile Index product may adversely affect our ability to differentiate ourselves from our competitors, which
would have a material adverse effect on our business and operating results .
If Internet search engines’ methodologies are modified or our search result page rankings decline for other reasons, our user engagement could decline.
We depend in part on various Internet search engines, such as Google, Bing and Yahoo!, to direct a significant amount of traffic to our websites. Our ability
to maintain the number of visitors directed to our websites is not entirely within our control.
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Our competitors’ search engine optimization, or SEO, efforts may result in their websites receiving a higher search result page ranking than ours, or Internet search
engines could revise their methodologies in an attempt to improve their search results, which could adversely affect the placement of our search result page
ranking. If search engine companies modify their search algorithms in ways that are detrimental to our new user growth or in ways that make it harder for our users
to use our websites, or if our competitors’ SEO efforts are more successful than ours, overall growth in our user base could slow, user engagement could decrease,
and we could lose existing users. These modifications may be prompted by search engine companies entering the online professional networking market or aligning
with competitors. Our websites have experienced fluctuations in search result rankings in the past, and we anticipate similar fluctuations in the future. Any
reduction in the number of users directed to our websites would harm our business and operating results.
We may not be able to halt the operations of websites that aggregate our data as well as data from other companies, including social networks, or copycat
websites that have misappropriated our data in the past or may misappropriate our data in the future. These activities could harm our brand and our business.
From time to time, third parties have misappropriated our data through website scraping, robots or other means and aggregated this data on their websites
with data from other companies. In addition, “copycat” websites have misappropriated data on our network and attempted to imitate our brand or the functionality
of our websites. These activities could degrade our brands and harm our business. When we have become aware of such websites, we have employed technological
or legal measures in an attempt to halt their operations. However, we may not be able to detect all such websites in a timely manner and, even if we could,
technological and legal measures may be insufficient to stop their operations. In some cases, particularly in the case of websites operating outside of the United
States, our available remedies may not be adequate to protect us against such websites. Regardless of whether we can successfully enforce our rights against these
websites, any measures that we may take could require us to expend significant financial or other resources.
If our business fails to attract and retain users, particularly users who create and post original content on our web properties, our financial results will be
adversely affected.
Our reliance upon user-generated content requires that we develop and maintain tools and services designed to facilitate:
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creation of user-generated content;
participation in discussion surrounding such user-generated content;
evaluation of user-generated content; and
distribution of user-generated content.
If our development efforts fail to facilitate such activities on our web properties, the level of user engagement and interaction will not increase and may
decline. Even if we succeed in facilitating such activities on our sites, there can be no assurance that such improvements will be deployed in a timely or cost-
effective manner.
If we fail to increase user engagement and interaction on our web properties, we will not attract and retain a loyal user base or the advertisers who desire to
reach them, which will adversely affect our business and our ability to maintain or grow our revenue.
We face risks relating to our foreign operations.
We operate websites serving numerous markets around the world. For the year ended December 31, 2018 , approximately 25% of our total revenues were
generated outside of the United States. Certain of these amounts are collected in local currency. As a result of operating outside the United States, we are at risk for
exchange rate fluctuations between such local currencies and the United States dollar. To date, we have not engaged in exchange rate hedging activities. Even if we
were to implement hedging strategies to mitigate this risk, these strategies might not eliminate our exposure to foreign exchange rate fluctuations and would
involve costs and risks of their own, such as ongoing management time and expertise, external costs to implement the strategies and potential accounting
implications. We are also subject to taxation in foreign jurisdictions. In addition, transactions between our foreign subsidiaries and us may be subject to United
States and foreign withholding taxes. Applicable tax rates in foreign jurisdictions differ from those of the United States, and change periodically. The extent, if any,
to which we will receive credit in the United States for taxes we pay in foreign jurisdictions will depend upon the application of limitations set forth in the U.S.
Internal Revenue Code, as well as the provisions of any tax treaties that may exist between the United States and such foreign jurisdictions. Our current or future
international operations might not succeed for a number of reasons including:
•
•
•
•
difficulties in staffing and managing foreign operations;
competition from local recruiting services or employment advertising agencies;
operational issues, such as longer customer payment cycles and greater difficulties in collecting accounts receivable;
seasonal reductions in business activity;
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language and cultural differences;
taxation issues;
foreign exchange controls that might prevent us from repatriating income earned in countries outside the United States;
credit risk;
higher levels of payment fraud;
•
•
•
•
•
• multiple and conflicting laws and regulations, including complications due to unexpected changes in these laws and regulations;
•
•
•
the burdens of complying with a wide variety of foreign laws and regulations;
difficulties in enforcing intellectual property rights in countries other than the United States; and
general political and economic trends.
Our future growth depends on our ability to expand operations in international markets. We may have limited experience or we may need to rely on
business partners in these markets, and our future growth will be materially adversely affected if we are unsuccessful in our international expansion efforts.
We operate local websites in numerous markets around the world. Our future growth will depend significantly on our ability to expand our brands and
product offerings in additional international markets. As we expand into new international markets, we may have only limited experience in marketing and
operating our products and services in such markets. In other instances, we may have to rely on the efforts and abilities of foreign business partners in such
markets. Certain international markets may be slower than domestic markets in adopting the online recruitment and advertising industry medium and, as a result,
our operations in international markets may not develop at a rate that supports our level of investment. In addition, business practices in these new international
markets may be unlike those in the other markets we serve and we may face increased exposure to fines and penalties under U.S. laws, such as the Foreign Corrupt
Practices Act, the U.K. Anti-Bribery Act and local laws prohibiting corrupt payments to governmental officials. Although we have implemented policies and
procedures designed to ensure compliance with these laws, we cannot be sure that our employees, contractors or agents will not violate our policies. Any such
violations could materially damage our reputation, our brand, our international expansion efforts, our business and our operating results.
We may be impacted by unfavorable decisions in proceedings related to future tax assessments.
We operate in a number of jurisdictions and are from time to time subject to audits and reviews by various taxation authorities with respect to income,
payroll, sales and use, and other taxes for current and past periods. We may become subject to future tax assessments by various authorities. The determination of
our worldwide provision for income taxes and current and deferred tax assets and liabilities requires judgment and estimation. There are many transactions and
calculations where the ultimate tax determination is uncertain. Although we believe our tax estimates are reasonable, the ultimate tax outcome may differ
materially from the tax amounts recorded in our consolidated financial statements. Any amount we might be required to pay in connection with an ongoing audit or
review or a future tax assessment may have a material adverse effect on our financial position, cash flows or overall results of operations.
Taxation risks could subject us to liability for past sales and cause our future sales to decrease.
We do not collect sales or use tax in certain jurisdictions on the services we provide in the United States. Our operations, and any future expansion of them,
along with other aspects of our evolving business, may result in additional sales or use tax obligations.
Currently, the individual states’ laws and regulations determine which services performed over the Internet are subject to sales tax. A number of states have
been considering or have adopted initiatives that could impose sales tax on certain services delivered electronically. Additionally, many states have implemented
laws or regulations requiring out-of-state vendors to collect sales tax following the U.S. Supreme Court's June 2018 decision in Wayfair
v.
South
Dakota,
Inc.
regarding the tax filing obligations of remote sellers. If more states implement such laws or regulations, we could be required to collect sales tax in additional
states. Also, a state may take the position that certain services we provide are subject to sales tax under existing regulations. The imposition by state and local
governments of various taxes upon certain services delivered over the Internet could create administrative burdens for us, put us at a competitive disadvantage if
they do not impose similar obligations on all of our online competitors and potentially decrease our future sales.
We collect indirect tax (including value added tax and goods and services tax) as applicable on services sold by us on some of our international sites.
Additional foreign countries may seek to impose indirect tax collection obligations on us.
A successful assertion by one or more jurisdictions that we should collect sales tax or other indirect tax on the sale of services could result in substantial tax
liabilities for past sales, decrease our ability to compete, and otherwise harm our business.
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Because we recognize most of our revenue from our contracts over the term of the agreement, a significant downturn in these businesses may not be
immediately reflected in our operating results.
We recognize revenue from sales of our recruiting contracts over the terms of the agreements, which, on average, is approximately 12 months. As a result, a
significant portion of the revenue we report in each quarter is generated from agreements entered into during previous quarters. Consequently, a decline in new or
renewed agreements in any one quarter may not significantly impact our revenue in that quarter but may, instead, negatively affect our revenue in future quarters.
In addition, we may be unable to adjust our fixed costs in response to reduced revenue. Accordingly, the effect of significant declines in the sales of these offerings
may not be reflected in our short-term results of operations.
The UK’s impending departure from the EU could adversely affect us.
The U.K. held a referendum on June 23, 2016 on its membership in the E.U., in which a majority of voters in the U.K. voted to exit the E.U. (commonly
referred to as “Brexit”). The U.K.’s departure from the E.U. is currently scheduled to take place on Friday, March 29, 2019. Brexit could cause disruptions to and
create uncertainty surrounding our business, including affecting our relationships with our existing and future customers and employees based in the UK and
Europe. For example, if as a result of Brexit, financial institutions move all or a portion of their operations out of the UK, it may result in decreased demand for
jobs in the financial sector in the UK and could negatively impact the performance of our eFinancialCareers business. Further, the potential loss of the EU
“passport,” or any other potential restriction on free travel of UK citizens to Europe, and vice versa, could adversely impact the jobs market in general and our
operations in Europe.
In addition, Brexit has resulted in significant volatility in the value of the British Pound Sterling and Euro currencies. Since our financial statements are
denominated in U.S. dollars and we currently do not hedge currency risk, a decline in the value of the Pound or Euro may have an adverse impact on our financial
condition and results of operations.
The ultimate effects of Brexit are uncertain and will depend on any agreements the UK makes to retain access to EU markets either during a transitional
period or more permanently. Brexit could adversely affect European and worldwide economic and market conditions and could contribute to instability in global
financial and foreign exchange markets. Uncertainty over the terms of the U.K.’s departure from the E.U. could harm our business and financial results. In addition,
other E.U. member countries may consider referendums regarding their E.U. membership. These events, along with any political changes that may occur as a result
of Brexit, could cause political and economic uncertainty in Europe. In addition, Brexit is likely to lead to legal uncertainty, including uncertainty regarding data
protection, taxation, and potentially divergent national laws and regulations as the UK determines which EU laws to replace or replicate, including the GDPR. Any
of these effects of Brexit, and others we cannot anticipate, could adversely affect our business, results of operations and financial condition.
We rely on the services of third-party data center hosting facilities. Interruptions or delays in those services could impair the delivery of our service and
harm our business.
Our Dice, eFinancialCareers, and Clearancejobs, and Rigzone website applications utilize cloud computing technology. It is hosted pursuant to service
agreements on technology platforms by third-party service providers, primarily through Amazon Web Services (AWS). We do not control the operation of these
providers or their facilities, and the facilities are vulnerable to damage, interruption or misconduct. Unanticipated problems at these facilities could result in lengthy
interruptions in our services. If the services of one or more of these providers are terminated, disrupted, interrupted or suspended for any reason, we could
experience disruption in our ability to provide our services, which may harm our business and reputation. Further, any damage to, or failure of, the cloud services
we use could result in interruptions in our services. Interruptions in our service may damage our reputation, reduce our revenue, cause us to issue credits or pay
penalties, cause customers to terminate their agreements and adversely affect our renewal rates and our ability to attract new customers. While we believe our
application and network architecture and use of multiple availability zones and regions within Amazon Web Services Cloud reduce our risk, our business would be
harmed if our customers and potential customers believe our services are unreliable.
Item 1B. Unresolved Staff Comments
None.
Item 2.
Properties
We do not own any properties. Our corporate headquarters are located at 1450 Broadway, 29th Floor, New York, New York, where we lease approximately
4,000 square feet. We lease approximately 45,000 square feet of office space in Urbandale, Iowa; 15,000 square feet of office space in London, England; and
28,000 square feet of office space in Centennial, Colorado. In addition, we have small offices in Cincinnati, Ohio; Frankfurt, Germany; Dubai, United Arab
Emirates; Singapore; Hong Kong; Beijing, China; and Shanghai, China.
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We are currently in the process of de-registering and liquidating our China locations as we no longer have ongoing trade purpose for them. During 2018, we
subleased two of our leased properties. Our prior corporate headquarters, which was located at 1040 Avenue of Americas, New York, New York and included
approximately 13,000 square feet, was subleased to a third party during the third quarter of 2018. We closed our San Jose office in the second quarter of 2018 and
subleased the property, which included approximately 16,000 square feet, to a third party during the third quarter of 2018.
We believe that our facilities are generally adequate for current and anticipated future use, although we may from time to time lease additional facilities as
operations require.
Item 3.
Legal Proceedings
From time to time we may be involved in disputes or litigation relating to claims arising out of our operations. We are currently not a party to any material
unrecorded pending legal proceedings. See also Note 9 of the Notes to Consolidated Financial Statements.
Item 4. Mine Safety Disclosures
None.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock is listed on the NYSE under the ticker symbol “DHX”. We have not listed our stock on any other markets or exchanges. Prior to July 18,
2007, there was no public market for our common stock.
Holders
As of December 31, 2018 , there were 23 stockholders of record of our common stock. A significant number of the outstanding shares of common stock
which are beneficially owned by individuals and entities are registered in the name of Cede & Co. Cede & Co. is a nominee of The Depository Trust Company, a
securities depository for banks and brokerage firms.
Dividend Policy
We have not declared or paid any cash dividends on our stock as a public company. We currently anticipate that all future earnings will be retained by the
Company to support our long-term growth strategy. Accordingly, we do not anticipate paying periodic cash dividends on our stock for the foreseeable future.
Furthermore, we are restricted by our Credit Agreement in the amount of cash dividends that we can pay.
The payment of any future dividends will be at the discretion of our board of directors and subject to the Credit Agreement and will depend upon, among
other things, future earnings, operations, capital requirements, our general financial condition, contractual restrictions and general business conditions.
Repurchases of Equity Securities
Our board of directors approved a stock repurchase program that permitted the Company to repurchase our common stock. The following table summarizes
the stock repurchase plans approved by the board of directors:
Approval Date
Authorized Repurchase Amount of Common Stock
Effective Dates
VI
December 2015
$50 million
VII
May 2018
$7 million
December 2015 to
December 2016
May 2018 to May
2019
The Company is currently under the Stock Repurchase Plan VII, which will be in effect for up to one year. Under each plan, management has discretion in
determining the conditions under which shares may be purchased from time to time.
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During the three months ended December 31, 2018, purchases of our common stock pursuant to the Stock Repurchase Plans were as follows:
Period
October 1 through October 31, 2018
November 1 through November 30, 2018
December 1 through December 31, 2018
Total
(a) Total Number of
Shares Purchased [1]
(b) Average Price Paid
per Share [2]
(c) Total Number of
Shares Purchased as Part
of Publicly Announced
Plans or Programs
(d) Approximate Dollar
Value of Shares that
May Yet Be Purchased
Under the Plans or
Programs
270,666 $
169,144 $
244,313 $
684,123 $
1.82
1.78
1.62
1.74
270,666
169,144
244,313
684,123
5,666,227
5,378,290
5,022,517
[1] No shares of our common stock were purchased other than through a publicly announced plan or program.
[2] Average price paid per share includes costs associated with the repurchases.
Securities Authorized for Issuance under Equity Compensation Plans
The following table sets forth information required by this item as of December 31, 2018 regarding compensation plans under which the Company’s equity
securities are authorized for issuance:
(a)
(b)
Number of
Securities to
be Issued
upon
Exercise of
Outstanding
Options, Warrants and
Rights
Weighted-
Average
Exercise
Price of
Outstanding
Options, Warrants and
Rights ($)
(c)
Number of
Securities
Remaining
Available for
Future
Issuance
Under Equity
Compensation
Plans
(Excluding
Securities
Reflected in
Column (a))
327,000 $
n/a
327,000 $
8.35
n/a
8.35
4,471,823
n/a
4,471,823
Plan Category
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total
For material features of the plans, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical
Accounting Policies—Stock and Stock-Based Compensation.”
The following graph shows the total shareholder return of an investment of $100 in cash on December 31, 2013 through December 31, 2018 (the last trading
day of our common stock on the NYSE in 2018 ) for (i) our common stock, (ii) the Russell 2000 and (iii) the Dow Jones Internet Composite Index, at the closing
price on December 31, 2018 . All values assume reinvestment of the full amount of all dividends, if any.
Performance Graph
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Comparative Returns
The returns shown on the graph do not necessarily predict future performance. The performance graph is not deemed “filed” with the SEC.
Item 6.
Selected Financial Data
The information set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K (this “Annual Report”).
The following consolidated statements of operations data for the years ended December 31, 2018 , 2017 and 2016 and the consolidated balance sheet data as
of December 31, 2018 and 2017 have been derived from the audited consolidated financial statements and related notes of DHI Group, Inc. for such years, which
are included elsewhere in this Annual Report. The consolidated statements of operations data for the years ended December 31, 2015 and 2014 and the
consolidated balance sheet data as of December 31, 2016, 2015 and 2014 have been derived from the audited consolidated financial statements and related notes of
DHI Group, Inc. for such years, which are not included in this Annual Report.
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Revenues
Operating expenses
Other operating income
Operating income
Income (loss) from operations before income taxes
Net income (loss)
Basic earnings (loss) per share
Diluted earnings (loss) per share
Weighted average shares outstanding:
Basic
Diluted
Other Financial Data:
Net cash from operating activities
Depreciation and amortization
Capital expenditures
Net cash from (used in) investing activities
Net cash used in financing activities
Balance Sheet Data:
Cash and cash equivalents
Acquired intangible assets, net
Goodwill
Total assets
Deferred revenue
Long-term debt, including current portion
Total stockholders’ equity
____________________
$
$
$
$
$
2018 (5)
2017 (4)
2016 (3)
2015 (2)
2014 (1)
(in thousands, except per share information)
For the year ended December 31,
161,570
$
207,950
$
153,247
3,369
11,692
9,602
7,174
195,077
9,992
22,865
19,397
$
15,978
$
226,970 $
223,579
—
3,391
(119)
(5,398) $
259,769 $
253,414
—
6,355
3,041
(10,968) $
0.15
$
0.33
$
(0.11) $
(0.21) $
0.14
$
0.33
$
(0.11) $
(0.21) $
48,520
49,605
47,908
48,230
48,319
48,319
51,402
51,402
262,615
216,011
—
46,604
42,849
27,612
0.53
0.51
52,328
54,410
2018 (5)
2017 (4)
For the year ended December 31,
2016 (3)
(in thousands)
2015 (2)
2014 (1)
14,918
$
34,409
$
9,762
(10,053)
7,489
(27,174)
11,890
(13,222)
(775)
(44,781)
44,997 $
16,636
(11,699)
(10,770)
(44,634)
63,159 $
23,192
(9,078)
(9,078)
(47,012)
58,668
27,201
(8,710)
(35,711)
(34,538)
2018 (5)
2017 (4)
$
6,472
$
12,068
$
39,000
153,974
258,385
56,086
17,288
145,355
45,737
170,791
295,718
83,646
41,450
132,641
At December 31,
2016 (3)
(in thousands)
2015 (2)
2014 (1)
22,987 $
49,120
171,745
310,095
84,615
84,760
103,883
34,050 $
65,292
198,598
368,935
83,316
99,436
138,613
26,777
81,345
239,256
422,636
86,444
109,180
177,798
(1) Reflects the OilCareers acquisition in March 2014.
(2) Reflects impairment of goodwill of $34.8 million related to the Energy reporting unit.
(3) Reflects the sale of Slashdot Media in January 2016 and the impairment of goodwill and intangible assets of $24.6 million related to the Energy reporting unit.
(4) Reflects the sale of Health eCareers on December 4, 2017 and the discontinuance of getTalent in the third quarter of 2017.
(5) Reflects the transfer of majority ownership of the BioSpace business to BioSpace management on January 31, 2018, sale of the RigLogix portion of the Rigzone business on February 20,
2018, sale of Hcareers on May 22, 2018, transfer of majority ownership of the remaining Rigzone business to Rigzone management on August 31, 2018, and Dice Europe ceased operations
August 31, 2018. On January 1, 2018, the Company adopted Topic 606, Revenue from Contracts with Customers. Refer to Note 3 of the Notes to Consolidated Financial Statements.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with Item 6. “Selected Financial Data,” and our consolidated financial statements and the related
notes included elsewhere in this Annual Report. Certain statements we make under this Item 7 constitute “Forward-Looking Statements” under the Private
Securities Litigation Reform Act of 1995. See also “Note Concerning Forward-Looking Statements.”
You should keep in mind that any forward-looking statement made by us herein, or elsewhere, speaks only as of the date on which it is made. New risks and
uncertainties come up from time to time, and it is impossible to predict these events or how they
30
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may affect us. We have no obligation to update any forward-looking statements after the date hereof, except as required by applicable law.
Overview
We are a leading provider of data, insights and connections through our specialized services for professional communities including technology and security
clearance and financial services. The Company exited the energy industry with the sale of the RigLogix portion of the Rigzone business on February 20, 2018 and
the transfer of majority ownership of the remaining Rigzone business to Rigzone management on August 31, 2018. The Company exited the hospitality industry
with the sale of Hcareers on May 22, 2018. Our mission is to empower professionals and organizations to compete and win through specialized insights and
relevant employment connections. Employers and recruiters use our websites and services to source and hire the most qualified professionals in select and highly-
skilled occupations, while professionals use our websites and services to find the best employment opportunities in and the most timely news and information about
their respective areas of expertise.
In online recruitment, we target employment categories in which there has been a long-term scarcity of highly skilled, highly qualified professionals relative
to market demand. Our websites serve as online marketplaces where employers and recruiters find and recruit prospective employees, and where professionals find
relevant job opportunities and information to further their careers.
Our websites offer job postings, news and content, career development and recruiting services tailored to the specific needs of the professional community
that each website serves.
Through our predecessors, we have been in the recruiting and career development business for more than 25 years. Based on our operating structure, we have
identified one reportable segment under the Segment Reporting topic of the FASB Accounting Standards Codification (ASC) as follows:
•
Tech-focused— Dice, Dice Europe (ceased operations on August 31, 2018), ClearanceJobs, eFinancialCareers, Brightmatter excluding getTalent
(absorbed into Tech-focused in the third quarter of 2017 and formerly in Corporate & Other) services.
Dice, Dice Europe (ceased operations on August 31, 2018), ClearanceJobs, and eFinancialCareers are aggregated into the Tech-focused reportable segment
primarily because the Company does not have discrete financial information for those brands individually.
We had other services and activities that individually were not a significant portion of consolidated revenues, operating income or total assets. These include
Hospitality (business sold May 22, 2018), Rigzone (sold the RigLogix portion of the Rigzone business on February 20, 2018 and transferred majority ownership of
the remaining Rigzone business to Rigzone management on August 31, 2018), and BioSpace (transferred majority ownership to BioSpace management on January
31, 2018) (each formerly in the Global Industry Group), Slashdot Media (business sold in the first quarter of 2016) and getTalent services (discontinued in the third
quarter of 2017), which are reported in the “Corporate & Other” category, along with corporate-related costs which are not considered in a segment.
Our Revenues and Expenses
We derive the majority of our revenues from customers who pay fees, either annually, quarterly or monthly, to post jobs on our websites and to access our
searchable databases of resumes. Our fees vary by customer based on the number of individual users of our databases of resumes, the number and type of job
postings purchased and the terms of the package purchased. Our Tech-focused segment sells recruitment packages that can include both access to our databases of
resumes and job posting capabilities. Our Corporate & Other services sells job postings and access to our resume databases either as part of a package or
individually. We believe the key metrics that are material to an analysis of our businesses are our total number of Dice recruitment package customers and the
revenue, on average, that these customers generate. Average monthly revenue per recruitment package customer is calculated by dividing recruitment package
customer revenue by the daily average count of recruitment package customers during the month, adjusted to reflect a thirty day month. We use the simple average
of each month to derive the quarterly amount. At December 31, 2018 and 2017 , Dice had approximately 6,200 and 6,450 total recruitment package customers in
the U.S., respectively, and the average monthly revenue per U.S. recruitment package customer increased from $ 1,110 for the year ended December 31, 2017 to $
1,119 for the year ended December 31, 2018 . Deferred revenue is a key metric of our business as it indicates a level of sales already invoiced that will be
recognized as revenue in the future. Deferred revenue reflects the impact of our ability to sign customers to longer term contracts. We recorded deferred revenue of
$ 56.1 million at December 31, 2018 and $ 83.6 million at December 31, 2017 . The lower deferred revenue is due to the divested businesses and increased
flexibility in the Company's billing terms to customers to bring them in line with market standards.
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We also generate revenue from advertising on our various websites or from lead generation and marketing solutions provided to our customers.
Advertisements include various forms of rich media and banner advertising, text links, sponsorships, and custom content marketing solutions. Lead generation
information utilizes advertising and other methods to deliver leads to a customer.
The Company’s revenues for the year ended December 31, 2018 declined year-over-year in each of our brands except ClearanceJobs and
eFinancialCareers. The declines are due to many factors including macroeconomic impacts and evolutions in the digital recruitment market. Foreign currency,
primarily changes in the USD:GBP exchange rates, contributed $0.9 million of the year-over-year revenue increase in eFinancialCareers. The digital recruitment
market continues to be impacted by attribution, which reflects our ability to receive the proper credit for value delivered to customers based on our customers’
internal tracking systems. Demonstrating attribution for candidates provided to each customer is a key initiative for the Company. However, attribution challenges
have contributed to lower renewal rates as demonstrated by the reduction in recruitment package customer count at Dice. The rate of revenue decline for Dice was
reduced during 2018 with a decline of 4% and 7% for the quarter and year ended December 31, 2018, respectively, compared to 10% and 11% for the same periods
of 2017.
The Company continues to evolve and present new products to attract and engage qualified professionals and match them with employers including the new
TalentSearch platform and real-time salary prediction tools. Our ability to grow our revenues will largely depend on our ability to grow our customer bases in the
markets in which we operate by acquiring new customers and advertisers while retaining a high proportion of the customers we currently serve, and to expand the
breadth of services our customers purchase from us. We continue to make investments in our business and infrastructure to help us achieve our long-term growth
objectives.
Other material factors that may affect our results of operations include our ability to attract qualified professionals that become engaged with our websites
and our ability to attract customers with relevant job opportunities. The greater the number of qualified professionals that use our websites, the more attractive our
websites become to employers and advertisers, which in turn makes them more likely to become our customers, resulting positively on our results of operations. If
we are unable to continue to attract qualified professionals to engage with our websites, our customers may no longer find our services attractive, which could have
a negative impact on our results of operations. Additionally, we need to ensure that our websites remain relevant in order to attract qualified professionals to our
websites and to engage them in high-valued tasks, such as posting resumes and/or applying to jobs.
The largest components of our expenses are personnel related costs and marketing and sales expenditures. Personnel costs consist of salaries, benefits, and
incentive compensation for our employees, including commissions for salespeople. Personnel costs are categorized in our statement of operations based on each
employee’s principal function. Marketing expenditures primarily consist of online advertising, brand promotion and lead generation to employers and job seekers.
Critical Accounting Policies
This discussion of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in
accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported
amount of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates,
including those related to revenue, goodwill and intangible assets, stock-based compensation and income taxes. We based our estimates of the carrying value of
certain assets and liabilities on historical experience and on various other assumptions that we believe are reasonable. In many cases, we could reasonably have
used different accounting policies and estimates. In some cases, changes in the accounting estimates are reasonably likely to occur from period to period. Our
actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more
significant judgments used in the preparation of our consolidated financial statements.
Revenue
Recognition
On January 1, 2018, we adopted Topic 606 applying the modified retrospective method to all contracts that were not completed as of January 1, 2018. Results
for periods beginning after January 1, 2018 are presented under Topic 606, while prior periods are reported under the accounting standards in effect for the period
presented.
Under Topic 606, we recognize revenue when control of the promised goods or services is transferred to our customers at an amount that reflects the
consideration to which we expect to receive in exchange for those goods or services. Revenue is recognized net of customer discounts ratably over the service
period. Customer billings delivered in advance of services being rendered are recorded as deferred revenue and recognized over the service period. We generate
revenues from the following sources:
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Recruitment
packages
. Recruitment package revenues are derived from the sale to recruiters and employers of a combination of job postings and access to a
searchable database of candidates on the Dice, ClearanceJobs, eFinancialCareers, and Rigzone (sold the RigLogix portion of the Rigzone business on February 20,
2018 and transferred majority ownership of the remaining Rigzone business to Rigzone management on August 31, 2018) websites. Certain of the Company’s
arrangements include multiple performance obligations, which primarily consists of the ability to post jobs and access to a searchable database of candidates. The
Company determines the units of accounting for multiple performance obligations in accordance with Topic 606. Specifically, the Company considers a
performance obligation as a separate unit of accounting if it has value to the customer on a standalone basis. The Company’s arrangements do not include a general
right of return. Services to customers buying a package of available job postings and access to the database are delivered over the same period and revenue is
recognized ratably over the length of the underlying contract, typically from one to twelve months. The separation of the package into two deliverables results in no
change in revenue recognition since delivery of the two services occurs over the same time period.
Advertising
revenue.
Advertising revenue is recognized over the period in which the advertisements are displayed on the websites or at the time a promotional
e-mail is sent out to the audience.
Classified
revenue.
Classified job posting revenues are derived from the sale of job postings to recruiters and employers. A job posting is the ability to list a
job on the website for a specified time period. Revenue from the sale of classified job postings is recognized ratably over the length of the contract or the period of
actual usage.
Data
services
revenue.
Access to the Company’s database of energy industry data is provided to customers for a fee. Data services revenue is recognized
ratably over the length of the underlying contract, typically from one to twelve months. The data services business, called RigLogix, was sold on February 20,
2018.
Career
fair
and
recruitment
event
booth
rentals
. Career fair and recruitment event revenues are derived from renting booth space to recruiters and
employers. Revenue from these sales are recognized when the career fair or recruitment event is held.
Goodwill
We record goodwill when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets
acquired.
We determine whether the carrying value of recorded goodwill is impaired on an annual basis or more frequently if indicators of potential impairment exist.
In testing goodwill for impairment, a qualitative assessment can be performed and if it is determined that the fair value of the reporting unit is more likely than not
less than the carrying amount, the impairment review process compares the fair value of the reporting unit in which the goodwill resides to the carrying value of
that reporting unit. If the fair value of the reporting unit is less than its carrying amount, an impairment charge is recorded for the amount the carrying value
exceeds the fair value. Our annual impairment test for goodwill is performed on October 1 on the Tech-focused reporting unit.
The annual impairment tests for the Tech-focused reporting unit, which were performed as of October 1, 2018 and 2017, resulted in the fair value of the
reporting unit exceeding the carrying value by 40% and 1%, respectively. The improved fair value as compared to the carrying value as of October 1, 2018 is
primarily driven by improved operating results and projections and a reduction in the estimated tax rate from 36% at October 1, 2017 to 26% at October 1, 2018.
Results for the Tech-focused reporting unit for the fourth quarter of 2018 and estimated future results as of December 31, 2018 are consistent with the October 1,
2018 analysis. As a result, the Company believes it is not more likely than not that the fair value of the reporting units is less than the carrying value as of
December 31, 2018. Therefore, no interim impairment testing was performed as of December 31, 2018.
The amount of goodwill as of December 31, 2018 allocated to the Tech-focused reporting unit was $154.0 million. Determining the fair value of a reporting
unit is judgmental in nature and requires the use of estimates and key assumptions, particularly assumed discount rates and projections of future operating results.
The discount rate applied for the Tech-focused reporting unit was 14.3% An increase to the discount rate applied or reductions to future projected operating results
could result in future impairment of the Tech-focused reporting unit’s goodwill. It is reasonably possible that changes in judgments, assumptions and estimates the
Company made in assessing the fair value of goodwill could cause the Company to consider some portion or all of the goodwill of the Tech-focused reporting unit
to become impaired. In addition, a future decline in the overall market conditions and/or changes in the Company’s market share could negatively impact the
estimated future cash flows and discount rates used to determine the fair value of the reporting unit and could result in an impairment charge in the foreseeable
future.
During the year ended December 31, 2016, an impairment of $15.4 million was recorded at the Energy reporting unit. The fair value of this reporting unit
was determined by a combination of a discounted cash flow methodology and market comparable method. Cash flow projections for this reporting unit decreased
during 2016 due to a decline in financial performance resulting from declining oil prices. The charge is reflected as Impairment of Goodwill on the Consolidated
Statements of Operations.
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Table of Contents
The determination of whether or not goodwill has become impaired involves a significant level of judgment in the assumptions underlying the approach used
to determine the value of our reporting unit. Fair values are determined either by using a discounted cash flow methodology or by using a combination of a
discounted cash flow methodology and a market comparable method. The discounted cash flow methodology is based on projections of the amounts and timing of
future revenues and cash flows, assumed discount rates and other assumptions as deemed appropriate. We consider factors such as historical performance,
anticipated market conditions, operating expense trends and capital expenditure requirements. Additionally, the discounted cash flows analysis takes into
consideration cash expenditures for product development, other technological updates and advancements to our websites and investments to improve our candidate
databases. The market comparable method indicates the fair value of a business by comparing it to publicly traded companies in similar lines of business or to
comparable transactions or assets. Considerations for factors such as size, growth, profitability, risk and return on investment are analyzed and compared to the
comparable businesses and adjustments are made. A market value of invested capital of the publicly traded companies is calculated and then applied to the entity’s
operating results to arrive at an estimate of value. Changes in our strategy and/or market conditions could significantly impact these judgments and require
adjustments to recorded amounts of goodwill.
Indefinite-Lived
Acquired
Intangible
Assets
The indefinite-lived acquired intangible assets include the Dice trademarks and brand name. The Dice trademark, trade name and domain name is one of the
most recognized names of online recruiting and career development. Since Dice’s inception in 1991, the brand has been recognized as a leader in recruiting and
career development services for technology and engineering professionals. Currently, the brand is synonymous with the most specialized online marketplace for
industry-specific talent. The brand has a significant online and offline presence in online recruiting and career development services. Considering the recognition
and the awareness of the Dice brand in the talent acquisition and staffing services market, Dice’s long operating history and the intended use of the Dice brand, the
remaining useful life of the Dice trademark, trade name and domain name was determined to be indefinite.
We determine whether the carrying value of recorded indefinite-lived acquired intangible assets is impaired on an annual basis or more frequently if
indicators of potential impairment exist. The impairment review process compares the fair value of the indefinite-lived acquired intangible assets to its carrying
value. If the carrying value exceeds the fair value, an impairment loss is recorded. The impairment test performed as of October 1, 2018 and 2017 resulted in the
fair value of the Dice trademarks and brand exceeding the carrying value by 2% and 4%, respectively.
Revenue attributable to the Dice trademarks and brand name have declined during the year ended December 31, 2018 due to competition in the technology
recruiting market, challenges in developing and introducing new products and product enhancements to the market and the Company’s ability to attribute value
delivered to customers. Revenues related to the Dice trademarks and brand name declined 7% and 10% for the years ended December 31, 2018 and 2017,
respectively, and declined 4% and 10% for the three months ended December 31, 2018 and 2017, respectively. The rate of revenue decline narrowed throughout
2018. Revenue projections for the year ended December 31, 2019 and beyond include a modest increase compared to the year ended December 31, 2018. The
Company’s ability to achieve these revenue projections may be impacted by, among other things, the factors noted above that have contributed to the decline in
recent periods. Cash flows attributable to the Dice trademarks and brand name declined during 2018 as a result of the lower revenue, as well as increased spending
focused on new and enhanced products and consulting fees related to expense reduction strategies. Operating expenses, excluding amortization expense,
impairment charges and disposition related and other costs, are projected to slightly decline for the year ended December 31, 2019 as compared to the year ended
December 31, 2018 and then increase at levels that allow for modest operating margin improvements. If future cash flows attributable to the Dice trademark are not
achieved, the Company could realize an impairment in a future period. The Company utilized a relief from royalty rate method to value the Dice trademarks and
brand name using a royalty rate of 6.0% based on comparable industry studies and improving operating margins and a discount rate of 15.3%.
The determination of whether or not indefinite-lived acquired intangible assets have become impaired involves a significant level of judgment in the
assumptions underlying the approach used to determine the value of the indefinite-lived acquired intangible assets. We consider factors such as historical
performance, anticipated market conditions, operating expense trends and capital expenditure requirements. Changes in our strategy and/or market conditions could
significantly impact these judgments and require adjustments to recorded amounts of intangible assets.
Income
Taxes
We utilize the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized for differences between
the financial statement and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years 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.
34
Table of Contents
The calculation of our tax liabilities involves dealing with uncertainties in applying tax laws and regulations in numerous jurisdictions. Tax benefits from
uncertain tax positions are recognized when it is more likely than not that the positions will be sustained upon examination, including resolutions of any related
appeals or litigation processes, based on the technical merits. Because of the complexity of some of these uncertainties, the ultimate resolution could result in a
payment that is materially different from our current estimate of the accrual for unrecognized tax benefits.
Stock
and
Stock
Based
Compensation
Under our 2012 Omnibus Equity Award Plan, we have granted stock options, restricted stock and Performance-Based Restricted Stock Units (“PSUs”) to
certain of our employees and directors. Compensation expense is recorded for stock awards made to employees and directors in return for service to the Company.
The expense is measured at the fair value of the award on the date of grant and recognized as compensation expense on a straight-line basis over the service period,
which is the vesting period. The fair value of PSUs granted during 2016 and 2017, which included market based performance measures, are measured using the
Monte Carlo pricing model. The fair value of the PSUs granted in 2018, which include internal performance measures, is determined based on the most probable
performance outcome. The expense related to the PSUs is recorded over the vesting period.
Recent Developments
None.
Cyclicality
The labor market and certain of the industries that we serve have historically experienced short-term cyclicality. However, we believe that online career
websites continue to provide economic and strategic value to the labor market and industries that we serve.
Any slowdown in recruitment activity that occurs will negatively impact our revenues and results of operations. Alternatively, a decrease in the
unemployment rate or a labor shortage, including as a result of an increase in job turnover, generally means that employers (including our customers) are seeking to
hire more individuals, which would generally lead to more job postings and database licenses and have a positive impact on our revenues and results of operations.
Based on historical trends, improvements in labor markets and the need for our services generally lag behind overall economic improvements. Additionally, there
has historically been a lag from the time customers begin to increase purchases of our recruitment services and the impact to our revenues due to the recognition of
revenue occurring over the length of the contract, which can be several months to a year.
From the second half of 2011 into 2014, we saw tougher market conditions in our finance segment and a less urgent recruiting environment for technology
professionals. If recruitment is slow in the industries in which we operate during 2019 and beyond, our revenues and results of operations will be negatively
impacted.
Results of Operations
Our historical financial information discussed in this Annual Report has been derived from the Company’s financial statements and accounting records for
the years ended December 31, 2018, 2017 and 2016. Consolidated operating results and consolidated operating results as a percent of revenue follows:
35
Table of Contents
(in thousands)
Revenues
Operating expenses:
Cost of revenues
Product development
Sales and marketing
General and administrative
Depreciation
Amortization of intangible assets
Impairment of goodwill
Impairment of fixed and intangible assets
Disposition related and other costs
Total operating expenses
Other operating income:
Gain on sale of businesses
Proceeds from restitution award
Total other operating income
For the year ended December 31,
2018
2017
2016
2018 vs 2017
2017 vs 2016
$
161,570
$
207,950
$
226,970
$
(46,380)
$
(19,020)
18,344
20,212
59,721
37,589
9,280
482
—
—
7,619
153,247
3,369
—
3,369
29,974
24,984
80,508
40,749
9,752
2,138
—
2,226
4,746
32,126
25,714
77,451
43,684
9,849
6,787
15,369
9,252
3,347
(11,630)
(4,772)
(20,787)
(3,160)
(472)
(1,656)
—
(2,226)
2,873
195,077
223,579
(41,830)
6,699
3,293
9,992
—
—
—
(3,330)
(3,293)
(6,623)
(2,152)
(730)
3,057
(2,935)
(97)
(4,649)
(15,369)
(7,026)
1,399
(28,502)
6,699
3,293
9,992
19,474
Operating income
$
11,692 $
22,865
3,391 $
(11,173) $
Revenues
Operating expenses:
Cost of revenues
Product development
Sales and marketing
General and administrative
Depreciation
Amortization of intangible assets
Impairment of goodwill
Impairment of intangible assets
Disposition related and other costs
Total operating expenses
Other operating income:
Gain on sale of businesses
Proceeds from restitution award
Total other operating income
Operating income
For the year ended December 31,
2018
2017
2016
100.0%
100.0%
100.0%
11.4%
12.5%
37.0%
23.3%
5.7%
0.3%
—%
—%
4.7%
14.4%
12.0%
38.7%
19.6%
4.7%
1.0%
—%
1.1%
2.3%
14.2%
11.3%
34.1%
19.2%
4.3%
3.0%
6.8%
4.1%
1.5%
94.8%
93.8%
98.5%
2.1%
—%
2.1%
7.2%
3.2%
1.6%
4.8%
11.0%
—%
—%
—%
1.5%
36
Table of Contents
Comparison of Years Ended December 31, 2018 and 2017
Revenues
Tech-focused
Dice (1)
eFinancialCareers
ClearanceJobs
Dice Europe
Tech-focused
Healthcare
Corporate & Other
Hcareers
Rigzone
BioSpace
Slashdot Media and getTalent
Corporate & Other
Total revenues
(1) Includes Dice US, and Targeted Job Fairs
Year Ended December 31,
2018
2017
Increase (Decrease)
(in thousands, except percentages)
Percent
Change
$
94,438 $
101,471 $
33,758
21,086
2,976
152,258
32,480
17,342
7,105
158,398
(7,033)
1,278
3,744
(4,129)
(6,140)
(6.9)%
3.9 %
21.6 %
(58.1)%
(3.9)%
—
24,354
(24,354)
n.m.
5,329
3,771
212
—
9,312
14,368
7,171
3,592
67
25,198
$
161,570 $
207,950 $
(9,039)
(3,400)
(3,380)
(67)
(15,886)
(46,380)
(62.9)%
(47.4)%
(94.1)%
(100.0)%
(63.0)%
(22.3)%
We experienced a decrease in the Tech-focused segment revenue of $6.1 million , or 3.9% . Revenue at Dice U.S. decreased by $7.0 million , or 6.9%, for
the year ended December 31, 2018 compared to the same period of 2017. The rate of Dice U.S. revenue decline narrowed throughout the 2018 period, as compared
to the 2017 period. The lower Dice U.S. revenues were a result of competition in the technology recruiting market, challenges in developing and introducing new
products and product enhancements to the market, and the Company's ability to attribute value delivered to customers. Recruitment package customer count in the
U.S. decreased from 6,450 at December 31, 2017 to 6,200 at December 31, 2018 while average monthly revenue per U.S. recruitment package customer increased
from $1,110 to $1,119 for the years ended December 31, 2017 and 2018, respectively. Dice Europe revenue decreased by $4.1 million as compared to the same
period in 2017 primarily due to Dice Europe ceasing operations on August 31, 2018. Revenues for ClearanceJobs increased by $3.7 million for the year ended
December 31, 2018 as compared to the same period in 2017 , primarily due to continuing strong market conditions and enhanced product offerings.
eFinancialCareers revenue increased $1.3 million compared to 2017 primarily due to a positive impact of foreign exchange of $0.9 million , coupled with strong
renewals and new business activity in its Asia market.
Healthcare segment revenue, consisting of Health eCareers, decreased as a result of Health eCareers being sold on December 4, 2017.
Revenues from the Corporate & Other segment decreased by $15.9 million , or 63.0% , primarily due to the transfer of the majority ownership of BioSpace
to BioSpace management on January 31, 2018, the sale of the RigLogix portion of the Rigzone business on February 20, 2018, sale of Hcareers on May 22, 2018,
and transfer of the majority ownership of the remaining Rigzone business to Rigzone management on August 31, 2018. Subsequent to the divestiture dates,
BioSpace and Rigzone are no longer included in the Company's consolidated financial results.
Cost
of
Revenues
Cost of revenues
Percentage of revenues
Year Ended December 31,
2018
2017
Decrease
$
18,344
$
11.4%
37
(in thousands, except percentages)
$
29,974
(11,630)
14.4%
Percent
Change
(38.8)%
Table of Contents
Cost of revenues decreased by $11.6 million , or 38.8% , as the Healthcare segment decreased by $8.6 million as a result of the sale of Heath eCareers on
December 4, 2017. Corporate & Other cost of revenues decreased $2.2 million primarily due to the divested businesses. The Tech-focused segment decreased $0.8
million, which was primarily due to Dice Europe ceasing operations on August 31, 2018.
Product
Development
Expenses
Product development
Percentage of revenues
$
20,212
$
12.5%
(in thousands, except percentages)
$
24,984
(4,772)
12.0%
Year Ended December 31,
2018
2017
Decrease
Percent
Change
(19.1)%
Product development expenses decreased $4.8 million or 19.1% , as the Healthcare segment decreased $2.3 million due to the sale of Health eCareers on
December 4, 2017. Corporate & Other decreased $3.8 million, of which $2.7 million related to divested businesses and $1.1 million was due to the discontinuance
of getTalent in the third quarter of 2017. These decreases were partially offset by an increase in the Tech-focused segment of $1.3 million primarily due to
compensation related costs as the segment develops new products and features.
Sales
and
Marketing
Expenses
Year Ended December 31,
2018
2017
Decrease
Sales and marketing
Percentage of revenues
$
59,721
$
37.0%
(in thousands, except percentages)
$
80,508
(20,787)
38.7%
Percent
Change
(25.8)%
Sales and marketing expenses decreased $20.8 million , or 25.8% , as costs decreased $9.2 million in the Healthcare segment as a result of the Health
eCareers sale on December 4, 2017. Corporate & Other decreased $8.8 million, of which $7.5 million was related to the divested businesses in 2018, and $1.2
million due to the discontinuance of getTalent in the third quarter of 2017. The Tech-focused segment decreased $2.8 million, of which $2.9 million decrease was
due to Dice Europe ceasing operations on August 31, 2018. In the ongoing Tech-focused business, compensation related costs increased approximately $1.0
million, offset by a decrease in discretionary marketing spend of approximately $0.7 million, primarily related to advertising and promotional events, and a
decrease in commission expense of $0.6 million, which was driven by the capitalization and amortization of commission expense over the service period as a result
of adopting ASC Topic 606 on January 1, 2018.
General
and
Administrative
Expenses
General and administrative
Percentage of revenues
$
37,589
$
23.3%
(in thousands, except percentages)
$
40,749
(3,160)
19.6%
Year Ended December 31,
2018
2017
Decrease
Percent
Change
(7.8)%
General and administrative costs decreased $3.2 million or 7.8% . The Healthcare segment decreased $2.8 million due to the sale of Health eCareers on
December 4, 2017. Corporate & Other decreased $4.5 million, of which $2.0 million was related to the divested businesses in 2018, $1.1 million was due to lower
stock based compensation costs, and $1.3 million was due to lower legal and other professional fees. The Tech-focused segment increased $4.1 million, primarily
due to a $2.1 million increase in consulting costs and $1.0 million for the Fair Credit Reporting Act lawsuit and $0.6 million related to recruiting and employee
training.
Disposition
Related
and
Other
Costs
Disposition related and other costs
Percentage of revenues
Year Ended December 31,
2018
2017
Increase
$
7,619
$
4.7%
38
(in thousands, except percentages)
$
4,746
2,873
2.3%
Percent
Change
60.5%
Table of Contents
Disposition related and other costs, as described in Note 12 of the Notes to Consolidated Financial Statements, increased $2.9 million or 60.5% . The $7.6
million of expenses in 2018 was primarily due to the divestitures of the non-tech businesses and the reorganization to the tech-focused strategy, which primarily
consisted of severance and retention, lease exit, business closure, professional fees related to activist shareholders, search, financial advisory, and legal services,
and other costs to further these strategic objectives.
Disposition related and other costs of $4.7 million in 2017 are primarily due to severance and other related costs in connection with the divestiture process
and the reorganization to the tech-focused strategy.
Depreciation
Depreciation
Percentage of revenues
Year Ended December 31,
2018
2017
Decrease
Percent
Change
$
9,280
$
5.7%
(in thousands, except percentages)
$
9,752
(472)
(4.8)%
4.7%
Depreciation expense for the year ended December 31, 2018 decreased $0.5 million or 4.8% . Depreciation in the Healthcare segment decreased $1.6 million
due to the sale of Health eCareers on December 4, 2017. Depreciation in Corporate & Other decreased $0.9 million due to the divested businesses in 2018.
Depreciation in the Tech-focused segment increased $1.4 million, which was driven by the development and release of new products and features in 2018 and the
latter part of 2017.
Amortization
of
Intangible
Assets
Amortization
Percentage of revenues
$
482
$
0.3%
(in thousands, except percentages)
$
2,138
(1,656)
1.0%
Year Ended December 31,
2018
2017
Decrease
Percent
Change
(77.5)%
Amortization expense for the year ended December 31, 2018 decreased $1.7 million , or 77.5% . The decrease is primarily due to the divestiture of
businesses in the Healthcare segment and Corporate & Other.
Impairment
of
Fixed
and
Intangible
Assets
During 2017, $2.2 million of capitalized development costs related to getTalent were written off as the getTalent services (included in Corporate & Other)
were discontinued during the third quarter of 2017. No such costs were written off during the year ended December 31, 2018.
Other
Operating
Income
Other operating income for the year ended December 31, 2018 included a gain of $4.6 million related to the sale of the RigLogix portion of the Rigzone
business on February 20, 2018 and a $0.8 million gain related to post closing price adjustment to the sale of the Health eCareers business. These gains were
partially offset by losses recognized on sale of the Hcareers business on May 22, 2018 of $0.8 million, the transfer of majority ownership of the remaining Rigzone
business to Rigzone management on August 31, 2018 of $0.7 million and the transfer of majority ownership of the BioSpace business to BioSpace management on
January 31, 2018 of $0.5 million. See also Note 4 of the Notes to Consolidated Financial Statements.
Other operating income for the year ended December 31, 2017 included $6.7 million of gain on sale from the sale of the Health eCareers business (see Note
4) and proceeds from restitution award of $3.3 million in the OilPro related legal matter.
Operating
Income
Operating income for the year ended December 31, 2018 was $ 11.7 million , a margin of 7.2% , compared to $ 22.9 million for the same period in 2017 , a
margin of 11.0% , and a year over year decrease of $ 11.2 million , or 48.9%. Contributing to the higher margin in 2017 was the $6.7 million gain on the sale of
Health eCareers and the $3.3 million restitution award related to an OilPro legal matter. These increases were partially offset by a $2.2 million asset impairment in
2017 and on the increase in disposition related and other costs of $2.9 million .
39
Table of Contents
Interest
Expense
Interest expense
Percentage of revenues
$
2,054
$
(1.3)%
3,445
$
(1.7)%
(1,391)
(40.4)%
Interest expense for the year ended December 31, 2018 decreased from the same period in 2017 primarily due to lower weighted-average debt outstanding
Year Ended December 31,
2018
2017
Decrease
(in thousands, except percentages)
Percent
Change
during the year ended December 31, 2018 .
Income
Taxes
Income (loss) before income taxes
Income tax expense
Effective tax rate
Year Ended December 31,
2018
2017
(in thousands, except
percentages)
$
9,602
2,428
25.3%
19,397
3,419
17.6%
$
A reconciliation between tax expense at the federal statutory rate and the reported income tax expense is summarized as follows:
Federal statutory rate
Gain (loss) on sale of businesses
Stock-based compensation
State taxes, net of federal effect
Difference between foreign and U.S. rates
Change in accrual for unrecognized tax benefits
U.S. tax on global intangible low-taxed income, net of credits
Executive compensation
Currency translation gains
Gross tax on foreign dividend
Foreign tax credits
U.S. transition tax on foreign earnings
Federal rate change impact on deferred tax liabilities
Research and development tax credits
Change in valuation allowances
Other
Income tax expense
Year Ended December 31,
2018
2017
$
2,016 $
(6,111)
2,112
(38)
(102)
(1,179)
229
126
219
—
—
368
—
(481)
5,117
152
$
2,428 $
6,789
(1,571)
1,414
35
(1,054)
1,003
—
—
—
275
(275)
2,962
(3,281)
(1,764)
(780)
(334)
3,419
Our effective income tax rate was 25.3% and 17.6% for the years ended December 31, 2018 and 2017, respectively. The 2018 tax rate differed from the
federal statutory rate because of permanent book/tax differences in basis related to the gain or loss on sale of businesses; tax deficiencies in stock-based
compensation; a decreased accrual for unrecognized tax benefits; and an increase in the valuation allowance for capital loss carryforwards. The 2017 tax rate
differed from the federal statutory rate for a number of reasons, including the allocation of income between the U.S. and foreign jurisdictions; permanent book/tax
differences in basis related to the gain or loss on sale of businesses; tax deficiencies in stock-based compensation; an increased accrual for unrecognized tax
benefits; the transition tax on foreign earnings; a decrease in deferred tax liabilities because of a change in the federal statutory rate; credits for research and
development; and a reduction in the valuation allowance for foreign tax credits.
40
Table of Contents
Earnings
per
Share
Earnings per share was $0.15 and $0.33 for the years ended December 31, 2018 and December 31, 2017 , respectively, a decrease of $0.18 . The decrease
was primarily due to 2017 including a $6.6 million gain on the sale of Health eCareers and $3.3 million in restitution awards, partially offset by a $2.9 million
increase in disposition related and other costs in 2018.
Comparison of Years Ended December 31, 2017 and 2016
Revenues
Tech-focused:
Dice (1)
eFinancialCareers
ClearanceJobs
Dice Europe
Tech-focused
Healthcare
Corporate & Other
Hcareers
Rigzone
BioSpace
Slashdot Media and getTalent
Corporate & Other
Total revenues
(1) Includes Dice and Targeted Job Fairs
Year Ended December 31,
2017
2016
Increase (Decrease)
(in thousands, except percentages)
Percent
Change
$
101,471 $
113,231 $
32,480
17,342
7,105
158,398
35,103
14,086
8,179
170,599
(11,760)
(2,623)
3,256
(1,074)
(12,201)
(10.4)%
(7.5)%
23.1 %
(13.1)%
(7.2)%
24,354
27,066
(2,712)
(10.0)%
14,368
7,171
3,592
67
25,198
14,908
9,485
4,110
802
29,305
$
207,950 $
226,970 $
(540)
(2,314)
(518)
(735)
(4,107)
(19,020)
(3.6)%
(24.4)%
(12.6)%
(91.6)%
(14.0)%
(8.4)%
We experienced a decrease in the Tech-focused segment revenue of $12.2 million, or 7.2%. Revenue at Dice U.S. decreased by $11.8 million compared to
the same period in 2016 due to competition in the technology recruiting market, challenges in developing and introducing new products and product enhancements
to the market, and the Company's ability to attribute value delivered to customers. Recruitment package customer count in the U.S. decreased from 7,050 at
December 31, 2016 to 6,450 at December 31, 2017 while average monthly revenue per U.S. recruitment package customer decreased 1% to $1,110. Dice Europe
revenue decreased by $1.1 million as compared to the same period in 2016 primarily due to lower renewals as well as a negative impact of foreign exchange in
2017 of approximately $0.2 million. eFinancialCareers revenue decreased $2.6 million compared to 2016 due to lower renewals with Brexit contributing to the
decline and the negative impact of foreign exchange of $1.0 million. Revenues for ClearanceJobs increased by $3.3 million for the year ended December 31, 2017
as compared to the same period in 2016, primarily due to improved market conditions and enhanced product offerings.
The Healthcare segment, consisting of Health eCareers, revenue decreased by $2.7 million, or 10.0% from the comparable 2016 period primarily due to
generating one less month of revenue as a result of being sold December 4, 2017.
Revenues from the Corporate & Other segment decreased by $4.1 million or 14.0% primarily driven by a decrease in Energy of $2.3 million due to the
deteriorating energy market and due to the sale of the Slashdot Media business in January 2016 which generated $0.7 million in revenue in that period.
Cost
of
Revenues
Cost of revenues
Percentage of revenues
Year Ended December 31,
2017
2016
Decrease
$
29,974
$
14.4%
41
(in thousands, except percentages)
$
32,126
(2,152)
14.2%
Percent
Change
(6.7)%
Table of Contents
Cost of revenues decreased by $2.2 million, or 6.7%, primarily due to decreased headcount in both the Tech-focused segment of $0.9 million and Corporate
& Other of $0.6 million. A decrease in the Healthcare segment of $0.7 million was due to the sale of Health eCareers on December 4, 2017.
Product
Development
Expenses
Product development
Percentage of revenues
Year Ended December 31,
2017
2016
Decrease
Percent
Change
$
24,984
$
12.0%
(in thousands, except percentages)
$
25,714
(730)
(2.8)%
11.3%
Product development costs decreased $0.7 million or 2.8%. During the year ended December 31, 2017, the Company reallocated its resources towards the
Tech-focused segment to align with the Tech-focused strategy. The primary changes related to headcount costs, in which the Tech-focused segment experienced a
$1.4 million increase and the Corporate & Other segment experienced a $1.3 million decrease. Other product development changes included a decrease in Slashdot
Media costs of $0.4 million due to the sale of the business in January 2016, and a decrease of consulting and headcount costs of $0.3 million in the Healthcare
segment.
Sales
and
Marketing
Expenses
Sales and marketing
Percentage of revenues
Year Ended December 31,
2017
2016
Increase
$
80,508
$
38.7%
(in thousands, except percentages)
$
77,451
3,057
34.1%
Percent
Change
3.9%
Sales and marketing costs increased $3.1 million, or 3.9%. The Tech-focused segment increased by $3.8 million, primarily due to increased discretionary
marketing spend of $3.7 million to increase brand awareness and drive traffic to our sites. Corporate & Other discretionary marketing spend increased $0.5 million
due to higher costs at BioSpace (transferred majority ownership to BioSpace management on January 31, 2018) and getTalent (discontinued in the third quarter of
2017), while these increases were offset by reduced headcount costs of $0.9 million in Corporate & Other.
General
and
Administrative
Expenses
General and administrative
Percentage of revenues
$
40,749
$
19.6%
(in thousands, except percentages)
$
43,684
(2,935)
19.2%
Year Ended December 31,
2017
2016
Decrease
Percent
Change
(6.7)%
General & Administrative expenses decreased $2.9 million or 6.7%. Expenses for the Tech-focused segment decreased $1.9 million primarily due to
decreased stock compensation costs of $1.7 million and a decrease in headcount costs of approximately $0.4 million, slightly offset by increased professional fees
of $0.2 million. Corporate & Other experienced a $0.7 million decrease in General & Administrative expenses, primarily due to lower headcount and a decrease in
legal and professional fees associated with the Oil Pro litigation, director search fees and the strategic alternatives process. The Healthcare segment decreased
approximately $0.3 million, which was primarily due to lower stock compensation expense of $0.2 million from forfeitures due to the sale of Health eCareers on
December 4, 2017. Overall, lower stock compensation costs were driven primarily by a decrease in the fair value of new grants awarded.
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Table of Contents
Disposition
Related
and
Other
Costs
Year Ended December 31,
2017
2016
Increase
(in thousands, except percentages)
Percent
Change
Disposition related and other costs
Percentage of revenues
$
4,746
$
2.3%
3,347
$
1.5%
1,399
n.m.
Disposition related and other costs are primarily related to the strategic alternatives process and divestiture costs, including the sale of Health eCareers. Costs
for the year ended December 31, 2017 consist of severance and retention of $3.1 million, professional fees of $1.1 million, and China exit costs of $0.5 million.
Prior year costs were primarily due to the sale of Slashdot Media, including severance of $1.0 million, stock based compensation acceleration of $0.9 million, and a
loss on sale of $0.6 million. Also included in disposition related and other costs in 2016 is other severance primarily related to the formation of the Global Industry
Group of $0.8 million.
Depreciation
Depreciation
Percentage of revenues
Year Ended December 31,
2017
2016
Decrease
Percent
Change
$
9,752
$
4.7%
(in thousands, except percentages)
$
9,849
(97)
(1.0)%
4.3%
Depreciation expense for the year ended December 31, 2017 approximated the same period of the prior year. During 2017, depreciation expense related to
getTalent (discontinued in the third quarter of 2017) increased $0.5 million while the Healthcare segment decreased approximately $0.5 million.
Amortization
of
Intangible
Assets
Amortization
Percentage of revenues
$
2,138
$
1.0%
(in thousands, except percentages)
$
6,787
(4,649)
3.0%
Year Ended December 31,
2017
2016
Decrease
Percent
Change
(68.5)%
Amortization expense for the year ended December 31, 2017 decreased $4.6 million, or 68.5%. The reduction was due to certain intangible assets in Health
eCareers, Hospitality, and Dice Europe becoming fully amortized during 2016. Additionally, Rigzone decreased $2.1 million due to intangible assets being written
off in the third quarter of 2016.
Impairment
of
goodwill
Goodwill of $15.4 million related to Rigzone, the Energy reporting unit, was fully written off in the third quarter of 2016 due to the decline in demand for
energy professionals, stemming from persistently depressed oil prices, which has significantly decreased the use of our energy industry job posting websites and
related services. No such impairment was reported during 2017.
Impairment
of
Fixed
and
Intangible
Assets
During 2017, $2.2 million of capitalized development costs related to getTalent were written off as the getTalent services (included in Corporate & Other)
were discontinued during the third quarter of 2017. During 2016, unamortized intangible assets of $9.3 million related to Rigzone, the Energy reporting unit,
formerly within the Global Industry Group segment and currently included in Corporate & Other, were written off as a result of the decline in demand for energy
professionals, stemming from depressed oil prices, which significantly decreased the use of our energy industry job posting websites and related services.
43
Table of Contents
Other
Operating
Income
Other operating income for the year ended December 31, 2017 included $6.7 million of gain on sale from the sale of the Health eCareers business (see Note 4)
and proceeds from restitution award of $3.3 million in the OilPro related legal matter.
Operating
Income
Operating income for the year ended December 31, 2017 was $22.9 million compared to $3.4 million for the same period in 2016, an increase of $19.5 million
or 580%. Included in operating income for 2017 was other operating income of $10.0 million related to the sale of Health eCareers and proceeds from restitution
award in the OilPro related legal matter that did not occur in 2016, and lower impairment costs of $22.4 million. The operating income improvements in the current
period were partially offset by lower revenues of $19.0 million primarily due to lower customer activity across all brands except for ClearanceJobs.
Interest
Expense
Year Ended December 31,
2017
2016
Decrease
(in thousands, except percentages)
Percent
Change
Interest expense
Percentage of revenues
$
3,445
$
(1.7)%
3,481
$
(1.5)%
(36)
(1.0)%
Interest expense for the year ended December 31, 2017 includes $410,000 of deferred financing costs charged to interest expense following the borrowing
capacity reduction of the Credit Agreement from $250 million to $150 million. Excluding this charge, interest expense decreased $346,000 due to lower average
borrowings during the period, partially offset by higher interest rates.
Income
Taxes
Income before income taxes
Income tax expense
Effective tax rate
Year Ended December 31,
2017
2016
(in thousands, except
percentages)
$
19,397
3,419
17.6%
(119)
5,279
(4,436.1)%
$
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A reconciliation between tax expense at the federal statutory rate and the reported income tax expense is summarized as follows:
Federal statutory rate
Gain (loss) on sale of businesses
Stock-based compensation
Nondeductible impairment
State taxes, net of federal effect
Difference between foreign and U.S. rates
Change in accrual for unrecognized tax benefits
Gross tax on foreign dividend
Tax credits related to foreign dividend
US transition tax on foreign earnings
Federal rate change impact on deferred tax liabilities
Research and development tax credits
Change in valuation allowances
Other
Income tax expense
Year Ended December 31,
2017
2016
$
6,789 $
(1,571)
1,414
—
35
(1,054)
1,003
275
(275)
2,962
(3,281)
(1,764)
(780)
(334)
$
3,419 $
(42)
—
—
5,287
756
297
(923)
5,084
(4,244)
—
—
(173)
(713)
(50)
5,279
Our effective income tax rate was 17.6% and (4,436.1)% for the years ended December 31, 2017 and 2016, respectively. The 2017 tax rate differed from the
federal statutory rate for a number of reasons, including the allocation of income between the US and foreign jurisdictions; permanent book/tax differences in basis
related to the gain or loss on sale of businesses; tax deficiencies in stock-based compensation; an increased accrual for unrecognized tax benefits; the transition tax
on foreign earnings; a decrease in deferred tax liabilities because of a change in the federal statutory rate; credits for research and development; and a reduction in
the valuation allowance for foreign tax credits.
Enactment of US tax reform legislation in December 2017 resulted in a $0.3 million reduction in tax expense. We recorded tax expense of $3.0 million for
the one-time transition tax on the deemed repatriation of undistributed foreign earnings and recorded a tax benefit of $3.3 million for the reduction in our deferred
tax liabilities because of the change in the US federal tax rate from 35% to 21%.
The 2016 tax rate differed significantly from the federal statutory rate because of impairment charges of $24.6 million, of which $15.4 million related to non-
deductible goodwill. Based on the jurisdictions where the impairment charges were recorded, the non-deductible amounts caused 2016 tax expense to exceed the
expected expense at statutory tax rates by $5.3 million.
The 2016 tax rate was also impacted by the modification of our indefinite reinvestment assertion resulting in the repatriation of cash from our Canada
subsidiary to the United States, which caused tax expense of $0.8 million. Additionally, the implementation of a tax planning strategy to utilize foreign tax credits
resulted in a $0.7 million decrease in the valuation allowance related to such credits. Also, we had a $0.9 million tax benefit in 2016 from a reduction in the accrual
for unrecognized tax benefits, primarily due to the expiration of the statute of limitations in various tax jurisdictions.
Earnings
(Loss)
per
Share
Earnings (loss) per share was $0.33 and ( $0.11 ) for the years ended December 31, 2017 and December 31, 2016, respectively, an improvement of $0.44. The
improvement was primarily due to improved net income (loss) in 2017, which was driven by a gain on the sale of Health eCareers of $6.7 million, proceeds from
restitution award in the OilPro related legal matter of $3.3 million as compared to an impairment of goodwill and intangibles of $24.6 million that was recorded for
the Energy reporting unit during 2016.
Liquidity and Capital Resources
Non-GAAP
Measures
45
Table of Contents
We have provided certain non-GAAP financial information as additional information for our operating results. These measures are not in accordance with, or
an alternative for, measures in accordance with GAAP and may be different from similarly titled non-GAAP measures reported by other companies. We believe the
presentation of non-GAAP measures, such as Adjusted EBITDA and Adjusted EBITDA margin, provides useful information to management and investors
regarding certain financial and business trends relating to our financial condition and results of operations.
Adjusted
Revenues
Adjusted Revenues is a non-GAAP metric used by management to measure operating performance. Adjusted Revenues represents Revenues less the revenues
of divested businesses. We consider Adjusted Revenues to be an important measure to evaluate the performance of our ongoing businesses and provide comparable
results excluding our divestitures.
Adjusted
EBITDA
and
Adjusted
EBITDA
Margin
Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP metrics used by management to measure operating performance. Management uses
Adjusted EBITDA as a performance measure for internal monitoring and planning, including preparation of annual budgets, analyzing investment decisions and
evaluating profitability and performance comparisons between us and our competitors. The Company also uses this measure to calculate amounts of performance
based compensation under the senior management incentive bonus program. Adjusted EBITDA represents net income plus (to the extent deducted in calculating
such net income) interest expense, income tax expense, depreciation and amortization, non-cash stock based compensation, losses resulting from certain
dispositions outside the ordinary course of business including prior negative operating results of those divested businesses, certain writeoffs in connection with
indebtedness, impairment charges with respect to long-lived assets, expenses incurred in connection with an equity offering or any other offering of securities by
the Company, extraordinary or non-recurring non-cash expenses or losses, transaction costs in connection with the credit agreement, deferred revenues written off
in connection with acquisition purchase accounting adjustments, writeoff of non-cash stock based compensation, severance and retention costs related to
dispositions or reorganizations of the Company, losses related to legal claims and fees that are unusual in nature or infrequent, and business interruption insurance
proceeds, minus (to the extent included in calculating such net income) non-cash income or gains, and interest income, and any income or gain resulting from
certain dispositions outside the ordinary course of business, including prior positive operating results of those divested businesses, and gains related to legal claims
that are unusual in nature or infrequent.
The Company changed its definition of Adjusted EBITDA during the first quarter of 2018 to exclude severance and retention costs related to dispositions or
reorganizations of the Company, the prior operating results of divested businesses, and losses related to legal claims and fees that are unusual in nature or
infrequent. The Company changed its definition of Adjusted EBITDA to provide a more transparent and comparable view of its financial performance.
Accordingly, all prior periods have been recast to reflect the current definition.
We also consider Adjusted EBITDA, as defined above, to be an important indicator to investors because it provides information related to our ability to
provide cash flows to meet future debt service, capital expenditures and working capital requirements and to fund future growth. We present Adjusted EBITDA as
a supplemental performance measure because we believe that this measure provides our board of directors, management and investors with additional information
to measure our performance, provide comparisons from period to period and company to company by excluding potential differences caused by variations in
capital structures (affecting interest expense) and tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating
losses), and to estimate our value.
We understand that although Adjusted EBITDA is frequently used by securities analysts, lenders and others in their evaluation of companies, Adjusted
EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our liquidity or results as reported under
GAAP. Some limitations are:
•
•
•
•
•
Adjusted EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
Adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments on our
debt;
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and
Adjusted EBITDA does not reflect any cash requirements for such replacements; and
Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
46
Table of Contents
To compensate for these limitations, management evaluates our liquidity by considering the economic effect of excluded expense items independently, as
well as in connection with its analysis of cash flows from operations and through the use of other financial measures, such as capital expenditure budget variances,
investment spending levels and return on capital analysis.
Adjusted EBITDA Margin is computed as Adjusted EBITDA divided by Adjusted Revenues. Adjusted Revenues, Adjusted EBITDA and Adjusted EBITDA
Margin are not measurements of our financial performance under GAAP and should not be considered as an alternative to revenue, net income, operating income,
revenue or any other performance measures derived in accordance with GAAP as a measure of our profitability or liquidity.
A reconciliation of Adjusted Revenues for the years ended December 31, 2018 , 2017 and 2016 follows (in thousands):
Revenues
Health eCareers
Hcareers
Rigzone
BioSpace
Adjusted Revenues
Year Ended December 31,
2018
2017
2016
161,570 $
207,950 $
—
(5,329)
(3,771)
(212)
(24,354)
(14,368)
(7,171)
(3,592)
152,258 $
158,465 $
226,970
(27,066)
(14,908)
(9,484)
(4,110)
171,402
$
$
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A reconciliation of Adjusted EBITDA for the years ended December 31, 2018 , 2017 and 2016 follows (in thousands):
Reconciliation of Net Income (Loss) to Adjusted EBITDA:
Net income (loss)
Interest expense
Income tax expense
Depreciation
Amortization of intangible assets
Impairment of goodwill
Non-cash stock based compensation 1
Impairment of fixed and intangible assets
(Gain) loss on sale of businesses, net
Costs related to strategic alternatives process
Disposition related and other costs
Proceeds from restitution award
Legal contingencies and related fees
Divested businesses
Other
Adjusted EBITDA
Reconciliation of Operating Cash Flows to Adjusted EBITDA:
Net cash provided by operating activities
Interest expense
Amortization of deferred financing costs
Income tax expense
Deferred income taxes
Change in accrual for unrecognized tax benefits
Change in accounts receivable
Change in deferred revenue
Costs related to strategic alternatives process
Disposition related and other costs 2
Proceeds from restitution award
Legal contingencies and related fees
Divested businesses
Changes in working capital and other
Adjusted EBITDA
Year Ended December 31,
2018
2017
2016
$
7,174 $
15,978 $
(5,398)
2,054
2,428
9,280
482
—
6,606
—
(3,369)
—
7,619
—
1,965
(2,243)
36
3,445
3,419
9,752
2,138
—
8,608
2,226
(6,699)
807
4,746
(3,293)
739
(4,916)
23
$
$
32,032 $
36,973 $
14,918 $
34,409 $
2,054
(342)
2,428
(2,699)
1,179
(11,947)
18,866
—
7,619
—
1,965
(2,243)
234
3,445
(690)
3,419
(212)
(346)
(1,976)
(712)
807
4,746
(3,293)
739
(4,916)
1,553
$
32,032 $
36,973 $
3,481
5,279
9,849
6,787
15,369
10,245
9,252
—
250
3,347
—
—
(6,261)
29
52,229
44,997
3,481
(324)
5,279
3,268
923
(2,281)
(2,370)
250
1,808
—
—
(6,261)
3,459
52,229
1. Non-cash stock based compensation for 2016 excludes accelerated stock compensation of $0.9 million which is included in disposition related and other costs.
2. Disposition related and other costs for 2016 excludes accelerated stock compensation of $0.9 million and the loss on sale of the Slashdot business of $0.6 million, which were already added back to net cash provided by
operating activities.
A reconciliation of Adjusted EBITDA Margin for the years ended December 31, 2018 , 2017 and 2016 follows (in thousands):
Adjusted Revenues
Adjusted EBITDA
Adjusted EBITDA Margin
Year Ended December 31,
2018
2017
$
$
152,258
32,032
$
$
21%
158,465
36,973
$
$
23%
2016
171,402
52,229
30%
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Cash
Flows
We have summarized our cash flows for the years ended December 31, 2018 , 2017 and 2016 (in thousands).
Cash from operating activities
Cash from (used in) investing activities
Cash used in financing activities
Year Ended December 31,
2018
2017
2016
$
14,918 $
34,409 $
7,489
(27,174)
(775)
(44,781)
44,997
(10,770)
(44,634)
We have financed our operations primarily through cash provided by operating activities and borrowings under our revolving credit facility. In the fourth
quarter of 2016, the Company implemented a tax planning strategy which enhanced our ability to utilize foreign tax credits in the U.S. As a result, we changed our
assertion regarding the indefinite reinvestment of our Canada subsidiary’s foreign earnings, and repatriated accumulated earnings of $5.5 million in 2017 and $16.4
million in 2016 from Canada to the United States. In the fourth quarter of 2017, the Company also repatriated earnings of $7.3 million from its U.K. subsidiary
since such earnings were subject to tax in the U.S. because of the deemed repatriation provisions in U.S. tax reform legislation enacted in December 2017. Cash
from Canada and the U.K. was used by the Company to pay down debt resulting in lower cash at December 31, 2018 and 2017.
At December 31, 2018 , we had cash of $6.5 million compared to $12.1 million at December 31, 2017 . Cash held by foreign subsidiaries totaled
approximately $2.2 million and $9.6 million at December 31, 2018 and 2017, respectively. Cash balances and cash generation in the United States, along with the
unused portion of our revolving credit facility, are sufficient to maintain liquidity and meet our obligations without being dependent on cash and earnings from our
foreign subsidiaries.
Liquidity
Our principal internal sources of liquidity are cash on hand, as well as the cash flow that we generate from our operations. In addition, externally, we had
$72.0 million in borrowing capacity under our $90.0 million Credit Agreement (reduced from $150.0 million in the fourth quarter of 2018) at December 31, 2018 .
We believe that our existing U.S. cash, cash generated from operations and available borrowings under our Credit Agreement will be sufficient to satisfy our
currently anticipated cash requirements through at least the next 12 months and the foreseeable future thereafter. However, it is possible that one or more lenders
under the revolving credit facility may refuse or be unable to satisfy their commitment to lend to us or we may need to refinance our debt and be unable to do so. In
addition, our liquidity could be negatively affected by a decrease in demand for our products and services. We may also make acquisitions and may need to raise
additional capital through future debt financings or equity offerings to the extent necessary to fund such acquisitions, which we may not be able to do on a timely
basis or on terms satisfactory to us or at all.
Comparison of Years Ended December 31, 2018 and 2017
Operating
Activities
Net cash flows from operating activities primarily consist of net income adjusted for certain non-cash items, including depreciation, amortization, changes in
deferred tax assets and liabilities, stock based compensation, impairment of intangible goodwill and fixed and intangible assets, gain or loss on the sale of
businesses, and the effect of changes in working capital. Net cash flows from operating activities were $14.9 million and $34.4 million for the years ended
December 31, 2018 and 2017 , respectively, a decrease of $ 19.5 million . Cash inflow from operations is driven by earnings and is dependent on the amount and
timing of billings and cash collection from our customers. Cash provided by operating activities during the year ended December 31, 2018 decreased due to $11.0
million lower earnings, which includes cash flows from operating activities, excluding changes in working capital, and $8.5 million from changes in working
capital. The lower earnings are primarily due to lower adjusted revenues of $6.1 million and the increase in disposition related and other costs of $2.9 million
during the year ended December 31, 2018. In addition, the proceeds from restitution award of $3.3 million in the year ended December 31, 2017 did not recur in
the same period of 2018. The changes in working capital are primarily due to increased flexibility in the Company's billing terms to customers to bring them in line
with market standards.
Investing
Activities
During the year ended December 31, 2018 , cash provided by investing activities was $7.5 million compared to $0.8 million of cash used during the year
ended December 31, 2017 , an increase of $8.3 million. Cash from investing activities during the year ended December 31, 2018 was attributable to net cash
received from the sale of businesses of $17.5 million, partially offset by the acquisition of fixed assets, including costs of internally developed software, of $10.1
million . Cash used in investing activities
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during the year ended December 31, 2017 was attributable to $13.2 million used to acquire fixed assets, including costs of internally developed software, partially
offset by $12.9 million of net cash proceeds from the sale of the Health eCareers.
Financing
Activities
Cash used in financing activities during the year ended December 31, 2018 was $27.2 million primarily due to $24.0 million of net repayments on long-term
debt and $2.0 million of repurchases of common stock. Cash used during the year ended December 31, 2017 was $44.8 million primarily due to $44.0 million of
payments on long-term debt.
Comparison of Years Ended December 31, 2017 and 2016
Operating
Activities
Net cash flows from operating activities primarily consist of net income adjusted for certain non-cash items, including depreciation, amortization, changes in
deferred tax assets and liabilities, stock based compensation, impairment of goodwill and fixed and intangible assets, gain or loss on sale of business, and the effect
of changes in working capital. Net cash flows from operating activities were $34.4 million and $45.0 million for the years ended December 31, 2017 and 2016,
respectively. Cash inflow from operations for the year ended December 31, 2017, which included $3.3 million of proceeds from a restitution award in the OilPro
related legal matter, is driven by earnings and is dependent on the amount and timing of billings and cash collections from our customers. The decline in revenue,
partially offset by cost reductions, are the primary drivers for the decrease in cash flows from operations in the year ended December 31, 2017 compared to 2016.
Investing
Activities
During the year ended December 31, 2017, cash used by investing activities was $0.8 million compared to $10.8 million in the year ended December 31, 2016.
Cash used by investing activities in the year ended December 31, 2017 was attributable to the $13.2 million used to acquire fixed assets, partially offset by
proceeds received from sale of the Health eCareers business of $12.9 million. Cash used by investing activities in the year ended December 31, 2016 was primarily
attributable to the $11.7 million used to acquire fixed assets and $1.5 million used to purchase preferred stock in a leading tech skills assessment company, partially
offset by proceeds from the sale of the Slashdot Media business of $2.4 million.
Financing
Activities
Cash used for financing activities during the year ended December 31, 2017 was $44.8 million compared to cash used of $44.6 million in the year ended
December 31, 2016. During the current year, the cash used was primarily due to $44.0 million of payments on long-term debt. During the year ended December 31,
2016, the cash used was primarily due to $29.6 million of payments to repurchase the Company’s common stock and $15.0 million used in net repayments on long-
term debt, partially offset by $2.8 million in proceeds from stock option exercises.
Financings and Capital Requirements
Credit
Agreement
In November 2018, the Company, together with Dice Inc. (a wholly-owned subsidiary of the Company) and its wholly-owned subsidiary, Dice Career
Solutions, Inc. (collectively, the “Borrowers”) entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”), which matures in
November 2023, and replaces the previously existing credit agreement dated November 2015. The Credit Agreement provides for a revolving loan facility of $ 90
million (previously $150 million), with an Expansion Option up to $140 million, as permitted under the Credit Agreement. The Company borrowed $18 million to
repay, in full, all outstanding indebtedness, including accrued interest, under the previous credit agreement and to pay certain costs associated with the Credit
Agreement. Unamortized debt issuance costs of $0.2 million were recorded to interest expense at the time of reduction.
Borrowings under the Credit Agreement bear interest, at the Company’s option, at a LIBOR rate or a base rate plus a margin. The margin ranges from 1.75%
to 2.50% on LIBOR loans and 0.75% to 1.50% on base rate loans, determined by the Company’s most recent consolidated leverage ratio. The facility may be
prepaid at any time without penalty.
The Credit Agreement contains various customary affirmative and negative covenants and also contains certain financial covenants, including a consolidated
leverage ratio and a consolidated interest coverage ratio. Borrowings are allowed under the Credit Agreement to the extent the consolidated leverage ratio,
calculated on a pro forma basis, is equal to or less than 2.50 to 1.00. Negative covenants include restrictions on incurring certain liens; making certain payments,
such as stock repurchases and dividend payments; making certain investments; making certain acquisitions; making certain dispositions; and incurring additional
indebtedness. Restricted payments are allowed under the Credit Agreement to the extent the consolidated leverage ratio, calculated
50
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on a pro forma basis, is equal to or less than 2.00 to 1.00, plus an additional $5.0 million of restricted payments. The Credit Agreement also provides that the
payment of obligations may be accelerated upon the occurrence of customary events of default, including, but not limited to, non-payment, change of control, or
insolvency. As of December 31, 2018 , the Company was in compliance with all of the financial covenants under the Credit Agreement.
The obligations under the Credit Agreement are guaranteed by two of the Company’s wholly-owned subsidiaries, eFinancialCareers, Inc and Targeted Job
Fairs, Inc., and secured by substantially all of the assets of the Borrowers and the guarantors and stock pledges from certain of the Company’s foreign subsidiaries.
Other
Capital
Requirements
We anticipate capital expenditures in 2019 to be approximately $8 million to $10 million. We intend to use operating cash flows to fund capital expenditures.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Commitments and Contingencies
The following table presents certain minimum payments due and the estimated timing under contractual obligations with minimum firm commitments as of
December 31, 2018 :
Credit Agreement
Operating lease obligations
Total contractual obligations
Total
Less Than 1
Year
Payments due by period
1-3 Years
3-5 Years
(in thousands)
More Than 5
Years
$
$
18,000 $
20,415
— $
— $
18,000 $
4,244
6,807
4,840
38,415 $
4,244 $
6,807 $
22,840 $
—
4,524
4,524
We make commitments to purchase advertising from online vendors which we pay for on a monthly basis. We have no significant long-term obligations to
purchase a fixed or minimum amount with these vendors.
Our principal commitments consist of obligations under operating leases for office space and equipment and long-term debt. As of December 31, 2018 , we
had $18.0 million outstanding under our Credit Agreement. Interest payments are due quarterly or at varying, specified periods (to a maximum of three months)
based on the type of loan (LIBOR or base rate loan) we choose. See Note 8 “Indebtedness” in our consolidated financial statements for additional information
related to our Credit Agreement.
Future interest payments on our Credit Agreement are variable due to our interest rate being based on a LIBOR rate or a base rate. Assuming an int eres t rate
of 4.25% (the rate in effect on December 31, 2018 ) on our current borrowings, interest payments are expected to be $1.0 million per year in 2019-2022 and $0.9
million in 2023.
As of December 31, 2018 , we recorded approximately $1.7 million of unrecognized tax benefits as liabilities, and we are uncertain if or when such amounts
may be settled. Related to the unrecognized tax benefits considered permanent differences, we have also recorded a liability for potential penalties and interest.
Included in the balance of unrecognized tax benefits at December 31, 2018 are $1.7 million of tax benefits that if recognized, would affect the effective tax rate.
The Company believes it is reasonably possible that as much as $0.2 million of its unrecognized tax benefits may be recognized in the next twelve months.
Recent Accounting Pronouncements
For a discussion of new accounting pronouncements affecting the Company, refer to Note 2 of Notes to Consolidated Financial Statements included in Item 8
of this Annual Report.
51
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Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We have exposure to financial market risks, including changes in foreign currency exchange rates, interest rates, and other relevant market prices.
Foreign Exchange Risk
We conduct business serving multiple markets, in four languages, mainly across Europe, Asia, Australia, and North America using the eFinancialCareers
name. Rigzone (sold RigLogix portion of the Rigzone business on February 20, 2018 and DHI transferred majority ownership of the remaining Rigzone business to
Rigzone management on August 31, 2018), Dice Europe (ceased operations on August 31, 2018) and Hcareers (sold May 22, 2018) also conduct business outside
the United States. For the years ended December 31, 2018 and 2017 , approximately 25% of our revenues were earned outside the United States and certain of
these amounts are collected in local currency. We are subject to risk for exchange rate fluctuations between such local currencies and the British Pound Sterling
and between local currencies and the United States dollar and the subsequent translation of the British Pound Sterling to United States dollars. We currently do not
hedge currency risk. A decrease in foreign exchange rates during a period would result in decreased amounts reported in our Consolidated Balance Sheets,
Consolidated Statements of Operations, Comprehensive Income, and of Cash Flows. For example, if foreign exchange rates between the British Pound Sterling and
United States dollar decreased by 1.0%, the impact on our revenues and expenses during 2018 would have been a decrease of approximately $0.2 million.
In connection with Brexit, the global markets and currencies have been adversely impacted, including a decline in the value of the British Pound Sterling as
compared to the United States dollar. Volatility in exchange rates could continue as the UK negotiates its exit from the EU. We currently do not hedge our British
Pound Sterling exposure and therefore are susceptible to currency risk. In the longer term, any impact from Brexit on us will depend, in part, on the outcome of
tariff, trade, regulatory and other negotiations. Although it is unknown what the result of those negotiations will be, it is possible that new terms may adversely
affect our operations and financial results. In addition, trade talks or pacts between the United States and other nations could adversely affect our operations and
financial results.
The financial statements of our non-United States subsidiaries are translated into United States dollars using current exchange rates, with gains or losses
included in the cumulative translation adjustment account, which is a component of stockholders’ equity. As of December 31, 2018 and 2017 , our translation
adjustment decreased stockholders’ equity by $31.2 million and $27.3 million , respectively. The change from December 31, 2017 to December 31, 2018 is
primarily attributable to the position of the United States dollar against the British Pound Sterling.
Interest Rate Risk
We have interest rate risk primarily related to borrowings under our Credit Agreement. Borrowings under our Credit Agreement bear interest, at our option,
at a LIBOR rate or base rate plus a margin. The margin ranges from 1.75% to 2.50% on the LIBOR loans and 0.75% to 1.50% on the base rate, as determined by
our most recent consolidated leverage ratio. As of December 31, 2018 , we had outstanding borrowings of $18.0 million under our Credit Agreement. If interest
rates were to rise by 1.0%, annual interest expense on our current borrowings would increase by approximately $0.2 million.
52
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Item 8.
Financial Statements and Supplementary Data
DHI Group, Inc.
Report of Independent Registered Public Accounting Firm
Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 2018 and 2017
Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2018,
2017 and 2016
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2018, 2017 and
2016
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016
Notes to Consolidated Financial Statements
Page
54
55
56
57
58
59
60
53
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of DHI Group, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of DHI Group, Inc. and subsidiaries (the "Company") as of December 31, 2018 and 2017, the
related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended
December 31, 2018, and the related notes and schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the
financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its
operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the
United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal
control over financial reporting as of December 31, 2018, based on criteria established in Internal
Control
-
Integrated
Framework
(2013)
issued by the Committee
of Sponsoring Organizations of the Treadway Commission and our report dated February 7, 2019, expressed an unqualified opinion on the Company's internal
control over financial reporting.
Change in Accounting Principle
As discussed in Note 3 to the financial statements, the Company has changed its method of accounting for contract acquisition costs in 2018 due to adoption of
ASU No. 2014-09, Revenue
from
Contracts
with
Customers.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements
based on our audits. We are a public accounting firm registered with the 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 audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to
assess the risks of material misstatement of the 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 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 financial statements. We believe
that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Des Moines, Iowa
February 7, 2019
We have served as the Company's auditor since 2005.
54
Table of Contents
DHI GROUP, INC.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2018 and 2017
(in thousands, except per share data)
Current assets
Cash
ASSETS
Accounts receivable, net of allowance for doubtful accounts of $647 and $1,688
Income taxes receivable
Prepaid and other current assets
Total current assets
Fixed assets, net
Acquired intangible assets, net
Capitalized contract costs
Goodwill
Deferred income taxes
Other assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses
Deferred revenue
Income taxes payable
Total current liabilities
Long-term debt, net
Deferred income taxes
Deferred revenue
Income taxes payable
Accrual for unrecognized tax benefits
Other long-term liabilities
Total liabilities
Commitments and contingencies (Note 9)
Stockholders’ equity
Convertible preferred stock, $.01 par value, authorized 20,000 shares; no shares issued and outstanding
Common stock, $.01 par value, authorized 240,000; issued 87,522 and 83,125 shares, respectively; outstanding:
53,396 and 50,480 shares, respectively
Additional paid-in capital
Accumulated other comprehensive loss
Accumulated earnings
Treasury stock, 34,126 and 32,645 shares, respectively
Total stockholders’ equity
Total liabilities and stockholders’ equity
See
accompanying
notes
to
the
consolidated
financial
statements.
55
December 31,
2018
December 31, 2017
$
6,472 $
$
$
22,850
2,203
7,330
38,855
15,890
39,000
7,939
153,974
136
2,591
258,385 $
25,030 $
54,723
1,168
80,921
17,288
10,444
1,363
—
1,680
1,334
12,068
38,769
2,617
5,086
58,540
16,147
45,737
—
170,791
469
4,034
295,718
22,196
83,646
1,129
106,971
41,450
8,245
—
1,489
2,859
2,063
113,030
163,077
—
876
383,123
(31,236)
71,435
(278,843)
145,355
$
258,385 $
—
831
375,537
(27,330)
59,776
(276,173)
132,641
295,718
Table of Contents
DHI GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 2018, 2017 and 2016
(in thousands, except per share amounts)
Revenues
Operating expenses:
Cost of revenues
Product development
Sales and marketing
General and administrative
Depreciation
Amortization of intangible assets
Impairment of goodwill
Impairment of fixed and intangible assets
Disposition related and other costs (Note 12)
Total operating expenses
Other operating income:
Gain on sale of businesses (Note 4)
Proceeds from restitution award
Total other operating income
Operating income
Interest expense
Other expense
Income (loss) before income taxes
Income tax expense
Net income (loss)
Basic earnings (loss) per share
Diluted earnings (loss) per share
Weighted-average basic shares outstanding
Weighted-average diluted shares outstanding
See
accompanying
notes
to
the
consolidated
financial
statements.
56
For the year ended December 31,
2018
2017
2016
$
161,570 $
207,950 $
226,970
18,344
20,212
59,721
37,589
9,280
482
—
—
7,619
153,247
3,369
—
3,369
11,692
(2,054)
(36)
9,602
2,428
29,974
24,984
80,508
40,749
9,752
2,138
—
2,226
4,746
32,126
25,714
77,451
43,684
9,849
6,787
15,369
9,252
3,347
195,077
223,579
6,699
3,293
9,992
22,865
(3,445)
(23)
19,397
3,419
—
—
—
3,391
(3,481)
(29)
(119)
5,279
(5,398)
(0.11)
(0.11)
48,319
48,319
$
$
$
7,174 $
15,978 $
0.15 $
0.14 $
48,520
49,605
0.33 $
0.33 $
47,908
48,230
Table of Contents
DHI GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the years ended December 31, 2018, 2017, and 2016
(in thousands)
Net income (loss)
Foreign currency translation adjustment
Total other comprehensive income (loss)
Comprehensive income (loss)
See
accompanying
notes
to
the
consolidated
financial
statements.
$
$
57
For the year ended December 31,
2018
2017
2016
7,174 $
15,978 $
(5,398)
(3,906)
(3,906)
3,268 $
4,946
4,946
20,924 $
(11,808)
(11,808)
(17,206)
Table of Contents
Balance at January 1, 2016
Net loss
Other comprehensive income (loss)
Stock based compensation
Excess tax benefit over book expense from stock options exercised
Restricted stock issued
Restricted stock forfeited or withheld to satisfy tax obligations
Purchase of treasury stock under stock repurchase plan
Exercise of common stock options
Performance-Based Restricted Stock Units forfeited or withheld to satisfy
tax obligations
Performance-Based Restricted Stock Units eligible to vest
Balance at December 31, 2016
Net loss
Other comprehensive income (loss)
Stock based compensation
Restricted stock issued
Restricted stock forfeited or withheld to satisfy tax obligations
Exercise of common stock options
Cumulative-effect of new accounting principle (see Note 2)
Balance at December 31, 2017
Net income
Other comprehensive income (loss)
Stock based compensation
Restricted stock issued
Restricted stock forfeited or withheld to satisfy tax obligations
Performance-Based Restricted Stock Units eligible to vest
Cumulative-effect of new accounting principle (see Note 2)
Unclaimed shareholder liability (see Note 10)
Purchase of treasury stock under stock repurchase plan
Balance at December 31, 2018
DHI GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the years ended December 31, 2018, 2017, and 2016 (in thousands)
Convertible
Preferred Stock
Common Stock
Shares
Issued
Amount
Shares
Issued
— $
—
80,717
Amount
$
807
Additional
Paid-in
Capital
$
352,208
Treasury
Stock
$ (243,410)
Accumulated
Earnings (Loss)
Accumulated
Other
Comprehensive
Loss
$
49,476
$
(20,468)
11,145
94
2,800
(2,361)
(28,709)
(506)
1,302
(328)
642
(98)
(246)
13
(3)
6
(1)
(2)
—
—
81,989
820
366,247
(274,986)
1,725
(655)
66
17
(7)
1
8,608
402
280
(1,187)
—
—
83,125
831
375,537
(276,173)
4,087
(440)
750
41
(4)
8
6,606
980
(693)
(5,398)
44,078
15,978
(280)
59,776
7,174
4,485
Total
$ 138,613
(5,398)
(11,808)
(11,808)
11,145
94
13
(2,364)
(28,709)
2,806
(507)
(2)
(32,276)
103,883
4,946
15,978
4,946
8,608
17
(1,194)
403
—
(27,330)
132,641
7,174
(3,906)
(3,906)
6,606
41
(697)
8
4,485
980
See
accompanying
notes
to
the
consolidated
financial
statements
.
58
— $
—
87,522
$
876
$
383,123
(1,977)
$ (278,843)
$
71,435
$
(31,236)
(1,977)
$ 145,355
Table of Contents
DHI GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2018, 2017 and 2016
(in thousands)
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
For the year ended December 31,
2018
2017
2016
$
7,174 $
15,978 $
(5,398)
Depreciation
Amortization of intangible assets
Deferred income taxes
Amortization of deferred financing costs
Stock based compensation
Impairment of goodwill
Impairment of fixed and intangible assets
Change in accrual for unrecognized tax benefits
(Gain) loss on sale of businesses
Changes in operating assets and liabilities:
Accounts receivable
Prepaid expenses and other assets
Capitalized contract costs
Accounts payable and accrued expenses
Income taxes receivable/payable
Deferred revenue
Other, net
Net cash flows from operating activities
Cash flows from (used in) investing activities:
Cash received from sale of business, net
Purchases of fixed assets
Purchases of cost method investments
Net cash flows from (used in) investing activities
Cash flows used in financing activities:
Payments on long-term debt
Proceeds from long-term debt
Payments under stock repurchase plan
Proceeds from stock option exercises
Purchase of treasury stock related to vested restricted stock and performance stock units
Financing costs paid
Net cash flows used in financing activities
Effect of exchange rate changes
Net change in cash for the period
Cash, beginning of period
Cash, end of period
See
accompanying
notes
to
the
consolidated
financial
statements.
59
9,280
482
2,699
342
6,606
—
—
(1,179)
(3,369)
11,947
1,759
(3,236)
1,743
(972)
(18,866)
508
14,918
17,542
(10,053)
—
7,489
(31,000)
7,000
(1,977)
—
(693)
(504)
(27,174)
(829)
(5,596)
12,068
9,752
2,138
212
690
8,608
—
2,226
346
(6,699)
1,976
(1,120)
—
1,659
(2,111)
712
42
34,409
12,947
(13,222)
(500)
(775)
(44,000)
—
—
403
(1,184)
—
(44,781)
228
(10,919)
22,987
$
6,472 $
12,068 $
9,849
6,787
(3,268)
324
11,145
15,369
9,252
(923)
639
2,281
(132)
—
(2,954)
(64)
2,370
(280)
44,997
2,429
(11,699)
(1,500)
(10,770)
(42,000)
27,000
(29,572)
2,806
(2,868)
—
(44,634)
(656)
(11,063)
34,050
22,987
Table of Contents
DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
DHI Group, Inc. (“DHI” or the “Company”), a Delaware corporation, was incorporated on June 28, 2005. DHI is a leading provider of data, insights and
employment connections through its specialized services for technology professionals and other select online communities. Its mission is to empower tech
professionals and organizations to compete and win through expert insights and relevant employment connections. Employers and recruiters use its websites and
services to source, hire and connect with the most qualified and highly-skilled tech professionals, while professionals use its websites and services to find ideal
employment opportunities, relevant job advice and tailored career-related data. For over 25 years, through its predecessor companies, the Company was built on
providing employers and professionals with career connections, news, tools and information. The Company serves multiple markets located throughout North
America, Europe, the Middle East and the Asia Pacific region.
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation — The consolidated financial statements include the accounts of DHI and its wholly-owned subsidiaries and cost method
investment. All intercompany balances and transactions have been eliminated in consolidation.
Revenue Recognition — On January 1, 2018, we adopted Topic 606 applying the modified retrospective method to all contracts that were not completed as
of January 1, 2018. Results for periods beginning after January 1, 2018 are presented under Topic 606, while prior periods are reported under the accounting
standards in effect for the period presented.
Under Topic 606, we recognize revenue when control of the promised goods or services is transferred to our customers at an amount that reflects the consideration
to which we expect to receive in exchange for those goods or services. Revenue is recognized net of customer discounts ratably over the service period. Billings
with customers are based on contractual schedules. Customer billings delivered in advance and payments received in advance of services being rendered are
recorded as deferred revenue and recognized over the service period. We generate revenues from the following sources:
Recruitment
packages.
Recruitment package revenues are derived from the sale to recruiters and employers of a combination of job postings and access to a
searchable database of candidates on the Dice, ClearanceJobs, eFinancialCareers and Rigzone (sold the RigLogix portion of the Rigzone business on February 20,
2018 and DHI transferred majority ownership of the remaining Rigzone business to Rigzone management on August 31, 2018). Certain of the Company’s
arrangements include multiple performance obligations, which primarily consists of the ability to post jobs and access to a searchable database of candidates. The
Company determines the units of accounting for multiple performance obligations in accordance with Topic 606. Specifically, the Company considers a
performance obligation as a separate unit of accounting if it has value to the customer on a standalone basis. The Company’s arrangements do not include a general
right of return. Services to customers buying a package of available job postings and access to the database are delivered over the same period and revenue is
recognized ratably over the length of the underlying contract, typically from one to twelve months. The separation of the package into two deliverables results in no
change in revenue recognition since delivery of the two services occurs over the same time period.
Advertising
revenue.
Advertising revenue is recognized over the period in which the advertisements are displayed on the websites or at the time a promotional e-
mail is sent out to the audience.
Classified
revenue.
Classified job posting revenues are derived from the sale of job postings to recruiters and employers. A job posting is the ability to list a job on
the website for a specified time period. Revenue from the sale of classified job postings is recognized ratably over the length of the contract or the period of actual
usage.
Data
services
revenue.
Access to the Company’s database of energy industry data is provided to customers for a fee. Data services revenue is recognized ratably
over the length of the underlying contract, typically from one to twelve months. The data services business, called RigLogix, was sold on February 20, 2018.
Career
fair
and
recruitment
event
booth
rentals.
Career fair and recruitment event revenues are derived from renting booth space to recruiters and employers.
Revenue from these sales are recognized when the career fair or recruitment event is held.
Concentration of Credit Risk— Cash is maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance
provided on such deposits. These deposits may be redeemed upon demand. The Company believes it is not exposed to any significant credit risk.
60
Table of Contents
DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company performs ongoing credit evaluations of its customers’ financial condition and generally does not require collateral on accounts receivable. No
single customer represents 10% or more of revenues for the years ended December 31, 2018, 2017 and 2016.
Allowance for Doubtful Accounts— The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its
customers to make required payments. If the financial condition of DHI’s customers were to deteriorate, resulting in an impairment of their ability to make
payments, additional allowances may be required.
Statements of Cash Flows— All bank deposits are considered cash.
The supplemental disclosures to the accompanying consolidated statements of cash flows are as follows (in thousands):
Supplemental cash flow information:
Interest paid
Taxes paid
Non-cash investing and financing activities:
2018
2017
2016
$
1,807 $
2,634
3,254 $
4,697
3,256
9,096
Capital expenditures on fixed assets included in accounts payable and accrued
expenses
223
63
201
Investments— During 2017, pursuant to the achievement of certain performance milestones, the Company purchased additional preferred stock representing
a 2.3% interest in the fully diluted shares of a leading tech skills assessment company for $0.5 million , bringing its total interest to 10.0% . During the year ended
December 31, 2018, the skills assessment company completed an additional equity offering, lowering DHI's total interest to 7.6% . As of December 31, 2018, it
was not practicable to estimate the fair value of the preferred stock as the shares are not traded. The investment is carried at its original cost of $2.0 million , which
is included in the other asset section of the consolidated balance sheets.
On January 31, 2018, the Company transferred a majority ownership of the BioSpace business to BioSpace management with zero proceeds received from
the transfer. The Company retained a 20% preferred share interest in the BioSpace business. The fair value of the investment was estimated to be zero at the time of
the transfer. As of December 31, 2018, it was not practicable to estimate the fair value of the preferred stock investment as the shares are not traded. The
investment is recorded at cost, which is zero. Upon a liquidation, sale or change in control of BioSpace within five years of January 31, 2018, the Company has the
right to the first $1.0 million of proceeds or the option to convert its 20% preferred stock interest to a 20% common stock interest. On January 31, 2023, the 20%
preferred share interest will convert to a 20% common share interest.
On August 31, 2018, the Company transferred a majority ownership of the Rigzone business to Rigzone management, while retaining a 40% common share
interest, with zero proceeds received from the transfer. The Company has agreed to provide $0.4 million of funding to the Rigzone business, which is recorded in
accounts payable and accrued expenses on the consolidated balance sheets as of December 31, 2018. The Company has no further funding requirements to the
Rigzone business. The Company has evaluated the 40% common share investment in the Rigzone business and has determined the investment meets the definition
and criteria of a variable interest entity ("VIE"). The Company evaluated the VIE and determined that the Company does not have a controlling financial interest in
the VIE, as the Company does not have the power to direct the activities of the VIE that most significantly impact the VIE's economic performance. The common
share interest is being accounted for under the equity method of accounting as the Company has the ability to exercise significant influence over Rigzone. As
accumulated earnings of the VIE have been approximately zero since the date of transfer, the investment continues to be recorded at cost, which was zero at
December 31, 2018.
Rigzone is a website dedicated to delivering online content, data , and career services in the oil and gas industry in North America, Europe, the Middle East,
and Asia Pacific. Oil and gas companies, as well as companies that serve the energy industry, use Rigzone to find talent for roles such as petroleum engineers,
sales, professionals with energy industry expertise and skilled tradesmen.
Fixed Assets— Depreciation of equipment, furniture and fixtures, computer software and capitalized website development costs are provided under the
straight-line method over estimated useful lives ranging from two to five years. Amortization of leasehold improvements is provided over the shorter of the term of
the related lease or the estimated useful life of the improvement. The cost of additions and betterments is capitalized, and repairs and maintenance costs are charged
to operations in the periods incurred.
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Capitalized Software Costs— Capitalized software costs consist of costs to purchase and develop software for internal use. The Company capitalizes certain
incurred software development costs in accordance with the Internal Use Software subtopic of the FASB ASC. Costs incurred during the application-development
stage for software bought and further customized by outside vendors for the Company’s use and software developed by a vendor for the Company’s proprietary use
have been capitalized.
Website Development Costs— The Company capitalizes certain costs incurred in designing, developing, testing and implementing enhancements to its
websites. These costs are amortized over the enhancement’s estimated useful life, which generally approximates two years. Costs related to the planning and post
implementation phases of website development efforts are expensed as incurred.
Goodwill and Indefinite-Lived Acquired Intangible Assets— Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated
fair value of the net identified tangible and intangible assets acquired. The indefinite-lived acquired intangible assets include the Dice trademarks and brand name.
The Company performs a test for impairment of goodwill and indefinite-lived intangible assets annually on October 1, or more frequently if indicators of potential
impairment exist, to determine if the carrying value of the recorded asset is impaired. The impairment review process for goodwill compares the fair value of the
reporting unit in which goodwill resides to its carrying value. The impairment review process for indefinite-lived intangible assets compares the fair value of the
assets to their carrying value. The determination of whether or not the asset has become impaired involves a significant level of judgment in the assumptions
underlying the approach used to determine the value of the Company’s reporting units or the intangible asset. Changes in the Company’s strategy and/or market
conditions could significantly impact these judgments and require adjustments to recorded amounts of goodwill or indefinite-lived intangible assets. See Note 5 for
discussion of impairment charges.
Capitalized Contract Costs— The Company capitalizes certain contract acquisition costs consisting primarily of commissions paid when contracts are
signed. For costs incurred to obtain new business sales contracts, the Company capitalizes and expenses these costs over an average customer life, which was
approximately two years as of December 31, 2018. For the remaining sales contracts, the Company capitalizes and expenses these costs over a weighted average
contract term, which was approximately one year as of December 31, 2018. See Note 3 for additional contract acquisition cost disclosures.
Foreign Currency Translation— For the Company’s foreign operations whose functional currency is not the U.S. dollar, the assets and liabilities are
translated into U.S. dollars at current exchange rates. Resulting translation adjustments are reflected as Other Comprehensive Income (Loss). Revenue and
expenses are translated at average exchange rates for the period. Transaction gains and losses that arise from exchange rate fluctuations on transactions
denominated in a currency other than the functional currency are charged to operations as incurred.
Advertising Costs— The Company expenses advertising costs as they are incurred. Advertising expense for the years ended December 31, 2018, 2017 and
2016 was $26.7 million , $35.3 million and $30.5 million , respectively.
Income Taxes— The Company recognizes deferred taxes by the asset and liability method. Under this method, deferred income taxes are recognized for
differences between the financial statement and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years 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 primary sources
of temporary differences are stock-based compensation, amortization and impairment of intangible assets, and depreciation of fixed assets.
Stock-Based Compensation— The Company has a plan to grant equity awards to certain employees and directors of the Company and its subsidiaries. See
Note 13.
Fair Value of Financial Instruments— The carrying amounts reported in the consolidated balance sheets for cash, accounts receivable, and accounts
payable and accrued expenses approximate their fair values. The Company’s long-term debt consists of borrowings under its credit facility. See Note 5 for fair
value disclosures.
Risks and Uncertainties— The Company is subject to the risks, expenses and uncertainties frequently encountered by companies in the rapidly evolving
markets for online products and services. These risks include the failure to develop and extend the Company’s online service brands, the rejection of the
Company’s services by consumers, vendors and/or advertisers, the inability of the Company to maintain and increase the levels of traffic on its online services, as
well as other risks and uncertainties. In the event that the Company does not successfully execute its business plan, certain assets may not be recoverable.
Use of Estimates— The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as
of the date of the financial statements, and reported amounts of
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
revenues and expenses during the reporting period. Actual results could differ from these estimates. DHI’s significant estimates include the useful lives and
valuation of fixed assets and intangible assets, goodwill, the income tax valuation allowance, and the assumptions used to value the Performance-Based Restricted
Stock Units (“PSUs”) of the Company.
Earnings (Loss) per Share— The Company follows the Earnings Per Share topic of the FASB ASC in computing earnings per share (“EPS”). Basic EPS is
calculated by dividing net income (loss) by the weighted average number of shares outstanding. When the effects are dilutive, diluted earnings (loss) per share is
calculated using the weighted average number of shares outstanding, and the dilutive effect of stock-based compensation awards as determined under the treasury
stock method. Certain stock awards were excluded from the computation of diluted (loss) earnings per share due to their anti-dilutive effect. See Note 17.
New Accounting Pronouncements— In May 2014, FASB issued ASU No. 2014-09 ("Topic 606"), Revenue from Contracts with Customers. Topic 606
supersedes the revenue recognition requirements in Accounting Standards Codification Topic 605, Revenue Recognition, and requires entities to measure and
recognize revenue and the related cash flows it expects to be entitled for the transfer of promised goods or services to customers and requires an entity to recognize
the incremental costs of obtaining a contract with a customer as an asset if the entity expects to recover those costs over time. Topic 606 became effective for
reporting periods beginning after December 15, 2017. Topic 606 provides companies with two implementation methods. Companies can choose to apply the
standard retrospectively to each prior reporting period presented (full retrospective application) or retrospectively with the cumulative effect of initially applying
the standard as an adjustment to the opening balance of retained earnings of the annual reporting period that includes the date of initial application (modified
retrospective application). The Company has chosen the modified retrospective application method and has implement Topic 606 effective January 1, 2018.
The Company has determined that the January 1, 2018 cumulative effect to its revenue streams was an increase of approximately $0.2 million to deferred
revenues, and the cumulative effect to its contract acquisition costs was an increase to contract acquisition cost assets of approximately $6.1 million , with a net
after tax increase to retained earnings of approximately $4.5 million . The cumulative impact on contract acquisition costs was computed based on contracts in
force as of December 31, 2017 using average commission rates on both new business sales to be amortized over approximately two years and the remaining sales
contracts to be amortized over approximately one year. See Note 3 to the Notes to the Consolidated Financial Statements.
In January 2016, the FASB issued ASU No. 2016-01, Financial
Instruments
-
Overall
(Subtopic
825-10):
Recognition
and
Measurement
of
Financial
Assets
and
Financial
Liabilities.
The new standard aims to improve existing U.S. GAAP and will change certain aspects of accounting for equity investments, financial
instruments, financial liabilities, and presentation and related disclosures. The updated standard became effective for fiscal years beginning after December 15,
2017, including interim periods within those fiscal years. The Company adopted the new standard in the first quarter of 2018, and has determined the adoption did
not have material impact on its consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases
. The new standard has requirements on how to account for leases by both the lessee and the
lessor and adds clarification for what constitutes a lease, among other items. The updated standard becomes effective for fiscal years beginning after December 15,
2018 and interim periods the following year, with early adoption permitted. The new standard must be applied using a modified retrospective transition. In July
2018, the FASB issued updated guidance which allows an additional transition method to adopt the new standard at the adoption date, as compared to the
beginning of the earliest period presented, and recognize a cumulative-effect adjustment to the beginning balance of retained earnings in the period of adoption.
DHI has implemented the new standard effective January 1, 2019 and has elected to recognize a cumulative effect adjustment to the beginning balance of retained
earnings in the period of adoption. Adoption of this standard has resulted in a right-of-use asset of approximately $16 to $18 million and a related lease liability of
approximately $17 to $19 million being established on the Company's balance sheet, with no material cumulative-effect adjustment to retained earnings. The
Company has implemented processes and tools to assist in the ongoing lease data collection and analysis, and has updated accounting policies and internal controls
as a result of adopting this standard.
In March 2016, the FASB issued ASU No. 2016-09, Improvements
to
Employee
Share-Based
Payment
Accounting
. The Company adopted the standard
during the three months ended March 31, 2017. The new standard requires all income tax effects of awards to be recognized in the income statement when the
awards vest or are settled, rather than in additional paid-in capital. Accordingly, the new standard eliminates the requirement to reclassify excess tax benefits from
operating activities to financing activities in the statement of cash flows. Additionally, the Company can now make a policy election to account for forfeitures as
they occur. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement were applied prospectively. The tax effect of
awards vested resulted in income tax expense of $1.4 million during the twelve months ended December 31, 2017. The Company recast 2016 cash flows to reflect
the excess tax benefit as an operating activity, resulting in a reclassification of $0.4 million from “Excess tax benefit over book expense from stock based
compensation” to “Income taxes receivable/payable” on the Consolidated Statements of Cash Flows. The Company will record forfeitures as they occur, rather
63
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
than estimating in advance. On January 1, 2017, under the modified retrospective transition method as required by the standard, the Company recorded a
cumulative-effect adjustment of $0.3 million to decrease accumulated earnings and increase additional paid-in capital to remove estimated forfeitures on all
outstanding equity awards after December 31, 2016.
In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill
and
Other
. The new standard eliminates Step 2 from the goodwill impairment
test and requires the Company to compare the fair value of a reporting unit with its carrying amount. The Company should recognize an impairment charge for the
amount by which the carrying amount exceeds the fair value. The standard is effective for fiscal years beginning after December 15, 2019, with early adoption
permitted. Accordingly, the Company has adopted the new standard during the year ended December 31, 2017, which did not have a material impact on the
consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill
and
Other-Internal-Use
Software:
Customer's
Accounting
for
Implementation
Costs
Incurred
in
a
Cloud
Computing
Arrangement
that
is
a
Service
Contract.
The new standard requires entities that are customers in cloud computing
arrangements to defer implementation costs if they would be capitalized by the entity in software licensing arrangements under the internal-use software guidance.
ASU No. 2018-15 is effective for fiscal years beginning after December 15, 2019 and interim periods within those years and early adoption is permitted. The
amendments allow either a retrospective or prospective approach to all implementation costs incurred after adoption. The Company is evaluating the expected
impact of this standard on its consolidated financial statements.
3. REVENUE RECOGNITION
On January 1, 2018, the Company adopted Topic 606 applying the modified retrospective method to all contracts that were not completed as of January 1,
2018. Results for reporting periods beginning after January 1, 2018 will be presented under Topic 606, while prior period amounts will not be adjusted and
continue to be reported under the accounting standards in effect prior to January 1, 2018.
We recorded a net increase to opening retained earnings of $4.5 million as of January 1, 2018 due to the cumulative impact of adopting Topic 606.
Changes in accounting policies as a result of adopting Topic 606 and nature of goods.
The Company recognizes revenue when control of the promised goods or services is transferred to our customers at an amount that reflects the consideration
to which we expect to receive in exchange for those goods or services. Revenue is recognized net of customer discounts ratably over the service period. Customer
billings delivered in advance of services being rendered are recorded as deferred revenue and recognized over the service period. See also Note 2 to the Notes to
Consolidated Financial Statements.
Disaggregation of revenue
Our brands serve various economic professions, such as technology, financial, hospitality (the Hcareers business was sold on May 22, 2018), and energy
(sold the RigLogix portion of the Rigzone business on February 20, 2018 and transferred majority ownership of the remaining Rigzone business to Rigzone
management on August 31, 2018). The following table provides information about disaggregated revenue by brand and includes a reconciliation of the
disaggregated revenue with reportable segments (in thousands):
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Dice (1)
ClearanceJobs
Dice Europe (2)
eFinancial Careers
Hcareers (3)
Rigzone (3)
BioSpace (3)
Total
DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended December 31, 2018
Tech-focused
Corporate & Other
Total
$
$
94,438 $
21,086
2,976
33,758
—
—
—
152,258 $
— $
—
—
—
5,329
3,771
212
9,312 $
94,438
21,086
2,976
33,758
5,329
3,771
212
161,570
(1) Includes Dice U.S. and Targeted Job Fairs.
(2) The Company ceased Dice Europe operations on August 31, 2018.
(3) The Company sold the RigLogix portion of the Rigzone business on February 20, 2018 and transferred majority ownership of the remaining Rigzone business to Rigzone management on
August 31, 2018. Hcareers was sold on May 22, 2018 and the Company transferred majority ownership of BioSpace to BioSpace management on January 31, 2018.
Revenue for periods ending prior to January 1, 2018 have not been presented under Topic 606.
Contract Balances
The following table provides information about opening and closing balances of receivables and contract liabilities from contracts with customers as
required under Topic 606 (in thousands):
Receivables
Short-term contract liabilities (deferred revenue)
Long-term contract liabilities (deferred revenue)
As of December 31, 2018
As of January 1, 2018
$
$
22,850
54,723
1,363
38,769
83,646
—
We receive payments from customers based upon contractual billing schedules; accounts receivable is recorded when customers are invoiced per the
contractual billing schedules. As the Company's standard payment terms are less than one year, the Company elected the expedient, where applicable. As a result,
the Company did not consider the effects of a significant financing component. Contract liabilities include customer billings delivered in advance of performance
under the contract, and associated revenue is realized when services are rendered under the contract.
Receivables increase due to customer billings and decrease by cash collected from customers along with business divestitures. Included in January 1, 2018 is
$4.4 million of receivables related to businesses divested during the year ended December 31, 2018. Contract liabilities increase due to customer billings and are
decreased as performance obligations are satisfied under the contracts. Included in January 1, 2018 is $8.4 million of short-term contract liabilities related to the
businesses divested during the year ended December 31, 2018.
During the year ended December 31, 2018, the Company recognized the following revenues as a result of changes in the contract liability balances in the
respective periods (in thousands):
Revenue recognized in the period from:
Amounts included in the contract liability at the beginning of the period
$
75,967
Year Ended December 31, 2018
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Transaction price allocated to the remaining performance obligations
Under the guidance of Topic 606, the following table includes estimated revenue expected to be recognized in future periods related to performance
obligations that are unsatisfied or partially unsatisfied at the end of the reporting period (in thousands):
Tech-focused
Contract acquisition costs
2019
2020
2021
Total
$
54,723 $
1,348 $
15 $
56,086
In connection with the adoption of Topic 606, we are required to capitalize certain contract acquisition costs consisting primarily of commissions paid when
contracts are signed. As allowed for by the practical expedient, the Company is using a portfolio approach for contract acquisition costs, which allows the new
revenue guidance to be applied to a portfolio of contracts with similar characteristics. As a result, the Company has applied the portfolio approach to new business
contracts and recurring or remaining business contracts. The Company reasonably expects that the effects of applying the portfolio approach would not differ
materially from applying Topic 606 at the individual contract level. As of January 1, 2018, the date we adopted Topic 606, we capitalized $6.1 million in contract
acquisition costs related to contracts that were not completed. The cumulative effect for contract acquisition costs was computed based on contracts in force as of
December 31, 2017 using the average commission rates on both new business sales contracts, to be amortized over approximately two years, and the remaining
sales contracts to be amortized over approximately one year. For costs incurred to obtain new business sales contracts, we will record these costs over an average
customer life, which was determined using customer renewal rates; for the remaining sales contracts, we will record these costs over the weighted average contract
term. For the year ended December 31, 2018, the Company recorded $10.1 million of expense related to the amortization of contract acquisition costs and there
was no impairment loss incurred. During the year ended December 31, 2018 $1.2 million of contract acquisition costs were removed due to the sale of BioSpace
and the RigLogix portion of the Rigzone business in the first quarter of 2018, the sale of Hcareers in the second quarter of 2018, and the transfer of majority
ownership of the remaining Rigzone business to Rigzone management in the third quarter of 2018.
In accordance with Topic 606, the impact of adoption to our consolidated statements of operations was as follows:
(in thousand, except per share amounts
Revenues
Operating expenses
Gain on sale of businesses
Operating income
Net income
Basic earnings per share
Diluted earnings per share
Year Ended December 31, 2018
As Reported
Balance Without
Adoption of Topic 606
Effect of Change-
Higher (Lower)
161,570 $
153,247 $
3,369 $
11,692 $
7,174 $
0.15 $
0.14 $
161,457 $
156,129 $
4,568 $
9,896 $
5,827 $
0.12 $
0.12 $
113
(2,882)
(1,199)
1,796
1,347
0.03
0.02
$
$
$
$
$
$
$
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In accordance with Topic 606, the impact of adoption to our consolidated balance sheets was as follows:
(in thousands)
Assets
Capitalized contract assets
Total Assets
Liabilities & Stockholders Equity
Deferred revenue
Deferred income taxes
Total liabilities
Stockholders equity
Accumulated earnings
Total stockholders' equity
Total liabilities & stockholders' equity
As of December 31, 2018
As reported
Balance Without Adoption of
Topic 606
Effect of Change-Higher
(Lower)
$
$
$
$
$
$
$
$
7,939 $
258,385 $
— $
250,446 $
54,723 $
10,444 $
113,030 $
71,435 $
145,355 $
258,385 $
54,610 $
8,450 $
110,923 $
65,603 $
139,523 $
250,446 $
7,939
7,939
113
1,994
2,107
5,832
5,832
7,939
In accordance with Topic 606, the impact of adoption to our consolidated statements of cash flows was as follows:
Cash flows from operating activities:
Net Income
Adjustments to reconcile net income to net cash flows from operating activities:
Deferred income taxes
Gain on sale of businesses, net
Capitalized contract costs
Deferred revenue
Net cash flows from operating activities
4. SALE OF BUSINESSES
Year Ended December 31, 2018
As Reported
Adoption of Topic 606
Balance Without
Effect of Change-Higher
(Lower)
$
$
$
$
$
$
7,174 $
5,827 $
2,699 $
(3,369) $
(3,236) $
(18,866) $
14,918 $
1,896 $
(4,568) $
— $
(18,753) $
14,918 $
1,347
803
1,199
(3,236)
(113)
—
The Company transferred a majority ownership of the Rigzone business to Rigzone management on August 31, 2018. The Company retained a 40% common
share interest in Rigzone. The Company incurred approximately $0.4 million in selling costs and recognized a $0.7 million loss on sale during the year ended
December 31, 2018.
The Company sold the Hcareers business on May 22, 2018 for $16.5 million and incurred approximately $1.5 million in selling costs, with $1.7 million of the
purchase price placed in escrow (recorded in prepaid and other current assets), to be released twelve months after the closing date, subject to the terms and
conditions of the transaction agreement, including certain contingencies. Additionally, the Company recorded a receivable of $0.2 million (recorded in prepaid and
other current assets) related to working capital to be released four months after the closing date, subject to the terms and conditions of the transaction agreement.
As of December 31, 2018, working capital had not been finalized. Net cash proceeds of $14.0 million were received on the date of sale of Hcareers. As a result of
the sale, a $0.8 million loss was recognized in the second quarter of 2018.
The Company sold the RigLogix portion of the Rigzone business on February 20, 2018 for $4.2 million and incurred approximately $0.6 million in selling
costs. $0.4 million of the purchase price was placed in escrow (recorded in prepaid and other current assets) and will be released twelve months after the closing
date, subject to the terms and conditions of the transaction
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
agreement. As a result of the sale, a $4.6 million gain was recognized in the first quarter of 2018. The gain on sale exceeded net proceeds as liabilities transferred in
the transaction exceeded assets, primarily due to deferred revenues of $1.2 million .
The Company transferred a majority ownership of the BioSpace business to BioSpace management on January 31, 2018. The Company retained a preferred
share interest in BioSpace, Inc., representing a 20% diluted interest. The Company incurred approximately $0.3 million in selling costs and recognized a $0.5
million loss on sale during the year ended December 31, 2018.
The Company sold the Health eCareers business on December 4, 2017 for $15.0 million and incurred approximately $0.6 million of selling costs. $1.5
million of the purchase price was placed in escrow (recorded in other current assets in the consolidated balance sheet) and will be released 18 months after the
closing date, subject to the terms and conditions of the transaction agreement. Additionally, the Company recorded a receivable of $0.6 million (recorded in other
current assets in the consolidated balance sheet) related to working capital, which was released during the first quarter of 2018. Net cash proceeds on the date of
sale were $12.9 million . A $6.7 million gain on the sale of the business during the fourth quarter of 2017.
The Company sold the Slashdot and SourceForge businesses (together referred to as “Slashdot Media”) on January 27, 2016 for $2.8 million cash plus
working capital of $0.4 million and incurred approximately $0.8 million of selling costs. A $0.6 million loss on sale of business was recognized in the year ended
December 31, 2016.
5. FAIR VALUE MEASUREMENTS
The FASB ASC topic on Fair Value Measurements and Disclosures defines fair value, establishes a framework for measuring fair value and requires certain
disclosures for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. As a basis for considering assumptions, a
three-tier fair value hierarchy is used, which prioritizes the inputs used in measuring fair value as follows:
•
•
•
Level 1 – Quoted prices for identical instruments in active markets.
Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and
model-derived valuations, in which all significant inputs are observable in active markets.
Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The carrying amounts reported in the Consolidated Balance Sheets for cash, accounts receivable, other assets, accounts payable and accrued expenses and
long-term debt approximate their fair values. The fair value of the long-term debt was estimated using present value techniques and market based interest rates and
credit spreads. The estimated fair value of long-term debt is based on Level 2 inputs.
Certain assets and liabilities are measured at fair value on a non-recurring basis. These assets include goodwill and intangible assets which result as
acquisitions occur. Items valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is
significant to the valuation. Thus, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable. Such
instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, for example, when there is
evidence of impairment.
Impairment —The impairment review process for goodwill compares the fair value of the reporting unit in which the goodwill resides to the carrying value
of that reporting unit. If the fair value of the reporting unit is less than the carrying value, an impairment charge is recorded for the excess of the carrying value over
the fair value of the reporting unit. Fair values are determined either by using a discounted cash flow methodology or by using a combination of a discounted cash
flow methodology and a market comparable method. The discounted cash flow methodology is based on projections of the amounts and timing of future revenues
and cash flows, assumed discount rates and other assumptions as deemed appropriate. Factors such as historical performance, anticipated market conditions,
operating expense trends and capital expenditure requirements are considered. Additionally, the discounted cash flows analysis takes into consideration cash
expenditures for product development, other technological updates and advancements to the websites and investments to improve the candidate databases. The
market comparable method indicates the fair value of a business by comparing it to publicly traded companies in similar lines of business or to comparable
transactions or assets. Considerations for factors such as size, growth, profitability, risk and return on investment are analyzed and compared to the comparable
businesses and adjustments are made. A market value of invested capital of the publicly traded companies is calculated and then applied to the entity’s operating
results to arrive at an estimate of value.
During the third quarter of 2016, goodwill at the Energy reporting unit with a carrying value of $15.4 million was tested for impairment due to the decline in
demand for energy professionals, stemming from persistently depressed oil prices. The Company recorded an impairment of goodwill of $ 15.4 million as of
September 30, 2016, bringing goodwill at the Energy reporting unit to zero. In order to arrive at the implied fair value of goodwill, the Company calculated the fair
value of all the assets and liabilities of the reporting unit as if it had been acquired in a business combination. After assigning fair value to the assets and liabilities
of
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
the reporting unit, the implied fair value of goodwill resulted in an impairment of $ 15.4 million in the year ended December 31, 2016. The goodwill balance
represented a Level 3 asset measured at fair value on a nonrecurring basis subsequent to its original recognition.
The fair value of the assets and liabilities of the Energy reporting unit was determined by a combination of a discounted cash
flow methodology and market comparable method. Cash flow projections for this reporting unit decreased due to a decline in financial performance resulting from
persistently low oil prices. The charge is reflected as Impairment of Goodwill on the Consolidated Statements of Operations.
As required under FASB ASC 360, Impairment
or
Disposal
of
Long-Lived
Assets
, an impairment loss shall be recognized only if the carrying amount of the
long-lived asset is not recoverable and exceeds its fair value. During 2017, the Company performed an in-depth review of the getTalent product and the market
outlook due to slow sales of the product and the high cost of development. Based on the review, the Company determined the required investments to competitively
position the product were too high. As a result, the product offering was canceled. The long-lived assets of getTalent were tested for recoverability. This process
resulted in an impairment of capitalized website development costs of $9.3 million , which was recorded in the third quarter of 2017 and reduced the net book value
of assets related to getTalent to zero. During 2016, the long-lived assets of the Energy reporting unit were tested for recoverability due to the downturn in the
current and expected future financial performance of the reporting unit and an impairment charge of unamortized intangible assets of $2.2 million was recorded,
which reduced the unamortized intangible assets at the Energy reporting unit to zero. Both getTalent (discontinued in the third quarter of 2017) and Energy (sold
RigLogix portion of the Rigzone business on February 20, 2018 and transferred majority ownership of the remaining business to Rigzone management on August
31, 2018) are included in Corporate & Other.
6. FIXED ASSETS, NET
Fixed assets, net consist of the following as of December 31, 2018 and 2017 (in thousands):
Computer equipment and software
Furniture and fixtures
Leasehold improvements
Capitalized development costs
Less: Accumulated depreciation and amortization
Fixed assets, net
7. ACQUIRED INTANGIBLE ASSETS, NET
2018
2017
8,954 $
2,809
2,890
26,919
41,572
(25,682)
15,890 $
13,588
3,093
3,199
21,824
41,704
(25,557)
16,147
$
$
As a result of the sale of Hcareers (sold May 22, 2018), the Company disposed of all its remaining unamortized acquired intangible assets. Acquired
intangible assets disposed of in conjunction with the sale had costs of $12.9 million and accumulated amortization of $6.7 million . Therefore, as of December 31,
2018, the net value of all finite-lived acquired intangible assets was zero.
As of December 31, 2018, the Company had an indefinite-lived acquired intangible asset of $39.0 million related to the Dice trademark and brand name. The
Company evaluates the indefinite-lived acquired intangible asset for impairment on an annual basis. No impairment has been recorded during the twelve months
ending December 31, 2018.
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Below is a summary of the major acquired intangible assets (in thousands) as of December 31, 2017:
Technology
Trademarks and brand names—Dice
Trademarks and brand names—Other
Customer lists
Candidate and content database
Acquired intangible assets, net
As of and for the year ended December 31, 2017
Total Cost
Accumulated
Amortization
Foreign
Currency
Translation
Adjustment
Acquired
Intangible
Assets, Net
$
$
4,561 $
(3,930) $
(631) $
39,000
11,103
12,887
8,857
—
(7,260)
(5,696)
(8,354)
—
(2,185)
(2,112)
(503)
76,408 $
(25,240) $
(5,431) $
—
39,000
1,658
5,079
—
45,737
During the fourth quarter of 2017, the Company disposed of $4.6 million of fully amortized acquired intangible assets from the sale of Health eCareers (sold
December 4, 2017).
During the first quarter of 2017 and the second quarter of 2016, the Company retired $26.7 million and $44.1 million , respectively, of fully amortized
acquired intangible assets.
During the quarter ended September 30, 2016, the long-lived assets of the Energy reporting unit were tested for recoverability due to the downturn in the
current and expected future financial performance of the reporting unit. The Company recorded an impairment of unamortized intangible assets of $9.3 million as
of September 30, 2016.
Indefinite
Life
on
Trade
Name
Considering the recognition of the Dice brand, its long history, awareness in the talent acquisition and staffing services market, and the intended use, the
remaining useful life of the Dice.com trademarks and brand name was determined to be indefinite. We determine whether the carrying value of recorded indefinite-
lived acquired intangible assets is impaired on an annual basis or more frequently if indicators of potential impairment exist. The impairment review process
compares the fair value of the indefinite-lived acquired intangible assets to its carrying value. If the carrying value exceeds the fair value, an impairment loss is
recorded. The impairment test performed as of October 1, 2018 and 2017 resulted in the fair value of the Dice trademarks and brand name exceeding the carrying
value by 2% and 4%, respectively.
Revenue attributable to the Dice trademarks and brand name have declined during the year ended December 31, 2018 due to competition in the technology
recruiting market, challenges in developing and introducing new products and product enhancements to the market and the Company’s ability to attribute value
delivered to customers. Revenues related to the Dice trademarks and brand name declined 7% and 10% for the years ended December 31, 2018 and 2017,
respectively, and declined 4% and 10% for the three months ended December 31, 2018 and 2017, respectively. The rate of revenue decline narrowed throughout
2018. Revenue projections for the year ended December 31, 2019 and beyond include a modest increase compared to the year ended December 31, 2018. The
Company’s ability to achieve these revenue projections may be impacted by, among other things, the factors noted above that have contributed to the decline in
recent periods. Cash flows attributable to the Dice trademarks and brand name declined during 2018 as a result of the lower revenue, as well as increased spending
focused on new and enhanced products and consulting fees related to expense reduction strategies. Operating expenses, excluding amortization expense,
impairment charges and disposition related and other costs, are projected to slightly decline for the year ended December 31, 2019 as compared to the year ended
December 31, 2018 and then increase at levels that allow for modest operating margin improvements. If future cash flows attributable to the Dice trademark are not
achieved, the Company could realize an impairment in a future period. The Company utilized a relief from royalty rate method to value the Dice trademarks and
brand name using a royalty rate of 6.0% based on comparable industry studies and improving operating margins and a discount rate of 15.3%.
The determination of whether or not indefinite-lived acquired intangible assets have become impaired involves a significant level of judgment in the
assumptions underlying the approach used to determine the value of the indefinite-lived acquired intangible assets. Fair values are determined using a profit
allocation methodology which estimates the value of the trademark and brand name by capitalizing the profits saved because the company owns the asset. We
consider factors such as historical performance, anticipated market conditions, operating expense trends and capital expenditure requirements. Changes in our
strategy and/or market conditions could significantly impact these judgments and require adjustments to recorded amounts of intangible assets. If projections are
not achieved, the Company could realize an impairment in a future period.
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8. INDEBTEDNESS
DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Credit Agreement —In November 2018, the Company, together with Dice Inc. (a wholly-owned subsidiary of the Company) and its wholly-owned
subsidiary, Dice Career Solutions, Inc. (collectively, the “Borrowers”), entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”),
which matures in November 2023, and replaces the previously existing credit agreement dated November 2015. The Credit Agreement provides for a revolving
loan facility of $90 million (previously $150 million ), with an Expansion Option up to $140 million , as permitted in the Credit Agreement. The Company
borrowed $18 million to repay, in full, all outstanding indebtedness, including accrued interest, under the previous credit agreement and to pay certain costs
associated with the Credit Agreement. Unamortized debt issuance costs of $0.2 million were recorded to interest expense at the time of reduction.
Borrowings under the Credit Agreement bear interest, at the Company’s option, at a LIBOR rate or a base rate plus a margin. The margin ranges from 1.75%
to 2.50% on LIBOR loans and 0.75% to 1.50% on base rate loans, determined by the Company’s most recent consolidated leverage ratio. The facility may be
prepaid at any time without penalty.
The Credit Agreement contains various customary affirmative and negative covenants and also contains certain financial covenants, including a consolidated
leverage ratio and a consolidated interest coverage ratio. Borrowings are allowed under the Credit Agreement to the extent the consolidated leverage ratio,
calculated on a pro forma basis, is equal to or less than 2.50 to 1.00 . Negative covenants include restrictions on incurring certain liens; making certain payments,
such as stock repurchases and dividend payments; making certain investments; making certain acquisitions; making certain dispositions; and incurring additional
indebtedness. Restricted payments are allowed under the Credit Agreement to the extent the consolidated leverage ratio, calculated on a pro forma basis, is equal to
or less than 2.00 to 1.00 , plus an additional $5.0 million of restricted payments. The Credit Agreement also provides that the payment of obligations may be
accelerated upon the occurrence of customary events of default, including, but not limited to, non-payment, change of control, or insolvency. As of December 31,
2018 , the Company was in compliance with all of the financial covenants under the Credit Agreement.
The obligations under the Credit Agreement are guaranteed by two of the Company’s wholly-owned subsidiaries, eFinancialCareers, Inc and Targeted Job
Fairs, Inc. and secured by substantially all of the assets of the Borrowers and the guarantors and stock pledges from certain of the Company’s foreign subsidiaries.
Previous Credit Agreement —The Borrowers previously maintained an Amended and Restated Credit Agreement (the “Old Credit Agreement”), which was
scheduled to mature in November 2020. The Old Credit Agreement, when entered into during November 2015, provided for a revolving loan facility of $250.0
million , which was subsequently reduced to $150.0 million , during August 2017, as permitted under the Old Credit Agreement. Unamortized debt issuance costs
of $0.4 million were recorded to interest expense at the time of reduction.
Borrowings under the Old Credit Agreement accrued interest, at the Company’s option, at a LIBOR rate or a base rate plus a margin. The margin ranges from
1.75% to 2.50% on LIBOR loans and 0.75% to 1.50% on base rate loans, determined by the Company’s most recent consolidated leverage ratio. There was no
penalty for prepayment of this facility.
The amounts borrowed as of December 31, 2018 and 2017 are as follows (dollars in thousands):
Amounts borrowed:
Revolving credit facility
Less: deferred financing costs, net of accumulated amortization of $25 and $1,529
Total borrowed
Available to be borrowed under revolving facility
Interest rates:
LIBOR rate loans:
Interest margin
Actual interest rates
There are no scheduled payments until maturity of the Credit Agreement in November 2023.
December 31,
2018
December 31,
2017
$
$
$
18,000
$
(712)
17,288
$
42,000
(550)
41,450
72,000
$
108,000
1.75%
4.25%
2.25%
3.88%
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. COMMITMENTS AND CONTINGENCIES
Leases
The Company leases equipment and office space under operating leases expiring at various dates through December 2026. Future minimum lease payments
under non-cancellable operating leases as of December 31, 2018 are as follows (in thousands):
2019
2020
2021
2022
2023
2024 and thereafter
Total minimum payments
$
$
4,244
3,710
3,097
2,540
2,300
4,524
20,415
Rent expense was $3.7 million , $4.9 million and $4.5 million for the years ended December 31, 2018 , 2017, and 2016, respectively, and is included in
General and Administrative expense in the Consolidated Statements of Operations.
Litigation
The Company is subject to various claims from taxing authorities, lawsuits and other complaints arising in the ordinary course of business. The Company
records provisions for losses when claims become probable and the amounts are reasonably estimable. Although the outcome of these legal matters cannot be
determined, it is the opinion of management that the final resolution of these matters will not have a material adverse effect on the Company’s financial condition,
operations or liquidity.
During the first quarter of 2018, the Company recorded a $1.0 million liability related to a class action lawsuit regarding the applicability of provisions of the
Fair Credit Reporting Act (the "FCRA") to one of our products. The recorded liability reflects a tentative settlement, which upon execution and final approval by
the court, will resolve all remaining claims subject to the lawsuit. The lawsuit was brought by Ian Douglas, individually, as a representative of the class and on
behalf of the general public, against DHI Group, Inc. and Dice Inc. asserting six claims under the FCRA that the Company's Open Web profiles are "consumer
reports" and Dice is a "consumer reporting agency" under the FCRA, including claims pursuant to the private right of action in 15 U.S.C. Section 1681n for alleged
willful violations of the FCRA. The action was originally filed in a federal district court on July 26, 2017, but as part of the settlement process, the action has been
re-filed and is pending in the Superior Court of Santa Clara County, California (Case No. 18CV331732). The parties have moved for preliminary approval of the
settlement, which the court is scheduled to hear in March 2019.
Tax
Contingencies
The Company operates in a number of tax jurisdictions and is routinely subject to examinations by various tax authorities with respect to income taxes and
indirect taxes. The determination of the Company’s worldwide provision for taxes requires judgment and estimation. The Company has reserved for potential
examination adjustments to our provision for income taxes and accrual of indirect taxes in amounts which the Company believes are reasonable.
10. EQUITY TRANSACTIONS
Stock Repurchase Plans — In May 2018, the Board of Directors authorized a stock repurchase program that permits the purchase of up to $7 million of the
Company's common stock through May 2019. Under the plan, management has discretion in determining the conditions under which shares may be purchased
from time to time. There were no stock repurchase plan in place during the year ended December 31, 2017. The following table summarizes the Stock Repurchase
Plans approved by the Board of Directors:
Approval Date
Authorized Repurchase Amount of Common Stock
Effective Dates
72
VI
December 2015
$50 million
December 2015 to
December 2016
VII
May 2018
$7 million
May 2018 to May 2019
Table of Contents
DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During the years ended December 31, 2018 , 2017 and 2016 purchases of the Company’s common stock pursuant to Stock Repurchase Plans were as follows:
Period
Year Ended December 31, 2018
Year Ended December 31, 2017
Year Ended December 31, 2016
Total Number of Shares
Purchased
Average Price Paid
per Share
Approximate Dollar
Value of Shares
Purchased
1,086,420 $
— $
3,946,396 $
1.82 $
— $
7.27 $
1,977,483
—
28,709,000
There were 26,337 unsettled share repurchases, which are included above in the number of shares purchased as of December 31, 2018 . There were no
unsettled shares repurchases as of December 31, 2017 and 2016.
Convertible Preferred Stock— The Company has 20 million shares of convertible preferred stock authorized, with a $0.01 par value. No shares have been
issued and outstanding since prior to our initial public offering in 2007. The rights, preferences, privileges and restrictions granted to and imposed on the
convertible preferred stock are as set forth below. The Company currently has no preferred stock outstanding. The Company’s amended and restated certificate of
incorporation permits the terms of any preferred stock to be determined at the time of issuance.
Dividend
provisions
The preferred stockholders would be entitled to dividends only when dividends are paid to common shareholders. In the event of a dividend, the holders of
the preferred shares would be entitled to share in the dividend on a pro rata basis, as if their shares had been converted into shares of common stock.
Conversion
rights
Any holder of preferred stock has the right, at its option, to convert the preferred shares into shares of common stock at a ratio of one preferred stock share
for one common stock share. The holders of 66 2 / 3 % of all outstanding preferred stock have the right at any time to require all the outstanding shares of preferred
stock to be converted into an equal number of shares of common stock. Voting rights include the right to vote at a special or annual meeting of stockholders on all
matters entitled to be voted on by holders of common stock, voting together as a single class with the common stock. There are no redemption rights associated
with the preferred stock.
Liquidation
rights
Upon the occurrence of liquidation, the holders of the preferred shares shall be paid in cash for each share of preferred stock held, out of, but only to the
extent of, the assets of the Company legally available for distribution to its stockholders, before any payment or distribution is made to any shareholders of
common stock . The liquidation value is $2.17 per share, subject to adjustments for stock splits, stock dividends, combinations, or other recapitalizations of the
preferred stock.
Dividends— No dividends have been declared in 2018, 2017 or 2016. Our Credit Agreement limits our ability to declare and pay dividends. Refer to Note 8
“Indebtedness.”
Unclaimed Shareholder Liability— Prior to the third quarter of 2018, other long-term liabilities included $1.0 million due to former shareholders of the
Company under a Joint Plan of Reorganization that was agreed to by the Company and two of its creditors, and confirmed by the U.S. Bankruptcy Court of the
Southern District Court of New York on June 24, 2003. During the third quarter of 2018, the Company concluded the unclaimed amounts were no longer due and
payable and further, such amounts represent additional equity of the Company. Accordingly, the Company reclassified $1.0 million from other long-term liabilities
to additional paid-in capital during the third quarter of 2018.
11. ACCUMULATED OTHER COMPREHENSIVE LOSS
FASB ASC topic on Comprehensive Income establishes standards for the reporting and display of comprehensive income (loss) and its components in a full
set of general-purpose financial statements. This statement requires that all items that are required to be recognized as components of comprehensive income (loss)
be reported in a financial statement with the same prominence as other financial statements. The Company had no amounts reclassified out of accumulated other
comprehensive income for the years ended December 31, 2018, 2017, and 2016. The foreign currency translation adjustments impact comprehensive income (loss).
Accumulated other comprehensive income (loss), net consists of the following components, net of tax (in thousands):
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Foreign currency translation:
Balance at beginning of year
Translation adjustments
Balance at end of year
Year Ended December 31,
2018
2017
2016
$
$
(27,330) $
(32,276) $
(3,906)
4,946
(31,236) $
(27,330) $
(20,468)
(11,808)
(32,276)
12. DISPOSITION RELATED AND OTHER COSTS
In May 2017, the Company announced plans to divest a number of its online professional communities to achieve greater focus and resource allocation
toward its core tech-focused business. The planned divestitures included: BioSpace (transferred majority ownership to BioSpace management on January 31,
2018), Hcareers (sold May 22, 2018), Health eCareers (sold December 4, 2017), and Rigzone (sold the RigLogix portion of the Rigzone business on February 22,
2018 and transferred majority ownership of the remaining Rigzone business to Rigzone management on August 31, 2018). In connection with the planned
divestitures and reorganization to the tech-focused strategy, the Company incurred certain costs, including severance and retention, lease exit, business closure,
professional fees related to activist shareholders, search, financial advisory, and legal services, and other costs to further these strategic objectives.
The following table displays a roll forward of the disposition related and other costs and related liability balances (in thousands):
Accrual at
December 31, 2017
Expense
Cash Payments
Non-cash
Impairment
Accrual at
December 31,
2018
Severance and retention
Professional fees and other costs
Lease exit and related asset impairment costs
Total disposition related and other costs
$
$
1,237 $
3,191 $
(3,339) $
825
—
2,914
1,514
(2,468)
(399)
2,062 $
7,619 $
(6,206) $
— $
—
(168)
(168)
$
1,089
1,271
947
3,307
Severance and retention
Professional fees
Total disposition related and other costs
Accrual at December
31, 2016
Expense
Cash Payments
Accrual at
December 31, 2017
$
$
— $
—
— $
3,112 $
1,634
4,746 $
(1,875) $
(809)
(2,684) $
1,237
825
2,062
In January 2016, the Company completed the sale of Slashdot Media and incurred severance costs and additional stock based compensation expense for
the acceleration of stock vesting. The Company recognized a loss on the sale of assets of Slashdot Media.
The following table displays the disposition related and other costs incurred during the year ended December 31, 2016 (in thousands):
Severance — Slashdot Media
Accelerated stock based compensation expense — Slashdot Media
Loss on sale of Slashdot Media
Severance related to other brands
Total
13. STOCK BASED COMPENSATION
$
981
900
639
827
$
3,347
Under the 2012 Omnibus Equity Award Plan, the Company has granted stock options, restricted stock and Performance-Based Restricted Stock Units
(“PSUs”) to certain employees and directors. On January 1, 2017, as a result of ASU No. 2016-09 as discussed in Note 2, the Company began recording expense
based upon the number of awards outstanding with no estimate for
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
forfeitures. Previously, the Company estimated forfeitures that it expected would occur and recorded expense based upon the number of awards expected to vest.
The Company recorded stock based compensation expense of $ 6.6 million and $ 8.6 million in the years ended December 31, 2018 and 2017, respectively.
During the year ended December 31, 2016, the Company recorded $ 11.1 million , which included $0.9 million of accelerated compensation due to the sale of
Slashdot Media as shown in Note 12. At December 31, 2018 , there was $8.8 million of unrecognized compensation expense related to unvested awards, which is
expected to be recognized over a weighted-average period of approximately 1.5 years.
In connection with the employment agreement for the Company's new Chief Executive Officer, the Company granted, as Inducement Grants Under NYSE
Rule 303A.08, 1,750,000 restricted stock units during the second quarter of 2018 and 750,000 performance based restricted stock units during the fourth quarter of
2018 to the Company's new Chief Executive Officer.
Restricted Stock— Restricted stock is granted to employees of the Company and its subsidiaries, and to non-employee members of the Company’s Board.
These shares are part of the compensation plan for services provided by the employees or Board members. The closing price of the Company’s stock on the date of
grant is used to determine the fair value of the grants. The expense related to the restricted stock grants is recorded over the vesting period as described below.
There was no cash flow impact resulting from the grants.
The restricted stock vests in various increments either quarterly or on the anniversaries of each grant, subject to the recipient’s continued employment or
service through each applicable vesting date. Vesting occurs over one year for Board members and over two to four years for employees.
A summary of the status of restricted stock awards as of December 31, 2018 , 2017 , and 2016 and the changes during the periods then ended is presented
below:
Year Ended December 31,
2018
2017
2016
Weighted-
Average Fair
Value at Grant
Date
5.48
1.68
4.20
5.03
2.32
Shares
2,393,257 $
4,087,342 $
(439,750) $
(1,521,917) $
4,518,932 $
Weighted-
Average Fair
Value at Grant
Date
7.87
4.05
6.54
7.89
5.48
Shares
2,226,375 $
1,724,500 $
(655,000) $
(902,618) $
2,393,257 $
Weighted-
Average Fair
Value at Grant
Date
8.54
7.33
8.17
8.58
7.87
Shares
2,122,225 $
1,302,375 $
(327,750) $
(870,475) $
2,226,375 $
Non-vested at beginning of the period
Granted
Forfeited
Vested
Non-vested at end of period
PSUs— PSUs are granted to employees of the Company and its subsidiaries. These shares are granted under two compensation agreements that are for
services provided by the employees. Under the first agreement, with grants during the years ended December 31, 2016 and 2017, the fair value of PSUs are
measured using the Monte Carlo pricing model. The expense related to these PSUs are recorded over the vesting period. These shares will vest on the dates the
Compensation Committee certifies the Company’s achievement of stock price performance relative to the Russell 2000 Index, provided that the recipient remains
employed through such date. Performance will be measured over three separate measurement periods: a one-year measurement period, a two-year measurement
period and a three-year measurement period. For performance periods one and two, vesting is not to exceed the total grant divided by three. For performance period
three, vesting is no less than zero and no greater than 150% of the initial grant less shares vested in performance periods one and two. As of December 31, 2018,
there were 505,000 unvested shares related to this agreement.
Under the second agreement, the fair value of the PSUs are measured at the grant date fair value of the award, which was determined based on an analysis of
the probable performance outcomes. The performance period is based on the achievement of bookings targets during the year ended December 31, 2019, as defined
in the agreement. The earned shares will vest one-third on each of the first, second, and third anniversaries of the grant date, or if later, the date the Compensation
Committee certifies the performance results with respect to the performance period. There was no cash flow impact resulting from the grants.
The fair value of PSUs measured using the Monte Carlo pricing model utilized the following assumptions:
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Weighted average fair value of PSUs granted
Dividend yield of DHI Group, Inc. stock
Dividend yield of Russell 2000 Index
Risk free interest rate
Volatility of DHI Group, Inc. stock
Volatility of Russell 2000 Index
Year Ended December 31,
2017
2016
$
5.38
$
—%
1.4%
1.5%
41.0%
16.7%
7.24
—%
1.7%
0.9%
33.5%
16.7%
A summary of the status of PSUs as of December 31, 2018 , 2017, and 2016 and the changes during the periods then ended is presented below:
2018
Weighted- Average
Fair Value at Grant
Date
Shares
Year Ended December 31,
2017
Weighted- Average
Fair Value at Grant
Date
Shares
2016
Weighted- Average
Fair Value at Grant
Date
Shares
Non-vested at beginning of the period
Granted
Forfeited
Vested
Non-vested at end of period
760,003 $
750,000 $
(255,003) $
— $
1,255,000 $
6.92
1.58
8.27
—
3.45
580,004 $
397,500 $
(217,501) $
— $
760,003 $
8.02
5.38
7.04
—
6.92
415,000 $
417,500 $
(98,751) $
(153,745) $
580,004 $
9.25
7.24
8.17
9.13
8.02
Stock Options— The fair value of each option grant is estimated using the Black-Scholes option-pricing model using the weighted-average assumptions in
the table below. This valuation model requires the Company to make assumptions and judgments about the variables used in the calculation, including the fair
value of the Company’s common stock, the expected life (the period of time that the options granted are expected to be outstanding), the volatility of the
Company’s common stock, a risk-free interest rate and expected dividends. The expected life of options granted is derived from historical exercise behavior. The
risk-free rate for periods within the expected life of the option is based on the U.S. Treasury rates in effect at the time of grant. The stock options vest 25% after
one year, beginning on the first anniversary date of the grant, and 6.25% each quarter following the first anniversary. There was no cash flow impact resulting from
the grants. No stock options were granted during the years ended December 31, 2018 , 2017 , and 2016.
A summary of the status of options previously granted as of December 31, 2018 , 2017 , and 2016 , and the changes during the periods then ended is
presented below:
Options outstanding at January 1
Exercised
Forfeited
Options outstanding at December 31
Exercisable at December 31
Year Ended December 31, 2018
Options
Weighted-Average
Exercise Price
Aggregate Intrinsic
Value
1,101,875 $
— $
(774,875) $
327,000 $
327,000 $
9.28 $
— $
9.67
8.35 $
8.35 $
—
—
—
—
—
76
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Options outstanding at January 1
Exercised
Forfeited
Options outstanding at December 31
Exercisable at December 31
Options expected to Vest at December 31
Options outstanding at January 1
Exercised
Forfeited
Options outstanding at December 31
Exercisable at December 31
Year Ended December 31, 2017
Options
Weighted-Average
Exercise Price
Aggregate Intrinsic
Value
1,779,613 $
(66,188) $
(611,550) $
1,101,875 $
1,076,155 $
25,720 $
8.46 $
6.08 $
7.25
9.28 $
9.32 $
7.43
50,869
12,821
—
—
—
Year Ended December 31, 2016
Options
Weighted-Average
Exercise Price
Aggregate Intrinsic
Value
2,673,512 $
(641,710) $
(252,189) $
1,779,613 $
1,552,642 $
7.46 $
4.37 $
8.20
8.46 $
8.52 $
5,485,248
2,209,260
—
50,869
50,869
In connection with the Company’s sale of Slashdot Media, the Company accelerated the vesting of 130,375 shares of restricted stock and 24,001 stock
options to certain former employees during the year ended December 31, 2016, the expense of which is recorded in Disposition Related and Other Costs in the
Consolidated Statements of Operations.
The weighted-average remaining contractual term of options exercisable at December 31, 2018 is 1.5 years. The following table summarizes information
about options outstanding as of December 31, 2018 :
Exercise Price
$ 7.00 - $ 7.99
$ 8.00 - $ 8.99
$ 9.00 - $ 9.99
Options Outstanding
Weighted-
Average
Remaining
Contractual
Life
(in years)
Number
Outstanding
155,000
92,000
80,000
327,000
Options
Exercisable
Number
Exercisable
2.1
0.8
1.1
155,000
92,000
80,000
327,000
77
Table of Contents
14. INCOME TAXES
DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax assets (liabilities) included in the balance sheet as of December 31, 2018 and 2017 are as follows (in thousands):
Deferred tax assets:
Net operating loss carryforward
Capital loss carryforward
Allowance for doubtful accounts
Provision for accrued expenses and other, net
Stock based compensation
Deferred revenue
Tax credit carryforward
Less valuation allowance
Deferred tax asset, net of valuation allowance
Deferred tax liabilities:
Acquired intangibles
Depreciation of fixed assets
Capitalized contract costs
Deferred tax liabilities
Net deferred tax liability
Recognized in Consolidated Balance Sheets:
Deferred tax asset
Deferred tax liability
Net deferred tax liability
2018
2017
$
71 $
5,263
145
1,621
2,603
537
272
10,512
5,305
5,207
(10,374)
(3,291)
(1,850)
(15,515)
(10,308) $
136
(10,444)
(10,308) $
$
$
168
—
272
1,300
3,770
920
—
6,430
224
6,206
(10,933)
(3,049)
—
(13,982)
(7,776)
469
(8,245)
(7,776)
The Company had deferred tax assets of $0.1 million and $0.2 million , respectively, at December 31, 2018 and 2017 related to net operating loss
carryforwards; $5.3 million at December 31, 2018 related to capital loss carryforwards; and $0.3 million at December 31, 2018 related to tax credit carryforwards.
The Company had no capital loss or tax credit carryforwards at December 31, 2017. The net operating losses expire in various years through 2037 and the capital
losses expire in 2023. The tax credit carryforward period is indefinite. The Company has recorded valuation allowances of $5.3 million and $0.2 million ,
respectively, at December 31, 2018 and 2017 in order to measure only the portion of the deferred tax assets which are more likely than not to be realized.
Tax expense (benefit) for the years ended December 31, 2018 , 2017 and 2016 is as follows (in thousands):
Current income tax expense (benefit):
Federal
State
Foreign
Current income tax expense
Deferred income tax expense (benefit):
Federal
State
Foreign
Deferred income tax expense (benefit)
Income tax expense
2018
2017
2016
$
(1,299) $
1,984 $
(119)
1,570
152
1,387
104
785
2,276
2,428 $
(285)
1,504
3,203
(207)
329
94
216
3,419 $
$
78
5,048
931
2,259
8,238
(891)
192
(2,260)
(2,959)
5,279
Table of Contents
DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation between the tax expense at the federal statutory rate and the reported income tax expense is summarized as follows:
Federal statutory rate
Gain (loss) on sale of businesses
Stock-based compensation
Nondeductible impairment
State taxes, net of federal effect
Difference between foreign and U.S. rates
Change in accrual for unrecognized tax benefits
U.S. tax on global intangible low-taxed income, net of credits
Executive compensation
Currency translation gains
Gross tax on foreign dividend
Foreign tax credits
U.S. transition tax on foreign earnings
Federal rate change impact on deferred tax liabilities
Research and development tax credits
Change in valuation allowances
Other
Income tax expense
Effective tax rate
Year Ended December 31,
2018
2017
2016
$
2,016
$
6,789
$
(6,111)
2,112
—
(38)
(102)
(1,179)
229
126
219
—
—
368
—
(481)
5,117
152
2,428
$
25.3%
(1,571)
1,414
—
35
(1,054)
1,003
—
—
—
275
(275)
2,962
(3,281)
(1,764)
(780)
(334)
3,419
$
17.6%
$
(42)
—
—
5,287
756
297
(923)
—
—
—
5,084
(4,244)
—
—
(173)
(713)
(50)
5,279
(4,436.1)%
H.R.1, commonly known as the Tax Cuts and Jobs Act (“TCJA”), was signed into law in December 2017 and made significant changes to the Internal
Revenue Code. Changes included a reduction in the U.S. statutory federal tax rate from 35% to 21%; the transition of U.S. international taxation from a worldwide
tax system to a territorial system; a one-time transition tax on the deemed repatriation of undistributed earnings from foreign subsidiaries; and a tax on global
intangible low-taxed income earned by foreign subsidiaries.
Subsequent to enactment of the TCJA in December 2017, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118 (“SAB
118”) to provide guidance regarding accounting for the TCJA’s impact. SAB 118 required companies to recognize those tax items for which accounting had been
completed. For items whose accounting had not been completed, companies were required to recognize provisional amounts to the extent they were reasonably
estimable, with subsequent adjustments over a measurement period as more information was available and calculations were finalized. The measurement period
provided in SAB 118 concluded as of December 2018.
As of December 31, 2017, the Company applied the guidance of SAB 118 and recorded a provisional decrease of $3.3 million in its deferred tax liabilities to
reflect the new U.S. statutory rate of 21%; and recorded a liability of $3.0 million less tax credits of $1.4 million for a $1.6 million provisional estimate of the
transition tax on the deemed repatriation of foreign earnings.
In the year ended December 31, 2018, the Company completed its analysis of the impact of the TCJA on its deferred tax liabilities and its transition tax
liability. No change was made to the provisional adjustment of the deferred tax liabilities. For the transition tax, the Company recognized a measurement-period
adjustment on the basis of revised foreign earnings computations and additional guidance issued by U.S. federal and state tax authorities. The adjustment increased
the transition tax liability to $2.0 million , resulting in tax expense of $0.4 million .
The Company had asserted as of December 31, 2016 that with the exception of its Canada subsidiary, all unremitted earnings of foreign subsidiaries were
indefinitely reinvested outside the U.S. As of December 31, 2017, the Company indicated that it was evaluating the impact of the TCJA on the Company's existing
accounting position with regard to indefinite reinvestment, including an analysis of the potential U.S. and foreign tax liabilities that could result from future
repatriations. The Company completed this
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
evaluation in the year ended December 31, 2018 and made no change to its indefinite reinvestment position. The Company also sold its Canada subsidiary during
2018. As of December 31, 2018, undistributed earnings of all foreign subsidiaries will continue to be indefinitely reinvested outside the U.S., and taxes that would
result from distributions have not been provided as determination of the deferred tax liability is not practicable.
The TCJA established new rules designed to tax U.S. companies on global intangible low-taxed income ("GILTI") earned by foreign subsidiaries. Companies
can make an accounting policy election either to recognize deferred taxes for temporary basis differences related to GILTI; or to recognize tax expense as current
period cost in the period when the tax related to GILTI is incurred. As of December 31, 2017, the Company indicated that it was evaluating its policy election
alternatives and the impact of GILTI on tax expense. The Company completed this evaluation in the year ended December 31, 2018 and elected to treat tax expense
related to GILTI as a current period cost. The Company determined its GILTI liability for 2018 to be $0.4 million less tax credits of $0.2 million , resulting in tax
expense of $0.2 million .
The Company recorded impairment charges of zero, $2.2 million , and $24.6 million for the years ended December 31, 2018, 2017, and 2016, respectively.
Of the total impairment, the amount relating to non-deductible goodwill in 2016 was $15.4 million , which caused tax expense to exceed the expected expense at
statutory tax rates by $5.3 million . The amount of non-deductible goodwill was zero in 2018 and 2017.
Prior to December 2016, the Company had asserted under ASC 740-30 that all unremitted earnings of its foreign subsidiaries were indefinitely invested. The
Company evaluates this assertion based on a number of factors, including the operating plans, budgets, and forecasts for both the Company and its foreign
subsidiaries; the long-term and short-term financial requirements in the U.S. and in each foreign jurisdiction; and the tax consequences of any decision to repatriate
earnings of foreign subsidiaries to the U.S. In the fourth quarter of 2016, the Company evaluated a tax planning strategy related to the utilization of foreign tax
credits on its U.S. federal tax return. Absent the strategy, the Company believed that it would not realize any of the credits during the allowable carryforward
period under U.S. law. The Company concluded in December 2016 that it would implement the strategy, thus impacting the tax consequences of repatriation by
enabling greater utilization of foreign tax credits. As a result, the Company changed its assertion regarding the indefinite reinvestment of its Canada subsidiary’s
foreign earnings, but did not change its assertion with regard to the undistributed earnings of all other foreign subsidiaries. The Company recorded a tax liability of
$0.8 million at December 31, 2016 reflecting the repatriation of $16.4 million from Canada to the U.S. All cumulative earnings of the Canada subsidiary through
December 31, 2016 were distributed, so no additional accrual for deferred taxes related to earnings of the Canada subsidiary was required. The Company also
recorded a tax benefit of $0.7 million in the year ended December 31, 2016 to record the partial release of a valuation allowance related to its foreign tax credit
carryforwards.
An uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return, or planned to be taken in a tax return not
yet filed, that has not been reflected in measuring income tax expense for financial reporting purposes. At December 31, 2018 and 2017 , the Company has
recorded a liability of $1.7 million and $2.9 million , respectively, which consists of unrecognized tax benefits of $1.4 million and $2.5 million , respectively, and
estimated accrued interest and penalties of $0.3 million and $0.4 million , respectively. The Company recognizes interest and penalties related to uncertain tax
positions in income tax expense. During the years ended December 31, 2018 , 2017 and 2016 , interest expense (income) and penalties recorded in the
Consolidated Statements of Operations were $(61,000) , $(41,000) and $(86,000) , respectively. Following is a reconciliation of the amounts of unrecognized tax
benefits, net of tax and excluding interest and penalties, for the years ended December 31, 2018 , 2017 and 2016 (in thousands):
Unrecognized tax benefits—beginning of period
Increases in tax positions related to current year
Increases in tax positions related to prior year
Decreases in tax positions related to prior year
Settlements with taxing authorities
Lapse of statute of limitations
Unrecognized tax benefits—end of period
2018
2017
2016
2,539 $
2,153 $
2,989
330
—
(9)
(838)
(600)
278
646
—
—
(538)
1,422 $
2,539 $
117
—
(43)
—
(910)
2,153
$
$
The foregoing table indicates unrecognized tax benefits, net of tax and excluding interest and penalties. The balance of gross unrecognized benefits was $1.5
million , $2.7 million , and $2.9 million at December 31, 2018, 2017 and 2016, respectively. If the unrecognized tax benefits at December 31, 2018, 2017 and 2016
were recognized in full, tax benefits of $1.7 million , $2.9 million and $2.5 million , respectively, would affect the effective tax rate.
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company files income tax returns in the U.S. and various foreign jurisdictions. The Company is generally no longer subject to examinations by U.S.
federal tax authorities for tax years prior to 2015, or by U.S. state and foreign authorities for tax years prior to 2014. The Company believes it is reasonably
possible that as much as $0.2 million of its unrecognized tax benefits may be recognized by the end of 2019 as a result of a lapse of the statute of limitations.
15. EMPLOYEE SAVINGS PLAN
The Company has a savings plan (the “Savings Plan”) that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code.
Under the Savings Plan, participating employees may defer a portion of their pretax earnings, up to the Internal Revenue Service annual contribution limit. The
Company contributed $1.3 million , $1.7 million , and $1.7 million for the years ended December 31, 2018 , 2017 and 2016 , respectively, to match employee
contributions to the Savings Plan.
16. SEGMENT INFORMATION
The Company previously had two reportable segments which was reduced to one reportable segment when Health eCareers (Healthcare reportable segment)
was sold on December 4, 2017. The remaining Tech-focused reportable segment includes the Dice, Dice Europe (ceased operations on August 31, 2018),
ClearanceJobs, eFinancialCareers (formerly in the Global Industry Group segment), and Brightmatter (absorbed into Tech-focused in the third quarter of 2017 and
formerly in Corporate & Other) services. Management has organized its reportable segment based upon our internal management reporting.
The Company has other services and activities that individually are not significant in relation to consolidated revenues, operating income or total assets.
These include Slashdot Media (business sold in the first quarter of 2016), Hcareers (sold May 22, 2018), Rigzone (sold the RigLogix portion of the Rigzone
business on February 20, 2018 and transferred majority ownership of the remaining Rigzone business to Rigzone management on August 31, 2018), BioSpace
(transferred majority ownership to BioSpace management on January 31, 2018) (each formerly in the Global Industry Group segment), and getTalent (discontinued
in the third quarter of 2017) services, which are recorded in the "Corporate & Other" category, along with corporate-related costs which are not considered in a
segment.
The Company’s foreign operations are comprised of the Dice Europe operation (ceased operations on August 31, 2018) and a portion of the
eFinancialCareers and Rigzone services (sold the RigLogix portion of the Rigzone business on February 20, 2018 and transferred majority ownership of the
remaining Rigzone business to Rigzone management on August 31, 2018), which operate in Europe, the financial centers of the gulf region of the Middle East and
Asia Pacific. The Company’s foreign operations also include Hcareers (sold on May 22, 2018), which operated in Canada. Revenue by geographic region, as
shown in the table below, is based on the location of each of the Company’s subsidiaries.
81
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table shows the segment information (in thousands):
2018
2017
2016
By Segment:
Revenues:
Tech-focused
Healthcare
Corporate & Other
Total revenues
Depreciation:
Tech-focused
Healthcare
Corporate & Other
Total depreciation
Amortization:
Tech-focused
Healthcare
Corporate & Other
Total amortization
Operating income (loss):
Tech-focused
Healthcare
Corporate & Other
Operating income
Interest expense
Other expense
Income (loss) before income taxes
Capital expenditures:
Tech-focused
Healthcare
Corporate & Other
Total capital expenditures
By Geography:
Revenues:
United States
United Kingdom
EMEA, APAC and Canada (1)
Non-United States
Total revenues
$
$
$
$
$
$
$
$
$
$
$
$
152,258 $
158,398 $
—
9,312
24,354
25,198
161,570 $
207,950 $
8,942 $
—
338
9,280
— $
—
482
482 $
6,868 $
1,625
1,259
9,752 $
132 $
596
1,410
2,138 $
26,851 $
38,462 $
—
(15,159)
11,692
(2,054)
(36)
(1,507)
(14,090)
22,865
(3,445)
(23)
9,602 $
19,397 $
10,060 $
10,481 $
—
221
1,160
1,914
10,281 $
13,555 $
170,599
27,066
29,305
226,970
7,060
2,089
700
9,849
1,923
835
4,029
6,787
54,066
(929)
(49,746)
3,391
(3,481)
(29)
(119)
7,545
1,113
2,756
11,414
2018
2017
2016
121,097 $
154,406 $
15,665
24,808
40,473
22,247
31,297
53,544
161,570 $
207,950 $
167,855
23,969
35,146
59,115
226,970
(1) Europe (excluding United Kingdom), the Middle East and Africa (“EMEA”) and Asia-Pacific (“APAC”)
82
Table of Contents
Total assets:
Tech-focused
Healthcare
Corporate & Other
Total assets
DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31,
2018
December 31,
2017
December 31,
2016
$
$
251,860 $
266,390 $
—
6,525
—
29,328
258,385 $
295,718 $
263,462
14,375
32,258
310,095
The following table shows the carrying amount of goodwill by segment as of December 31, 2017 and 2018 and the changes in goodwill for the years ended
(in thousands):
Goodwill at January 1, 2017
Foreign currency translation adjustment
Sale of business
Goodwill at December 31, 2017
Foreign currency translation adjustment
Sale of business
Goodwill at December 31, 2018
Goodwill at December 31, 2018
Goodwill
Accumulated impairment losses
Tech-focused
Healthcare
Corporate & Other
Total
152,162 $
6,269 $
13,314 $
171,745
5,315
—
—
(6,269)
—
—
5,315
(6,269)
157,477 $
— $
13,314 $
170,791
(3,503)
—
153,974 $
153,974 $
—
153,974 $
—
—
— $
— $
—
— $
—
(13,314)
(3,503)
(13,314)
— $
153,974
— $
153,974
—
— $
—
153,974
$
$
$
$
$
The annual impairment tests for the Tech-focused reporting unit, which were performed as of October 1, 2018 and 2017, resulted in the fair value of the
reporting unit exceeding the carrying value by 40% and 1%, respectively. The increased fair value as compared to the carrying value is primarily driven by
improved operating results and projections and a reduction in the estimated tax rate from 36% at October 1, 2017 to 26% and October 1, 2018. Results for the
Tech-focused reporting unit for the fourth quarter of 2018 and estimated future results as of December 31, 2018 are consistent with the October 1, 2018 analysis.
As a result, the Company believes it is not more likely than not that the fair value of the reporting units is less than the carrying value as of December 31, 2018.
Therefore, no interim impairment testing was performed as of December 31, 2018.
The amount of goodwill as of December 31, 2018 allocated to the Tech-focused reporting unit was $154.0 million . Determining the fair value of a reporting
unit is judgmental in nature and requires the use of estimates and key assumptions, particularly assumed discount rates and projections of future operating results.
The discount rate applied for the Tech-focused reporting unit was 14.3% An increase to the discount rate applied or reductions to future projected operating results
could result in future impairment of the Tech-focused reporting unit’s goodwill. It is reasonably possible that changes in judgments, assumptions and estimates the
Company made in assessing the fair value of goodwill could cause the Company to consider some portion or all of the goodwill of the Tech-focused reporting unit
to become impaired. In addition, a future decline in the overall market conditions and/or changes in the Company’s market share could negatively impact the
estimated future cash flows and discount rates used to determine the fair value of the reporting unit and could result in an impairment charge in the foreseeable
future.
The Tech-focused reporting unit has gone through a period of revenue declines, resulting from competition in the U.S. as well as market slowness in the U.K.
due to Brexit. These disruptions and uncertainties could decrease demand for finance and technology professionals in the markets we serve. This decline in demand
and any future declines in demand could significantly decrease the use of our finance and technology industry job posting websites and related services, which may
adversely affect the Tech-focused reporting unit's financial condition and results of operations. If recruitment activity is slow in the industries in which we operate
during 2019 and beyond, our revenues and results of operations may be negatively impacted. As a result of these factors, in the fourth quarter, the Company further
evaluated the fair value of the Tech-focused reporting unit and believes it is not more likely than not that the fair value is less than the carrying value. If events and
circumstances change resulting in significant
83
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
reductions in actual operating income or projections of future operating income, the Company will test this reporting unit for impairment prior to the annual
impairment test.
The decline in oil prices in 2014 and 2015 and the continued volatility in 2016 decreased demand for energy professionals worldwide. This decline in
demand for energy professionals significantly decreased the use of the Company’s energy industry products and services, adversely affecting the Energy reporting
unit’s financial condition and results of operations. As a result of these factors, the Company evaluated the fair value of this reporting unit and recorded a goodwill
impairment of $15.4 million during the quarter ended September 30, 2016 at the Corporate & Other segment, bringing goodwill for the Energy reporting unit to
zero. See Note 5 for further discussion.
17. EARNINGS PER SHARE
Basic earnings per share (“EPS”) is computed based on the weighted-average number of shares of common stock outstanding. Diluted EPS is computed
based on the weighted-average number of shares of common stock outstanding plus common stock equivalents assuming exercise of stock options, where dilutive.
In 2016 shares issuable from stock-based awards of $ 0.8 million were excluded from the computation of shares contingently issuable upon exercise as we
recognized a net loss. The following is a calculation of basic and diluted earnings per share and weighted-average shares outstanding (in thousands, except per
share amounts):
Income (loss) from continuing operations—basic and diluted
Weighted-average shares outstanding—basic
Add shares issuable from stock-based awards
Weighted-average shares outstanding—diluted
Basic earnings (loss) per share
Diluted earnings (loss) per share
2018
2017
2016
7,174 $
15,978 $
(5,398)
48,520
1,085
49,605
47,908
322
48,230
0.15 $
0.14 $
0.33 $
0.33 $
48,319
—
48,319
(0.11)
(0.11)
$
$
$
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DHI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of unaudited quarterly results of operations for 2018 and 2017:
2018
Revenues
Total operating expenses
Other operating income (loss)
Operating income
Net income (loss)
Basic earnings per common share
Diluted earnings per common share
2017
Revenues
Total operating expenses
Other Operating Income
Operating income (loss)
Net income (loss)
Basic earnings (loss) per common share
Diluted earnings (loss) per common share
March 31 [1]
June 30 [2]
September 30 [3]
December 31
For the Three Months Ended
(in thousands, except per share amounts)
$
$
$
$
$
$
$
$
$
$
$
43,071 $
41,595 $
40,861
4,639
39,686
(839)
6,849 $
1,070 $
3,503 $
0.07 $
0.07 $
52,190 $
47,895
— $
4,295 $
1,340 $
0.03 $
0.03 $
(205) $
— $
— $
52,400 $
48,398
— $
4,002 $
1,822 $
0.04 $
0.04 $
38,917 $
37,085
(365)
1,467 $
930 $
0.02 $
0.02 $
52,424 $
49,886
— $
2,538 $
1,058 $
0.02 $
0.02 $
37,987
35,615
(66)
2,306
2,946
0.06
0.06
[4]
[4]
50,936
48,898
9,992
[5]
12,030
11,758
0.24
0.24
[4]
[4]
[1]
[2]
[3]
[4]
[5]
Majority ownership of the BioSpace business was transferred to BioSpace management on January 31, 2018 and the RigLogix portion of the Rigzone
business was sold on February 20, 2018.
The Hcareers business was sold on May 22, 2018.
Majority ownership of the remaining Rigzone business was transferred to Rigzone management and Dice Europe ceased operations on August 31, 2018.
The sum of the quarter may not equal the full year amount.
Includes gain on sale of Health eCareers of $6.7 million and proceeds from restitution award of $3.3 million related to the OilPro legal matter.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
None.
Item 9A. Controls and Procedures
Evaluation
of
Disclosure
Controls
and
Procedures
Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of the
Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the fiscal period covered by
this report.
Based on such evaluations, the CEO and CFO have concluded that the disclosure controls and procedures are effective to provide reasonable assurance that
information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the SEC,
and that such information is accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding
required disclosure.
85
Table of Contents
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 Rules 13a-15(f) and 15d-
15(f) under the Exchange Act).
Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal
Control—
Integrated
Framework
(2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management
concluded that the Company’s internal control over financial reporting was effective as of December 31, 2018 .
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.
Deloitte & Touche LLP has audited the Company’s internal control over financial reporting as of December 31, 2018 and has issued a report regarding its
assessment included herein.
Changes
in
Internal
Controls
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) occurred during the quarter ended
December 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of DHI Group, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of DHI Group, Inc. and subsidiaries (the “Company”) as of December 31, 2018, 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 Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria
established in Internal
Control
-
Integrated
Framework
(2013)
issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial
statements as of and for the year ended December 31, 2018, of the Company and our report dated February 7, 2019, expressed an unqualified opinion on those
financial statements and included an explanatory paragraph regarding the Company’s adoption of a new accounting standard.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express
an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
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 that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) 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 (3) 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.
/s/ Deloitte & Touche LLP
Des Moines, Iowa
February 7, 2019
87
Table of Contents
Item 9B. Other Information
None.
88
Table of Contents
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information called for by Item 10 will be set forth in our definitive proxy statement relating to our 2019 Annual Meeting of Stockholders (the "Proxy
Statement”) to be filed within 120 days of the Company’s fiscal year end of December 31, 2018 and is incorporated herein by reference.
As previously announced, Art Zeile became the Company's President, Chief Executive Officer in April 2018. Prior to Mr. Zeile's joining the Company,
Michael Durney served as the Company's President and Chief Executive Officer until March 31, 2018.
Executive Officers of the Company
Set forth below is information relating to the Company’s executive officers as of February 7, 2019.
Name
Art Zeile
Luc Grégoire
Klavs Miller
Christian Dwyer
Michelle Marian
Ian Shepherd
Pam Bilash
Brian P. Campbell
Age
55
59
49
51
53
53
60
54
Position
President and Chief Executive Officer
Chief Financial Officer
Chief Technology Officer
Chief Product Officer
Chief Marketing Officer
Chief Revenue Officer
Senior Vice President, Human Resources
Senior Vice President, Corporate Development and General Counsel
Art
Zeile
has been President and Chief Executive Officer, as well as a director of the Company since April 2018. Prior to joining DHI, Art co-founded
HOSTING, a cloud computing services company and served as its Chief Executive Officer from 2008 until 2016. At HOSTING, Art formulated a strategy for a
rollup of cloud services companies in the U.S. and focused on managing security and compliance for mission critical web applications. Earlier in his career, Art
served as CEO of QTC Management Inc, a healthcare technology company, from 2006 to 2007. Prior to joining QTC Management, Art co-founded Inflow Inc., a
public data center company, and Link-VTC, one of the first companies to deliver videoconferencing services. Art earned a bachelor's degree in Astronautical
Engineering from the U.S. Air Force Academy and served in the United States Air Force from 1988 until 1993. Art also received a master's degree in public policy
from Harvard University.
Luc
Grégoire
has been Chief Financial Officer since joining the Company in November 2016. He has responsibility for the Company’s financial
organization, including financial and strategic planning, corporate development, accounting, financial reporting, investor relations, treasury, internal audit and tax,
as well as the Company’s legal organization. Prior to joining the Company, Mr. Grégoire served as the Chief Financial Officer at AvePoint, Inc. from 2014 to 2016
which he helped steer to a SaaS business model. Earlier in his career, he held senior finance roles with Take-Two Interactive from 2008-2014, McGraw Hill from
2007 to 2008, Standard Motor Products from 2005-2007 and Merck from 1992-2005, and had been a partner with Arthur Andersen. He also serves on the board of
a private New York-based residential real estate company. He graduated from Concordia University with a Bachelor of Commerce degree and holds a Graduate
Diploma in Public Accountancy from McGill University. Mr. Grégoire is a licensed Certified Public Accountant in Canada.
Klavs
Miller
is Chief Technology Officer and previously served as Senior Vice President, Technology since January 2014, after joining the Company through
its acquisition of onTargetjobs where Mr. Miller served as the Chief Information Officer since 2011. He oversees the Company’s technology-related functions,
including enterprise R&D, operations, support and infrastructure. Mr. Miller started his career as a software engineer in the early 1990s, followed by various
technical and management positions with international ERP company, Baan. Since then, he has held a number of senior management positions with various
technology and software companies, such as InfoNow, Vericept and Quark. He holds a B.S. in Electrical Engineering from Vestjysk Teknikum, Denmark.
Christian
Dwyer
is the Chief Product Officer, joining the Company in September 2018. Mr. Dwyer oversees the product strategy, development and expansion
of DHI products including Dice, ClearanceJobs and eFinancialCareers. Prior to joining DHI, Mr. Dwyer served as the Executive Vice President of Product
Management at HealthGrades, where he led product strategy, product development and business development across consumer web, mobile and native
applications. He previously served as Senior Vice President and General Manager at AOL/MapQuest, where he successfully repositioned the business for growth
by establishing partnership alliances and scaling new products across web and mobile applications. Earlier in his career he held leadership positions at Navidec and
Carpoint.com. Mr. Dwyer serves as a board member for the Colorado Technology Association. He earned an M.S.
89
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in Finance from the University of Colorado at Denver and a B.A. in Business Economics from the University of California at Santa Barbara.
Michelle
Marian
is the Chief Marketing Officer, joining the Company in October 2018. Ms. Marian leads DHI’s global marketing organization with
responsibility for its digital marketing strategy, demand generation and branding. Prior to joining DHI, Ms. Marian was the Head of Global Digital Marketing at
Crocs, where she was responsible for driving new customer growth and a data-driven customer centric approach to eCommerce. Prior to Crocs, she served as the
Vice President of Marketing at Shopathome.com, defining the marketing strategy and execution of customer acquisition and engagement initiatives at the
company. Earlier in her career, Ms. Marian held executive marketing positions at Webroot, Safeway, and AOL. Ms. Marian holds a Masters of International
Business Studies from the University of South Carolina and a B.S. in International Business & Marketing from the University of Colorado at Boulder.
Ian
Shepherd
is the Chief Revenue Officer. Mr. Shepherd joined DHI in September 2017 as Executive Vice President of Sales and became the Chief
Revenue Officer in June 2018. Mr. Shepherd is responsible for driving the growth agenda for the Company strategy and leading direct and indirect sales across the
globe. Prior to joining the Company, Mr. Shepherd served as the Senior Vice President of North American Enterprise Sales at Monster Worldwide. Mr. Shepherd
has an extensive history of leading global sales operations at a number of SaaS-based and public companies. In 2013, he served as Senior Vice President of sales at
Automic Software and prior to that was Group Vice President at Oracle. Mr. Shepherd holds a B.A. degree in economics from the University of Manitoba.
Pam
Bilash
has been the Senior Vice President, Human Resources since January 2014, having joined the Company through its acquisition of onTargetjobs
where she led the Human Resources team as Executive Vice President since 2009. Ms. Bilash worked for Thomson Reuters in roles of increasing responsibility,
culminating as Senior Vice President of Human Resources for the healthcare group. Ms. Bilash is a graduate of the University of Hartford.
Brian
P.
Campbell
is the Senior Vice President, Corporate Development, General Counsel and Corporate Secretary of DHI Group, Inc. He served as Vice
President, Business and Legal Affairs at DHI since June 2003, after joining our predecessor, Dice Inc. in January 2000. Mr. Campbell is responsible for managing
our legal affairs, including intellectual property, mergers and acquisitions, strategic alliances, corporate securities, real estate, litigation and employment law, as
well as corporate development and supervising outside counsel. Mr. Campbell also oversees our privacy initiatives. Prior to joining the Company, Mr. Campbell
served as Vice President, General Counsel and Corporate Secretary at CMP Media, where he worked since 1995. From 1988 to 1995, Mr. Campbell worked as a
Corporate Associate at the law firm of Mudge, Rose, Guthrie, Alexander and Ferdon. Mr. Campbell is the Immediate Past President of the New York City Chapter
of the Association of Corporate Counsel, where he has served on the Board of Directors for six years and has been a member for over twenty years. He earned a
J.D. from St. John’s University School of Law and a B.A. from the University of Virginia.
We have adopted a code of conduct and ethics that applies to all of our directors, officers and employees, including or chief executive officer, chief financial
officer and persons performing similar functions. Our code of conduct and ethics is posted on the investors section of our website at www.dhigroupinc.com.
Item 11. Executive Compensation
The information called for by Item 11 pertaining to executive compensation will be set forth in the Proxy Statement and is incorporated herein by reference.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information called for by Item 12 pertaining to security ownership of certain beneficial owners and management will be set forth in the Proxy Statement
and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information called for by Item 13 pertaining to certain relationships and related transactions will be set forth in the Proxy Statement and is incorporated
herein by reference.
Item 14. Principal Accounting Fees and Services
The information called for by Item 14 pertaining to principal accounting fees and services will be set forth in the Proxy Statement and is incorporated herein
by reference.
90
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PART IV
Item 15. Exhibits
(a)
1.
2.
3.
Financial Statement Schedules
The consolidated financial statements are listed under Item 8 of this Annual Report.
Financial Statement Schedules.
See (b) below.
Exhibits.
2.1
3.1
3.2
3.3
4.1
4.2
4.3
4.4
10.1†
10.2†
10.3†
10.4†
10.5†
10.6†
10.7†
10.8†
10.9†
Share Purchase Agreement, dated as of May 22, 2018, by and among DHI Group, Inc., OnTargetJobs
Canada, Inc. and Virgil AcquisitionCo Inc. (incorporated by reference from Exhibit 2.1 to Company's
Current Report on Form 8-K (File No. 001-33584) filed on May 29, 2018).
Amended and Restated Certificate of Incorporation (incorporated by reference from Exhibit 3.1 to the
Company’s Current Report on Form 8-K (File No. 001-33584) filed on July 23, 2007).
Second Amended and Restated By-laws (incorporated by reference from Exhibit 3.1 to the Company’s
Current Report on Form 8-K (File No. 001-33584) filed on March 9, 2016).
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Dice Holdings,
Inc., effective April 21, 2015.
Specimen Stock Certificate (incorporated by reference from Exhibit 4.1 to Amendment No. 4 to the
Company’s Registration Statement on Form S-1 (File No. 333-141876) filed on June 22, 2007).
Second Amended and Restated Shareholders Agreement, dated as of July 23, 2007, by and between DHI
Group, Inc. and the eFG Shareholders named therein (incorporated by reference from Exhibit 4.1 to the
Company’s Current Report on Form 8-K (File No. 001-33584) filed on July 23, 2007).
Institutional and Management Shareholders Agreement, dated as of July 23, 2007, by and among DHI
Group, Inc., the Quadrangle Entities named therein, the General Atlantic Entities named therein and the
Management Shareholders named therein (incorporated by reference from Exhibit 4.2 to the Company’s
Current Report on Form 8-K (File No. 001-33584) filed on July 23, 2007).
Amendment No. 1 to Second Amended and Restated Shareholders Agreement, dated as of February 4,
2008, by and among DHI Group, Inc. and the eFG Shareholders named therein (incorporated by
reference from Exhibit 4.4 to the Company’s Annual Report on Form 10-K (File No. 001-33584) filed
on March 25, 2008).
The DHI Group, Inc. 2005 Omnibus Stock Plan (the “2005 Stock Plan”) (incorporated by reference from
Exhibit 10.14 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No. 333-
141876) filed on May 18, 2007).
Form of Stock Option Award Agreement under the 2005 Stock Plan (incorporated by reference from
Exhibit 10.15 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No. 333-
141876) filed on May 18, 2007).
The DHI Group, Inc. 2007 Equity Award Plan (the “2008 Equity Plan”) (incorporated by reference from
Exhibit 10.16 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No. 333-
141876) filed on May 18, 2007).
Form of Stock Award Agreement under the 2007 Equity Plan (incorporated by reference from Exhibit
10.11 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File No. 333-
141876) filed on June 8, 2007).
The DHI Group, Inc. 2012 Omnibus Equity Award Plan (the “2012 Equity Plan”) (incorporated by
reference from Exhibit 10.1 to the Company’s Registration Statement on Form S-8 (File No. 333-
182756) filed on July 19, 2012).
Form of Stock Option Award Agreement under the 2012 Equity Plan (incorporated by reference from
Exhibit 10.2 to the Company’s Registration Statement on Form S-8 (File No. 333-182756) filed on July
19, 2012).
Form of Restricted Stock Award Agreement under the 2012 Equity Plan (incorporated by reference from
Exhibit 10.3 to the Company’s Registration Statement on Form S-8 (File No. 333-182756) filed on July
19, 2012).
Form of Performance-Based Restricted Stock Unit Award Agreement under the 2012 Equity Plan
(incorporated by reference from Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2015 (File No. 001-33584) filed on April 29, 2015).
The DHI Group, Inc. Executive Cash Incentive Plan (incorporated by reference from Exhibit 10.12 to
Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File No. 333-141876) filed on
June 8, 2007).
91
Table of Contents
10.10†
10.11†
10.12†
10.13†
10.14†
10.15†
10.16†
10.17†
10.18†
10.19*
10.20†
10.21†
10.22†
10.23†
10.24*†
21.1*
31.1*
31.2*
32.1*
32.2*
Employment Agreement, dated as of April 20, 2000, and amended as of March 1, 2001, between
Earthweb Inc. and Michael P. Durney (incorporated by reference from Exhibit 10.4 to Amendment No. 6
to the Company’s Registration Statement on Form S-1 (File No. 333-141876) filed on July 11, 2007).
Separation Agreement, dated as November 1, 2017, by and between DHI Group, Inc. and Michael P
Durney (incorporated by reference from Exhibit 10.10 to the Company's Annual Report on Form 10-K
for the year ended December 31, 207 (File No. 001-33584) filed on February 12, 2018).
Separation Agreement dated as of February 9, 2018 between eFinancialCareers Limited and James
Bennett (incorporated by reference from Exhibit 10.11 to the Company's Annual Report on Form 10-K
for the year ended December 31, 2017 (File No. 001-33584) filed on February 12, 2018).
Employment Agreement, dated as of January 31, 2000, and amended as of March 1, 2001, between
Earthweb Inc. and Brian Campbell (incorporated by reference from Exhibit 10.7 to Amendment No. 6 to
the Company’s Registration Statement on Form S-1 (File No. 333-141876) filed on July 11, 2007).
Employment Agreement, dated as of June 20, 2005 between eFinancialCareers Limited and John Benson
(incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the
quarterly period ended on March 31, 2008 (File No. 001-33584) filed on May 7, 2008).
Employment Agreement dated as of November 16, 2004, and amended as of July 1, 2011 between
eFinancialCareers Limited and James Bennett (incorporated by reference from Exhibit 10.2 to the
Company’s Quarterly Report on Form 10-Q (File No. (001-33584) filed on April 25, 2012 with the
Securities and Exchange Commission).
Amendment to Employment Agreement dated as of July 29, 2013 between Dice Inc., DHI Group, Inc.
and Michael P. Durney (incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2013 (File No. 001-33584) filed on October 29,
2013).
Employment Agreement dated as of January 1, 2014 between Dice Inc. and Pamela Bilash (incorporated
by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2014 (File No. 001-33584) filed on April 30, 2014).
Employment Agreement dated as of January 1, 2014 between Dice Inc. and Klavs Miller (incorporated
by reference from Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2014 (File No. 001-33584) filed on April 30, 2014).
Second Amended and Restated Credit Agreement dated as of November 14, 2018, among DHI Group,
Inc., Dice Inc. and Dice Career Solutions, Inc., as Borrowers, the various lenders party thereto,
JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A. and BMO Harris Bank
N.A., as co-syndication agents and TD Bank, N.A., as documentation agent.
Employment Agreement dated as of November 1, 2016 between Dice Inc. and Luc Grégoire
incorporated by reference from Exhibit 10.23 to the Company's Annual Report on Form 10-K (File No.
001-33584) filed on February 9, 2017).
Separation Agreement, dated as of June 16, 2017 among DHI Group, Inc., Dice Inc., and Shravan Goli
(incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K (File No.
001-33584) filed on June 29, 2017).
Employment Agreement and Addendum to Employment Agreement dated as of April 9, 2018 between
DHI Group, Inc., Dice Inc. and Art Zeile (incorporated by reference from Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 (File No. 001-33584) filed on
August 2, 2018).
Employment Agreement and Addendum to Employment Agreement dated as of September 9, 2018
between DHI Group, Inc. and Christian Dwyer.
Employment Agreement and Addendum to Employment Agreement dated as of September 25, 2018,
between DHI Group, Inc. and Michelle Marian.
Subsidiaries of the Registrant.
Certifications of Art Zeile, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
Certifications of Luc Grégoire, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
Certifications of Art Zeile, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
Certifications of Luc Grégoire, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
101.INS
XBRL Instance Document.
92
Table of Contents
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
XBRL Taxonomy Extension Schema Document.
XBRL Taxonomy Extension Calculation Linkbase Document.
XBRL Taxonomy Extension Definition Linkbase Document.
XBRL Taxonomy Extension Label Linkbase Document.
XBRL Taxonomy Extension Presentation Linkbase Document.
________________
*
†
(b)
Filed herewith.
Identifies a management contract or compensatory plan or arrangement.
Financial Statement Schedules.
Schedule II—Consolidated Valuation and Qualifying Accounts
Page
94
93
Table of Contents
Item 16. Form 10-K Summary
None.
DHI GROUP, INC.
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
As of December 31, 2016, 2017 and 2018
(in thousands)
SCHEDULE II
Column A
Description
Reserves Deducted From Assets to Which They Apply:
Reserve for uncollectible accounts receivable:
Year ended December 31, 2016
Year ended December 31, 2017
Year ended December 31, 2018
Deferred tax valuation allowance:
Year ended December 31, 2016
Year ended December 31, 2017 (1)
Year ended December 31, 2018 (2)
Column B
Balance at
Beginning
of Period
Column C
Column D
Charged
to Income
Deductions
Column E
Balance
at End of
Period
$
$
2,945 $
3,181
1,688
1,746 $
1,033
224
1,435 $
1,556
1,069
(713) $
(809)
5,081
(1,199) $
(3,049)
(2,110)
— $
—
—
3,181
1,688
647
1,033
224
5,305
____________________
(1)
(2)
Reduction primarily due to utilization of foreign tax credits.
Increase primarily due to valuation allowance for tax capital loss carryforward resulting from Rigzone sale.
See
notes
to
the
DHI
Group,
Inc.
consolidated
financial
statements
included
elsewhere
herein.
94
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Annual
Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
Date:
February 7, 2019
DHI Group, Inc.
By:
/S/ Art Zeile
Art Zeile
President and Chief Executive Officer
(on behalf of the registrant)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on
the dates indicated.
Signature
/S/ Art Zeile
Art Zeile
President, Chief Executive Officer and Director
(Principal Executive Officer)
Title
Date
February 7, 2019
February 7, 2019
/S/ Luc Grégoire
Luc Grégoire
Chief Financial Officer
(Principal Financial and Accounting Officer)
/S/ John W. Barter
Chairman and Director
February 7, 2019
John W. Barter
/S/ Carol Carpenter
Director
Carol Carpenter
/S/ Golnar Sheikholeslami
Director
Golnar Sheikholeslami
/S/ Brian Schipper
Director
Brian Schipper
/S/ Burton Goldfield
Director
Burton Goldfield
/S/ Jim Friedlich
Director
Jim Friedlich
/S/ Jennifer Deason
Director
Jennifer Deason
95
February 7, 2019
February 7, 2019
February 7, 2019
February 7, 2019
February 7, 2019
February 7, 2019
EXECUTION COPY
J.P.MORGAN
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
November 14, 2018
among
DHI GROUP, INC.
DICE INC. and DICE CAREER SOLUTIONS, INC.,
as Borrowers
The Lenders Party Hereto
JPMORGAN CHASE BANK, N.A.
as Administrative Agent
BANK OF AMERICA, N.A.
and BMO HARRIS BANK N.A.
as Co-Syndication Agents
and
TD BANK, N.A.
as Documentation Agent
JPMORGAN CHASE BANK, N.A.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
and
BMO HARRIS BANK N.A.
as Joint Bookrunners and Joint Lead Arrangers
ARTICLE I Definitions
SECTION 1.01
SECTION 1.02
SECTION 1.03
SECTION 1.04
SECTION 1.05
SECTION 1.06
ARTICLE II The Credits
Defined Terms
Classification of Loans and Borrowings
Terms Generally
Accounting Terms; GAAP
Amendment and Restatement of Existing Credit Agreement
Interest Rates; LIBOR Notification
SECTION 2.01
SECTION 2.02
SECTION 2.03
SECTION 2.04
SECTION 2.05
SECTION 2.06
SECTION 2.07
SECTION 2.08
SECTION 2.09
SECTION 2.10
SECTION 2.11
SECTION 2.12
SECTION 2.13
SECTION 2.14
SECTION 2.15
SECTION 2.16
SECTION 2.17
SECTION 2.18
SECTION 2.19
SECTION 2.20
SECTION 2.21
SECTION 2.22
SECTION 2.23
Commitments
Loans and Borrowings
Requests for Borrowings
Determination of Dollar Amounts
[Intentionally Omitted]
Letters of Credit
Funding of Borrowings
Interest Elections
Termination and Reduction of Commitments
Repayment of Loans; Evidence of Debt
Prepayment of Loans
Fees
Interest
Alternate Rate of Interest
Increased Costs
Break Funding Payments
Taxes
Payments Generally; Allocations of Proceeds; Pro Rata Treatment; Sharing of Set‑offs
Mitigation Obligations; Replacement of Lenders
Expansion Option
[Intentionally Omitted]
Judgment Currency
Defaulting Lenders
ARTICLE III Representations and Warranties
SECTION 3.01
SECTION 3.02
SECTION 3.03
SECTION 3.04
SECTION 3.05
SECTION 3.06
SECTION 3.07
SECTION 3.08
SECTION 3.09
SECTION 3.10
SECTION 3.11
SECTION 3.12
Existence, Qualification and Power
Authorization; No Contravention
Governmental Authorization; Other Consents
Binding Effect
Financial Statements; No Material Adverse Effect
Litigation
No Default
Ownership of Property
Environmental Compliance
Insurance
Taxes
ERISA Compliance
1
1
30
30
31
31
32
32
32
32
33
34
34
34
39
40
41
42
42
43
44
45
46
48
48
51
54
54
56
56
57
58
58
58
59
59
59
59
59
60
60
60
60
61
SECTION 3.13
SECTION 3.14
SECTION 3.15
SECTION 3.16
SECTION 3.17
SECTION 3.18
SECTION 3.19
SECTION 3.20
SECTION 3.21
SECTION 3.22
SECTION 3.23
Subsidiaries
Margin Regulations; Investment Company Act
Disclosure
Compliance with Laws
Intellectual Property; Licenses, Etc
Solvency
Perfection of Security Interests in the Collateral
Business Locations; Taxpayer Identification Number
Labor Matters
Anti-Corruption Laws and Sanctions
EEA Financial Institutions
ARTICLE IV Conditions
SECTION 4.01
SECTION 4.02
Effective Date
Each Credit Event
ARTICLE V Affirmative Covenants
SECTION 5.01
SECTION 5.02
SECTION 5.03
SECTION 5.04
SECTION 5.05
SECTION 5.06
SECTION 5.07
SECTION 5.08
SECTION 5.09
SECTION 5.10
SECTION 5.11
SECTION 5.12
SECTION 5.13
SECTION 5.14
SECTION 5.15
Financial Statements
Certificates; Other Information
Notices
Payment of Taxes
Preservation of Existence, Etc
Maintenance of Properties
Maintenance of Insurance
Compliance with Laws
Books and Records
Inspection Rights
Use of Proceeds
ERISA Compliance
Additional Subsidiaries
Pledged Assets
Post-Closing Matters
ARTICLE VI Negative Covenants
SECTION 6.01
SECTION 6.02
SECTION 6.03
SECTION 6.04
SECTION 6.05
SECTION 6.06
SECTION 6.07
SECTION 6.08
SECTION 6.09
SECTION 6.10
SECTION 6.11
SECTION 6.12
SECTION 6.13
SECTION 6.14
Liens
Investments
Indebtedness
Fundamental Changes
Dispositions
Restricted Payments
Change in Nature of Business
Transactions with Affiliates and Insiders
Burdensome Agreements
Use of Proceeds
Financial Covenants
Prepayment of Subordinated Debt, Etc
Organization Documents; Fiscal Year; Legal Name, State of Formation and Form of Entity
Ownership of Subsidiaries
61
62
62
62
62
63
63
63
63
63
64
64
64
64
65
65
66
67
68
68
68
68
69
69
69
70
70
70
71
71
72
72
73
74
76
76
76
77
77
77
78
78
78
79
79
SECTION 6.15
Sale Leasebacks; Synthetic Leases; Securitization Transactions
ARTICLE VII Events of Default
ARTICLE VIII The Administrative Agent
SECTION 8.01
SECTION 8.02
SECTION 8.03
SECTION 8.04
SECTION 8.05
SECTION 8.06
SECTION 8.07
SECTION 8.08
SECTION 8.09
ARTICLE IX Miscellaneous
SECTION 9.01
SECTION 9.02
SECTION 9.03
SECTION 9.04
SECTION 9.05
SECTION 9.06
SECTION 9.07
SECTION 9.08
SECTION 9.09
SECTION 9.10
SECTION 9.11
SECTION 9.12
SECTION 9.13
SECTION 9.14
SECTION 9.15
SECTION 9.16
SECTION 9.17
Authorization and Action
Administrative Agent’s Reliance, Indemnification, Etc
Posting of Communications
The Administrative Agent Individually
Successor Administrative Agent
Acknowledgements of Lenders and Issuing Banks
Collateral Matters.
Credit Bidding
Certain ERISA Matters
Notices
Waivers; Amendments
Expenses; Indemnity; Damage Waiver
Successors and Assigns
Survival
Counterparts; Integration; Effectiveness; Electronic Execution
Severability
Right of Setoff
Governing Law; Jurisdiction; Consent to Service of Process
WAIVER OF JURY TRIAL
Headings
Confidentiality
USA PATRIOT Act
Appointment for Perfection
Releases of Subsidiary Guarantors
Interest Rate Limitation
No Advisory or Fiduciary Responsibility
ARTICLE X Cross-Guarantee
79
79
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85
86
87
87
88
89
89
90
92
92
93
95
97
100
100
101
101
101
102
102
102
103
103
103
104
104
105
SCHEDULES:
Schedule 2.01A – Commitments
Schedule 2.01B – Letter of Credit Commitments
Schedule 3.10 – Insurance
Schedule 3.13 – Subsidiaries
Schedule 3.17 – IP Rights
Schedule 3.20(a) – Locations of Real Property
Schedule 3.20(b) – Locations of Tangible Personal Property
Schedule 3.20(c) – Location of Chief Executive Office, Taxpayer Identification Number, Etc.
Schedule 3.20(d) – Changes in Legal Name, State of Formation and Structure
Schedule 3.20(e) – Deposit and Investment Accounts
Schedule 6.01 – Liens Existing on the Effective Date
Schedule 6.02 – Investments Existing on the Effective Date
Schedule 6.03 – Indebtedness Existing on the Effective Date
EXHIBITS:
Exhibit A – Form of Assignment and Assumption
Exhibit B – Form of Opinion of Loan Parties’ Counsel
Exhibit C – Form of Increasing Lender Supplement
Exhibit D – Form of Augmenting Lender Supplement
Exhibit E – List of Closing Documents
Exhibit F – Compliance Certificate
Exhibit G-1 – Form of U.S. Tax Certificate (Foreign Lenders That Are Not Partnerships)
Exhibit G-2 – Form of U.S. Tax Certificate (Foreign Participants That Are Not Partnerships)
Exhibit G-3 – Form of U.S. Tax Certificate (Foreign Participants That Are Partnerships)
Exhibit G-4 – Form of U.S. Tax Certificate (Foreign Lenders That Are Partnerships)
Exhibit H – Form of Security Agreement
Exhibit I – Form of Subsidiary Guaranty
Exhibit J-1 – Form of Borrowing Request
Exhibit J-2 – Form of Interest Election Request
SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “ Agreement ”) dated as of November 14, 2018 among DHI
GROUP, INC. (the “ Company ”), DICE INC. (“ Dice ”), DICE CAREER SOLUTIONS, INC. (“ DCS ” and, together with the Company and
Dice, the “ Borrowers ” and each a “ Borrower ”), the LENDERS from time to time party hereto, JPMORGAN CHASE BANK, N.A., as
Administrative Agent, BANK OF AMERICA, N.A. and BMO HARRIS BANK N.A., as Co-Syndication Agents and TD BANK N.A., as
Documentation Agent.
WHEREAS, the Borrowers, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent thereunder, are
currently party to the Amended and Restated Credit Agreement, dated as of November 24, 2015 (as amended, supplemented or otherwise
modified prior to the date hereof, the “ Existing Credit Agreement ”);
WHEREAS, the Borrowers, the Lenders, the Departing Lender (as hereafter defined), 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; (ii) modify and re-evidence the
“Secured Obligations” under, and as defined in, the Existing Credit Agreement, which shall be repayable in accordance with the terms of this
Agreement; and (iii) set forth the terms and conditions under which the Lenders will, from time to time, make loans and extend other
financial accommodations to or for the benefit of the Borrowers and (b) that the Departing Lender shall cease to be a party to the Existing
Credit Agreement as evidenced by its execution and delivery of its Departing Lender Signature Page;
WHEREAS, it is the intent of the parties hereto that this Agreement not constitute a novation of the obligations and liabilities of the
parties under the Existing Credit Agreement or be deemed to evidence or constitute full repayment of such obligations and liabilities, but that
this Agreement amend and restate in its entirety the Existing Credit Agreement and modify and re-evidence the obligations and liabilities of
the Borrowers and the other Loan Parties outstanding thereunder, which shall be payable in accordance with the terms hereof; and
WHEREAS, it is also the intent of the Borrowers and the Subsidiary Guarantors to confirm that all obligations under the “Loan
Documents” (as referred to and defined in the Existing Credit Agreement) shall continue in full force and effect as modified and/or restated
by the Loan Documents (as referred to and defined herein) and that, from and after the Effective Date, all references to the “Credit
Agreement” contained in any such existing “Loan Documents” shall be deemed to refer to this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree
that the Existing Credit Agreement is hereby amended and restated as follows:
ARTICLE I
Definitions
SECTION 1.01 Defined Terms . As used in this Agreement, the following terms have the meanings specified below:
“ ABR ”, when used in reference to any Loan or Borrowing, refers to such Loan, or the Loans comprising such Borrowing, bearing
interest at a rate determined by reference to the Alternate Base Rate.
“ Acquisition ”, by any Person, means the acquisition by such Person, in a single transaction or in a series of related transactions, of
either (a) all or any substantial portion of the property of, or a line of business or division of, another Person or (b) at least a majority of the
Voting Stock of another Person, in each case whether or not involving a merger or consolidation with such other Person.
“ Acquisition-Related Incremental Term Loans ” has the meaning assigned to such term in Section 2.20.
“ Adjusted Covenant Period ” has the meaning specified in Section 6.11(a) .
“ Adjusted LIBO Rate ” means, with respect to any Eurocurrency Borrowing for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory
Reserve Rate.
“ Administrative Agent ” means JPMorgan Chase Bank, N.A. (including its branches and affiliates), in its capacity as administrative
agent for the Lenders hereunder.
“ Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.
“ Affiliate ” means, with respect to any 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.
“ Aggregate Commitment ” means the aggregate of the Commitments of all of the Lenders, as reduced or increased from time to time
pursuant to the terms and conditions hereof. As of the Effective Date, the Aggregate Commitment is $90,000,000.
“ Agreed Currencies ” means (i) Dollars, (ii) euro, (iii) Pounds Sterling and (iv) any other currency (x) that is a lawful currency (other
than Dollars) that is readily available and freely transferable and convertible into Dollars, (y) for which a LIBO Screen Rate is available in the
Administrative Agent’s reasonable determination and (z) that is agreed to by the Administrative Agent and each of the Lenders.
“ Agreement ” has the meaning assigned to such term in the introductory paragraph.
“ Alternate Base Rate ” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the
NYFRB Rate in effect on such day plus ½ of 1% and (c) the Adjusted LIBO Rate for a one month Interest Period in Dollars on such day (or if
such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that for the purpose of this definition, the
Adjusted LIBO Rate for any day shall be based on the LIBO Screen Rate (or if the LIBO Screen Rate is not available for such one month
Interest Period, the Interpolated Rate) at approximately 11:00 a.m. London time on such day. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change
in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate, respectively. If the Alternate Base Rate is being used as an alternate rate of
interest pursuant to Section 2.14 hereof, then the Alternate Base Rate shall be the greater of clauses (a) and (b) above and shall be determined
without reference to clause (c) above. For the avoidance of doubt, if the Alternate Base Rate as so determined would be less than 1.00%, such
rate shall be deemed to be 1.00% for purposes of this Agreement.
“ Alternative Rate ” has the meaning assigned to such term in Section 2.14(a).
“ Anti-Corruption Laws ” means all laws, rules, and regulations of any jurisdiction with authority or jurisdiction over the Company or
any of its Subsidiaries from time to time concerning or relating to bribery or corruption.
“ Applicable Party ” has the meaning assigned to such term in Section 8.03(c).
“ Applicable Percentage ” means, with respect to any Lender, the percentage of the Aggregate Commitment represented by such
Lender’s Commitment; provided that, in the case of Section 2.23 when a Defaulting Lender shall exist, “Applicable Percentage” shall mean
the percentage of the Aggregate Commitment (disregarding any Defaulting Lender’s Commitment) represented by such Lender’s
Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments
most recently in effect, giving effect to any assignments and to any Lender’s status as a Defaulting Lender at the time of determination.
“ Applicable Rate ” means, for any day, with respect to any Eurocurrency Loan or any ABR Loan, or with respect to the commitment
fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “Eurocurrency Spread”, “ABR
Spread” or “Commitment Fee Rate”, as the case may be, based upon the Consolidated Leverage Ratio as of the last day of the most recent
fiscal quarter or fiscal year for which Financials have been delivered pursuant to Section 5.01 :
Category 1 :
Category 2 :
Category 3 :
Category 4 :
Consolidated Leverage
Ratio:
< 1.00 to 1.00
≥ 1.00 to 1.00 but < 1.50 to
1.00
≥ 1.50 to 1.00 but < 2.00 to
1.00
> 2.00 to 1.00
Eurocurrency
Spread
1.75%
2.00%
2.25%
2.50%
For purposes of the foregoing,
ABR
Spread
0.75%
1.00%
1.25%
1.50%
Commitment
Fee Rate
0.30%
0.35%
0.40%
0.45%
(i) if at any time the Company fails to deliver the Financials on or before the date the Financials are due pursuant to
Section 5.01, Category 4 shall be deemed applicable for the period commencing three (3) Business Days after the required
date of delivery and ending on the date which is three (3) Business Days after the Financials are actually delivered, after
which the Category shall be determined in accordance with the table above as applicable;
(ii) adjustments, if any, to the Category then in effect shall be effective three (3) Business Days after the
Administrative Agent has received the applicable Financials (it being understood and agreed that each change in Category
shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding
the effective date of the next such change); and
(iii) notwithstanding the foregoing, Category 1 shall be deemed to be applicable until the Administrative Agent’s
receipt of the applicable Financials for the Company’s first fiscal quarter ending after the Effective Date (unless such
Financials demonstrate that Category 2, 3 or 4 should have been applicable during such period, in which case such other
Category shall be deemed to be applicable during such period) and adjustments to the Category then in effect shall thereafter
be effected in accordance with the preceding paragraphs.
“ Approved Electronic Platform ” has the meaning assigned to such term in Section 8.03(a).
“ Approved Fund ” has the meaning assigned to such term in Section 9.04(b).
“ Arranger ” means each of JPMorgan Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated and BMO Harris Bank
N.A. in its capacity as a joint bookrunner and a joint lead arranger hereunder.
“ Assignment and Assumption ” means an assignment and assumption agreement entered into by a Lender and an assignee (with the
consent of any party whose consent is required by Section 9.04), and
accepted by the Administrative Agent, in the form of Exhibit A or any other form (including electronic records generated by the use of an
electronic platform) approved by the Administrative Agent.
“ Attributable Indebtedness ” means, with respect to any Person on any date, in respect of any Capital Lease, the capitalized amount
thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP.
“ Audited Financial Statements ” means the audited consolidated balance sheet of the Company and its Subsidiaries for the fiscal year
ended December 31, 2017, and the related consolidated statements of income or operations, shareholders’ equity and cash flows of the
Company and its Subsidiaries for such fiscal year, including the notes thereto.
“ Augmenting Lender ” has the meaning assigned to such term in Section 2.20.
“ Auto-Extension Letter of Credit ” has the meaning assigned to such term in Section 2.06(c)(B).
“ Availability Period ” means the period from and including the Effective Date to but excluding the earlier of the Maturity Date and
the date of termination of the Commitments.
“ Available Revolving Commitment ” means, at any time with respect to any Lender, the Revolving Commitment of such Lender
then in effect minus the Revolving Credit Exposure of such Lender at such time.
“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in
respect of any liability of an EEA Financial Institution.
“ Bail-In Legislation ” means, 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 for such EEA Member Country from time to time
which is described in the EU Bail-In Legislation Schedule.
“ Banking Services ” means each and any of the following bank services provided to the Company or any Subsidiary by any Lender
or any of its Affiliates: (a) credit cards for commercial customers (including, without limitation, commercial credit cards and purchasing
cards), (b) stored value cards, (c) merchant processing services and (d) treasury management services (including, without limitation,
controlled disbursement, automated clearinghouse transactions, return items, any direct debit scheme or arrangement, overdrafts and interstate
depository network services).
“ Banking Services Agreement ” means any agreement entered into by the Company or any Subsidiary in connection with Banking
Services.
“ Banking Services Obligations ” means any and all obligations of the Company or any Subsidiary, whether absolute or contingent
and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and
substitutions therefor) in connection with Banking Services.
“ Bankruptcy Code ” means Title 11 of the United States Code entitled “Bankruptcy”, as now and hereafter in effect, or any successor
statute.
“ Bankruptcy Event ” means, with respect to any Person, such Person becomes the subject of a voluntary or involuntary bankruptcy or
insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar
Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative
Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or
appointment or has had any order for relief in such proceeding entered in respect thereof, provided that a Bankruptcy Event shall not result
solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or
instrumentality thereof, provided, further, that such ownership interest does not result in or provide such Person with immunity from the
jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person
(or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such
Person.
“ Beneficial Ownership Regulation ” means 31 C.F.R. § 1010.230.
“ Benefit Plan ” means 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”.
“ Board ” means the Board of Governors of the Federal Reserve System of the United States of America.
“ Borrower ” and “ Borrowers ” each has the meaning specified in the introductory paragraph hereto.
“ Borrower Materials ” has the meaning specified in Section 5.02.
“ Borrowing ” means Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of
Eurocurrency Loans, as to which a single Interest Period is in effect.
“ Borrowing Request ” means a request by any Borrower for a Borrowing in accordance with Section 2.03, which shall be
substantially in the form attached hereto as Exhibit J-1 or any other form approved by the Administrative Agent.
“ Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are
authorized or required by law to remain closed; provided that, when used in connection with a Eurocurrency Loan, the term “ Business Day ”
shall also exclude any day on which banks are not open for dealings in the relevant Agreed Currency in the London interbank market or the
principal financial center of such Agreed Currency (and, if the Borrowings or LC Disbursements which are the subject of a borrowing,
drawing, payment, reimbursement or rate selection are denominated in euro, the term “ Business Day ” shall also exclude any day on which
the TARGET2 payment system is not open for the settlement of payments in euro).
“ Capital Lease ” means, as applied to any Person, any lease of any property by that Person as lessee which, in accordance with
GAAP, is required to be accounted for as a capital lease on the balance sheet of that Person.
“ Cash Equivalents ” means, as at any date: (1) with respect to the Company or any of its Subsidiaries (a) securities issued or directly
and fully guaranteed or insured by the United States or any agency or
instrumentality thereof having maturities of not more than three years from the date of acquisition (and acquired the Company or its
Subsidiaries in a manner consistent with past practices), (b) Dollar denominated time deposits and certificates of deposit of (i) any Lender,
(ii) any domestic commercial bank of recognized standing having capital and surplus in excess of $500,000,000 or (iii) any bank whose short-
term commercial paper rating from S&P is at least A‑1 or the equivalent thereof or from Moody’s is at least P-1 or the equivalent thereof (any
such bank being an “Approved Bank”), in each case with maturities of not more than one year from the date of acquisition, (c) commercial
paper and variable or fixed rate notes issued by any Approved Bank (or by the parent company thereof) or any variable rate notes issued by,
or guaranteed by, any domestic corporation rated A‑1 (or the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or better
by Moody’s and maturing within 270 days of the date of acquisition, (d) repurchase agreements entered into by any Person with a bank or
trust company (including any of the Lenders) or recognized securities dealer having capital and surplus in excess of $500,000,000 for direct
obligations issued by or fully guaranteed by the United States in which such Person shall have a perfected first priority security interest
(subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase
obligations and (e) investments, classified in accordance with GAAP as current assets, in money market investment programs registered
under the Investment Company Act of 1940 which are administered by reputable financial institutions having capital of at least $500,000,000
and the portfolios of which are limited to Investments of the character described in the foregoing subdivisions (a) through (d) and (2) with
respect to any Foreign Subsidiary of the Company: (a) obligations of the national government of the country in which such Foreign
Subsidiary maintains its chief executive office and principal place of business provided such country is a member of the Organization for
Economic Cooperation and Development, in each case maturing within one year after the date of investment therein, (b) certificates of
deposit of, bankers acceptances of, or time deposits with, any commercial bank which is organized and existing under the laws of the country
in which such Foreign Subsidiary maintains its chief executive office and principal place of business and whose short-term commercial paper
rating from S&P is at least A‑1 or the equivalent thereof or from Moody’s is at least P-1 or the equivalent thereof (any such bank being an “
Approved Foreign Bank ”), and in each case with maturities of not more than 270 days from the date of acquisition, (c) the equivalent of
demand deposit accounts which are maintained with an Approved Foreign Bank and (d) other investments of a comparable tenor and credit
quality as those described in the foregoing clause (1) utilized by a Foreign Subsidiary for short term cash management purposes in countries
in which such Foreign Subsidiary operates or in a country that is a member of the Organization for Economic Cooperation and Development.
“ Change in Law ” means the occurrence, after the date of this Agreement (or with respect to any Lender, if later, the date on which
such Lender becomes a Lender), of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change
in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental
Authority, or (c) the making or issuance of any request, rules, guideline, requirement or directive (whether or not having the force of law) by
any Governmental Authority; provided however , that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street
Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directives thereunder, issued in connection
therewith or in implementation thereof, and (ii) all requests, rules, guidelines, requirements and 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 be deemed to be a “Change in Law” regardless of the date enacted,
adopted, issued or implemented.
“ Change of Control ” means an event or series of events by which:
(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but
excluding (i) any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or
other fiduciary or administrator of any such plan or (ii) any Permitted Holder) becomes (or shall have entered into a contract or arrangement
that, upon consummation thereof, will become) the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange
Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all Equity Interests that such person or group
has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)),
directly or indirectly, of a majority of the Equity Interests of the Company entitled to vote for members of the board of directors or equivalent
governing body of the Company on a fully diluted basis (and taking into account all such securities that such person or group has the right to
acquire pursuant to any option right);
(b) during any period of twenty-four (24) consecutive months, a majority of the members of the board of directors or other
equivalent governing body of the Company cease to be composed of individuals (i) who were members of that board or equivalent governing
body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent
governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred
to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing
body; and
(c) the Company fails to own and control 100% of the issued and outstanding Equity Interests of Dice or DCS.
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Collateral ” means a collective reference to all real and personal property with respect to which Liens in favor of the Administrative
Agent, for the benefit of itself and the Lenders, are purported to be granted pursuant to and in accordance with the terms of the Collateral
Documents.
“ Collateral Documents ” means a collective reference to the Security Agreement, the Mortgages, if any, and other security
documents as may be executed and delivered by the Loan Parties pursuant to the terms of Section 5.14.
“ Commitment ” means, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s
Revolving Credit Exposure hereunder, as such commitment may be (a) reduced or terminated from time to time pursuant to Section 2.09,
(b) increased from time to time pursuant to Section 2.20 and (c) reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04. The initial amount of each Lender’s Commitment is set forth on Schedule 2.01A , or in the Assignment and
Assumption or other documentation or record (as such term is defined in Section 9-102(a)(70) of the New York Uniform Commercial Code)
contemplated hereby pursuant to which such Lender shall have assumed its Commitment, as applicable.
“ Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any
successor statute.
“ 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 by the
Administrative Agent, any Lender or the
Issuing Bank by means of electronic communications pursuant to Section 8.03(c), including through an Approved Electronic Platform.
“ Company ” means DHI Group, Inc., a Delaware corporation.
“ Compliance Certificate ” means a certificate substantially in the form of Exhibit F .
“ Computation Date ” is defined in Section 2.04.
“ Consolidated EBITDA ” means, for any period, for the Company and its Subsidiaries on a consolidated basis, an amount equal to
the sum of (a) Consolidated Net Income for such period plus (b) without duplication, the following to the extent deducted in calculating such
Consolidated Net Income: (i) Consolidated Interest Charges for such period, (ii) the provision for federal, state, local and foreign income
taxes payable for such period, (iii) the amount of depreciation and amortization expense for such period, (iv) non-cash stock option expenses
deducted for the period, (v) losses during such period resulting from the Disposition of any asset of the Company or any Subsidiary outside
the ordinary course of business, to the extent permitted by this Agreement, (vi) write-off of debt discount and debt issuance costs and
commissions, discounts and other similar fees and charges associated with Indebtedness of the Company and its Subsidiaries (including in
respect of this Agreement), (vii) any non-cash charges, including those associated with impairment and disposal of long-lived assets pursuant
to Accounting Standards Codification 360, (viii) any reasonable transaction related fees and expenses incurred in connection with any equity
offering or any other offering of securities by the Company, (ix) any extraordinary or non-recurring non-cash expenses or losses including,
whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, non-cash losses on
sales of assets outside of the ordinary course of business, (x) reasonable transaction related fees and expenses incurred by such Person or its
Subsidiaries in connection with the transactions contemplated to be consummated hereby on the Effective Date in an aggregate amount not to
exceed $250,000, (xi) write-off of non-cash deferred revenue in connection with purchase accounting applied in respect of any Permitted
Acquisition (it being understood that such non-cash deferred revenue shall be recognized in such period(s) as it would have been recognized
but for such Acquisition), (xii) write-off of non-cash stock compensation expense, if any, and (xiii) business interruption insurance proceeds
to the extent not already included in Consolidated Net Income, minus (c) without duplication, the following to the extent included in
calculating such Consolidated Net Income: (i) non-cash income or gains for such period, (ii) interest income, (iii) any income or gain during
such period resulting from the Disposition of any asset of the Company or any Subsidiary outside of the ordinary course of business and (iv)
any cash payments made during such period in respect of items described in clauses (b)(vii) or (b)(ix) above subsequent to the fiscal quarter
in which the relevant non-cash expenses, losses or charges were incurred.
“ Consolidated Funded Indebtedness ” means, as of any date of determination with respect to the Company and its Subsidiaries on a
consolidated basis, without duplication, the sum of: (a) all obligations for borrowed money, whether current or long-term (including the
Obligations) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments; (b) all purchase money
Indebtedness; (c) the maximum amount available to be drawn under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments, in each case to the extent issued or provided in respect of obligations that
constitute Indebtedness, (d) any unreimbursed drawings under letters of credit (including standby and commercial), bankers’ acceptances,
bank guaranties, surety bonds and similar instruments, in each case to the extent not issued or provided in respect of obligations that
constitute Indebtedness; (e) all obligations in respect of the deferred purchase price of property or services (other than trade accounts payable
in the ordinary course of business); (f) all Attributable Indebtedness;
(g) all obligations to purchase, redeem, retire, defease or otherwise make any payment prior to the Maturity Date in respect of any Equity
Interests or any warrant, right or option to acquire such Equity Interest, valued, in the case of a redeemable preferred interest, at the greater of
its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; (h) all Guarantees with respect to Indebtedness of the
types specified in clauses (a) through (g) above of another Person; and (i) all Indebtedness of the types referred to in clauses (a) through
(h) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which any
Loan Party or any Subsidiary is a general partner or joint venturer, except to the extent that Indebtedness is expressly made non-recourse to
such Person. Notwithstanding the foregoing, for purposes of calculating Consolidated Funded Indebtedness, (i) Earn-Outs shall only be
included to the extent that such Earn-Outs would, assuming the satisfaction of the conditions to the payment thereof set forth in the
documentation governing such Earn-Out, become payable within twelve months of the date of determination of Consolidated Funded
Indebtedness and (ii) the amount of such Earn-Out shall be determined by the Company in accordance with GAAP (including SFAS 141(R)).
“ Consolidated Interest Charges ” means, for any period, for the Company and its Subsidiaries on a consolidated basis, an amount
equal to the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses in connection with borrowed money
(including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in
accordance with GAAP, plus (b) the portion of rent expense with respect to such period under Capital Leases that is treated as interest in
accordance with GAAP.
“ Consolidated Interest Coverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated EBITDA to
(b) Consolidated Interest Charges, in each case for the four most recently completed fiscal quarters.
“ Consolidated Leverage Ratio ” means, as of any date of determination, the ratio of (a) Consolidated Funded Indebtedness as of such
date to (b) the sum of (i) Consolidated EBITDA for the four most recently completed fiscal quarters plus (ii) the Earn-Out EBITDA
Adjustment, if any.
“ Consolidated Net Income ” means, for any period, for the Company and its Subsidiaries on a consolidated basis, the net income
(excluding extraordinary gains and losses) for that period.
“ Contractual Obligation ” means, 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 ” means 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. The terms “ Controlling ” and “ Controlled ” have
meanings correlative thereto.
“ Co-Syndication Agent ” means each of Bank of America, N.A. and BMO Harris Bank N.A., in its capacity as co-syndication agent
for the credit facility evidenced by this Agreement.
“ Credit Event ” means a Borrowing, the issuance, amendment, renewal or extension of a Letter of Credit, an LC Disbursement or any
of the foregoing.
“ Credit Party ” means the Administrative Agent, any Issuing Bank or any other Lender.
“ DCS ” has the meaning specified in the introductory paragraph hereto.
“ Debtor Relief Laws ” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy,
assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of
the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
“ Default ” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of
time, or both, would be an Event of Default.
“ Defaulting Lender ” means any Lender that (a) has failed, within two (2) Business Days of the date required to be funded or paid, to
(i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or (iii) pay over to any Credit Party any other
amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing
that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and
including the particular default, if any) has not been satisfied, (b) has notified the Company or any Credit Party in writing, or has made a
public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless
such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent
(specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally
under other agreements in which it commits to extend credit, (c) has failed, within three (3) Business Days after request by a Credit Party,
acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and
is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit under this
Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of
such certification in form and substance satisfactory to it and the Administrative Agent or (d) has become the subject of (i) a Bankruptcy
Event or (ii) a Bail-In Action.
“ Departing Lender ” means the lender under the Existing Credit Agreement that executes and delivers to the Administrative Agent a
Departing Lender Signature Page.
“ Departing Lender Signature Page ” means the signature page to this Agreement on which it is indicated that the Departing Lender
executing the same shall cease to be a party to the Existing Credit Agreement on the Effective Date.
“ Dice ” has the meaning specified in the introductory paragraph hereto.
“ Disposition ” or “ Dispose ” means the sale, transfer, license, lease or other disposition (whether effected pursuant to a Division or
otherwise) of any property by any Loan Party or any Subsidiary, including any sale, assignment, transfer or other disposal, with or without
recourse, of any notes or accounts receivable or any rights and claims associated therewith, but excluding any Involuntary Disposition and
any issuance of Equity Interests.
“ Dividing Person ” has the meaning assigned to it in the definition of “Division”.
“ Division ” means the division of the assets, liabilities and/or obligations of a Person (the “ Dividing Person ”) among two or more
Persons (whether pursuant to a “plan of division” or similar arrangement), which may or may not include the Dividing Person and pursuant to
which the Dividing Person may or may not survive.
“ Division Successor ” means any Person that, upon the consummation of a Division of a Dividing Person, holds all or any portion of
the assets, liabilities and/or obligations previously held by such Dividing Person immediately prior to the consummation of such Division. A
Dividing Person which retains any of its assets, liabilities and/or obligations after a Division shall be deemed a Division Successor upon the
occurrence of such Division.
“ Documentation Agent ” means TD Bank, N.A. in its capacity as documentation agent for the credit facility evidenced by this
Agreement.
“ Dollar Amount ” of any amount of any currency means, at the time of determination thereof, (a) if such amount is expressed in
Dollars, such amount, (b) if such amount is expressed in a Foreign Currency, the equivalent of such amount in Dollars determined by using
the rate of exchange for the purchase of Dollars with such Foreign Currency last provided (either by publication or otherwise provided to the
Administrative Agent) by the applicable Thomson Reuters Corp. (“ Reuters ”) source on the Business Day (New York City time)
immediately preceding the date of determination or if such service ceases to be available or ceases to provide a rate of exchange for the
purchase of Dollars with such Foreign Currency, as provided by such other publicly available information service which provides that rate of
exchange at such time in place of Reuters chosen by the Administrative Agent in its sole discretion (or if such service ceases to be available
or ceases to provide such rate of exchange, the equivalent of such amount in Dollars as determined by the Administrative Agent using any
method of determination it deems appropriate in its sole discretion) and (c) if such amount is denominated in any other currency, the
equivalent of such amount in Dollars as determined by the Administrative Agent using any method of determination it deems appropriate in
its sole discretion.
“ Dollars ” or “ $ ” refers to lawful money of the United States of America.
“ Domestic Subsidiary ” means any Subsidiary that is organized under the laws of any state of the United States or the District of
Columbia other than any Domestic Subsidiary substantially all of the assets of which are Equity Interests of a Foreign Subsidiary that is a
“controlled foreign corporation” within the meaning of Section 957 of the Code.
“ Earn-Out ” means any performance-based, deferred and contingent purchase consideration incurred in connection with an
Acquisition.
“ Earn-Out EBITDA Adjustment ” means, as of any date of determination with respect to any Earn-Out that is required to be included
in the determination of “Consolidated Funded Indebtedness” at such date, the minimum amount, if any, by which the portion of Consolidated
EBITDA attributable to the assets, business or entity acquired in the related Acquisition would need to be increased to satisfy the
performance-based condition precedent to the payment of such Earn-Out.
“ ECP ” means an “eligible contract participant” as defined in Section 1(a)(18) of the Commodity Exchange Act or any regulations
promulgated thereunder and the applicable rules issued by the Commodity Futures Trading Commission and/or the SEC.
“ EEA Financial Institution ” means (a) any institution 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 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 ” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“ EEA Resolution Authority ” means any public administrative authority or any Person entrusted with public administrative authority
of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“ Effective Date ” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with
Section 9.02).
“ Electronic Signature ” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and
adopted by a Person with the intent to sign, authenticate or accept such contract or record.
“ Environmental Laws ” means any and all federal, state, local, foreign and other applicable statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to
pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous
substances or wastes, air emissions and discharges to waste or public systems.
“ Environmental Liability ” means any liability, contingent or otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of any Loan Party or any Subsidiary directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials 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.
“ Equity Interests ” means, 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.
“ ERISA ” means the Employee Retirement Income Security Act of 1974.
“ ERISA Affiliate ” means any trade or business (whether or not incorporated) under common control with the Company within the
meaning of Section 414(b) or (c) of the Internal Revenue Code (and Sections 414(m) and (o) of the Internal Revenue Code for purposes of
provisions relating to Section 412 of the Internal Revenue Code).
“ ERISA Event ” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of the Company or any ERISA
Affiliate from a Multiple Employer Plan subject to Section 4063 of ERISA during a plan year in which such entity was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA;
(c) a complete or partial withdrawal by the Company or any ERISA Affiliate from a Multiemployer Plan; (d) the filing of a notice of intent to
terminate, the treatment of a Pension Plan amendment as a termination
under Section 4041 or 4041A of ERISA, (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or
condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the
meaning of Sections 430, 431 and 432 of the Internal Revenue Code or Sections 303, 304 and 305 of ERISA or (h) the imposition of any
liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Company
or any ERISA Affiliate.
“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any
successor Person), as in effect from time to time.
“ euro ” and/or “ EUR ” means the single currency of the Participating Member States.
“ Eurocurrency ”, when used in reference to a currency means an Agreed Currency and when used in reference to any Loan or
Borrowing, means that such Loan, or the Loans comprising such Borrowing, bears interest at a rate determined by reference to the Adjusted
LIBO Rate.
“ Eurocurrency Payment Office ” of the Administrative Agent means, for each Foreign Currency, the office, branch, affiliate or
correspondent bank of the Administrative Agent for such currency as specified from time to time by the Administrative Agent to the
Company and each Lender.
“ Event of Default ” has the meaning assigned to such term in Article VII.
“ Excluded Account ” means (a) any deposit account of a Loan Party that is used solely for the purpose of payroll, bonuses, other
compensation, employee benefits and related expenses and (b) deposit accounts of the Loan Parties that have balances of less than $500,000
in the aggregate.
“ Excluded Property ” means, with respect to any Loan Party, (a) any owned real property which is located outside of the United
States, (b) any leased real property, (c) any IP Rights for which a perfected Lien thereon is not effected either by filing of a Uniform
Commercial Code financing statement or by appropriate evidence of such Lien being filed in either the United States Copyright Office or the
United States Patent and Trademark Office, (d) unless requested by the Administrative Agent or the Required Lenders, any personal property
(other than personal property described in clause (c) above) for which the attachment or perfection of a Lien thereon is not governed by the
Uniform Commercial Code, (e) the Equity Interests of any Foreign Subsidiary to the extent not required to be pledged to secure the
Obligations pursuant to Section 5.14(a) , (f) any property which, subject to the terms of Section 6.09 , is subject to a Lien of the type
described in Section 6.01(i) pursuant to documents which prohibit such Loan Party from granting any other Liens in such property, (g) any
general intangible, permit, lease, license, contract or other instrument to the extent the grant of a security interest in such general intangible,
permit, lease, license, contract or other instrument in the manner contemplated by the Loan Documents, under the terms thereof or under
applicable Law, is prohibited and would result in the termination thereof or give the other parties thereto the right to terminate, accelerate or
otherwise alter such Loan Party’s rights, titles and interests thereunder (including upon the giving of notice or the lapse of time or both)
including any intent-to-use applications for trademarks to the extent that, and solely during the period in which, the grant of a security interest
therein would impair the validity or enforceability of such applications under applicable Law; provided that (x) any such exclusion described
in the foregoing clause (g) on the security interests granted under the Loan Documents shall only apply to the extent that any such prohibition
could not be rendered ineffective pursuant to the Uniform Commercial Code or any other applicable Law (including Debtor Relief Laws) or
principles of equity and (y) in the event of the termination or elimination of any such prohibition or the requirement for any consent contained
in any applicable Law, general intangible, permit, lease, license, contract or other instrument, to
the extent sufficient to permit any such item to become Collateral, or upon the granting of any such consent, or waiving or terminating any
requirement for such consent, a security interest in such general intangible, permit, lease, license, contract or other instrument shall be
automatically and simultaneously granted under the Collateral Documents and shall be included as Collateral, (h) any particular asset if, in the
sole judgment of the Administrative Agent, the burden, cost or consequences of creating or perfecting such pledges or security interests in
such assets or obtaining title insurance is excessive in relation to the benefits to be obtained therefrom by the Lenders under the Loan
Documents, and (i) any Excluded Account.
“ Excluded Subsidiary ” means, unless the Company (in its sole discretion) has caused such Person to execute and deliver a Joinder
Agreement and has otherwise complied with the requirements of Section 5.13(b) with respect thereto, Oilcareers.com, Inc., a Delaware
corporation.
“ Excluded Swap Obligation ” means, with respect to any Loan Party, any Specified Swap Obligation if, and to the extent that, all or a
portion of the Guarantee of such Loan Party of, or the grant by such Loan Party of a security interest to secure, such Specified 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 Loan Party’s failure
for any reason to constitute an ECP at the time the Guarantee of such Loan Party or the grant of such security interest becomes or would
become effective with respect to such related Specified Swap Obligation. If a Specified Swap Obligation arises under a master agreement
governing more than one swap, such exclusion shall apply only to the portion of such Specified Swap Obligation that is attributable to swaps
for which such Guarantee or security interest is or becomes illegal.
“ Excluded Taxes ” means 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, Letter of Credit or Commitment pursuant to a Law in effect on the
date on which (i) such Lender acquires such interest in the Loan, Letter of Credit or Commitment (other than pursuant to an assignment
request by any Borrower under Section 2.19(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant
to Section 2.17, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender acquired
the applicable interest in a Loan, Letter of Credit or Commitment or to such Lender immediately before it changed its lending office, (c)
Taxes attributable to such Recipient’s failure to comply with Section 2.17(f) and (d) any withholding Taxes imposed under FATCA.
“ Existing Credit Agreement ” has the meaning assigned to such term in the recitals hereto.
“ Existing Loans ” has the meaning assigned to such term in Section 2.01.
“ FATCA ” means 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 ” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds
transactions by depositary institutions, as determined in such manner as the NYFRB shall set forth on its public website from time to time,
and published on the next succeeding Business Day by the NYFRB as the effective federal funds rate; provided that if the Federal Funds
Effective Rate as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.
“ Financial Officer ” means the chief financial officer, principal accounting officer, treasurer or controller of the Company.
“ Financials ” means the annual or quarterly financial statements, and accompanying certificates and other documents, of the
Company and its Subsidiaries required to be delivered pursuant to Section 5.01(a) or 5.01(b).
“ Foreign Currencies ” means Agreed Currencies other than Dollars.
“ Foreign Currency LC Exposure ” means, at any time, the sum of (a) the Dollar Amount of the aggregate undrawn and unexpired
amount of all outstanding Foreign Currency Letters of Credit at such time plus (b) the aggregate principal Dollar Amount of all LC
Disbursements in respect of Foreign Currency Letters of Credit that have not yet been reimbursed at such time.
“ Foreign Currency Letter of Credit ” means a Letter of Credit denominated in a Foreign Currency.
“ Foreign Currency Sublimit ” means $20,000,000.
“ Foreign Lender ” means a Lender that is not a U.S. Person.
“ Foreign Subsidiary ” means any Subsidiary that is not a Domestic Subsidiary.
“ GAAP ” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board, consistently applied and as in effect from time to time.
“ Governmental Authority ” means the government of the United States of America, any other nation or 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
supranational bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial
accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for
International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).
“ Guarantee ” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in
any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services
for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or
level of income or cash flow of the
primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of
assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any
Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any
right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to
be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.
“ Hazardous Materials ” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or
other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
“ IBA ” has the meaning assigned to such term in Section 1.06.
“ Immaterial Foreign Subsidiary ” means any direct (“first-tier”) Foreign Subsidiary of any Loan Party that (a) together with its
Subsidiaries, has neither annual revenues nor assets in excess of 5% of revenues or assets, respectively, of the Company and its Subsidiaries
on a consolidated basis and (b) together with all other direct (“first-tier”) Foreign Subsidiaries of the Loan Parties meeting the criteria set
forth in the preceding clause (a), and their respective Subsidiaries, has neither annual revenues nor assets in excess of 10% of revenues or
assets, respectively, of the Company and its Subsidiaries on a consolidated basis.
“ Impacted Interest Period ” has the meaning assigned to such term in the definition of “LIBO Rate”.
“ Increasing Lender ” has the meaning assigned to such term in Section 2.20.
“ Incremental Term Loan ” has the meaning assigned to such term in Section 2.20.
“ Incremental Term Loan Amendment ” has the meaning assigned to such term in Section 2.20.
“ Indebtedness ” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as
indebtedness or liabilities in accordance with GAAP:
(a) all obligations for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements
or other similar instruments;
(b) the maximum amount available to be drawn under letters of credit (including standby and commercial), bankers’ acceptances,
bank guaranties, surety bonds and similar instruments;
(c) the Swap Termination Value of any Swap Contract;
(d) all obligations to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary
course of business), including Earn-Outs;
(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;
(f) all Attributable Indebtedness;
(g) all obligations to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interests or any
warrant, right or option to acquire such Equity Interest, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends;
(h) all Guarantees of such Person in respect of any of the foregoing; and
(i) all Indebtedness of the types referred to in clauses (a) through (h) above of any partnership or joint venture (other than a joint
venture that is itself a corporation or limited liability company) in which such Person is a general partner or joint venturer, unless such
Indebtedness is expressly made non-recourse to such Person.
“ Indemnified Taxes ” means (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) hereof,
Other Taxes.
“ Ineligible Institution ” has the meaning assigned to such term in Section 9.04(b).
“ Interest Election Request ” means a request by the applicable Borrower to convert or continue a Borrowing in accordance with
Section 2.08, which shall be substantially in the form attached hereto as Exhibit J-2 or any other form approved by the Administrative Agent.
“ Interest Payment Date ” means (a) with respect to any ABR Loan, the last day of each March, June, September and December and
the Maturity Date and (b) with respect to any Eurocurrency Loan, the last day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Eurocurrency Borrowing with an Interest Period of more than three months’ duration, each day prior
to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period and the
Maturity Date.
“ Interest Period ” means with respect to any Eurocurrency Borrowing, the period commencing on the date of such Borrowing and
ending on the day that is one week, or the numerically corresponding day in the calendar month that is one, two, three or six months,
thereafter, as the applicable Borrower (or the Company on behalf of the applicable Borrower) may elect; provided , that (i) if any Interest
Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such
next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding
Business Day and (ii) any Interest Period pertaining to a Eurocurrency Borrowing that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the
last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.
“ Interpolated Rate ” means, at any time, for any Interest Period, the rate per
annum
(rounded to the same number of decimal places
as the LIBO Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest
error) to be equal to the rate that results from
interpolating on a linear basis between: (a) the LIBO Screen Rate for the longest period (for which the LIBO Screen Rate is available for the
applicable currency) that is shorter than the Impacted Interest Period; and (b) the LIBO Screen Rate for the shortest period (for which the
LIBO Screen Rate is available for the applicable currency) that exceeds the Impacted Interest Period, in each case, at such time; provided that
if any Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.
“ Investment ” means, as to any Person, any direct or indirect acquisition or investment by such Person (including as a Division
Successor pursuant to a Division), whether by means of (a) the purchase or other acquisition of Equity Interests of another Person, (b) a loan,
advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity
participation or interest in, another Person, or (c) an Acquisition. For purposes of covenant compliance, the amount of any Investment shall be
the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.
“ Involuntary Disposition ” means any loss of, damage to or destruction of, or any condemnation or other taking for public use of, any
property of any Loan Party or any Subsidiary.
“ IP Rights ” has the meaning specified in Section 3.17 .
“ IRS ” means the United States Internal Revenue Service.
“ Issuing Bank ” means each of JPMorgan Chase Bank, N.A. and Bank of America, N.A., each in its capacity as the issuer of Letters
of Credit hereunder, and its successors in such capacity as provided in Section 2.06(i). Each Issuing Bank may, in its discretion, arrange for
one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall include any such
Affiliate with respect to Letters of Credit issued by such Affiliate. Each reference herein to the “Issuing Bank” in connection with a Letter of
Credit or other matter shall be deemed to be a reference to the relevant Issuing Bank with respect thereto, and, further, references herein to
“the Issuing Bank” shall be deemed to refer to each of the Issuing Banks or the relevant Issuing Bank, as the context requires.
“ Joinder Agreement ” means a joinder agreement substantially in the form of Annex I attached to the Subsidiary Guaranty, executed
and delivered by a Wholly-Owned Domestic Subsidiary in accordance with the provisions of Section 5.13 .
“ Laws ” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations,
ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any
Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders,
directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or
not having the force of law.
“ LC Collateral Account ” has the meaning assigned to such term in Section 2.06(j).
“ LC Disbursement ” means a payment made by an Issuing Bank pursuant to a Letter of Credit.
“ LC Exposure ” means, at any time, the sum of (a) the aggregate undrawn Dollar Amount of all outstanding Letters of Credit at such
time plus (b) the aggregate Dollar Amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the applicable
Borrower at such time. The LC Exposure of any Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.
“ Lender Parent ” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.
“ Lenders ” means the Persons listed on Schedule 2.01A and any other Person that shall have become a Lender hereunder pursuant to
Section 2.20 or pursuant to an Assignment and Assumption or other documentation contemplated hereby, other than any such Person that
ceases to be a party hereto pursuant to an Assignment and Assumption or other documentation contemplated hereby. Unless the context
otherwise requires, the term “Lenders” includes the Issuing Banks. For the avoidance of doubt, the term “Lenders” excludes the Departing
Lender.
“ Letter of Credit ” means any letter of credit issued pursuant to this Agreement.
“ Letter of Credit Agreement ” has the meaning assigned to such term in Section 2.06(b).
“ Letter of Credit Commitment ” means, with respect to each Issuing Bank, the commitment of such Issuing Bank to issue Letters of
Credit hereunder. The initial amount of each Issuing Bank’s Letter of Credit Commitment is set forth on Schedule 2.01B , or if an Issuing
Bank has entered into an Assignment and Assumption, the amount set forth for such Issuing Bank as its Letter of Credit Commitment in the
Register maintained by the Administrative Agent. Notwithstanding the foregoing, each Issuing Bank may, in its sole discretion, issue Letters
of Credit to the Borrowers in excess of its Letter of Credit Commitment provided that the Dollar Amount of the LC Exposure shall not exceed
$10,000,000.
“ LIBO Rate ” means, with respect to any Eurocurrency Borrowing denominated in any Agreed Currency and for any Interest Period,
the LIBO Screen Rate at approximately 11:00 a.m., London time, on the Quotation Day for such Agreed Currency; provided that if the LIBO
Screen Rate shall not be available at such time for such Interest Period (an “ Impacted Interest Period ”) with respect to such Agreed Currency
then the LIBO Rate shall be the Interpolated Rate.
“ LIBO Screen Rate ” means, for any day and time, with respect to any Eurocurrency Borrowing denominated in any Agreed
Currency and for any Interest Period, the London interbank offered rate as administered by ICE Benchmark Administration (or any other
Person that takes over the administration of such rate) for such Agreed Currency for a period equal in length to such Interest Period as
displayed on such day and time on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does
not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page
of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable
discretion); provided that if the LIBO Screen Rate as so determined would be less than zero, such rate shall be deemed to be zero for the
purposes of this Agreement.
“ Lien ” means any mortgage, pledge, hypothecation, deposit arrangement, encumbrance, lien (statutory or otherwise), charge, or
preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever
(including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property,
and any financing lease having substantially the same economic effect as any of the foregoing).
“ Limited Conditionality Acquisition ” means any Permitted Acquisition for which the Company has determined, in good faith, that
limited conditionality is reasonably necessary.
“ Limited Conditionality Acquisition Agreement ” means, with respect to any Limited Conditionality Acquisition, the definitive
acquisition documentation in respect thereof.
“ LLC ” means any Person that is a limited liability company under the laws of its jurisdiction of formation.
“ Loan Documents ” means this Agreement, any promissory notes issued pursuant to Section 2.10(e) of this Agreement, any Letter of
Credit applications, any Letter of Credit Agreement and any agreements between any Borrower and an Issuing Bank regarding such Issuing
Bank’s Letter of Credit Commitment or the respective rights and obligations between such Borrower and such Issuing Bank in connection
with the issuance of Letters of Credit, the Collateral Documents, the Subsidiary Guaranty, and all other agreements, instruments, documents
and certificates identified in Section 4.01 executed and delivered to, or in favor of, the Administrative Agent or any Lenders and including all
other pledges, powers of attorney, consents, assignments, contracts, notices, letter of credit agreements and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Loan Party, or any employee of any Loan Party, and delivered to the
Administrative Agent or any Lender in connection with this Agreement. Any reference in this Agreement or any other Loan Document to a
Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to this Agreement or such Loan Document as the same may be in effect at any and all times such
reference becomes operative. “Loan Documents” shall not include Banking Services Agreements or Swap Contracts.
“ Loan Parties ” means, collectively, the Borrowers and the Subsidiary Guarantors.
“ Loans ” means the loans made by the Lenders to the Borrowers pursuant to this Agreement.
“ Local Time ” means (i) New York City time in the case of a Loan, Borrowing or LC Disbursement denominated in Dollars and
(ii) local time in the case of a Loan, Borrowing or LC Disbursement denominated in a Foreign Currency (it being understood that such local
time shall mean London, England time unless otherwise notified by the Administrative Agent).
“ Material Adverse Effect ” means (a) a material adverse change in, or a material adverse effect upon, the business, assets, liabilities,
operations or financial condition of the Company and its Subsidiaries taken as a whole; (b) a material impairment of the rights and remedies
of the Administrative Agent or the Lenders under any Loan Document or of the ability of any Loan Party to perform its material obligations
under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability
against any Loan Party of any Loan Document to which it is a party.
“ Material Foreign Subsidiary ” means any direct (“first-tier”) Foreign Subsidiary of any Loan Party that is not an Immaterial Foreign
Subsidiary.
“ Maturity Date ” means November 14, 2023; provided , however , if such date is not a Business Day, the Maturity Date shall be the
next preceding Business Day.
“ Moody’s ” means Moody’s Investors Service, Inc.
“ Mortgages ” means the mortgages, deeds of trust or deeds to secure debt that purport to grant to the Administrative Agent a security
interest in the fee interests of any Loan Party in any real property.
“ Multiemployer Plan ” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the
Company or any ERISA Affiliate makes or is obligated to make contributions, or with respect to which the Company or any ERISA Affiliate
has any liability.
“ Multiple Employer Plan ” means a Plan which has two or more contributing sponsors (including the Company or any ERISA
Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.
“ Non-Extension Notice Date ” has the meaning assigned to such term in Section 2.06(c)(B).
“ NYFRB ” means the Federal Reserve Bank of New York.
“ NYFRB Rate ” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight
Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided
that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds
transaction quoted at 11:00 a.m., New York City time, on such day received by the Administrative Agent from a federal funds broker of
recognized standing selected by it; provided , further , that if any of the aforesaid rates as so determined would be less than zero, such rate
shall be deemed to be zero for purposes of this Agreement.
“ Obligations ” means all unpaid principal of and accrued and unpaid interest on the Loans, all LC Exposure, all accrued and unpaid
fees and all expenses, reimbursements, indemnities and other obligations and indebtedness (including interest and fees accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such
proceeding), obligations and liabilities of any of the Company and its Subsidiaries to any of the Lenders, the Administrative Agent, any
Issuing Bank or any indemnified party, individually or collectively, existing on the Effective Date or arising thereafter, direct or indirect, joint
or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of
law or otherwise, arising or incurred under this Agreement or any of the other Loan Documents or to the Lenders or any of their Affiliates
under any Swap Contract or any Banking Services Agreement or in respect of any of the Loans made or reimbursement or other obligations
incurred or any of the Letters of Credit or other instruments at any time evidencing any thereof; provided that the definition of “Obligations”
shall not create or include any guarantee by any Loan Party of (or grant of security interest by any Loan Party to support, as applicable) any
Excluded Swap Obligations of such Loan Party for purposes of determining any obligations of any Loan Party.
“ OFAC ” means the Office of Foreign Assets Control of the U.S. Department of the Treasury.
“ Organization Documents ” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or
equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company,
the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or
other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement,
instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental
Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such
entity.
“ Other Connection Taxes ” means, 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 solely 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, Letter of Credit or
Loan Document).
“ Other Taxes ” means 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, 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 2.19).
“ Overnight Bank Funding Rate ” means, for any day, the rate comprised of both overnight federal funds and overnight eurodollar
borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set
forth on its public website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank
funding rate.
“ Overnight Foreign Currency Rate ” means, for any amount payable in a Foreign Currency, the rate of interest per annum as
determined by the Administrative Agent at which overnight or weekend deposits in the relevant currency (or if such amount due remains
unpaid for more than three (3) Business Days, then for such other period of time as the Administrative Agent may elect) for delivery in
immediately available and freely transferable funds would be offered by the Administrative Agent to major banks in the interbank market
upon request of such major banks for the relevant currency as determined above and in an amount comparable to the unpaid principal amount
of the related Credit Event, plus any taxes, levies, imposts, duties, deductions, charges or withholdings imposed upon, or charged to, the
Administrative Agent by any relevant correspondent bank in respect of such amount in such relevant currency.
“ Participant ” has the meaning assigned to such term in Section 9.04.
“ Participant Register ” has the meaning assigned to such term in Section 9.04(c).
“ Participating Member State ” means any member state of the European Union that adopts or has adopted the euro as its lawful
currency in accordance with legislation of the European Union relating to economic and monetary union.
“ Patriot Act ” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).
“ PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.
“ Pension Funding Rules ” means the rules of the Internal Revenue Code and ERISA regarding minimum required contributions
(including any installment payment thereof) to Pension Plans and set forth in Sections 412, 430, 431, 432 and 436 of the Internal Revenue
Code and Sections 302, 303, 304 and 305 of ERISA.
“ Pension Plan ” means any employee pension benefit plan (excluding a Multiple Employer Plan and a Multiemployer Plan) that is
maintained or is contributed to by the Company and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the
minimum funding standards under Section 412 of the Internal Revenue Code.
“ Permitted Acquisition ” means an Investment consisting of an Acquisition by the Company or any of its Wholly-Owned
Subsidiaries, provided that (a) the property acquired (or the property of the Person acquired) in such Acquisition is reasonably related to the
business conducted by the Loan Parties and their Subsidiaries on the Effective Date or any reasonable extensions or expansions thereof, (b) in
the case of an Acquisition of the Equity Interests of another Person, the board of directors (or other comparable governing body) of such other
Person shall have duly approved such Acquisition, (c) the Company shall have delivered
to the Administrative Agent a Pro Forma Compliance Certificate demonstrating that, upon giving effect to such Acquisition, the Loan Parties
would be in compliance with the financial covenants set forth in Section 6.11 on a Pro Forma Basis, (d) the representations and warranties
made by the Loan Parties in each Loan Document shall be true and correct in all material respects at and as if made as of the date of such
Acquisition (after giving effect thereto), (e) if such transaction involves the purchase of an interest in a partnership between any Loan Party as
a general partner and entities unaffiliated with the Company as the other partners, such transaction shall be effected by having such equity
interest acquired by a corporate holding company directly or indirectly wholly-owned by such Loan Party newly formed for the sole purpose
of effecting such transaction, and (f) either (i) the Consolidated Leverage Ratio, calculated on a Pro Forma Basis after giving effect to such
Acquisition, is equal to or less than 2.50 to 1.00 (or equal to or less than 2.75 to 1.00 if the Company has made an election for an Adjusted
Covenant Period in connection with such Acquisition), or (ii) the aggregate cash and non-cash consideration (including any assumption of
Indebtedness, deferred purchase price, any Earn-Outs and Equity Interests issued) paid by the Company and its Subsidiaries for all such
Acquisitions occurring during any fiscal year of the Company shall not exceed $10,000,000.
“ Permitted Holders ” means General Atlantic Partners 79, L.P., Quadrangle Capital Partners II LP and their respective Affiliates (that
are not portfolio companies).
“ Permitted Liens ” means, at any time, Liens in respect of property of any Loan Party or any Subsidiary permitted to exist at such
time pursuant to the terms of Section 6.01 .
“ Permitted Transfers ” means (a) Dispositions of inventory in the ordinary course of business; (b) Dispositions of machinery and
equipment no longer used or useful in the conduct of business of the Company and its Subsidiaries that are Disposed of in the ordinary course
of business; (c) Dispositions of property to the Company or any Subsidiary; provided , that if the transferor of such property is a Loan Party
either (i) the transferee thereof must be a Loan Party or (ii) to the extent such transaction constitutes an Investment, such transaction is
permitted under Section 6.02 ; (d) Dispositions of accounts receivable in connection with the collection or compromise thereof; (e) licenses,
sublicenses, leases or subleases granted to others not interfering in any material respect with the business of the Company and its
Subsidiaries; (f) the use, transfer, sale or disposition of cash or Cash Equivalents for fair market value in the ordinary course of business and
not otherwise prohibited by the Loan Documents; and (g) the termination of leases, subleases, licenses and sublicenses in the ordinary course
of business.
“ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
“ Plan ” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the Company or, with
respect to any such plan that is subject to Section 412, Section 430 or Section 431 of the Internal Revenue Code or Title IV of ERISA, any
ERISA Affiliate.
“ Plan Asset Regulations ” means 29 CFR § 2510.3-101 et
seq.
, as modified by Section 3(42) of ERISA, as amended from time to
time.
“ Pounds Sterling ” means the lawful currency of the United Kingdom.
“ Prime Rate ” means the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street
Journal ceases to quote such rate, the highest per annum interest rate published by the Board in Federal Reserve Statistical Release H.15 (519)
(Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as
determined by the
Administrative Agent) or any similar release by the Board (as determined by the Administrative Agent). Each change in the Prime Rate shall
be effective from and including the date such change is publicly announced or quoted as being effective.
“ Pro Forma Basis ” means, with respect to any transaction, such transaction shall be deemed to have occurred as of the first day of
the most recent four fiscal quarter period preceding the date of such transaction for which financial statements were required to be delivered
pursuant to Section 5.01(a) or 5.01(b) . In connection with the foregoing, (a) with respect to any Disposition or Involuntary Disposition,
(i) income statement and cash flow statement items (whether positive or negative) attributable to the property disposed of shall be excluded to
the extent relating to any period occurring prior to the date of such transaction and (ii) Indebtedness which is retired shall be excluded and
deemed to have been retired as of the first day of the applicable period and (b) with respect to any Acquisition, (i) income statement and cash
flow statement items attributable to the Person or property acquired shall be included to the extent relating to any period applicable in such
calculations to the extent (A) such items are not otherwise included in such income and cash flow statement items for the Company and its
Subsidiaries in accordance with GAAP or in accordance with any defined terms set forth in Section 1.01 and (B) such items are supported by
financial statements or other information reasonably satisfactory to the Administrative Agent and (ii) any Indebtedness incurred or assumed
by any Loan Party or any Subsidiary (including the Person or property acquired) in connection with such transaction and any Indebtedness of
the Person or property acquired which is not retired in connection with such transaction (A) shall be deemed to have been incurred as of the
first day of the applicable period and (B) if such Indebtedness has a floating or formula rate, shall have an implied rate of interest for the
applicable period for purposes of this definition determined by utilizing the rate which is or would be in effect with respect to such
Indebtedness as at the relevant date of determination.
“ Pro Forma Compliance Certificate ” means a certificate of a Responsible Officer of the Company containing reasonably detailed
calculations of the financial covenants set forth in Section 6.11 as of the end of the period of the four fiscal quarters most recently ended for
which the Company has delivered financial statements pursuant to Section 5.01(a) or 5.01(b) after giving effect to the applicable transaction
on a Pro Forma Basis.
“ PTE ” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be
amended from time to time.
“ Public Lender ” has the meaning specified in Section 5.02 .
“ Quotation Day ” means, with respect to any Eurocurrency Borrowing for any Interest Period, (i) if the currency is Pounds Sterling,
the first day of such Interest Period, (ii) if the currency is euro, the day that is two (2) TARGET2 Days before the first day of such Interest
Period, and (iii) for any other currency, two Business Days prior to the commencement of such Interest Period (unless, in each case, market
practice differs in the relevant market where the LIBO Rate for such currency is to be determined, in which case the Quotation Day will be
determined by the Administrative Agent in accordance with market practice in such market (and if quotations would normally be given on
more than one day, then the Quotation Day will be the last of those days)).
“ Recipient ” means (a) the Administrative Agent, (b) any Lender and (c) any Issuing Bank, as applicable.
“ Reference Bank Rate ” means the arithmetic mean of the rates (rounded upwards to four decimal places) supplied to the
Administrative Agent at its request by the Reference Banks (as the case may be) as of the applicable time on the Quotation Day for Loans in
the applicable currency and the applicable Interest
Period as the rate at which the relevant Reference Bank could borrow funds in the London (or other applicable) interbank market in the
relevant currency and for the relevant period, were it to do so by asking for and then accepting interbank offers in reasonable market size in
that currency and for that period.
“ Reference Banks ” means such banks as may be appointed by the Administrative Agent in consultation with the Company. No
Lender shall be obligated to be a Reference Bank without its consent.
“ Register ” has the meaning assigned to such term in Section 9.04(b).
“ Related Parties ” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers,
employees, agents, advisors and representatives of such Person and of such Person’s Affiliates.
“ Reorganization ” means, with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the
meaning of Section 4241 of ERISA, as in effect for plan years beginning before January 1, 2015, prior to repeal by the Multiemployer
Pension Reform Act of 2014, Public Law No. 113-235.
“ Reportable Event ” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty-day notice
period has been waived.
“ Required Lenders ” means, subject to Section 2.23, at any time, Lenders having Revolving Credit Exposures and unused
Commitments representing more than 50% of the sum of the total Revolving Credit Exposures and unused Commitments at such time.
“ Responsible Officer ” means the chief executive officer, vice president, president, chief financial officer, treasurer, assistant
treasurer or controller of a Loan Party, and solely for purposes of the delivery of incumbency certificates pursuant to Section 4.01 , the
secretary or any assistant secretary of a Loan Party and, solely for purposes of notices given pursuant to Article II , any other officer or
employee of the applicable Borrower so designated by any of the foregoing officers in a written notice to the Administrative Agent. Any
document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized
by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively
presumed to have acted on behalf of such Loan Party.
“ Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other property) with respect to any
Equity Interests of any Person, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit,
on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such Equity Interests or on
account of any return of capital to such Person’s stockholders, partners or members (or the equivalent Person thereof), or any option, warrant
or other right to acquire any such dividend or other distribution or payment.
“ Revolving Credit Exposure ” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such
Lender’s Revolving Loans and its LC Exposure at such time.
“ Revolving Loan ” means a Loan made pursuant to Section 2.01.
“ S&P ” means Standard & Poor’s Rating Services, a Standard & Poor’s Financial Services LLC business.
“ Sale and Leaseback Transaction ” means, with respect to any Loan Party or any Subsidiary, any arrangement, directly or indirectly,
with any Person whereby such Loan Party or such Subsidiary shall sell or transfer any property used or useful in its business, whether now
owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same
purpose or purposes as the property being sold or transferred.
“ Sanctioned Country ” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the
time of this Agreement, Crimea, Cuba, Iran, North Korea and Syria).
“ Sanctioned Person ” means, at any time, (a) any Person listed in any Sanctions-related lists of designated Persons maintained by
OFAC, the U.S. Department of State, the United Nations Security Council, the European Union or any European Union member state, Her
Majesty’s Treasury of the United Kingdom or other relevant sanctions authority having jurisdiction or authority over the Company or any of
its Subsidiaries, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such
Person or Persons described in the foregoing clauses (a) or (b).
“ Sanctions ” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a)
the U.S. government, including those administered by OFAC or the U.S. Department of State or (b) the United Nations Security Council, the
European Union or any European Union member state, Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority
having jurisdiction or authority over the Company or any of its Subsidiaries.
“ SEC ” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
“ Secured Obligations ” means all Obligations, together with all Swap Obligations and Banking Services Obligations owing to one or
more Lenders or their respective Affiliates; provided that the definition of “Secured Obligations” shall not create or include any guarantee by
any Loan Party of (or grant of security interest by any Loan Party to support, as applicable) any Excluded Swap Obligations of such Loan
Party for purposes of determining any obligations of any Loan Party.
“ Secured Parties ” means the holders of the Secured Obligations from time to time and shall include (i) each Lender and each Issuing
Bank in respect of its Loans and LC Exposure respectively, (ii) the Administrative Agent, the Issuing Banks and the Lenders in respect of all
other present and future obligations and liabilities of the Company and each Subsidiary of every type and description arising under or in
connection with this Agreement or any other Loan Document, (iii) each Lender and affiliate of such Lender in respect of Swap Contracts and
Banking Services Agreements entered into with such Person by the Company or any Subsidiary, (iv) each indemnified party under
Section 9.03 in respect of the obligations and liabilities of the Borrowers to such Person hereunder and under the other Loan Documents, and
(v) their respective successors and (in the case of a Lender, permitted) transferees and assigns.
“ Securitization Transaction ” means, with respect to any Person, any financing transaction or series of financing transactions
(including factoring arrangements) pursuant to which such Person or any Subsidiary of such Person may sell, convey or otherwise transfer, or
grant a security interest in, accounts, payments, receivables, rights to future lease payments or residuals or similar rights to payment to a
special purpose subsidiary or affiliate of such Person.
“ Security Agreement ” means the Second Amended and Restated Security and Pledge Agreement in the form of Exhibit H , dated as
of the Effective Date, executed in favor of the Administrative Agent by each of the Loan Parties.
“ Solvent ” or “ Solvency ” means, with respect to any Person as of a particular date, that on such date (a) such Person is able to pay
its debts and other liabilities, contingent obligations and other commitments as they mature, (b) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (c) such Person is
not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person’s property would
constitute unreasonably small capital, (d) the fair value of the property of such Person is greater than the total amount of liabilities, including
contingent liabilities, of such Person and (e) the present fair salable value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they become absolute and matured. The amount of contingent liabilities at
any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.
“ Specified Swap Obligation ” means, with respect to any Loan Party, any obligation to pay or perform under any agreement, contract
or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act or any rules or regulations
promulgated thereunder.
“ Statutory Reserve Rate ” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator
of which is the number one minus the aggregate of the maximum reserve, liquid asset, fees or similar requirements (including any marginal,
special, emergency or supplemental reserves or other requirements) established by any central bank, monetary authority, the Board, the
Financial Conduct Authority, the Prudential Regulation Authority, the European Central Bank or other Governmental Authority for any
category of deposits or liabilities customarily used to fund loans in the applicable currency, expressed in the case of each such requirement as
a decimal. Such reserve, liquid asset, fees or similar requirements shall include those imposed pursuant to Regulation D of the Board.
Eurocurrency Loans shall be deemed to be subject to such reserve, liquid asset, fee or similar requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to any Lender under any applicable law, rule or regulation, including
Regulation D of the Board. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any
reserve, liquid asset or similar requirement.
“ Subordinated Debt ” means unsecured Indebtedness of a Loan Party which is expressly subordinated in right of payment to the prior
payment-in-full of the Obligations pursuant to a subordination agreement or other subordination provisions, and containing such other
payment terms, covenants, defaults and remedies, that are satisfactory to the Administrative Agent.
“ Subsidiary ” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which
a majority of the shares of Voting Stock is at the time beneficially owned, or the management of which is otherwise controlled, directly, or
indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or
to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Company.
“ Subsidiary Guarantor ” means each Wholly-Owned Domestic Subsidiary of the Company that is party to the Subsidiary Guaranty
and each other Wholly-Owned Domestic Subsidiary that joins as a Guarantor pursuant to Section 5.13 or otherwise, together with their
successors and permitted assigns.
“ Subsidiary Guaranty ” means that certain Second Amended and Restated Guaranty in the form of Exhibit I dated as of the Effective
Date (including any and all supplements thereto) and executed by each Subsidiary Guarantor party thereto, as amended, restated,
supplemented or otherwise modified from time to time.
“ Swap Contract ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions,
commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond
index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign
exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any
options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any
and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of
master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”),
including any such obligations or liabilities under any Master Agreement.
“ Swap Obligations ” means any and all obligations of the Company or any Subsidiary, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and
substitutions therefor), under (a) any and all Swap Contracts permitted hereunder with a Lender or an Affiliate of a Lender, and (b) any and
all cancellations, buy backs, reversals, terminations or assignments of any such Swap Contract transaction.
“ Swap Termination Value ” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally
enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out
and termination value(s) determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in
clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-
market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any
Affiliate of a Lender).
“ Synthetic Lease ” means any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet
financing arrangement whereby the arrangement is considered borrowed money indebtedness for tax purposes but is classified as an operating
lease or does not otherwise appear on a balance sheet under GAAP.
“ TARGET2 ” means the Trans-European Automated Real-time Gross Settlement Express Transfer ( TARGET2 ) payment system
(or, if such payment system ceases to be operative, such other payment system (if any) reasonably determined by the Administrative Agent to
be a suitable replacement) for the settlement of payments in euro.
“ TARGET2 Day ” means a day that TARGET2 is open for the settlement of payments in euro.
“ Taxes ” means 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.
“ Threshold Amount ” means $7,500,000.
“ Transactions ” means the execution, delivery and performance by the Loan Parties of this Agreement and the other Loan
Documents, the borrowing of Loans and other credit extensions, the use of the proceeds thereof and the issuance of Letters of Credit
hereunder.
“ Type ”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans
comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
“ UCC ” means the Uniform Commercial Code as in effect from time to time in the State of New York or any other state the laws of
which are required to be applied in connection with the issue of perfection of security interests.
“ Unliquidated Obligations ” means, at any time, any Secured Obligations (or portion thereof) that are contingent in nature or
unliquidated at such time, including any Secured Obligation that is: (i) an obligation to reimburse a bank for drawings not yet made under a
letter of credit issued by it; (ii) any other obligation (including any guarantee) that is contingent in nature at such time; or (iii) an obligation to
provide collateral to secure any of the foregoing types of obligations.
“ U.S. Person ” means a “United States person” within the meaning of Section 7701(a)(30) of the Code.
“ U.S. Tax Compliance Certificate ” has the meaning assigned to such term in Section 2.17(f)(ii)(B)(3).
“ Voting Stock ” means, with respect to any Person, Equity Interests issued by such Person the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though
the right so to vote has been suspended by the happening of such a contingency.
“ Wholly Owned Domestic Subsidiary ” means any Domestic Subsidiary that is a Wholly Owned Subsidiary.
“ Wholly Owned Subsidiary ” means any Person 100% of whose Equity Interests are at the time owned by the Company directly or
indirectly through other Persons 100% of whose Equity Interests are at the time owned, directly or indirectly, by the Company, except to
qualify directors where required by applicable Law or to satisfy other requirements of applicable Law with respect to the ownership of Equity
Interests of Foreign Subsidiaries.
“ Withholding Agent ” means any Loan Party and the Administrative Agent.
“ Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversion
powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which
write-down and conversion powers are described in the EU Bail-In Legislation Schedule.
SECTION 1.02 Classification of Loans and Borrowings . For purposes of this Agreement, Loans may be classified and
referred to by Type ( e.g ., a “Eurocurrency Loan”). Borrowings also may be classified and referred to by Type ( e.g ., a “Eurocurrency
Borrowing”).
SECTION 1.03 Terms Generally . The definitions of terms herein shall apply equally to the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The
words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be
construed to have the same meaning and effect as the word “shall”. The word “law” shall be construed as
referring to all statutes, rules, regulations, codes and other laws (including official rulings and interpretations thereunder having the force of
law or with which affected Persons customarily comply), and all judgments, orders and decrees, of all Governmental Authorities. Unless the
context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as
referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified
(subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein), (b) any definition of or
reference to any statute, rule or regulation shall be construed as referring thereto as from time to time amended, supplemented or otherwise
modified (including by succession of comparable successor laws), (c) any reference herein to any Person shall be construed to include such
Person’s successors and assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority,
any other Governmental Authority that shall have succeeded to any or all functions thereof, (d) the words “herein”, “hereof” and “hereunder”,
and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) 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, (f) any reference to any law, rule or regulation herein shall, unless otherwise specified, refer to such law, rule
or regulation as amended, modified or supplemented from time to time, (g) the words “asset” and “property” shall be construed to have the
same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and
contract rights and (h) any reference herein to a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale, disposition or
transfer, or similar term, shall be deemed to apply to a division of or by a limited liability company, or an allocation of assets to a series of a
limited liability company (or the unwinding of such a division or allocation), as if it were a merger, transfer, consolidation, amalgamation,
consolidation, assignment, sale or transfer, or similar term, as applicable, to, of or with a separate Person, and any division of a limited
liability company shall constitute a separate Person hereunder (and each division of any limited liability company that is a Subsidiary, joint
venture or any other like term shall also constitute such a Person or entity).
SECTION 1.04 Accounting Terms; GAAP . Except as otherwise expressly provided herein, all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Company notifies the
Administrative Agent that the Company requests an amendment to any provision hereof to eliminate the effect of any change occurring after
the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Company
that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given
before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect
and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision
amended in accordance herewith. Notwithstanding any other provision contained herein, (a) all terms of an accounting or financial nature
used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any
election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting
Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Company or any Subsidiary at “fair value”, as
defined therein and (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting
Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or
effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be
valued at the full stated principal amount thereof and (b) any treatment of any lease (or similar arrangement conveying the right to use) as a
capital lease where such lease (or similar arrangement) would not have been required to be so treated under GAAP as in effect on the
Effective Date, as a result of the effectiveness of the Financial Accounting Standards Board Accounting Standards
Codification 842 (or any other Accounting Standards Codification having a similar result or effect) (and related interpretations).
SECTION 1.05 Amendment and Restatement of Existing Credit Agreement . 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
4.01, 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. This Agreement is not intended to and shall not constitute a novation. All “Loans” made and
“Secured Obligations” incurred under the Existing Credit Agreement which are outstanding on the Effective Date shall continue as Loans and
Secured Obligations under (and shall be governed by the terms of) this Agreement and the other Loan Documents. Without limiting the
foregoing, upon the effectiveness hereof: (a) all references in the “Loan Documents” (as defined in the Existing Credit Agreement) to the
“Administrative Agent”, the “Credit Agreement” and the “Loan Documents” shall be deemed to refer to the Administrative Agent, this
Agreement and the Loan Documents, (b) all obligations constituting “Secured Obligations” with any Lender or any Affiliate of any Lender
which are outstanding on the Effective Date shall continue as Secured Obligations under this Agreement and the other Loan Documents, (c)
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 Revolving Credit Exposure and outstanding
Loans hereunder reflects such Lender’s Applicable Percentage of the outstanding aggregate Revolving Credit Exposures on the Effective
Date, (d) the Existing Loans of the Departing Lender shall be repaid in full (accompanied by any accrued and unpaid interest and fees
thereon), the Departing Lender’s “Commitment” under the Existing Credit Agreement shall be terminated and the Departing Lender shall not
be a Lender hereunder (provided, however, that the Departing Lender shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17
and 9.03) and (e) the Borrowers hereby agree to compensate each Lender (and the Departing Lender) for any and all losses, costs and
expenses incurred by such Lender in connection with the sale and assignment of any Eurocurrency Loans (including the “Eurocurrency
Loans” under the Existing Credit Agreement) and such reallocation (and any repayment or prepayment of the Departing Lender’s Loan)
described above, in each case on the terms and in the manner set forth in Section 2.16 hereof.
SECTION 1.06 Interest Rates; LIBOR Notification . The interest rate on Eurocurrency Loans is determined by reference to
the LIBO Rate, which is derived from the London interbank offered rate. The London interbank offered rate is intended to represent the rate
at which contributing banks may obtain short-term borrowings from each other in the London interbank market. In July 2017, the U.K.
Financial Conduct Authority announced that, after the end of 2021, it would no longer persuade or compel contributing banks to make rate
submissions to the ICE Benchmark Administration (together with any successor to the ICE Benchmark Administrator, the “ IBA ”) for
purposes of the IBA setting the London interbank offered rate. As a result, it is possible that commencing in 2022, the London interbank
offered rate may no longer be available or may no longer be deemed an appropriate reference rate upon which to determine the interest rate
on Eurocurrency Loans. In light of this eventuality, public and private sector industry initiatives are currently underway to identify new or
alternative reference rates to be used in place of the London interbank offered rate. In the event that the London interbank offered rate is no
longer available or in certain other circumstances as set forth in Section 2.14(c) of this Agreement, such Section 2.14(c) provides a
mechanism for determining an alternative rate of interest. The Administrative Agent will notify the Company, pursuant to Section 2.14, in
advance of any change to the reference rate upon which the interest rate on Eurocurrency Loans is based. However, the Administrative Agent
does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission or any other
matter related to the London interbank offered rate or other rates in the definition of “LIBO Rate” or with respect to any alternative or
successor rate thereto, or replacement rate thereof, including without limitation,
whether the composition or characteristics of any such alternative, successor or replacement reference rate, as it may or may not be adjusted
pursuant to Section 2.14(c), will be similar to, or produce the same value or economic equivalence of, the LIBO Rate or have the same
volume or liquidity as did the London interbank offered rate prior to its discontinuance or unavailability.
ARTICLE II
The Credits
SECTION 2.01 Commitments . Prior to the Effective Date, certain loans were made to the Borrowers under the Existing
Credit Agreement which remain outstanding as of the date of this Agreement (such outstanding loans being hereinafter referred to as the “
Existing Loans ”). Subject to the terms and conditions set forth in this Agreement, the Borrowers and each of the Lenders agree that on the
Effective Date but subject to the reallocation and other transactions described in Section 1.05, the Existing Loans shall be reevidenced as
Loans under this Agreement and the terms of the Existing Loans shall be restated in their entirety and shall be evidenced by this Agreement.
Subject to the terms and conditions set forth herein, each Lender (severally and not jointly) agrees to make Revolving Loans to the Borrowers
in Agreed Currencies from time to time during the Availability Period in an aggregate principal amount that will not result in (i) subject to
Sections 2.04 and 2.11(b), the Dollar Amount of such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment,
(ii) subject to Sections 2.04 and 2.11(b), the sum of the Dollar Amount of the total Revolving Credit Exposures exceeding the Aggregate
Commitment or (iii) subject to Sections 2.04 and 2.11(b), the Dollar Amount of the total outstanding Revolving Loans and LC Exposure, in
each case denominated in Foreign Currencies, exceeding the Foreign Currency Sublimit. Within the foregoing limits and subject to the terms
and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Revolving Loans.
SECTION 2.02 Loans and Borrowings . (a) Each Revolving Loan shall be made as part of a Borrowing consisting of
Revolving Loans of the same Type made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender
to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of
the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.
Subject to Section 2.14, each Borrowing shall be comprised entirely of ABR Loans or Eurocurrency Loans as the relevant Borrower
may request in accordance herewith; provided that each ABR Loan shall only be made in Dollars. Each Lender at its option may make any
Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan (and in the case of an Affiliate, the provisions
of Sections 2.14, 2.15, 2.16 and 2.17 shall apply to such Affiliate to the same extent as to such Lender); provided that any exercise of such
option shall not affect the obligation of the relevant Borrower to repay such Loan in accordance with the terms of this Agreement.
(b) At the commencement of each Interest Period for any Eurocurrency Borrowing, such Borrowing shall be in an aggregate
amount that is an integral multiple of $500,000 (or, if such Borrowing is denominated in a Foreign Currency, 500,000 units of such currency)
and not less than $1,000,000 (or, if such Borrowing is denominated in a Foreign Currency, 1,000,000 units of such currency). At the time that
each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than
$1,000,000; provided that an ABR Borrowing may be in an aggregate amount that is equal to the entire unused balance of the Aggregate
Commitment or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(e). Borrowings of
more than one
Type may be outstanding at the same time; provided that there shall not at any time be more than a total of ten (10) Eurocurrency Borrowings
outstanding.
(c) Notwithstanding any other provision of this Agreement, no Borrower shall be entitled to request, or to elect to convert or
continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.
SECTION 2.03 Requests for Borrowings . To request a Borrowing, the applicable Borrower, or the Company on behalf of
the applicable Borrower, shall notify the Administrative Agent of such request (a) by irrevocable written notice (via a written Borrowing
Request signed by the applicable Borrower, or the Company on behalf of the applicable Borrower) in the case of a Eurocurrency Borrowing,
not later than 11:00 a.m., Local Time, three (3) Business Days (in the case of a Eurocurrency Borrowing denominated in Dollars) or by
irrevocable written notice (via a written Borrowing Request signed by such Borrower, or the Company on its behalf) not later than 11:00 a.m.,
Local Time, four (4) Business Days (in the case of a Eurocurrency Borrowing denominated in a Foreign Currency), in each case before the
date of the proposed Borrowing or (b) by irrevocable written notice (via a written Borrowing Request signed by such Borrower, or the
Company on its behalf) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the requested date of the
proposed Borrowing. Each Borrowing Request shall specify the following information in compliance with Section 2.02:
(i) the name of the applicable Borrower;
(ii) the aggregate principal amount of the requested Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing;
(v) in the case of a Eurocurrency Borrowing, the Agreed Currency and initial Interest Period to be applicable
thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and
(vi) the location and number of the applicable Borrower’s account to which funds are to be disbursed, which shall
comply with the requirements of Section 2.07.
If no election as to the Type of Borrowing is specified, then, in the case of a Borrowing denominated in Dollars, the requested Borrowing
shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurocurrency Borrowing, then the relevant
Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in
accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s
Loan to be made as part of the requested Borrowing.
SECTION 2.04 Determination of Dollar Amounts . The Administrative Agent will determine the Dollar Amount of:
(a) any Loan denominated in a Foreign Currency, each of the following: (i) the date of the Borrowing of such Loan and (ii)
each date of a conversation or continuation of such Loan pursuant to the terms of this Agreement,
(b) any Letter of Credit denominated in a Foreign Currency, each of the following: (i) the date on which such Letter of
Credit is issued, (ii) the first Business Day of each calendar month and (iii) the date of any amendment of such Letter of Credit that has the
effect of increasing the face amount thereof, and
(c) any additional date as the Administrative Agent may determine at any time when an Event of Default exists.
Each day upon or as of which the Administrative Agent determines Dollar Amounts as described in the preceding clauses (a), (b) and (c) is
herein described as a “Computation Date” with respect to each Credit Event for which a Dollar Amount is determined on or as of such day.
SECTION 2.05 [Intentionally Omitted] .
SECTION 2.06 Letters of Credit . (a) General . Subject to the terms and conditions set forth herein, the Company may
request the issuance of Letters of Credit denominated in Agreed Currencies as the applicant thereof for the support of its or its Subsidiaries’
obligations, in a form reasonably acceptable to the Administrative Agent and the relevant Issuing Bank, at any time and from time to time
during the Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and
conditions of any Letter of Credit Agreement, the terms and conditions of this Agreement shall control. Notwithstanding anything herein to
the contrary, no Issuing Bank shall have any obligation hereunder to issue, and shall not issue, any Letter of Credit the proceeds of which
would be made available to any Person (i) to fund any activity or business of or with any Sanctioned Person, or in any country or territory
that, at the time of such funding, is the subject of any Sanctions, (ii) in any manner that would result in a violation of any Sanctions by any
party to this Agreement or (iii) in any manner that would result in a violation of one or more policies of the relevant Issuing Bank applicable
to letters of credit generally. The Company unconditionally and irrevocably agrees that, in connection with any Letter of Credit issued for the
support of any Subsidiary’s obligations as provided in the first sentence of this paragraph, the Company will be fully responsible for the
reimbursement of LC Disbursements in accordance with the terms hereof, the payment of interest thereon and the payment of fees due under
Section 2.12(b) to the same extent as if it were the sole account party in respect of such Letter of Credit (the Company hereby irrevocably
waiving any defenses that might otherwise be available to it as a guarantor or surety of the obligations of such a Subsidiary that is an account
party in respect of any such Letter of Credit).
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions . To request the issuance of a Letter of Credit
(or the amendment, renewal or extension of an outstanding Letter of Credit), the Company shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by the relevant Issuing Bank) to the relevant Issuing Bank and
the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension, but in any event no less
than three (3) Business Days) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed
or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such
Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the Agreed Currency
applicable thereto, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew
or extend such Letter of Credit. In addition, as a condition to any such Letter of Credit issuance, the Company shall have entered into a
continuing agreement (or other letter of credit agreement) for the issuance of letters of credit and/or shall submit a letter of credit application,
in each case, as required by the relevant Issuing Bank and using such Issuing Bank’s standard form (each, a “ Letter of Credit Agreement ”).
A Letter of Credit shall be issued,
amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Company shall be
deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) subject to Sections 2.04 and
2.11(b), the Dollar Amount of the LC Exposure shall not exceed $10,000,000, (ii) subject to Sections 2.04 and 2.11(b), the sum of (x) the
aggregate undrawn amount of all outstanding Letters of Credit issued by any Issuing Bank at such time plus (y) the aggregate amount of all
LC Disbursement made by such Issuing Bank that have not yet been reimbursed by or on behalf of the applicable Borrower at such time shall
not exceed such Issuing Bank’s Letter of Credit Commitment unless otherwise agreed by such Issuing Bank, (iii) subject to Sections 2.04 and
2.11(b), the sum of the Dollar Amount of the total Revolving Credit Exposures shall not exceed the Aggregate Commitment, (iv) the Dollar
Amount of each Lender’s Revolving Credit Exposure shall not exceed such Lender’s Commitment and (v) subject to Sections 2.04 and
2.11(b), the Dollar Amount of the total outstanding Revolving Loans and LC Exposure, in each case denominated in Foreign Currencies, shall
not exceed the Foreign Currency Sublimit. The Company may, at any time and from time to time, reduce the Letter of Credit Commitment of
any Issuing Bank with the consent of such Issuing Bank; provided that the Borrower shall not reduce the Letter of Credit Commitment of any
Issuing Bank if, after giving effect of such reduction, the conditions set forth in the immediately preceding clauses (i) through (v) shall not be
satisfied. Within the foregoing limits, the Company’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Company
may, during the Availability Period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and
reimbursed.
(c) Expiration Date . (A) Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i)subject to
Section 2.06(c)(B), the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof
one year after such renewal or extension) and (ii) the date that is five (5) Business Days prior to the Maturity Date.
(B) If the Company so requests in any applicable Letter of Credit application, the relevant Issuing Bank will agree to
issue a Letter of Credit that has automatic extension provisions (each, an “ Auto-Extension Letter of Credit ”); provided that any such
Auto-Extension Letter of Credit must permit the relevant Issuing Bank to prevent any such extension at least once in each twelve-
month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not
later than a day (the “ Non-Extension Notice Date ”) in each such twelve-month period to be agreed upon at the time such Letter of
Credit is issued. Unless otherwise directed by the relevant Issuing Bank, the Company shall not be required to make a specific request
to such Issuing Bank for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed
to have authorized (but may not require) the relevant Issuing Bank to permit the extension of such Letter of Credit at any time to an
expiry date not later than the date set forth in Section 2.06(c) provided, however, that such Issuing Bank shall not permit any such
extension if (A) such Issuing Bank has determined that it would not be permitted, or would have no obligation, at such time to issue
such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of Section 2.06(c) or
otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven Business Days
before the Non-Extension Notice Date from the Administrative Agent, the Required Lenders or the Company that one or more of the
applicable conditions specified in Section 4.02 is not then satisfied, and in each case directing such Issuing Bank not to permit such
extension.
(d) Participations . By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount
thereof) and without any further action on the part of the relevant Issuing Bank or the Lenders, the relevant Issuing Bank hereby grants to
each Lender, and each Lender hereby acquires from the relevant Issuing Bank, a participation in such Letter of Credit equal to such Lender’s
Applicable
Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing,
each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the relevant Issuing Bank,
such Lender’s Applicable Percentage of each LC Disbursement made by such Issuing Bank and not reimbursed by the Company on the date
due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Company for any reason.
Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment
shall be made without any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement . If the relevant Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the
Company shall reimburse such LC Disbursement by paying to the Administrative Agent in Dollars the Dollar Amount equal to such LC
Disbursement, calculated as of the date such Issuing Bank made such LC Disbursement (or if such Issuing Bank shall so elect in its sole
discretion by notice to the Company, in such other Agreed Currency which was paid by such Issuing Bank pursuant to such LC Disbursement
in an amount equal to such LC Disbursement) not later than 12:00 noon, Local Time, on the Business Day immediately following the day that
the Company receives such notice; provided that, the Company may, subject to the conditions to borrowing set forth herein, request in
accordance with Section 2.03 that such payment be financed with (i) to the extent such LC Disbursement was made in Dollars, an ABR
Borrowing or Eurocurrency Borrowing in Dollars in an amount equal to such LC Disbursement or (ii) to the extent such LC Disbursement
was made in a Foreign Currency, a Eurocurrency Borrowing in such Foreign Currency in an amount equal to such LC Disbursement and, in
each case, to the extent so financed, the Company’s obligation to make such payment shall be discharged and replaced by the resulting ABR
Borrowing or Eurocurrency Borrowing, as applicable, on the date such reimbursement is required to be made. If the Company fails to make
such payment when due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from
the Company in respect thereof and such Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Lender
shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Company, in the same manner as provided
in Section 2.07 with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis , to the payment obligations of the
Lenders), and the Administrative Agent shall promptly pay to the relevant Issuing Bank the amounts so received by it from the Lenders.
Promptly following receipt by the Administrative Agent of any payment from the Company pursuant to this paragraph, the Administrative
Agent shall distribute such payment to the relevant Issuing Bank or, to the extent that Lenders have made payments pursuant to this paragraph
to reimburse such Issuing Bank, then to such Lenders and relevant Issuing Bank as their interests may appear. Any payment made by a
Lender pursuant to this paragraph to reimburse the relevant Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving
Loans or Eurocurrency Borrowings, as contemplated above) shall not constitute a Loan and shall not relieve the Company of its obligation to
reimburse such LC Disbursement. If the Company’s reimbursement of, or obligation to reimburse, any amounts in any Foreign Currency
would subject the Administrative Agent, the relevant Issuing Bank or any Lender to any stamp duty, ad valorem charge or similar tax that
would not be payable if such reimbursement were made or required to be made in Dollars, the Company shall, at its option, either (x) pay the
amount of any such tax requested by the Administrative Agent, the relevant Issuing Bank or the relevant Lender or (y) reimburse each LC
Disbursement made in such Foreign Currency in Dollars, in an amount equal to the Dollar Amount thereof calculated on the date such LC
Disbursement is made.
(f) Obligations Absolute . The Company’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this
Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under
any and all circumstances whatsoever
and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, any Letter of Credit Agreement or this Agreement, or any
term or provision therein or herein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or
invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) any payment by the relevant Issuing Bank under
a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any
other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section,
constitute a legal or equitable discharge of, or provide a right of setoff against, the Company’s obligations hereunder. Neither the
Administrative Agent, the Lenders nor the Issuing Banks, nor any of their Related Parties, shall have any liability or responsibility by reason
of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document
required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the
control of the relevant Issuing Bank; provided that the foregoing shall not be construed to excuse the relevant Issuing Bank from liability to
the Company to the extent of any direct damages (as opposed to special, indirect, consequential or punitive damages, claims in respect of
which are hereby waived by the Company to the extent permitted by applicable law) suffered by the Company that are caused by such Issuing
Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the
terms thereof; provided further that anything contained herein to the contrary notwithstanding, the Company may have a claim against an
Issuing Bank, and an Issuing Bank may be liable to the Company, to the extent of any direct, as opposed to consequential or exemplary,
damages suffered by the Company which the Company proves were caused by such Issuing Bank’s unlawful failure to pay under any Letter
of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a
Letter of Credit. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the relevant
Issuing Bank (as finally determined by a court of competent jurisdiction), such Issuing Bank shall be deemed to have exercised care in each
such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, each Issuing Bank may,
in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any
notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict
compliance with the terms of such Letter of Credit.
(g) Disbursement Procedures . Each Issuing Bank shall, promptly following its receipt thereof, examine all documents
purporting to represent a demand for payment under a Letter of Credit. Each Issuing Bank shall promptly notify the Administrative Agent and
the Company by telephone (confirmed by telecopy) of such demand for payment and whether such Issuing Bank has made or will make an
LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Company of its obligation
to reimburse such Issuing Bank and the Lenders with respect to any such LC Disbursement.
(h) Interim Interest . If any Issuing Bank shall make any LC Disbursement, then, unless the Company shall reimburse such
LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and
including the date such LC Disbursement is made to but excluding the date that the Company reimburses such LC Disbursement, at the rate
per annum then applicable to ABR Revolving Loans (or in the case such LC Disbursement is denominated in a Foreign Currency, at the
Overnight Foreign Currency Rate for such Agreed Currency plus the then effective Applicable Rate with respect to Eurocurrency Revolving
Loans); provided that, if the Company fails to reimburse such
LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply. Interest accrued pursuant to this
paragraph shall be for the account of the relevant Issuing Bank, except that interest accrued on and after the date of payment by any Lender
pursuant to paragraph (e) of this Section to reimburse such Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(i) Replacement of Issuing Bank . (A) Any Issuing Bank may be replaced at any time by written agreement among the
Company, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the
Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the Company shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(b). From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and obligations of an Issuing Bank under this Agreement with respect to
Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to
any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an
Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit then outstanding and issued by it prior to such replacement, but shall not
be required to issue additional Letters of Credit.
(B) Subject to the appointment and acceptance of a successor Issuing Bank, an Issuing Bank may resign as an Issuing
Bank at any time upon thirty days’ prior written notice to the Administrative Agent, the Company and the Lenders, in which case, such
Issuing Bank shall be replaced in accordance with Section 2.06(i)(A) above.
(j) Cash Collateralization . If any Event of Default shall occur and be continuing, on the Business Day that the Company
receives notice from the Administrative Agent at the request of the Required Lenders (or, if the maturity of the Loans has been accelerated,
Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, the Company shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders (the “ LC Collateral Account ”), an amount in cash equal to the Dollar Amount of the LC Exposure as of such date;
provided that (i) the portions of such amount attributable to undrawn Foreign Currency Letters of Credit or LC Disbursements in a Foreign
Currency that the Company is not late in reimbursing shall be deposited in the applicable Foreign Currencies in the actual amounts of such
undrawn Letters of Credit and LC Disbursements and (ii) the obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event
of Default with respect to the Company described in clause (f) or (g) of Article VII . For the purposes of this paragraph, the Dollar Amount of
the Foreign Currency LC Exposure shall be calculated on the date notice demanding cash collateralization is delivered to the Company. The
Company also shall deposit cash collateral pursuant to this paragraph as and to the extent required by Section 2.11(b). Such deposit shall be
held by the Administrative Agent as collateral for the payment and performance of the Secured Obligations. The Administrative Agent shall
have exclusive dominion and control, including the exclusive right of withdrawal, over such account and the Company hereby grants the
Administrative Agent a security interest in the LC Collateral Account. Other than any interest earned on the investment of such deposits,
which investments shall be made at the option and sole discretion of the Administrative Agent and at the Company’s risk and expense, such
deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall
be applied by the Administrative Agent to reimburse the relevant Issuing Bank for LC Disbursements for which it has not been reimbursed
and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Company for the LC
Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Lenders with LC Exposure
representing greater than 50% of the total LC Exposure), be applied to satisfy other Secured Obligations. If the Company is required to
provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Company within three (3) Business Days after all Events of Default have been cured or waived.
(k) LC Exposure Determination . For all purposes of this Agreement, the amount of a Letter of Credit that, by its terms or
the terms of any document related thereto, provides for one or more automatic increases in the stated amount thereof shall be deemed to be
the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is
in effect at the time of determination.
(l) Issuing Bank Agreements . Each Issuing Bank agrees that, unless otherwise requested by the Administrative Agent,
such Issuing Bank shall report in writing to the Administrative Agent (i) on or prior to each Business Day on which such Issuing Bank
expects to issue, amend, renew or extend any Letter of Credit, the date of such issuance, amendment, renewal or extension, and the aggregate
face amount of the Letters of Credit to be issued, amended, renewed or extended by it and outstanding after giving effect to such issuance,
amendment, renewal or extension occurred (and whether the amount thereof changed), (ii) on each Business Day on which such Issuing Bank
pays any amount in respect of one or more drawings under Letters of Credit, the date of such payment(s) and the amount of such payment(s),
(iii) on any Business Day on which the Borrower fails to reimburse any amount required to be reimbursed to such Issuing Bank on such day,
the date of such failure and the amount and currency of such payment in respect of Letters of Credit and (iv) on any other Business Day, such
other information as the Administrative Agent shall reasonably request.
SECTION 2.07 Funding of Borrowings . (a) Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof solely by wire transfer of immediately available funds (i) in the case of Loans denominated in Dollars, by 12:00 noon,
New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders and
(ii) in the case of each Loan denominated in a Foreign Currency, by 12:00 noon, Local Time, in the city of the Administrative Agent’s
Eurocurrency Payment Office for such currency and at such Eurocurrency Payment Office for such currency. The Administrative Agent will
make such Loans available to the relevant Borrower by promptly crediting the amounts so received, in like funds, to (x) an account of the
Company designated by the Company in the applicable Borrowing Request, in the case of Loans denominated in Dollars and (y) an account
of such Borrower in the relevant jurisdiction and designated by such Borrower in the applicable Borrowing Request, in the case of Loans
denominated in a Foreign Currency; provided that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement as
provided in Section 2.06(e) shall be remitted by the Administrative Agent to the relevant Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing
(or in the case of an ABR Borrowing, prior to 12:00 noon, New York City time, on the date of such Borrowing) that such Lender will not
make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender
has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make
available to the relevant Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable
Borrowing available to the Administrative Agent, then the applicable Lender and such 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 such
amount is made available to such Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such
Lender, the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on
interbank compensation (including without limitation the Overnight Foreign Currency Rate in the case of Loans denominated in a Foreign
Currency) or (ii) in the case of such Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.
SECTION 2.08 Interest Elections . (a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurocurrency Borrowing, shall have an initial Interest Period as specified in such Borrowing Request.
Thereafter, the relevant Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a
Eurocurrency Borrowing, may elect Interest Periods therefor, all as provided in this Section. A Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding
the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, a Borrower, or the Company on its behalf, shall notify the Administrative
Agent of such election (by irrevocable written notice via an Interest Election Request in a form approved by the Administrative Agent and
signed by such Borrower, or the Company on its behalf) by the time that a Borrowing Request would be required under Section 2.03 if such
Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election.
Notwithstanding any contrary provision herein, this Section shall not be construed to permit any Borrower to (i) change the currency of any
Borrowing, (ii) elect an Interest Period for Eurocurrency Loans that does not comply with Section 2.02(d) or (iii) convert any Borrowing to a
Borrowing of a Type not available under such Borrowing.
(c) Each Interest Election Request shall specify the following information in compliance with Section 2.02:
(i) the name of the applicable Borrower and the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business
Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing; and
(iv) if the resulting Borrowing is a Eurocurrency Borrowing, the Interest Period and Agreed Currency to be
applicable thereto after giving effect to such election, which Interest Period shall be a period contemplated by the definition of the
term “Interest Period”.
If any such Interest Election Request requests a Eurocurrency Borrowing but does not specify an Interest Period, then the applicable
Borrower shall be deemed to have selected an Interest Period of one month’s duration.
(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the
details thereof and of such Lender’s portion of each resulting Borrowing.
(e) If the relevant Borrower fails to deliver a timely Interest Election Request with respect to a Eurocurrency Borrowing
prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest
Period (i) in the case of a Borrowing denominated in Dollars, such Borrowing shall be converted to an ABR Borrowing and (ii) in the case of
a Borrowing denominated in a Foreign Currency in respect of which the applicable Borrower shall have failed to deliver an Interest Election
Request prior to the third (3rd) Business Day preceding the end of such Interest Period, such Borrowing shall automatically continue as a
Eurocurrency Borrowing in the same Agreed Currency with an Interest Period of one month unless such Eurocurrency Borrowing is or was
repaid in accordance with Section 2.11. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing
and the Administrative Agent, at the request of the Required Lenders, so notifies the Company, then, so long as an Event of Default is
continuing (i) no outstanding Borrowing denominated in Dollars may be converted to or continued as a Eurocurrency Borrowing, (ii) unless
repaid, each Eurocurrency Borrowing denominated in Dollars shall be converted to an ABR Borrowing at the end of the Interest Period
applicable thereto and (iii) unless repaid, each Eurocurrency Borrowing denominated in a Foreign Currency shall automatically be continued
as a Eurocurrency Borrowing with an Interest Period of one month.
SECTION 2.09 Termination and Reduction of Commitments . (a) Unless previously terminated, the Commitments shall
terminate on the Maturity Date.
(b) The Company may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each
reduction of the Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the
Company shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with
Section 2.11, the Dollar Amount of the sum of the Revolving Credit Exposures would exceed the Aggregate Commitment.
(c) The Company shall notify the Administrative Agent of any election to terminate or reduce the Commitments under
paragraph (b) of this Section at least three (3) Business Days prior to the effective date of such termination or reduction, specifying such
election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the
contents thereof. Each notice delivered by the Company pursuant to this Section shall be irrevocable; provided that a notice of termination of
the Commitments delivered by the Company may state that such notice is conditioned upon the effectiveness of other credit facilities or other
refinancing, in which case such notice may be revoked by the Company (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied. Any termination or reduction of the Commitments shall be permanent. Each reduction of the
Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.
SECTION 2.10 Repayment of Loans; Evidence of Debt . (a) Each Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender the then unpaid principal amount of each Loan made to such Borrower on the Maturity
Date in the currency of such Loan.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of
each Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder,
Agreed Currency and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from each Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender’s share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie
evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative
Agent to maintain such accounts or any error therein shall not in any manner affect the Obligations.
(e) Any Lender may request that Loans made by it to any Borrower be evidenced by a promissory note. In such event, the
relevant Borrower shall prepare, execute and deliver to such Lender a promissory note payable to such Lender (or, if requested by such
Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or
more promissory notes in such form.
SECTION 2.11 Prepayment of Loans .
(a) Any Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part
without premium or penalty (but subject to the break funding payments required by Section 2.16), subject to prior notice in accordance with
the provisions of this Section 2.11(a). The applicable Borrower, or the Company on behalf of the applicable Borrower, shall notify the
Administrative Agent by written notice (promptly followed by telephonic confirmation of such request) of any prepayment hereunder (i) in
the case of prepayment of a Eurocurrency Borrowing, not later than 11:00 a.m., Local Time, three (3) Business Days (in the case of a
Eurocurrency Borrowing denominated in Dollars) or four (4) Business Days (in the case of a Eurocurrency Borrowing denominated in a
Foreign Currency), in each case before the date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later than
11:00 a.m., New York City time, on the date of the prepayment. Each such notice shall be irrevocable and shall specify the prepayment date
and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection
with a conditional notice of termination of the Commitments as contemplated by Section 2.09, then such notice of prepayment may be
revoked if such notice of termination is revoked in accordance with Section 2.09. Promptly following receipt of any such notice relating to a
Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in
an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02. Each prepayment
of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by (i) accrued
interest to the extent required by Section 2.13 and (ii) break funding payments pursuant to Section 2.16.
(b) If at any time, (i) other than as a result of fluctuations in currency exchange rates, (A) the sum of the aggregate principal
Dollar Amount of all of the Revolving Credit Exposures (calculated, with respect to those Credit Events denominated in Foreign Currencies,
as of the most recent Computation Date with respect to each such Credit Event) exceeds the Aggregate Commitment or (B) the sum of the
aggregate principal Dollar Amount of all of the outstanding Revolving Credit Exposures denominated in
Foreign Currencies (the “ Foreign Currency Exposure ”) (so calculated), as of the most recent Computation Date with respect to each such
Credit Event, exceeds the Foreign Currency Sublimit or (ii) solely as a result of fluctuations in currency exchange rates, (A) the sum of the
aggregate principal Dollar Amount of all of the Revolving Credit Exposures (so calculated) exceeds 105% of the Aggregate Commitment or
(B) the Foreign Currency Exposure, as of the most recent Computation Date with respect to each such Credit Event, exceeds 105% of the
Foreign Currency Sublimit, the Borrowers shall in each case immediately repay Borrowings or cash collateralize LC Exposure in an account
with the Administrative Agent pursuant to Section 2.06(j), as applicable, in an aggregate principal amount sufficient to cause (x) the
aggregate Dollar Amount of all Revolving Credit Exposures (so calculated) to be less than or equal to the Aggregate Commitment and (y) the
Foreign Currency Exposure to be less than or equal to the Foreign Currency Sublimit, as applicable.
SECTION 2.12 Fees . (a) The Company agrees to pay to the Administrative Agent for the account of each Lender a
commitment fee, which shall accrue at the Applicable Rate on the daily amount of the Available Revolving Commitment of such Lender
during the period from and including the Effective Date to but excluding the date on which such Commitment terminates. Commitment fees
accrued through and including the last day of March, June, September and December of each year shall be payable in arrears on the fifteenth
(15 th ) day following such last day and on the date on which the Commitments terminate, commencing on the first such date to occur after the
date hereof. All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).
(b) The Company agrees to pay (i) to the Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at the same Applicable Rate used to determine the interest rate applicable
to Eurocurrency Revolving Loans on the average daily Dollar Amount of such Lender’s LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date
on which such Lender’s Commitment terminates and the date on which such Lender ceases to have any LC Exposure and (ii) to the relevant
Issuing Bank for its own account a fronting fee, which shall accrue at the rate of 0.125% per annum on the average daily Dollar Amount of
the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) attributable to Letters of Credit issued by
such Issuing Bank during the period from and including the Effective Date to but excluding the later of the date of termination of the
Commitments and the date on which there ceases to be any LC Exposure, as well as such Issuing Bank’s standard fees and commissions with
respect to the issuance, amendment, cancellation, negotiation, transfer, presentment, renewal or extension of any Letter of Credit or
processing of drawings thereunder. Participation fees and fronting fees accrued through and including the last day of March, June, September
and December of each year shall be payable on the fifteenth (15 th ) day following such last day, commencing on the first such date to occur
after the Effective Date; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees
accruing after the date on which the Commitments terminate shall be payable on demand. Any other fees payable to any Issuing Bank
pursuant to this paragraph shall be payable within ten (10) days following written invoice. All participation fees and fronting fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding
the last day). Participation fees and fronting fees in respect of Letters of Credit denominated in Dollars shall be paid in Dollars, and
participation fees and fronting fees in respect of Letters of Credit denominated in a Foreign Currency shall be paid in such Foreign Currency.
(c) The Company agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the
times separately agreed upon between the Company and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in Dollars (except as otherwise expressly provided in this
Section 2.12) and immediately available funds, to the Administrative Agent (or to each Issuing Bank, in the case of fees payable to it) for
distribution, in the case of facility fees and participation fees, to the applicable Lenders. Fees paid shall not be refundable under any
circumstances.
SECTION 2.13 Interest . (a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus
the Applicable Rate.
(b) The Loans comprising each Eurocurrency Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest
Period in effect for such Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing:
(i) during the occurrence and continuance of an Event of Default under any of clauses (a), (f), or (g) of Article VII ,
(x) all Loans shall bear interest at 2% plus the rate otherwise applicable to such Loans as provided in the preceding paragraphs of this
Section or (y) in the case of any other amount outstanding hereunder, such amount shall accrue at 2% plus the rate applicable to ABR
Loans as provided in paragraph (a) of this Section; and
(ii) during the occurrence and continuance of any other Event of Default, the Required Lenders may, at their option,
by notice to the Company (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of
Section 9.02 requiring the consent of “each Lender directly affected thereby” for reductions in interest rates), declare that (x) all
Loans shall bear interest at 2% plus the rate otherwise applicable to such Loans as provided in the preceding paragraphs of this
Section or (y) in the case of any other amount outstanding hereunder, such amount shall accrue at 2% plus the rate applicable to ABR
Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and upon
termination of the Commitments; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the
Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment
and (iii) in the event of any conversion of any Eurocurrency Loan prior to the end of the current Interest Period therefor, accrued interest on
such Loan shall be payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest (i) computed by
reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a
year of 365 days (or 366 days in a leap year) and (ii) for Borrowings denominated in Pounds Sterling shall be computed on the basis of a year
of 365 days, and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The
applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination
shall be conclusive absent manifest error.
SECTION 2.14 Alternate Rate of Interest .
(a) If at the time that the Administrative Agent shall seek to determine the LIBO Screen Rate on the Quotation Day for any
Interest Period for a Eurocurrency Borrowing, the LIBO Screen Rate shall not be available for such Interest Period and/or for the applicable
currency with respect to such Eurocurrency Borrowing for any reason, and the Administrative Agent shall reasonably determine that it is not
possible to determine the Interpolated Rate (which conclusion shall be conclusive and binding absent manifest error), then the Reference
Bank Rate shall be the LIBO Rate for such Interest Period for such Eurocurrency Borrowing; provided that if the Reference Bank Rate shall
be less than zero, such rate shall be deemed to be zero for purposes of this Agreement; provided , further , however, that if less than two
Reference Banks shall supply a rate to the Administrative Agent for purposes of determining the LIBO Rate for such Eurocurrency
Borrowing, (i) if such Borrowing shall be requested in Dollars, then such Borrowing shall be made as an ABR Borrowing at the Alternate
Base Rate and (ii) if such Borrowing shall be requested in any Foreign Currency, the LIBO Rate shall be equal to the rate determined by the
Administrative Agent in its reasonable discretion after consultation with the Company and consented to in writing by the Required Lenders
(the “ Alternative Rate ”); provided , however , that until such time as the Alternative Rate shall be determined and so consented to by the
Required Lenders, Borrowings shall not be available in such Foreign Currency. It is hereby understood and agreed that, notwithstanding
anything to the foregoing set forth in this Section 2.14(a), if at any time the conditions set forth in Section 2.14(c)(i) or (ii) are in effect, the
provisions of this Section 2.14(a) shall no longer be applicable for any purpose of determining any alternative rate of interest under this
Agreement and Section 2.14(c) shall instead be applicable for all purposes of determining any alternative rate of interest under this
Agreement.
(b) If prior to the commencement of any Interest Period for a Eurocurrency Borrowing:
(i) the Administrative Agent determines (which determination shall be conclusive and binding absent manifest
error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable
(including because the LIBO Screen Rate is not available or published on a current basis), for the applicable currency and such
Interest Period; or
(ii) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate, as
applicable, for the applicable currency and such Interest Period will not adequately and fairly reflect the cost to such Lenders of
making or maintaining their Loans included in such Borrowing for the applicable currency and such Interest Period;
then the Administrative Agent shall give notice thereof to the applicable Borrower and the Lenders by telephone or telecopy as promptly as
practicable thereafter and, until the Administrative Agent notifies the applicable Borrower and the Lenders that the circumstances giving rise
to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any
Borrowing as, a Eurocurrency Borrowing in the applicable currency or for the applicable Interest Period, as the case may be, shall be
ineffective, (ii) if any Borrowing Request requests a Eurocurrency Borrowing in Dollars, such Borrowing shall be made as an ABR
Borrowing and (iii) if any Borrowing Request requests a Eurocurrency Borrowing in a Foreign Currency, then the LIBO Rate for such
Eurocurrency Borrowing shall be the Alternative Rate; provided that if the circumstances giving rise to such notice affect only one Type of
Borrowings, then the other Type of Borrowings shall be permitted.
(c) Notwithstanding the foregoing, if at any time the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that (i) the circumstances set forth in Section 2.14(b)(i) have arisen and such circumstances are unlikely to
be temporary or (ii) the circumstances set forth in Section 2.14(b)(i) have not arisen but (w) the supervisor for the administrator of the LIBO
Screen Rate
has made a public statement that the administrator of the LIBO Screen Rate is insolvent (and there is no successor administrator that will
continue publication of the LIBO Screen Rate), (x) the administrator of the LIBO Screen Rate has made a public statement identifying a
specific date after which the LIBO Screen Rate will permanently or indefinitely cease to be published by it (and there is no successor
administrator that will continue publication of the LIBO Screen Rate), (y) the supervisor for the administrator of the LIBO Screen Rate has
made a public statement identifying a specific date after which the LIBO Screen Rate will permanently or indefinitely cease to be published
or (z) the supervisor for the administrator of the LIBO Screen Rate or a Governmental Authority having jurisdiction over the Administrative
Agent has made a public statement identifying a specific date after which the LIBO Screen Rate may no longer be used for determining
interest rates for loans, then the Administrative Agent and the Company shall endeavor to establish an alternate rate of interest to the LIBO
Rate that gives due consideration to the then prevailing market convention for determining a rate of interest for syndicated loans in the United
States at such time, and shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related
changes to this Agreement as may be applicable (but for the avoidance of doubt, such related changes shall not include a reduction of the
Applicable Rate); provided that, if such alternate rate of interest as so determined would be less than zero, such rate shall be deemed to be
zero for the purposes of this Agreement. Notwithstanding anything to the contrary in Section 9.02, such amendment shall become effective
without any further action or consent of any other party to this Agreement so long as the Administrative Agent shall not have received, within
five (5) Business Days of the date notice of such alternate rate of interest is provided to the Lenders, a written notice from the Required
Lenders stating that such Required Lenders object to such amendment. Until an alternate rate of interest shall be determined in accordance
with this Section 2.14(c) (but, in the case of the circumstances described in clause (ii) of the first sentence of this Section 2.14(c), only to the
extent the LIBO Screen Rate for the applicable currency and such Interest Period is not available or published at such time on a current basis),
(x) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurocurrency
Borrowing in the applicable currency or for the applicable Interest Period, as the case may be, shall be ineffective, (y) if any Borrowing
Request requests a Eurocurrency Borrowing in Dollars, such Borrowing shall be made as an ABR Borrowing and (z) if any Borrowing
Request requests a Eurocurrency Borrowing in a Foreign Currency, then such request shall be ineffective.
SECTION 2.15 Increased Costs . (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including any
compulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, or credit
extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or any Issuing Bank;
(ii) impose on any Lender or any Issuing Bank or the London interbank market any other condition, cost or expense
(other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein; or
(iii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes and (B) Excluded Taxes) on its loans,
loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable
thereto;
and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing, converting
into or maintaining any Loan or of maintaining its obligation to make any such Loan or to increase the cost to such Lender, such Issuing Bank
or such other Recipient of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or
receivable by
such Lender such the Issuing Bank or such other Recipient hereunder, whether of principal, interest or otherwise, then the applicable
Borrower will pay to such Lender, such Issuing Bank or such other Recipient, as the case may be, such additional amount or amounts as will
compensate such Lender, such Issuing Bank or such other Recipient, as the case may be, for such additional costs incurred or reduction
suffered.
(b) If any Lender or any Issuing Bank determines that any Change in Law regarding capital or liquidity requirements has or
would have the effect of reducing the rate of return on such Lender’s or such Issuing Bank’s capital or on the capital of such Lender’s or such
Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held
by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below that which such Lender or such Issuing Bank or such
Lender’s or such Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s
or such Issuing Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding company with respect to capital adequacy
and liquidity), then from time to time the applicable Borrower will pay to such Lender or such Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding
company for any such reduction suffered.
(c) A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary to compensate such Lender
or such Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the
Company and shall be conclusive absent manifest error. The Company shall pay, or cause the other Borrowers to pay, such Lender or such
Issuing Bank, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.
(d) Failure or delay on the part of any Lender or any Issuing Bank to demand compensation pursuant to this Section shall
not constitute a waiver of such Lender’s or such Issuing Bank’s right to demand such compensation; provided that the Company shall not be
required to compensate a Lender or an Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than
180 days prior to the date that such Lender or such Issuing Bank, as the case may be, notifies the Company of the Change in Law giving rise
to such increased costs or reductions and of such Lender’s or such Issuing Bank’s intention to claim compensation therefor; provided further
that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be
extended to include the period of retroactive effect thereof.
SECTION 2.16 Break Funding Payments . In the event of (a) the payment of any principal of any Eurocurrency Loan other
than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default or as a result of any prepayment
pursuant to Section 2.11), (b) the conversion of any Eurocurrency Loan other than on the last day of the Interest Period applicable thereto,
(c) the failure to borrow, convert, continue or prepay any Eurocurrency Loan on the date specified in any notice delivered pursuant hereto
(regardless of whether such notice may be revoked under Section 2.11(a) and is revoked in accordance therewith) or (d) the assignment of
any Eurocurrency Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Company pursuant to
Section 2.19, then, in any such event, the Borrowers shall compensate each Lender for the loss, cost and expense attributable to such event
(excluding any loss of anticipated profits). Such loss, cost or expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event
not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been
the Interest Period for such
Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for deposits in the relevant currency of a comparable amount and period from
other banks in the eurocurrency market. 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 applicable Borrower and shall be conclusive absent manifest error. The applicable
Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.
SECTION 2.17 Taxes . (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. If any
applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or 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 2.17) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been
made.
(b) Payment of Other Taxes by the Borrowers . The relevant Borrower shall timely pay to the relevant Governmental
Authority in accordance with applicable Law, or at the option of the Administrative Agent timely reimburse it for, Other Taxes.
(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 2.17, such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt
issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such
payment reasonably satisfactory to the Administrative Agent.
(d) Indemnification by the Loan Parties . The Loan Parties shall indemnify each Recipient, within 10 days after written
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) 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 relevant 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 the Lenders . Each Lender shall severally indemnify the Administrative Agent, within 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 9.04(c) 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 paragraph (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 Company and to the Administrative Agent, at the time or times reasonably
requested by the Company or the Administrative Agent, such properly completed and executed documentation prescribed by applicable Laws
or by the taxing authorities of any jurisdiction and such other documentation reasonably requested by the Company 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 Company or the Administrative Agent, shall deliver such other documentation prescribed by applicable Law or
reasonably requested by the Company or the Administrative Agent as will enable the Company 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, execution and submission of such documentation (other than such documentation set forth in
Section 2.17(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if 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.
(i) Without limiting the generality of the foregoing, in the event that any Borrower is a U.S. Person:
(A) any Lender or Administrative Agent that is a U.S. Person shall deliver to such Borrower and the
Administrative Agent on or prior to the date on which such Lender or Administrative Agent becomes a Lender or
Administrative Agent under this Agreement (and from time to time thereafter upon the reasonable request of such Borrower
or the Administrative Agent), executed copies of IRS Form W-9 (or any successor form) certifying that such Lender or
Administrative Agent is exempt from U.S. Federal backup withholding Tax;
(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to such 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
such Borrower or the Administrative Agent), whichever of the following is applicable:
(1) 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 copies 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;
(2) executed copies of IRS Form W-8ECI (or any successor form);
(3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c)
of the Code, (x) a certificate substantially in the form of Exhibit G-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 such 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
(4) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY (or any
successor form), accompanied by IRS Form W-8ECI, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, a
U.S. Tax Compliance Certificate substantially in the form of Exhibit G-2 or Exhibit G-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
G-4 on behalf of each such direct and indirect partner;
(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to such 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
such 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 such Borrower or the Administrative Agent to determine the
withholding or deduction required to be made; and
(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 such
Borrower and the Administrative Agent at the time or times prescribed by Law and at such time or times reasonably requested
by such 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 such Borrower or the
Administrative Agent as may be necessary for such 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.
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 Company and the Administrative Agent in writing of its legal inability to do so.
(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 2.17 (including by the payment of additional amounts
pursuant to this Section 2.17), 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 2.17 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 paragraph (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
paragraph (g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (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
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.
(h) Survival . Each party’s obligations under this Section 2.17 shall survive the resignation or replacement of the
Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the
repayment, satisfaction or discharge of all obligations under any Loan Document.
(i) Defined Terms . For purposes of this Section 2.17, the term “Lender” includes the Issuing Banks.
(j) Certain FATCA Matters . For purposes of determining withholding Taxes imposed under FATCA, the Loan Parties and
the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) this Agreement and the Loans as not
qualifying as “grandfathered obligations” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).
SECTION 2.18 Payments Generally; Allocations of Proceeds; Pro Rata Treatment; Sharing of Set‑offs .
(a) Each Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to (i) in the case of
payments denominated in Dollars, 2:00 p.m., New York City time and (ii) in the case of payments denominated in a Foreign Currency, 2:00
p.m., Local Time, in the city of the Administrative Agent’s Eurocurrency Payment Office for such currency, in each case on the date when
due, in immediately available funds, without set-off, recoupment or counterclaim. Any amounts received after such time on any date may, in
the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made (i) in the same currency in which the applicable Credit Event was made (or where such
currency has been converted to euro, in euro) and (ii) to the Administrative Agent at its offices at 10 South Dearborn Street, Chicago, Illinois
60603 or, in the case of a Credit Event denominated in a Foreign Currency, the Administrative Agent’s Eurocurrency Payment Office for
such currency, except payments to be made directly to any Issuing Bank as expressly provided herein and except that payments pursuant to
Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments denominated in the same currency received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the
date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon
shall be payable for the period of such extension. Notwithstanding the foregoing provisions of this Section, if, after the making of any Credit
Event in any Foreign Currency, currency control or exchange regulations are imposed in the country which issues such currency with the
result that the type of currency in which the Credit Event was made (the “Original Currency”) no longer exists or any Borrower is not able to
make payment to the Administrative Agent for the account of the Lenders in such Original Currency, then all payments to be made by such
Borrower hereunder in such currency shall instead be made when due in Dollars in an amount equal to the Dollar Amount (as of the date of
repayment) of such payment due, it being the intention of the parties hereto that the Borrowers take all risks of the imposition of any such
currency control or exchange regulations.
(b) Any proceeds of Collateral received by the Administrative Agent (i) not constituting (A) a specific payment of principal,
interest, fees or other sum payable under the Loan Documents (which shall be applied as specified by the Company) or (B) a mandatory
prepayment (which shall be applied in accordance with Section 2.11) or (ii) after an Event of Default has occurred and is continuing and the
Administrative Agent so elects or the Required Lenders so direct, shall be applied ratably first , to pay any fees, indemnities, or expense
reimbursements including amounts then due to the Administrative Agent and the Issuing Banks from any Borrower, second , to pay any fees
or expense reimbursements then due to the Lenders from any Borrower, third , to pay interest then due and payable on the Loans ratably,
fourth , to prepay principal on the Loans and unreimbursed LC Disbursements and any other amounts owing with respect to Banking Services
Obligations and Swap Obligations ratably, fifth , to pay an amount to the Administrative Agent equal to the aggregate undrawn face amount
of all outstanding Letters of Credit and the aggregate amount of any unpaid LC Disbursements, to be held as cash collateral for such
Obligations, sixth , to the payment of any other Secured Obligation due to the Administrative Agent or any Lender by any Borrower and
seventh , the balance, if any, after all of the Secured Obligations have been paid in full, to the applicable Borrower or as otherwise required by
Law. Notwithstanding the foregoing, amounts received from any Loan Party shall not be applied to any Excluded Swap Obligation of such
Loan Party. Notwithstanding anything to the contrary contained in this Agreement, unless so directed by the Company, or unless a Default is
in existence, none of the Administrative Agent or any Lender shall apply any payment which it receives to any Eurocurrency Loan, except
(a) on the expiration date of the Interest Period applicable to any such Eurocurrency Loan or (b) in the event, and only to the extent, that there
are no outstanding ABR Loans and, in any event, the Borrowers shall pay the break funding payment required in accordance with
Section 2.16.
(c) At the election of the Administrative Agent, all payments of principal, interest, LC Disbursements, fees, premiums,
reimbursable expenses (including, without limitation, all reimbursement for fees and expenses pursuant to Section 9.03), and other sums
payable under the Loan Documents, may be paid from the proceeds of Borrowings made hereunder whether made following a request by a
Borrower (or the Company on behalf of a Borrower) pursuant to Section 2.03 or may be deducted from any deposit account of such Borrower
maintained with the Administrative Agent.
(d) If, except as expressly provided herein, any Lender shall, by exercising any right of set-off or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on any of its Revolving Loans or participations in LC Disbursements resulting in
such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans and participations in LC
Disbursements and accrued interest thereon than the proportion received by any other similarly situated Lender, then the Lender receiving
such greater proportion shall purchase (for cash at face value) participations in the Revolving
Loans and participations in LC Disbursements of other Lenders to the extent necessary so that the benefit of all such payments shall be shared
by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans and
participations in LC Disbursements; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any payment made by any Borrower pursuant to and in accordance with
the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in
any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Company or any Subsidiary or
Affiliate thereof (as to which the provisions of this paragraph shall apply). Each Borrower consents 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 such Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of
such Borrower in the amount of such participation.
(e) Unless the Administrative Agent shall have received notice from the relevant Borrower prior to the date on which any
payment is due to the Administrative Agent for the account of the Lenders or the relevant Issuing Banks hereunder that such Borrower will
not make such payment, the Administrative Agent may assume that such Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders or the relevant Issuing Banks, as the case may be, the amount
due. In such event, if such Borrower has not in fact made such payment, then each of the Lenders or the relevant Issuing Banks, as the case
may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or such Issuing
Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to
the Administrative Agent, at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation (including without limitation the Overnight Foreign Currency Rate in the case of Loans
denominated in a Foreign Currency).
(f) If any Lender shall fail to make any payment required to be made by it pursuant to 2.06(d) or (e), 2.07(b), 2.18(e) or
9.03(c), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter
received by the Administrative Agent for the account of such Lender and for the benefit of the Administrative Agent or the Issuing Banks to
satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid and/or (ii) hold any such amounts in
a segregated account as cash collateral for, and application to, any future funding obligations of such Lender under such Sections; in the case
of each of (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.
SECTION 2.19 Mitigation Obligations; Replacement of Lenders . (a) If any Lender requests compensation under
Section 2.15, or if any Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches
or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to
Section 2.15 or 2.17, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. The Company hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.
(b) If (i) any Lender requests compensation under Section 2.15, (ii) any Borrower is required to pay any Indemnified Taxes
or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17 or (iii) any
Lender becomes a Defaulting Lender, then the Company may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all its interests, rights (other than its existing rights to payments pursuant to Section 2.15 or 2.17) and obligations
under the Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Company shall have received the prior written consent of the Administrative Agent and the Issuing Banks,
which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Company (in the case of all
other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required
to be made pursuant to Section 2.17, such assignment will result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Company to require such assignment and delegation cease to apply. Each party hereto agrees that (a) an assignment required
pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by the Company, the Administrative Agent
and the assignee (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), and (b) the Lender required to make
such assignment need not be a party thereto in order for such assignment to be effective and shall be deemed to have consented to and be
bound by the terms thereof; provided that, following the effectiveness of any such assignment, the other parties to such assignment agree to
execute and deliver such documents necessary to evidence such assignment as reasonably requested by the applicable Lender, provided that
any such documents shall be without recourse to or warranty by the parties thereto.
SECTION 2.20 Expansion Option . The Company may from time to time elect to increase the Commitments or enter into
one or more tranches of term loans (each an “ Incremental Term Loan ”), in each case in minimum increments of $5,000,000 so long as, after
giving effect thereto, the aggregate amount of such increases and all such Incremental Term Loans does not exceed $50,000,000. The
Company may arrange for any such increase or tranche to be provided by one or more Lenders (each Lender so agreeing to an increase in its
Commitment, or to participate in such Incremental Term Loans, an “ Increasing Lender ”), or by one or more new banks, financial institutions
or other entities (each such new bank, financial institution or other entity, an “ Augmenting Lender ”; provided that no Ineligible Institution
may be an Augmenting Lender), which agree to increase their existing Commitments, or to participate in such Incremental Term Loans, or
extend Commitments, as the case may be; provided that (i) each Augmenting Lender, shall be subject to the approval of the Company and the
Administrative Agent and (ii) (x) in the case of an Increasing Lender, the Company and such Increasing Lender execute an agreement
substantially in the form of Exhibit C hereto, and (y) in the case of an Augmenting Lender, the Company and such Augmenting Lender
execute an agreement substantially in the form of Exhibit D hereto. No consent of any Lender (other than the Lenders participating in the
increase or any Incremental Term Loan) shall be required for any increase in Commitments or Incremental Term Loan pursuant to this
Section 2.20. Increases and new Commitments and Incremental Term Loans created pursuant to this Section 2.20 shall become effective on
the date agreed by the Company, the Administrative Agent and the relevant Increasing Lenders or Augmenting Lenders, and the
Administrative Agent shall notify each Lender thereof. Notwithstanding the foregoing, no increase in the Commitments (or in the
Commitment of any Lender) or tranche of Incremental Term Loans shall become effective under this paragraph unless, (i) on the proposed
date of the effectiveness of such increase or Incremental Term
Loans, (A) the conditions set forth in paragraphs (a) and (b) of Section 4.02 shall be satisfied or waived by the Required Lenders and the
Administrative Agent shall have received a certificate to that effect dated such date and executed by a Financial Officer of the Company and
(B) the Company shall be in compliance (on a pro forma basis) with the covenants contained in Section 6.11 and (ii) the Administrative
Agent shall have received documents consistent with those delivered on the Effective Date as to the corporate power and authority of the
Borrowers to borrow hereunder after giving effect to such increase; provided that, with respect to any Incremental Term Loans incurred for
the primary purpose of financing a Limited Conditionality Acquisition (“ Acquisition-Related Incremental Term Loans ”), (x) clause (i)(A) of
this sentence shall be deemed to have been satisfied so long as (1) as of the date of execution of the related Limited Conditionality
Acquisition Agreement by the parties thereto, no Default shall have occurred and be continuing or would result from entry into such
documentation, (2) as of the date of the borrowing of such Acquisition-Related Incremental Term Loans, no Event of Default under clause
(a), (f) or (g) of Article VII is in existence immediately before or after giving effect (including on a pro forma basis) to such borrowing and to
any concurrent transactions and any substantially concurrent use of proceeds thereof, (3) the representations and warranties set forth in Article
III shall be true and correct in all material respects (or in all respects if the applicable representation or warranty is qualified by materiality or
Material Adverse Effect) as of the date of execution of the applicable Limited Conditionality Acquisition Agreement by the parties thereto,
except to the extent any such representations or warranties are expressly limited to an earlier date, in which case such representations and
warranties shall be true and correct in all material respects (or in all respects if the applicable representation or warranty is qualified by
materiality or Material Adverse Effect) as of such specified earlier date and (4) as of the date of the borrowing of such Acquisition-Related
Incremental Term Loans, customary “Sungard” representations and warranties (with such representations and warranties to be reasonably
determined by the Lenders providing such Acquisition-Related Incremental Term Loans) shall be true and correct in all material respects (or
in all respects if the applicable representation or warranty is qualified by materiality or Material Adverse Effect) immediately prior to, and
after giving effect to, the incurrence of such Acquisition-Related Incremental Term Loans, except to the extent any such representations or
warranties are expressly limited to an earlier date, in which case such representations and warranties shall be true and correct in all material
respects (or in all respects if the applicable representation or warranty is qualified by materiality or Material Adverse Effect) as of such
specified earlier date and (y) clause (i)(B) of this sentence shall be deemed to have been satisfied so long as the Company shall be in
compliance (on a pro forma basis) with the covenants contained in Section 6.11 as of the date of execution of the related Limited
Conditionality Acquisition Agreement by the parties thereto. On the effective date of any increase in the Commitments or any Incremental
Term Loans being made, (i) each relevant Increasing Lender and Augmenting Lender shall make available to the Administrative Agent such
amounts in immediately available funds as the Administrative Agent shall determine, for the benefit of the other Lenders, as being required in
order to cause, after giving effect to such increase and the use of such amounts to make payments to such other Lenders, each Lender’s
portion of the outstanding Revolving Loans of all the Lenders to equal its Applicable Percentage of such outstanding Revolving Loans, and
(ii) the Borrowers shall be deemed to have repaid and reborrowed all outstanding Revolving Loans as of the date of any increase in the
Commitments (with such reborrowing to consist of the Types of Revolving Loans, with related Interest Periods if applicable, specified in a
notice delivered by the applicable Borrower, or the Company on behalf of the applicable Borrower, in accordance with the requirements of
Section 2.03). The deemed payments made pursuant to clause (ii) of the immediately preceding sentence shall be accompanied by payment of
all accrued interest on the amount prepaid and, in respect of each Eurocurrency Loan, shall be subject to indemnification by the Borrowers
pursuant to the provisions of Section 2.16 if the deemed payment occurs other than on the last day of the related Interest Periods. The
Incremental Term Loans (a) shall rank pari passu in right of payment with the Revolving Loans, (b) shall not mature earlier than the Maturity
Date (but may have amortization prior to such date) and (c) shall be subject to representations and warranties, covenants, events of default
and other terms substantially identical to (and in any event no more favorable to the
Incremental Term Loans than) those applicable to the Revolving Loans; provided that (i) the terms and conditions applicable to any tranche of
Incremental Term Loans maturing after the Maturity Date may provide for material additional or different financial or other covenants or
prepayment requirements applicable only during periods after the Maturity Date and (ii) the Incremental Term Loans may be priced
differently than the Revolving Loans. Incremental Term Loans may be made hereunder pursuant to an amendment or restatement (an “
Incremental Term Loan Amendment ”) of this Agreement and, as appropriate, the other Loan Documents, executed by the Borrowers, each
Increasing Lender participating in such tranche, each Augmenting Lender participating in such tranche, if any, and the Administrative Agent.
The Incremental Term Loan Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the
other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent, to effect the provisions of
this Section 2.20. Nothing contained in this Section 2.20 shall constitute, or otherwise be deemed to be, a commitment on the part of any
Lender to increase its Commitment hereunder, or provide Incremental Term Loans, at any time.
SECTION 2.21 [Intentionally Omitted] .
SECTION 2.22 Judgment Currency . If for the purposes of obtaining judgment in any court it is necessary to convert a sum
due from any Borrower hereunder in the currency expressed to be payable herein (the “ specified currency ”) into another currency, the
parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance
with normal banking procedures the Administrative Agent could purchase the specified currency with such other currency at the
Administrative Agent’s main New York City office on the Business Day preceding that on which final, non-appealable judgment is given.
The obligations of each Borrower in respect of any sum due to any Lender or the Administrative Agent hereunder shall, notwithstanding any
judgment in a currency other than the specified currency, be discharged only to the extent that on the Business Day following receipt by such
Lender or the Administrative Agent (as the case may be) of any sum adjudged to be so due in such other currency such Lender or the
Administrative Agent (as the case may be) may in accordance with normal, reasonable banking procedures purchase the specified currency
with such other currency. If the amount of the specified currency so purchased is less than the sum originally due to such Lender or the
Administrative Agent, as the case may be, in the specified currency, each Borrower agrees, to the fullest extent that it may effectively do so,
as a separate obligation and notwithstanding any such judgment, to indemnify such Lender or the Administrative Agent, as the case may be,
against such loss, and if the amount of the specified currency so purchased exceeds (a) the sum originally due to any Lender or the
Administrative Agent, as the case may be, in the specified currency and (b) any amounts shared with other Lenders as a result of allocations
of such excess as a disproportionate payment to such Lender under Section 2.18, such Lender or the Administrative Agent, as the case may
be, agrees to remit such excess to such Borrower.
SECTION 2.23 Defaulting Lenders . Notwithstanding any provision of this Agreement to the contrary, if any Lender
becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
(a) fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to
Section 2.12(a);
(b) the Commitment and Revolving Credit Exposure of such Defaulting Lender shall not be included in determining
whether the Required Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other
modification pursuant to Section 9.02); provided , that any amendment, waiver or other modification requiring the consent of all Lenders or
all Lenders directly
affected thereby shall not, except as otherwise provided in Section 9.02, require the consent of such Defaulting Lender in accordance with the
terms hereof;
(c) if any LC Exposure exists at the time such Lender becomes a Defaulting Lender then:
(i) all or any part of the LC Exposure of such Defaulting Lender shall be reallocated among the non-Defaulting
Lenders in accordance with their respective Applicable Percentages but only to the extent that the sum of all non-Defaulting Lenders’
Revolving Credit Exposures plus such Defaulting Lender’s LC Exposure does not exceed the total of all non-Defaulting Lenders’
Commitments;
(ii) if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Company shall
within one (1) Business Day following notice by the Administrative Agent cash collateralize for the benefit of each Issuing Bank
only, the Borrowers’ obligations corresponding to such Defaulting Lender’s LC Exposure (after giving effect to any partial
reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.06(j) for so long as such LC
Exposure is outstanding;
(iii) if the Company cash collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to clause (ii)
above, the Borrowers shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.12(b) with respect to such
Defaulting Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash collateralized;
(iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to clause (i) above, then the fees
payable to the Lenders pursuant to Section 2.12(a) and Section 2.12(b) shall be adjusted in accordance with such non-Defaulting
Lenders’ Applicable Percentages; and
(v) if all or any portion of such Defaulting Lender’s LC Exposure is neither reallocated nor cash collateralized
pursuant to clause (i) or (ii) above, then, without prejudice to any rights or remedies of the relevant Issuing Bank or any other Lender
hereunder, all letter of credit fees payable under Section 2.12(b) with respect to such Defaulting Lender’s LC Exposure shall be
payable to the Issuing Bank until and to the extent that such LC Exposure is reallocated and/or cash collateralized; and
(d) so long as such Lender is a Defaulting Lender, the relevant Issuing Bank shall not be required to issue, amend or
increase any Letter of Credit, unless it is reasonably satisfied that the related exposure and the Defaulting Lender’s then outstanding LC
Exposure will be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Company
in accordance with Section 2.23(c), and participating interests in any newly issued or increased Letter of Credit shall be allocated among non-
Defaulting Lenders in a manner consistent with Section 2.23(c)(i) (and such Defaulting Lender shall not participate therein).
If (i) a Bankruptcy Event or a Bail-In Action with respect to a Lender Parent shall occur following the date hereof and for so long as
such event shall continue or (ii) any Issuing Bank has a good faith belief that any Lender has defaulted in fulfilling its obligations under one
or more other agreements in which such Lender commits to extend credit, no Issuing Bank shall be required to issue, amend or increase any
Letter of Credit, unless such Issuing Bank shall have entered into arrangements with the Company or such Lender, satisfactory to such
Issuing Bank to defease any risk to it in respect of such Lender hereunder.
In the event that the Administrative Agent, the Company and each Issuing Bank each agrees that a Defaulting Lender has adequately
remedied all matters that caused such Lender to be a Defaulting Lender, then (i) the LC Exposure of the Lenders shall be readjusted to reflect
the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders as the
Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable
Percentage and (ii) so long as no Event of Default has occurred and is continuing, all funds held as cash collateral pursuant to Section 2.23(c)
(ii) shall thereafter be promptly returned to the Company. If the Commitments have been terminated, and all other Obligations have been paid
in full and no Letters of Credit are outstanding, then so long as no Event of Default has occurred and is then continuing, all funds held as cash
collateral pursuant to Section 2.23(c)(ii) shall thereafter be promptly returned to the Company.
ARTICLE III
Representations and Warranties
Each Borrower represents and warrants to the Lenders that:
SECTION 3.01 Existence, Qualification and Power .
Each Loan Party and each Subsidiary (a) is duly organized or formed, validly existing and, as applicable, in good standing under the
Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses,
authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its
obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and, as applicable, in good standing
under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such
qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect.
SECTION 3.02 Authorization; No Contravention .
The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party have been duly
authorized by all necessary corporate or other organizational action, and do not (a) contravene the terms of any of such Person’s Organization
Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made
under (i) any material Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any
of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its
property is subject; or (c) violate any material Law.
SECTION 3.03 Governmental Authorization; Other Consents .
No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any
other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of
this Agreement or any other Loan Document other than (a) those that have already been obtained and are in full force and effect and
(b) filings to perfect the Liens created by the Collateral Documents.
SECTION 3.04 Binding Effect .
Each Loan Document has been duly executed and delivered by each Loan Party that is party thereto. Each Loan Document constitutes
a legal, valid and binding obligation of each Loan Party that is party thereto, enforceable against each such Loan Party in accordance with its
terms, except as may be limited by applicable Debtor Relief Laws and general principles of equity.
SECTION 3.05 Financial Statements; No Material Adverse Effect .
(a) The financial statements delivered pursuant to Sections 5.01(a) and 5.01(b) (i) were prepared in accordance with GAAP,
except as otherwise expressly noted therein; and (ii) fairly present the financial condition of the Company and its Subsidiaries as of the date
thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein (subject, in the case of unaudited financial statements, to the absence of
footnotes and to normal year-end audit adjustments).
(b) The Audited Financial Statements and the unaudited consolidated financial statements of the Company and its
Subsidiaries for the fiscal quarters ending March 31, 2018 and June 30, 2018 (i) were prepared in accordance with GAAP, except as
otherwise expressly noted therein; and (ii) fairly present the financial condition of the Company and its Subsidiaries as of the date thereof and
their results of operations for the period covered thereby (subject, in the case of unaudited financial statements, to the absence of footnotes
and to normal year-end audit adjustments).
(c) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the
aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.
SECTION 3.06 Litigation .
There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Loan Parties threatened, at law, in
equity, in arbitration or before any Governmental Authority, by or against any Loan Party or any Subsidiary or against any of their properties
or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated
hereby or (b) could reasonably be expected to have a Material Adverse Effect.
SECTION 3.07 No Default .
(a) No Loan Party nor any Subsidiary is in default under or with respect to any Contractual Obligation that individually or
in the aggregate could reasonably be expected to have a Material Adverse Effect.
(b) No Default has occurred and is continuing.
SECTION 3.08 Ownership of Property .
Each Loan Party and each of its Subsidiaries has good record and marketable title in, or valid leasehold interests in, all real and
personal property and necessary or used in the ordinary conduct of its business, except to the extent that the failure to do so could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 3.09 Environmental Compliance .
(a) Except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the
Loan Parties and their Subsidiaries have no liability under existing Environmental Laws and there are no claims pending that allege their
potential liability under such Environmental Laws.
(b) Except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect,
(i) neither any Loan Party, nor, to the knowledge of the Loan Parties, any other Person, has owned or operated any underground or above-
ground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been
treated, stored or disposed on any property currently owned or operated by any Loan Party or any Subsidiary or on any property formerly
owned or operated by any Loan Party or any Subsidiary; (ii) there is no asbestos or asbestos-containing material on any property currently
owned or operated by any Loan Party or any Subsidiary; and (iii) neither any Loan Party, nor, to the knowledge of the Loan Parties, any other
Person, has caused any Hazardous Materials to have been released, discharged or disposed of on any property currently or formerly owned or
operated by any Loan Party or any Subsidiary.
(c) Except as could not reasonably be expected to have a Material Adverse Effect, no Loan Party nor any Subsidiary has
failed to undertake or complete, either individually or together with other potentially responsible parties, any investigation or assessment or
remedial or response action relating to any actual or threatened release, discharge or disposal of Hazardous Materials at any site, location or
operation, either voluntarily or pursuant to the order of any Governmental Authority or the requirements of any Environmental Law; and,
except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, all Hazardous Materials
generated, used, treated, handled or stored at, or transported to or from, any property currently or formerly owned or operated by any Loan
Party or any Subsidiary have been disposed of in a manner not expected to result in liability to any Loan Party or any Subsidiary.
SECTION 3.10 Insurance .
The properties of the Loan Parties and their Subsidiaries are insured with financially sound and reputable insurance companies not
Affiliates of the Company, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged
in similar businesses in localities where the applicable Loan Party or the applicable Subsidiary operates. The property and general liability
insurance coverage of the Loan Parties as in effect on the Effective Date is outlined as to carrier, policy number, expiration date, type, amount
and deductibles on Schedule 3.10 .
SECTION 3.11 Taxes .
Each Loan Party and its Subsidiaries have filed all federal income tax returns required to be filed, all other material federal tax returns
and reports required to be filed and all material state, local and foreign tax returns and reports required to be filed, and have paid all federal
income and other material Taxes due and payable, except those which are being contested in good faith by appropriate proceedings diligently
conducted and for which adequate reserves have been provided in accordance with GAAP. To the knowledge of the Loan Parties, there is no
proposed tax assessment against any Loan Party or any Subsidiary that would, if made, have a Material Adverse Effect. No Loan Party nor
any Subsidiary thereof is party to any tax sharing agreement (other than intercompany tax sharing agreements; provided that any such
intercompany tax sharing agreement involving a Loan Party has arms-length terms and conditions).
SECTION 3.12 ERISA Compliance .
(a) Each Plan is in compliance with the applicable provisions of ERISA and the Internal Revenue Code, except as could not
reasonably be expected to result in a Material Adverse Effect. Each Plan that is intended to be a qualified plan under Section 401(a) of the
Internal Revenue Code has received a favorable determination letter from the IRS to the effect that the form of such Plan is qualified under
Section 401(a) of the Internal Revenue Code, or an application for such a letter is currently being processed by the IRS. To the knowledge of
the Loan Parties, nothing has occurred that would prevent or cause the loss of such tax-qualified status.
(b) There are no pending or, to the knowledge of the Loan Parties, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan that could be reasonably be expected to have a Material Adverse Effect. There has been no
prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be
expected to result in a Material Adverse Effect.
(c) Except as would not result in liability to the Company or any other Loan Party in excess of the Threshold Amount, (i) no
ERISA Event has occurred, and no Loan Party nor any ERISA Affiliate is aware of any fact, event or circumstance that could reasonably be
expected to constitute or result in an ERISA Event with respect to any Pension Plan, Multiple Employer Plan or Multiemployer Plan; (ii) each
Loan Party and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan,
and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) 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 Internal Revenue Code)
is 60% or higher and no Loan Party nor any ERISA Affiliate knows of any facts or circumstances that could reasonably be expected to cause
the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date; (iv) no Loan Party nor any
ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which
have become due that are unpaid; (v) no Loan Party nor any ERISA Affiliate has engaged in a transaction that could be subject to
Section 4069 or Section 4212(c) of ERISA; (vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and
no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV
of ERISA to terminate any Pension Plan; and (vii) no Loan Party nor any ERISA Affiliate has received notification that a Multiemployer Plan
is in Reorganization.
SECTION 3.13 Subsidiaries .
Set forth on Schedule 3.13 is a complete and accurate list as of the Effective Date of each Subsidiary of any Loan Party, together with
(i) jurisdiction of organization, (ii) number of shares of each class of Equity Interests outstanding, and (iii) number and percentage of
outstanding shares of each class owned (directly or indirectly) by any Loan Party or any Subsidiary. The outstanding Equity Interests of each
Subsidiary of any Loan Party are validly issued, fully paid and non-assessable.
SECTION 3.14 Margin Regulations; Investment Company Act .
(a) No Borrower is engaged or will engage, principally or as one of its important activities, in the business of purchasing or
carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying
margin stock. Following the application of the proceeds of each Borrowing or drawing under each Letter of Credit, not more than 25% of the
value of the assets (either of the applicable Borrower only or of the Company and its Subsidiaries on
a consolidated basis) subject to the provisions of Section 6.01 or Section 6.05 or subject to any restriction contained in any agreement or
instrument between any Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of clause (e)
of Article VII will be margin stock.
(b) None of the Company, any Person Controlling the Company, or any Subsidiary is or is required to be registered as an
“investment company” under the Investment Company Act of 1940.
SECTION 3.15 Disclosure .
No report, financial statement, certificate or other written information (other than projections, pro forma financial information,
estimates, budgets, other forward-looking information and information of a general economic or industry nature) furnished by or on behalf of
any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby or delivered hereunder or
under any other Loan Document (as modified or supplemented by other information so furnished), as of the time it was furnished (and when
modified or supplemented, as applicable), contained any misstatement of material fact or omitted as of such time to state any material fact
necessary to make the statements therein (when taken as a whole), in light of the circumstances under which they were made, not materially
misleading. With respect to projections, the Loan Parties represent that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time of preparation; it being understood that such projections are not to be viewed as facts or as guarantee of
performance or achievement of any particular results (and no representation as to the performance or achievement of such results is made
herein) and that actual results may vary from actual results and that such variances may be material and that no assurance can be given that
the projected results will be realized.
SECTION 3.16 Compliance with Laws .
Each Loan Party and Subsidiary is in compliance with the requirements of all Laws (including Anti-Corruption Laws and applicable
Sanctions) and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which the failure to
comply therewith could not reasonably be expected to have a Material Adverse Effect.
SECTION 3.17 Intellectual Property; Licenses, Etc .
Each Loan Party and each Subsidiary owns, or possesses the legal right to use, all of the trademarks, service marks, trade names,
domain names, website addresses, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights (collectively, “
IP Rights ”) that are reasonably necessary for the operation of their respective businesses, except to the extent that a failure to own or possess
such legal right to use would not reasonably be expected to have a Material Adverse Effect. Set forth on Schedule 3.17 is a list of (i) all IP
Rights registered, or for which registration has been applied for, with the United States Copyright Office or the United States Patent and
Trademark Office and owned by each Loan Party as of the Effective Date and (ii) all material websites and domain names owned by each
Loan Party as of the Effective Date. Except for such claims and infringements that could not reasonably be expected to have a Material
Adverse Effect, no claim has been asserted and is pending by any Person challenging or questioning the use of any IP Rights or the validity or
effectiveness of any IP Rights, nor does any Loan Party know of any such claim, and, to the knowledge of the Responsible Officers of the
Loan Parties, the use of any IP Rights by any Loan Party or any Subsidiary or the granting of a right or a license in respect of any IP Rights
from any Loan Party or any Subsidiary does not infringe on the rights of any Person, except as would not reasonably be expected to have a
Material Adverse Effect. As of the Effective Date, none of the material IP Rights owned by any Loan Party is subject to any licensing
agreement or similar arrangement except as set forth on Schedule 3.17 .
SECTION 3.18 Solvency .
The Company and its Subsidiaries are Solvent on a consolidated basis.
SECTION 3.19 Perfection of Security Interests in the Collateral .
The Collateral Documents will, upon the execution and delivery thereof, be effective to create valid security interests in, and Liens
on, the Collateral purported to be covered thereby and described therein, which security interests and Liens will be perfected security interests
and Liens, prior to all other Liens other than Permitted Liens, upon the timely and proper filings, deliveries, notations and other actions
contemplated by the Collateral Documents (to the extent that (a) such security interests and Liens can be perfected by such filings, deliveries,
notations and other actions contemplated by the Collateral Documents and (b) such actions are required to be taken with respect to such
Collateral by the terms of the Collateral Documents).
SECTION 3.20 Business Locations; Taxpayer Identification Number .
Set forth on Schedule 3.20(a) is a list of all real property located in the United States that is owned or leased by any Loan Party as of
the Effective Date. Set forth on Schedule 3.20(b) is a list of all locations where any tangible personal property of any Loan Party is located as
of the Effective Date. Set forth on Schedule 3.20(c) is the chief executive office, exact legal name, U.S. tax payer identification number and
organizational identification number of each Loan Party as of the Effective Date. Except as set forth on Schedule 3.20(d) , no Loan Party has
during the five years preceding the Effective Date (i) changed its legal name, (ii) changed its state of formation, or (iii) been party to a
merger, consolidation or other change in structure. Set forth on Schedule 3.20(e) , is a list of each deposit and investment account of each
Loan Party as of the Effective Date.
SECTION 3.21 Labor Matters .
There are no collective bargaining agreements or Multiemployer Plans covering the employees of any Loan Party or any Subsidiary
as of the Effective Date. No Loan Party nor any Subsidiary has suffered any strikes, walkouts, work stoppages or other material labor
difficulty in the five years preceding the Effective Date.
SECTION 3.22 Anti-Corruption Laws and Sanctions . Each Borrower has implemented and maintains in effect policies and
procedures designed to ensure compliance in all material respects by such Borrower, its Subsidiaries and their respective directors, officers,
employees and agents with Anti-Corruption Laws and applicable Sanctions, and such Borrower, its Subsidiaries and their respective officers
and employees and, to the knowledge of such Borrower, its directors and agents, are in compliance with Anti-Corruption Laws and applicable
Sanctions in all material respects. None of (a) the Borrowers, any Subsidiary or to the knowledge of the Borrowers or such Subsidiary any of
their respective directors, officers or employees, or (b) to the knowledge of each Borrower, any agent of such Borrower or any Subsidiary that
will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No Borrowing or
Letter of Credit, use of proceeds or the other Transactions will violate, in any material respect, Anti-Corruption Laws or applicable Sanctions.
SECTION 3.23 EEA Financial Institutions . No Loan Party is an EEA Financial Institution.
ARTICLE IV
Conditions
SECTION 4.01 Effective Date . The obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of
Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance
with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received (i) from each party hereto either (A) a counterpart of this
Agreement signed on behalf of such party or (B) written evidence satisfactory to the Administrative Agent (which may include telecopy or
electronic transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement and (ii) duly
executed copies of the Loan Documents and such other certificates, documents, instruments and agreements, all in form and substance
satisfactory to the Administrative Agent and its counsel and as further described in the list of closing documents attached as Exhibit E .
(b) The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and
the Lenders and dated the Effective Date) of Moore & Van Allen PLLC, counsel for the Loan Parties, substantially in the form of Exhibit B .
The Company hereby requests such counsel to deliver such opinion.
(c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its
counsel may reasonably request relating to the organization, existence and good standing of the initial Loan Parties, the authorization of the
Transactions and any other legal matters relating to such Loan Parties, the Loan Documents or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel and as further described in the list of closing documents attached as Exhibit E .
(d) The Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice
President or a Financial Officer of the Company, confirming compliance with the conditions set forth in paragraphs (a) and (b) of
Section 4.02.
(e) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective
Date, including, to the extent invoiced at least one Business Day prior to the Effective Date, reimbursement or payment of all reasonable out-
of-pocket expenses required to be reimbursed or paid by the Company hereunder.
The Administrative Agent shall notify the Company and the Lenders of the Effective Date, and such notice shall be conclusive and binding.
SECTION 4.02 Each Credit Event . The obligation of each Lender to make a Loan on the occasion of any Borrowing, and
of the Issuing Banks to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions:
(a) The representations and warranties of the Borrowers set forth in this Agreement shall be true and correct in all material
respects (or in all respects if the applicable representation or warranty is qualified by materiality or Material Adverse Effect) on and as of the
date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, except to the extent
that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material
respects as of such earlier date.
(b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension
of such Letter of Credit, as applicable, no Default or Event of Default shall have occurred and be continuing.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and
warranty by the Borrowers on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder
shall have been paid in full and all Letters of Credit shall have expired or terminated, in each case, without any pending draw, and all LC
Disbursements shall have been reimbursed, each Borrower shall, and shall cause each Subsidiary to:
SECTION 5.01 Financial Statements .
Deliver to the Administrative Agent for delivery to each Lender:
(a) as soon as available, but in any event within 120 days after the end of each fiscal year of the Company, a consolidated
balance sheet of the Company and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or
operations, changes in shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and
accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to
the Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be
subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit; and
(b) as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal
year of the Company, a condensed consolidated balance sheet of the Company and its Subsidiaries as at the end of such fiscal quarter, and the
related condensed consolidated statements of income or operations for such fiscal quarter and for the portion of the Company’s fiscal year
then ended, and the related condensed consolidated statements of cash flows for such fiscal quarter and for the portion of the Company’s
fiscal year then ended, in each case setting forth in comparative form, as applicable, the figures for the corresponding fiscal quarter of the
previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by the chief executive
officer, chief financial officer, vice president-treasury, treasurer or controller of the Company as fairly presenting the financial condition,
results of operations, shareholders’ equity and cash flows of the Company and its Subsidiaries in accordance with GAAP, subject only to
normal year-end audit adjustments and the absence of footnotes.
Notwithstanding the foregoing, the obligations in Sections 5.01(a) and 5.01(b) shall be deemed satisfied with respect to the
consolidated financial statements of the Company and the Subsidiaries by furnishing the Company’s Form 10-K or 10-Q, as applicable, filed
with the SEC; provided that to the extent such information is in lieu of information required to be provided under Section 5.01(a) , such
materials are accompanied by a report and opinion of an independent registered public accounting firm of nationally
recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be
subject to any “going concern” or like qualification or exception or any qualifications or exceptions as to the scope of such audit.
SECTION 5.02 Certificates; Other Information .
Deliver to the Administrative Agent for delivery to each Lender:
(a) [reserved];
(b) concurrently with the delivery of the financial statements referred to in Sections 5.01(a) and 5.01(b) , a duly completed
Compliance Certificate signed by the chief executive officer, chief financial officer, vice president, treasurer or controller of the Company
which shall include, in the case of the Compliance Certificate accompanying the financial statements referred to in Section 5.01(a) , such
supplements to Schedules 3.13 , 3.17 , 3.20(a) , 3.20(b) , 3.20(c) , 3.20(d) and 3.20(e) , as are necessary such that, as supplemented, such
Schedules would be accurate and complete as of the date of such Compliance Certificate (which delivery may, unless the Administrative
Agent, or a Lender requests executed originals, be by electronic communication including fax or email and shall be deemed to be an original
authentic counterpart thereof for all purposes);
(c) not later than 60 days after the beginning of each fiscal year of the Company, commencing with the fiscal year
beginning January 1, 2019, a projected annual budget of the Company and its Subsidiaries containing, among other things, projected income
and cash-flow statements for each quarter of such fiscal year;
(d) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or
communication sent to the equityholders of any Loan Party or any Subsidiary, and copies of all annual, regular, periodic and special reports
and registration statements which a Loan Party or any Subsidiary may file or be required to file with the SEC under Section 13 or 15(d) of the
Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto;
(e) promptly after any request by the Administrative Agent or any Lender, copies of any material audit reports, management
letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of the Company by
independent accountants in connection with the accounts or books of the Company or any Subsidiary, or any audit of any of them;
(f) promptly after the furnishing thereof, copies of any material statement or material report furnished to any holder of debt
securities of any Loan Party or any Subsidiary pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise
required to be furnished to the Lenders pursuant to Section 5.01 or any other clause of this Section 5.02 ;
(g) promptly after a Responsible Officer of the Company in good faith determines the same could reasonably be expected to
have a Material Adverse Effect, 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 by such agency regarding financial or other
operational results of any Loan Party or any Subsidiary thereof; and
(h) promptly, (x) such additional information regarding the business, financial or corporate affairs of any Loan Party or any
Subsidiary, or compliance with the terms of the Loan Documents,
as the Administrative Agent or any Lender may from time to time reasonably request and (y) such information and documentation reasonably
requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money
laundering rules and regulations, including the Patriot Act and, to the extent applicable, the Beneficial Ownership Regulation.
Documents required to be delivered pursuant to Section 5.01(a) or 5.01(b) or Section 5.02(d) (to the extent any such documents are
included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which the Company posts such documents, or provides a link thereto on the Company’s website on the Internet at
the website address set forth in Section 9.01; or (ii) on which such documents are posted on the Company’s behalf on an Internet or intranet
website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether
sponsored by the Administrative Agent); provided that: (i) the Company shall deliver paper copies of such documents to the Administrative
Agent or any Lender upon its request to the Company to deliver such paper copies until a written request to cease delivering paper copies is
given by the Administrative Agent or such Lender and (ii) the Company shall notify the Administrative Agent and each Lender (by facsimile
or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions ( i.e.,
soft copies) of such documents. 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 Company 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.
Each Borrower hereby acknowledges that (a) the Administrative Agent will make available to the Lenders and the Issuing Banks
materials and/or information provided by or on behalf of such Borrower hereunder (collectively, “ Borrower Materials ”) by posting the
Borrower Materials on an Electronic System and (b) certain of the Lenders (each a “ Public Lender ”) may have personnel who do not wish to
receive material non-public information with respect to any of the Borrowers or their respective Affiliates, or the respective securities of any
of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. Each
Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously
marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by
marking Borrower Materials “PUBLIC,” such Borrower shall be deemed to have authorized the Administrative Agent, the Issuing Banks and
the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrowers or their
respective securities for purposes of United States federal and state securities laws ( provided , however , that to the extent such Borrower
Materials constitute Information, they shall be treated as set forth in Section 9.12 ); (y) all Borrower Materials marked “PUBLIC” are
permitted to be made available through a portion of the Platform designated as “Public Side Information;” and (z) the Administrative Agent
shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform
not marked as “Public Side Information.” Notwithstanding the foregoing, no Borrower shall be under any obligation to mark any Borrower
Materials “PUBLIC.”
SECTION 5.03 Notices .
(a) Promptly notify the Administrative Agent after a Responsible Officer of any Loan Party has obtained knowledge of the
occurrence of any Default.
(b) Promptly notify the Administrative Agent after a Responsible Officer of any Loan Party has obtained knowledge of any
matter that has resulted or could reasonably be expected to result in a Material Adverse Effect.
(c) Promptly notify the Administrative Agent after a Responsible Officer of any Loan Party has obtained knowledge of the
occurrence of any ERISA Event which is reasonably expected to result in liability to the Company or any other Loan Party in excess of the
Threshold Amount.
(d) Promptly notify the Administrative Agent of any material change in accounting policies or financial reporting practices
by any Loan Party or any Subsidiary.
Each notice pursuant to this Section 5.03 shall be accompanied by a statement of a Responsible Officer of the Company setting forth
details of the occurrence referred to therein and stating what action the Company has taken and proposes to take with respect thereto. Each
notice pursuant to Section 5.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document
that have been breached.
SECTION 5.04 Payment of Taxes .
Pay and discharge, as the same shall become due and payable, all its material tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted
and adequate reserves in accordance with GAAP are being maintained by such Loan Party or such Subsidiary.
SECTION 5.05 Preservation of Existence, Etc .
(a) Preserve, renew and maintain in full force and effect its legal existence and, if applicable, good standing under the Laws
of the jurisdiction of its organization except in a transaction permitted by Section 6.04 or 6.05 .
(b) Take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse
Effect.
(c) Preserve or renew all of its IP Rights, the non-preservation of which could reasonably be expected to have a Material
Adverse Effect.
SECTION 5.06 Maintenance of Properties .
Except where the failure to do so could not reasonably be expected to have a Material Adverse Effect:
(a) Maintain, preserve and protect all of its properties and equipment necessary in the operation of its business in good
working order and condition, ordinary wear and tear excepted.
(b) Make all repairs thereto and renewals and replacements thereof.
SECTION 5.07 Maintenance of Insurance .
(a) Maintain insurance with financially sound and reputable insurance companies not Affiliates of the Company, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses in localities where such Loan Party or such Subsidiary operates.
(b) Cause the Administrative Agent to be named as loss payee or mortgagee, as its interest may appear, and/or additional
insured with respect to any such insurance providing liability coverage or coverage in respect of any Collateral, and cause each provider of
any such insurance to agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to the
Administrative Agent, that it will give the Administrative Agent thirty days prior written notice before any such policy or policies shall be
altered or canceled.
SECTION 5.08 Compliance with Laws .
(a) Comply with the requirements of all Laws (including Anti-Corruption Laws and applicable Sanctions) and all orders, writs,
injunctions and decrees applicable to it or to its business or property, except in such instances in which the failure to comply therewith could
not reasonably be expected to have a Material Adverse Effect.
(b) Maintain in effect and enforce policies and procedures designed to ensure compliance by such Borrower, its Subsidiaries and
their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.
SECTION 5.09 Books and Records .
(a) Maintain proper books of record and account, in which entries that are full, true and correct in all material respects and
are in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of
such Loan Party or such Subsidiary (it being understood and agreed that Foreign Subsidiaries may maintain individual books and records in
conformity with generally accepted accounting principles that are applicable in their respective countries of organization and that such
maintenance shall not constitute a breach of the representations, warranties or covenants hereunder), as the case may be.
(b) Maintain such books of record and account in material conformity with all applicable requirements of any Governmental
Authority having regulatory jurisdiction over such Loan Party or such Subsidiary, as the case may be.
SECTION 5.10 Inspection Rights .
Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its
properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs,
finances and accounts with its directors, officers, and independent public accountants, all at the expense of the Borrowers and at such
reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Company;
provided , however , (i) absent an Event of Default, the Borrowers shall only be required to pay for one such visit and/or inspection per fiscal
year and (ii) if an Event of Default exists, the Administrative Agent or any Lender (or any of their respective representatives or independent
contractors) may do any of the foregoing at the expense of the Borrowers at any time during normal business hours and without advance
notice. Notwithstanding anything to the contrary in this Section 5.10 , none of the Company nor any Subsidiary shall be required to disclose,
permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter that
(i) constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative
Agent or any Lender (or their respective representatives or contractors) is prohibited by Law or (iii) is subject to attorney client or similar
privilege or constitutes attorney work-product.
SECTION 5.11 Use of Proceeds .
(a) Use the proceeds of the Credit Events (i) to finance working capital, capital expenditures, Permitted Acquisitions, share
repurchases and other Restricted Payments and other lawful corporate purposes, and (ii) to refinance the existing Indebtedness under the
Existing Credit Agreement, provided that in no event shall the proceeds of the Credit Extensions be used in contravention of any Law or of
any Loan Document. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation
of any of the Regulations of the Board, including Regulations T, U and X.
(b) No Borrower will request any Borrowing or Letter of Credit, and no Borrower shall use, and the Company shall procure
that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing or Letter
of Credit (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of
value, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business
or transaction of or with any Sanctioned Person, or in any Sanctioned Country, to the extent such activities, businesses or transaction would
be prohibited by Sanctions if conducted by a corporation incorporated in the United States or in a European Union member state or (iii) in any
manner that would result in the violation of any Sanctions applicable to any party hereto.
SECTION 5.12 ERISA Compliance .
Except where the failure to do so could not reasonably be expected to have a Material Adverse Effect, do, and cause each of its
ERISA Affiliates to do, each of the following: (a) maintain each Plan in compliance in all material respects with the applicable provisions of
ERISA, the Internal Revenue Code and other federal or state law; (b) cause each Plan that is qualified under Section 401(a) of the Internal
Revenue Code to maintain such qualification; and (c) make all required contributions to any Plan subject to Section 412, Section 430 or
Section 431 of the Internal Revenue Code.
SECTION 5.13 Additional Subsidiaries .
Within thirty days after the acquisition or formation of any Subsidiary:
(a) notify the Administrative Agent thereof in writing, together with the (i) jurisdiction of formation, (ii) number of shares
of each class of Equity Interests outstanding, (iii) number and percentage of outstanding shares of each class owned (directly or indirectly) by
the Company or any Subsidiary and (iv) number and effect, if exercised, of all outstanding options, warrants, rights of conversion or purchase
and all other similar rights with respect thereto; and
(b) if such Subsidiary is a Wholly-Owned Domestic Subsidiary, cause such Person to (i) become a Subsidiary Guarantor by
executing and delivering to the Administrative Agent a Joinder Agreement or such other documents as the Administrative Agent shall deem
appropriate for such purpose, and (ii) upon the request of the Administrative Agent in its sole discretion, deliver to the Administrative Agent
such Organization Documents, resolutions and favorable opinions of counsel, all in form, content and scope reasonably satisfactory to the
Administrative Agent.
Notwithstanding the foregoing, no Excluded Subsidiary shall be required to become a Subsidiary Guarantor.
SECTION 5.14 Pledged Assets .
(a) Equity Interests . Cause: (a) 100% of the issued and outstanding Equity Interests of each Domestic Subsidiary and
(b) 65% of the issued and outstanding Equity Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2) and 100% of
the issued and outstanding Equity Interests not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) in each Foreign
Subsidiary directly owned by a Loan Party to be subject at all times to a first priority, perfected Lien in favor of the Administrative Agent
pursuant to the terms and conditions of the Collateral Documents, together with opinions of counsel and any filings and deliveries reasonably
necessary in connection therewith to perfect the security interests therein, all in form and substance reasonably satisfactory to the
Administrative Agent. In addition, the Borrowers shall enter into such amendments to this Agreement as are reasonably requested by the
Administrative Agent to facilitate the pledge of Equity Interests in Foreign Subsidiaries to the extent such pledge is otherwise required by the
terms of this Agreement. Notwithstanding the foregoing, with respect to the pledge of Equity Interests issued by Foreign Subsidiaries, no
non-United States Law-governed security documents (and related opinions of local counsel) shall be required (x) for Immaterial Foreign
Subsidiaries or (y) unless such security documents are requested by the Administrative Agent or the Required Lenders, for Material Foreign
Subsidiaries.
(b) Other Property . (i) Cause all owned real and personal property (other than Excluded Property) of each Loan Party to be
subject at all times to first priority, perfected and, in the case of owned real property, title insured Liens in favor of the Administrative Agent
to secure the Obligations, in each case pursuant to the terms and conditions of the Collateral Documents or, with respect to any such property
acquired subsequent to the Effective Date, such other additional security documents as the Administrative Agent shall reasonably request,
subject in any case to Permitted Liens and (ii) deliver such other documentation as the Administrative Agent may reasonably request in
connection with the foregoing, including, without limitation, appropriate UCC-1 financing statements, real estate title insurance policies,
surveys, environmental reports, landlord’s waivers, certified resolutions and other organizational and authorizing documents of such Person
and favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to above and the perfection of the Administrative Agent’s Liens thereunder) and other items of
the types required to be delivered pursuant to Section 4.01(a) , all in form, content and scope reasonably satisfactory to the Administrative
Agent.
SECTION 5.15 Post-Closing Matters .
To the extent not delivered on the Effective Date,
(a) within sixty (60) days following the Effective Date (or such later date as the Administrative Agent may agree in its sole
discretion), deliver such executed deposit account control agreements (or similar agreements granting control to the Administrative Agent) to
the extent reasonably requested by the Administrative Agent with respect to the domestic deposit accounts (other than Excluded Accounts) of
the Loan Parties in form and substance reasonably satisfactory to the Administrative Agent; and
(b) within forty-five (45) days following the Effective Date (or such later date as the Administrative Agent may agree in its
sole discretion), deliver a foreign law pledge agreement (or similar security document) to the extent reasonably requested by the
Administrative Agent with respect to the required
pledge of the Equity Interests of DHI Careers Limited, together with an opinion of foreign counsel, in each case in form and substance
reasonably satisfactory to the Administrative Agent.
(c) within thirty (30) days following the Effective Date (or such later date as the Administrative Agent may agree in its sole
discretion), deliver to the Administrative Agent additional insurance and lender loss payee endorsements with respect to the liability
insurance policies and the property insurance policies of initial Loan Parties, in form and substance reasonably acceptable to the
Administrative Agent.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have
been paid in full and all Letters of Credit have expired or terminated, in each case, without any pending draw, and all LC Disbursements shall
have been reimbursed, no Borrower shall, nor shall it permit any Subsidiary to, directly or indirectly:
SECTION 6.01 Liens .
Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter
acquired, other than the following:
(a) Liens pursuant to any Loan Document;
(b) Liens existing on the date hereof and listed on Schedule 6.01 and any renewals or extensions thereof, provided that the
property covered thereby is not changed;
(c) Liens (other than Liens imposed under ERISA) for Taxes, assessments or governmental charges or levies not yet
delinquent or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the applicable Person in accordance with GAAP to the extent required by GAAP;
(d) statutory or common law Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen, repairmen,
construction contractors and suppliers or other similar Persons and other Liens imposed by law or pursuant to customary reservations or
retentions of title arising in the ordinary course of business that secure amounts not overdue for a period of more than thirty days or if more
than thirty days overdue, that are being contested in good faith and by appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the applicable Person in accordance with GAAP to the extent required by GAAP;
(e) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment
insurance and other social security legislation, other than any Lien imposed by ERISA;
(f) deposits and other pledges to secure the performance of bids, trade contracts, governmental contracts and leases (other
than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(g) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate,
are not substantial in amount, and which 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 Person;
(h) Liens securing judgments for the payment of money (or appeal or other surety bonds relating to such judgments) not
constituting an Event of Default under clause (h) of Article VII ;
(i) Liens securing Indebtedness permitted under Section 6.03(e); provided that (i) such Liens do not at any time encumber
any property other than the property financed by such Indebtedness and (ii) such Liens attach to such property concurrently with or within
ninety days after the acquisition thereof;
(j) leases or subleases granted to others not interfering in any material respect with the business of any Loan Party or any
Subsidiary;
(k) any interest of title of a lessor under, and Liens arising from UCC financing statements (or equivalent filings,
registrations or agreements in foreign jurisdictions) relating to, leases permitted by this Agreement;
(l) Liens deemed to exist in connection with Investments in repurchase agreements permitted under Section 6.02(a) ;
(m) normal and customary rights of setoff upon deposits of cash in favor of banks or other depository institutions;
(n) Liens of a collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of
collection;
(o) Liens on insurance proceeds securing the payment of financed insurance premiums to the extent permitted by
Section 6.03(h) ;
(p) non-exclusive licenses or sublicenses of IP Rights in the ordinary course of business that do not interfere in any material
respect with the business of any Loan Party or any Subsidiary;
(q) Liens in favor of the Issuing Banks on cash collateral securing the obligations of a Defaulting Lender to fund risk
participations hereunder;
(r) cash earnest money deposits made by the Company or any of its Subsidiaries in connection with any letter of intent or
purchase agreement with respect to a transaction permitted hereunder;
(s) Liens securing Indebtedness permitted in Section 6.03(j) ; provided that such Liens do not at any time encumber any
property other than the property subject to such Liens at the time the Indebtedness secured by such Lien was acquired or assumed;
(t) Liens on assets of Foreign Subsidiaries securing Indebtedness of such Foreign Subsidiaries permitted pursuant to
Section 6.03(k) ; and
(u) other Liens securing obligations in an aggregate principal amount outstanding at any time not to exceed $3,000,000.
SECTION 6.02 Investments .
Make any Investments, except:
(a) Investments held in the form of cash or Cash Equivalents (determined at the time of acquisition thereof);
(b) Investments existing as of the Effective Date and set forth in Schedule 8.02 ;
(c) Investments in any Person that is a Loan Party prior to giving effect to such Investment;
(d) Investments by (i) any Subsidiary that is not a Loan Party in any other Subsidiary that is not a Loan Party and (ii) by any
Loan Party in any other Subsidiary that is not a Loan Party (x) the proceeds of which are used to finance a Permitted Acquisition or
(y) otherwise in an aggregate amount not to exceed the sum of (A) $8,000,000 plus (B) the aggregate after-tax amount of cash and/or Cash
Equivalents repatriated by Foreign Subsidiaries to Loan Parties during the term of this Agreement;
(e) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the
grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially
troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;
(f) short-term loans and advances to directors, officers and employees for travel, entertainment, relocation and other
analogous purposes in the ordinary course of business in an aggregate amount not to exceed $1,000,000 at any one time outstanding;
(g) Guarantees permitted by Section 6.03 ;
(h) Permitted Acquisitions;
(i) Investments in tax exempt securities rated A or better by Moody’s or A+ or better by Standard & Poor’s;
(j) Investments in corporate debt obligations and equities on a case-by-case basis in conjunction with tax strategies;
provided that the aggregate amount of such Investments shall not exceed $500,000 at any time outstanding;
(k) [reserved];
(l) Investments of a nature not contemplated in the foregoing clauses in an amount not to exceed $3,000,000 in the
aggregate at any time outstanding.
Notwithstanding the foregoing, no additional Investments may be made in the Excluded Subsidiaries other than di minimis amounts needed to
effectuate transactions permitted pursuant to Section 6.04(d) .
SECTION 6.03 Indebtedness .
Create, incur, assume or suffer to exist any Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Indebtedness set forth in Schedule 6.03 (and renewals, refinancings and extensions thereof); provided that (i) the amount
of such Indebtedness is not increased at the time of such refinancing, renewal or extension except by an amount equal to a reasonable
premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount
equal to any existing commitments unutilized thereunder and (ii) if such Indebtedness is subordinated, the subordination provisions of any
such refinancing, renewal or extension are no less favorable in any material respect to the Loan Parties and their Subsidiaries or the Lenders
than the terms of any agreement or instrument governing the Indebtedness being refinanced, renewed or extended;
(c) intercompany Indebtedness outstanding on the Effective Date and intercompany Indebtedness permitted under
Section 6.02 ;
(d) obligations (contingent or otherwise) existing or arising under any Swap Contract, provided that such obligations are (or
were) entered into by such Person in the ordinary course of business for the purpose of mitigating risks associated with liabilities,
commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by
such Person, and not for purposes of speculation;
(e) purchase money Indebtedness (including obligations in respect of Capital Leases) hereafter incurred to finance the
purchase of fixed assets, and renewals, refinancings and extensions thereof, provided that (i) the aggregate outstanding principal amount of all
such Indebtedness shall not exceed, at any one time outstanding, the difference of (A) $15,000,000 minus (B) the aggregate principal amount
of Indebtedness outstanding pursuant to Section 6.03(f) ; and (ii) such Indebtedness when incurred shall not exceed the purchase price of the
asset(s) financed;
(f) Indebtedness in an aggregate principal amount not to exceed, at any one time outstanding, the difference of
(i) $15,000,000 minus (ii) the aggregate principal amount of Indebtedness outstanding pursuant to Section 6.03(e) ; provided that the
aggregate principal amount of all Indebtedness incurred pursuant to this Section 6.03(f) that is secured by Liens shall not exceed $3,000,000
at any time outstanding;
(g) Subordinated Debt;
(h) Indebtedness incurred in connection with the financing of insurance premiums in an amount not to exceed the annual
premiums in respect thereof at any one time outstanding;
(i) Guarantees with respect to Indebtedness permitted under this Section 6.03 ; provided that if the underlying Indebtedness
is Subordinated Debt, any Guarantees shall be subordinated on the same terms;
(j) Indebtedness of the type described in Section 6.03(e) of any Person that becomes a Subsidiary after the Effective Date as
a result of a Permitted Acquisition (and, for the avoidance of doubt, as a result of a Division) or otherwise assumed in connection with a
Permitted Acquisition, provided that such Indebtedness (and any Guarantees thereof) exists at the time of such Permitted Acquisition, and is
not created in contemplation of or in connection with such Permitted Acquisition and refinancings in respect thereof;
(k) Indebtedness of Foreign Subsidiaries in an aggregate outstanding principal amount not to exceed $3,000,000 at any
(l) Indebtedness consisting of obligations to pay the seller the deferred purchase price of a Permitted Acquisition, including
time; and
Earn-Outs.
SECTION 6.04 Fundamental Changes .
Merge, dissolve, liquidate or consolidate with or into another Person or consummate a Division as the Dividing Person, except that so
long as no Default exists or would result therefrom, (a) the Company may merge or consolidate with any of its Subsidiaries provided that the
Company is the continuing or surviving Person, (b) any Subsidiary may merge or consolidate with any other Subsidiary provided that (i) if a
Borrower is a party to such transaction, such Borrower is the continuing or surviving Person and (ii) if a Loan Party (other than a Borrower) is
a party to such transaction, the continuing or surviving Person is a Loan Party, (c) the Company or any Subsidiary may merge with any other
Person in connection with a Permitted Acquisition provided that (i) if a the Company is a party to such transaction, the Company is the
continuing or surviving Person and (ii) if a Loan Party is a party to such transaction, a Loan Party is the surviving Person, (d) any Subsidiary
that is an LLC may consummate a Division as the Dividing Person if, immediately upon the consummation of the Division, the assets of the
applicable Dividing Person are held by one or more Loan Parties at such time, or, with respect to assets not so held by one or more Loan
Parties, such Division, in the aggregate, would otherwise result in a Disposition permitted by Section 6.05(e) and (e) any Subsidiary (other
than a Borrower) may dissolve, liquidate or wind up its affairs at any time provided that such dissolution, liquidation or winding up, as
applicable, could not have a Material Adverse Effect.
SECTION 6.05 Dispositions .
Make any Disposition except:
(a) Permitted Transfers;
(b) Dispositions permitted by Section 6.04 ;
(c) sales of non-core assets acquired in connection with a Permitted Acquisition; provided that the fair market value of the
non-core assets subject to such sales shall not exceed 10% of the fair market value of the acquired entity or business;
(d) the Disposition of Rigzone.com, Inc. and its subsidiaries; and
(e) other Dispositions so long as (i) at least 75% of the consideration paid in connection therewith shall be cash paid
contemporaneous with consummation of the transaction and shall be in an amount not less than the fair market value of the property disposed
of, (ii) such transaction does not involve the sale or other disposition of a minority equity interest in any Subsidiary, (iii) such transaction does
not involve a sale or other disposition of receivables other than receivables owned by or attributable to other property concurrently being
disposed of in a transaction otherwise permitted under this Section 6.05 , and (iv) the aggregate net book value of all of the assets sold or
otherwise disposed of by the Loan Parties and their Subsidiaries in all such transactions in any fiscal year of the Company shall not exceed
$5,000,000 (plus any unused amount under this Section 6.05(d) for prior fiscal years).
SECTION 6.06 Restricted Payments .
Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except
that:
(a) each Loan Party (other than the Company) and each Subsidiary may make Restricted Payments to Persons that own
Equity Interests in such Loan Party or Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of
which such Restricted Payment is being made;
(b) each Loan Party and each Subsidiary may declare and make dividend payments or other distributions payable solely in
common Equity Interests of such Person;
(c) so long as no Default exists immediately prior and after giving effect thereto, each Loan Party and each Subsidiary may
make Restricted Payments; provided, that, the Consolidated Leverage Ratio, calculated on a Pro Forma Basis after giving effect to any such
Restricted Payment, shall be equal to or less than 2.00 to 1.00; and
(d) Each Loan Party and each Subsidiary may make other Restricted Payments in an amount not to exceed, in the aggregate
during any fiscal year of the Company, the sum of (i) $5,000,000 and (ii) the unused amount of Restricted Payments that were permitted to be
made during the immediately preceding fiscal year pursuant to Section 6.06(d)(i) without giving effect to any carryover amount (it being
understood and agreed that Restricted Payments in any fiscal year shall be deemed to use, first, the amount for such fiscal year set forth in
Section 6.06(d)(i) and, second, any amount carried forward to such fiscal year pursuant to this Section 6.06(d)(ii).
SECTION 6.07 Change in Nature of Business .
Engage in any material line of business substantially different from those lines of business conducted by the Loan Parties and their
Subsidiaries on the Effective Date or any business reasonably related or incidental thereto or reasonable extensions thereof.
SECTION 6.08 Transactions with Affiliates and Insiders .
Enter into or permit to exist any transaction or series of transactions with any officer, director or Affiliate of such Person other than
(a) transactions between or among the Company and its Subsidiaries that are not otherwise prohibited by this Agreement, (b) normal and
reasonable compensation and reimbursement of expenses of officers and directors and (c) except as otherwise specifically limited in this
Agreement, other transactions which are entered into on terms and conditions substantially as favorable to such Person as would be
obtainable by it in a comparable arms-length transaction with a Person other than an officer, director or Affiliate.
SECTION 6.09 Burdensome Agreements .
Enter into, or permit to exist, any Contractual Obligation that (a) encumbers or restricts the ability of any such Person to (i) make
Restricted Payments to any Loan Party, (ii) pay any Indebtedness or other obligation owed to any Loan Party, (iii) make loans or advances to
any Loan Party, (iv) transfer any of its property to any Loan Party, (v) pledge its property pursuant to the Loan Documents or any renewals,
refinancings, exchanges, refundings or extension thereof or (vi) act as a Loan Party pursuant to the Loan Documents or any renewals,
refinancings, exchanges, refundings or extension thereof, except (in respect of any of the matters referred to in clauses (i)-(v) above) for
(1) this Agreement and the other Loan Documents, (2) any document or instrument governing Indebtedness incurred pursuant to
Section 6.03(e) , provided that any such restriction contained therein relates only to the asset or assets constructed or acquired in connection
therewith, (3) any Permitted Lien or any document or instrument governing any Permitted Lien, provided that any such restriction contained
therein relates only to the asset or assets subject to such Permitted Lien or (4) customary restrictions and conditions contained in any
agreement relating to the sale of any property permitted under Section 6.05 pending the consummation of such sale, or (b) requires the grant
of any security for any obligation if such property is given as security for the Obligations.
SECTION 6.10 Use of Proceeds .
Use the proceeds of any Credit Event, whether directly or indirectly, and whether immediately, incidentally or ultimately, (i) to
purchase or carry margin stock (within the meaning of Regulation U of the FRB) 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 contravention of Regulation U of the
FRB or (ii) in contravention of Section 5.11(b).
SECTION 6.11 Financial Covenants .
(a) Maximum Consolidated Leverage Ratio . Permit the Consolidated Leverage Ratio as of the end of any fiscal quarter of
the Company, commencing with the fiscal quarter ending December 31, 2018, to be greater than to 2.50 to 1.00. Notwithstanding the
foregoing, the Company shall be permitted, but in no event on more than two (2) occasions during the term of this Agreement, to allow the
maximum Consolidated Leverage Ratio permitted under this Section 6.11(a) to be increased to 2.75 to 1.00 for a period of four consecutive
fiscal quarters (such period, an “ Adjusted Covenant Period ”) in connection with a Permitted Acquisition occurring during the first of such
four fiscal quarters if the aggregate consideration paid or to be paid in respect of such Acquisition exceeds $30,000,000 (and in respect of
which the Company shall provide notice in writing to the Administrative Agent (for distribution to the Lenders) of such increase and a
transaction description of such Acquisition (regarding the name or description of the Person or summary description of the assets being
acquired and the approximate purchase price)), so long as the Company is in compliance on a Pro Forma Basis with the maximum
Consolidated Leverage Ratio of 2.75 to 1.00 on the closing date of such Acquisition immediately after giving effect (including giving effect
on a Pro Forma Basis) to such Acquisition; provided that it is understood and agreed that (x) the Company may not elect a new Adjusted
Covenant Period for at least one fiscal quarter following the end of an Adjusted Covenant Period and (y) at the end of an Adjusted Covenant
Period, the maximum Consolidated Leverage Ratio permitted under this Section 6.11(a) shall revert to 2.50 to 1.00 as of the end of such
Adjusted Covenant Period and thereafter until another Adjusted Covenant Period (if any) is elected pursuant to the terms and conditions
described above.
(b) Minimum Consolidated Interest Coverage Ratio . Permit the Consolidated Interest Coverage Ratio as of the end of any
fiscal quarter of the Company, commencing with the fiscal quarter ending December 31, 2018, to be less than 3.50 to 1.00.
SECTION 6.12 Prepayment of Subordinated Debt, Etc .
(a) Amend or modify any of the terms of any Subordinated Debt except as permitted by the document evidencing such
Subordinated Debt or in the intercreditor or subordination agreement relating thereto.
(b) Make (or give any notice with respect thereto) any payment, redemption or acquisition for value of (including without
limitation, by way of depositing money or securities with the trustee with respect thereto before due for the purpose of paying when due),
refund, refinance or exchange of any Subordinated Debt except as permitted by the document evidencing such Subordinated Debt or in
the intercreditor or subordination agreement relating thereto; provided , that so long as (i) no Default exists immediately prior and after giving
effect thereto and (ii) the Loan Parties are in compliance with Section 6.11(b) after giving effect thereto on a Pro Forma Basis, the Company
may make prepayments of Subordinated Debt.
SECTION 6.13 Organization Documents; Fiscal Year; Legal Name, State of Formation and Form of Entity .
(a) Amend, modify or change its Organization Documents in a manner adverse to the rights of the Lenders under the Loan
Documents.
(b) Change its fiscal year.
(c) In the case of any Loan Party, without providing ten (10) days prior written notice to the Administrative Agent, change
its name, state of formation or form of organization.
SECTION 6.14 Ownership of Subsidiaries .
Notwithstanding any other provisions of this Agreement to the contrary, permit any Person (other than the Company or any wholly-
owned Subsidiary) to own any Equity Interests of any Subsidiary, except to qualify directors where required by applicable Law or to satisfy
other requirements of applicable Law with respect to the ownership of Equity Interests of Foreign Subsidiaries.
SECTION 6.15 Sale Leasebacks; Synthetic Leases; Securitization Transactions .
Enter into any Sale and Leaseback Transaction, Synthetic Lease or Securitization Transaction.
ARTICLE VII
Events of Default
If any of the following events (“ Events of Default ”) shall occur:
(a) Non-Payment . Any Loan Party fails to pay (i) when and as required to be paid herein, and in the currency required
hereunder, any amount of principal of any Loan or any LC Exposure, or (ii) within three Business Days after the same becomes due, any
interest on any Loan or on any LC Exposure, or any fee due hereunder, or (iii) within five Business Days after the same becomes due, any
other amount payable hereunder or under any other Loan Document; or
(b) Specific Covenants . Any Loan Party fails to perform or observe any term, covenant or agreement contained in (i)
Sections 5.01 or 5.02 and such failure continues for five Business Days or (ii) any of Section 5.03(a) , 5.05(a) (with respect to the legal
existence of the Borrowers only), 5.11 , 5.13 or 5.14 or Article VI ; or
(c) Other Defaults . Any Loan Party fails to perform or observe any other covenant or agreement (not specified in
subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for thirty
days after the earlier of the date on which (i) a Responsible Officer of a Loan Party becomes aware of such failure or (ii) notice thereof shall
have been given to the Company by the Administrative Agent or any Lender; or
(d) Representations and Warranties . Any representation, warranty, certification or statement of fact made or deemed made
by or on behalf of any Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith
shall be incorrect or misleading in any material respect (or, if such representation or warranty is qualified by materiality or Material Adverse
Effect, proving to have been incorrect or misleading in any respect as drafted) when made or deemed made; or
(e) Cross-Default . (i) Any Loan Party or any Subsidiary (A) fails to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee thereof (other than
Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the
Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or
contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or
other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a
trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer
to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or
cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such
Swap Contract) resulting from (A) any event of default under such Swap Contract as to which any Loan Party or any Subsidiary is the
Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which any
Loan Party or any Subsidiary is an Affected Party (as so defined) and (x) in either event, the Swap Termination Value owed by the Company
or such Subsidiary as a result thereof is greater than the Threshold Amount and (y) in the case of clause (ii)(B), the Company or such
Subsidiary shall fail to pay such Swap Termination Value; or
(f) Insolvency Proceedings, Etc . Any Loan Party or any Subsidiary institutes or consents to the institution of any
proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of
any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or
any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such
Person and the appointment continues undischarged or unstayed for sixty calendar days; or any proceeding under any Debtor Relief Law
relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues
undismissed or unstayed for sixty calendar days, or an order for relief is entered in any such proceeding; or
(g) Inability to Pay Debts; Attachment . (i) Any Loan Party or any Subsidiary becomes unable or admits in writing its
inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is
issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within thirty
days after its issue or levy; or
(h) Judgments . There is entered against any Loan Party or any Subsidiary (i) one or more final judgments or orders for the
payment of money in an aggregate amount (as to all such judgments or orders) exceeding the Threshold Amount (to the extent not covered by
independent third-party insurance as to which the insurer has been notified of the claim and does not dispute coverage), or (ii) any 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) there is a period of twenty consecutive days during which a stay of enforcement of such
judgment, by reason of a pending appeal or otherwise, is not in effect; or
(i) ERISA . (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could
reasonably be expected to result in liability of any Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC
in an aggregate amount in excess of the Threshold Amount, or (ii) the Company or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or
(j) Invalidity of Loan Documents . Any Loan Document, at any time after its execution and delivery and for any reason
other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or
any Loan Party or any other Person contests in any manner the validity or enforceability of any Loan Document; or any Loan Party denies
that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or
(k) Change of Control . There occurs any Change of Control; or
(l) Invalidity of Subordination Provisions . The subordination provisions contained in any document evidencing any
Subordinated Debt or in any intercreditor or subordination agreement relating thereto for any reason, other than as expressly permitted
hereunder or thereunder, shall cease to be in full force and effect;
then, and in every such event (other than an event with respect to any Borrower described in clause (f) or (g) of this Article), and at any time
thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to
the Company, take any or all of the following actions, at the same or different times: (i) terminate the Commitments (and the Letter of Credit
Commitments), and thereupon the Commitments (and the Letter of Credit Commitments) shall terminate immediately, (ii) declare the Loans
then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other Secured Obligations of the Borrowers accrued hereunder and under the other Loan Documents, shall become
due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the
Borrowers and (iii) require cash collateral for the LC Exposure in accordance with Section 2.06(j); and in case of any event with respect to
any Borrower described in clause (f) or (g) of this Article, the Commitments (and the Letter of Credit Commitments) shall automatically
terminate and the principal of the Loans then outstanding and cash collateral for the LC Exposure, together with accrued interest thereon and
all fees and other Secured Obligations accrued hereunder and under the other Loan Documents, shall automatically become due and payable,
and the obligation of the Borrowers to cash collateralize the LC Exposure as provided in clause (iii) above shall automatically become
effective, in each case, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers.
In addition to any other rights and remedies granted to the Administrative Agent and the Lenders in the Loan Documents, the Administrative
Agent on behalf of the Lenders may exercise all rights and remedies of a secured party under the UCC or any other applicable law. Without
limiting the generality of the foregoing, the Administrative Agent, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Loan Party or any other Person (all
and each of which demands, defenses, advertisements and notices are hereby waived by each Borrower on behalf of itself and its
Subsidiaries), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, or consent
to the use by any Loan Party of any cash collateral arising in respect of the Collateral on such terms as the Administrative Agent deems
reasonable, and/or may forthwith sell, lease, assign give an option or options to purchase or otherwise dispose of and deliver, or acquire by
credit bid on behalf of the Secured Parties, the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker’s board or office of the Administrative Agent or any Lender or elsewhere, upon such
terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery, all without
assumption of any credit risk. The Administrative Agent or any Lender shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption in any Loan Party, which right or equity is hereby waived and released by each Borrower on behalf of itself and its
Subsidiaries. Each Borrower further agrees on behalf of itself and its Subsidiaries, at the Administrative Agent’s request, to use commercially
reasonable efforts to assemble the Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall
reasonably select, whether at the premises of such Borrower, another Loan Party or elsewhere. The Administrative Agent shall apply the net
proceeds of any action taken by it pursuant to this Article VII , after deducting all reasonable costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the Collateral or in any other way relating to the Collateral or the rights
of the Administrative Agent and the Lenders hereunder, including reasonable attorneys’ fees and disbursements, to the payment in whole or
in part of the Secured Obligations, in such order as the Administrative Agent may elect, and only after such application and after the payment
by the Administrative Agent of any other amount required by any provision of law, including Section 9-615(a)(3) of the New York Uniform
Commercial Code, need the Administrative Agent account for the surplus, if any, to any Loan Party. To the extent permitted by applicable
law, each Borrower on behalf of itself and its Subsidiaries waives all claims, damages and demands it may acquire against the Administrative
Agent or any Lender arising out of the exercise by them of any rights hereunder, except direct or actual damages resulting from the gross
negligence or willful misconduct of the Administrative Agent or Lender as determined by a final and non-appealable judgment of a court of
competent jurisdiction. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other disposition.
ARTICLE VIII
The Administrative Agent
SECTION 8.01 Authorization and Action .
(a) Each Lender and Issuing Bank hereby irrevocably appoints the entity named as Administrative Agent in the heading of
this Agreement and its successors and assigns to serve as the administrative agent and collateral agent under the Loan Documents and each
Lender and Issuing Bank authorizes the Administrative Agent to take such actions as agent on its behalf and to exercise such powers under
this Agreement and the other Loan Documents as are delegated to the Administrative Agent under such agreements and to exercise such
powers as are reasonably incidental thereto. In addition, to the extent required under the laws of any jurisdiction other than within the United
States, each Lender and Issuing Bank hereby grants to the Administrative Agent any required powers of attorney to execute and enforce any
Collateral Document governed by the laws of such jurisdiction on such Lender’s or such Issuing Bank’s
behalf. Without limiting the foregoing, each Lender and Issuing Bank hereby authorizes the Administrative Agent to execute and deliver, and
to perform its obligations under, each of the Loan Documents to which the Administrative Agent is a party, to exercise all rights, powers and
remedies that the Administrative Agent may have under such Loan Documents.
(b) As to any matters not expressly provided for herein and in the other Loan Documents (including enforcement or
collection), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the written instructions of the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary, pursuant to the terms in the Loan Documents), and, unless and until
revoked in writing, such instructions shall be binding upon each Lender and Issuing Bank; provided , however, that the Administrative Agent
shall not be required to take any action that (i) the Administrative Agent in good faith believes exposes it to liability unless the Administrative
Agent receives an indemnification satisfactory to it from the Lenders and the Issuing Banks with respect to such action or (ii) is contrary to
this Agreement or any other Loan Document or applicable law, including any action that may be in violation of the automatic stay under any
requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors or that may effect a forfeiture, modification or
termination of property of a Defaulting Lender in violation of any requirement of law relating to bankruptcy, insolvency or reorganization or
relief of debtors; provided , further , that the Administrative Agent may seek clarification or direction from the Required Lenders prior to the
exercise of any such instructed action and may refrain from acting until such clarification or direction has been provided. Except as expressly
set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to any Borrower, any Subsidiary or any Affiliate of any of the foregoing that is communicated to or
obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity. Nothing in this Agreement shall require the
Administrative Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to it.
(c) In performing its functions and duties hereunder and under the other Loan Documents, the Administrative Agent is
acting solely on behalf of the Lenders and the Issuing Banks (except in limited circumstances expressly provided for herein relating to the
maintenance of the Register), and its duties are entirely mechanical and administrative in nature. Without limiting the generality of the
foregoing:
(i) the Administrative Agent does not assume and shall not be deemed to have assumed any obligation or duty or
any other relationship as the agent, fiduciary or trustee of or for any Lender, any Issuing Bank or any Secured Party other than as
expressly set forth herein and in the other Loan Documents, regardless of whether a Default or an Event of Default has occurred and
is continuing (and it is understood and agreed that the use of the term “agent” (or any similar term) herein or in any other Loan
Document with reference to the Administrative Agent is not intended to connote any fiduciary duty or other implied (or express)
obligations arising under agency doctrine of any applicable law, and that such term is used as a matter of market custom and is
intended to create or reflect only an administrative relationship between contracting parties); additionally, each Lender agrees that it
will not assert any claim against the Administrative Agent based on an alleged breach of fiduciary duty by the Administrative Agent
in connection with this Agreement and the transactions contemplated hereby;
(ii) where the Administrative Agent is required or deemed to act as a trustee in respect of any Collateral over which
a security interest has been created pursuant to a Loan Document
expressed to be governed by the laws of any jurisdiction other than the United States of America, the obligations and liabilities of the
Administrative Agent to the Secured Parties in its capacity as trustee shall be excluded to the fullest extent permitted by applicable
law; and
(iii) nothing in this Agreement or any Loan Document shall require the Administrative Agent to account to any
Lender for any sum or the profit element of any sum received by the Administrative Agent for its own account.
(d) The Administrative Agent may perform any of its duties and exercise its rights and powers hereunder or under any
other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any
such sub-agent may perform any of their respective duties and exercise their respective rights and powers through their respective Related
Parties. The exculpatory provisions of this Article 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 pursuant to this Agreement. The Administrative Agent shall not be
responsible for the negligence or misconduct of any sub-agent except to the extent that a court of competent jurisdiction determines in a final
and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-
agent.
(e) None of any Co-Syndication Agent, any Documentation Agent or any Arranger shall have obligations or duties
whatsoever in such capacity under this Agreement or any other Loan Document and shall incur no liability hereunder or thereunder in such
capacity, but all such persons shall have the benefit of the indemnities provided for hereunder.
(f) In case of the pendency of any proceeding with respect to any Loan Party under any federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, the Administrative Agent (irrespective of whether the principal of any Loan
or any reimbursement obligation in respect of any LC Disbursement 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 any Loan Party) shall be entitled and
empowered (but not obligated) by intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the
Loans, LC Disbursements and all other Obligations that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders, the Issuing Banks and the Administrative Agent (including any claim under
Sections 2.12, 2.13, 2.15, 2.17 and 9.03) allowed in such judicial proceeding; and
(ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute
the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by
each Lender, each Issuing Bank and each other Secured Party 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, the Issuing Banks or the other Secured Parties, to
pay to the Administrative Agent any amount due to it, in its capacity as the Administrative Agent, under the Loan Documents (including
under Section 9.03). Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or
adopt on behalf of any Lender or any Issuing Bank any plan of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or Issuing Bank or to authorize the Administrative Agent to vote in respect of the claim of any Lender
or Issuing Bank in any such proceeding.
(g) The provisions of this Article VIII are solely for the benefit of the Administrative Agent, the Lenders and the Issuing
Banks, and, except solely to the extent of the Borrowers’ rights to consent pursuant to and subject to the conditions set forth in this Article
VIII , none of the Borrowers or any Subsidiary, or any of their respective Affiliates, shall have any rights as a third party beneficiary under
any such provisions. 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 under the Loan Documents, to have agreed to the provisions of this Article VIII .
SECTION 8.02 Administrative Agent’s Reliance, Indemnification, Etc .
(a) Neither the Administrative Agent nor any of its Related Parties shall be (i) liable for any action taken or omitted to be
taken by it under or in connection with this Agreement or the other Loan Documents (x) with the consent of 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
to be necessary, under the circumstances as provided in the Loan Documents) or (y) in the absence of its own gross negligence or willful
misconduct (such absence to be presumed unless otherwise determined by a court of competent jurisdiction by a final and nonappealable
judgment) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan
Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other
document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other
Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of any Loan Party to perform its obligations hereunder or thereunder.
(b) The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof
(stating that it is a “notice of default”) is given to the Administrative Agent by the Company, a Lender or an Issuing Bank, and 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 any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in
connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any
Loan Document or the occurrence of any Default, (iv) the sufficiency, validity, enforceability, effectiveness or genuineness of any Loan
Document or any other agreement, instrument or document, (v) the satisfaction of any condition set forth in Article IV or elsewhere in any
Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent or satisfaction of any
condition that expressly refers to the matters described therein being acceptable or satisfactory to the Administrative Agent or (vi) the
creation, perfection or priority of Liens on the Collateral. Notwithstanding anything herein to the contrary, the Administrative Agent shall not
be liable for, or be responsible for any loss, cost or expense suffered by the Company, any Subsidiary, any Lender or any Issuing Bank as a
result of, any determination of the Credit Exposure, any of the component amounts thereof or any portion thereof attributable to each Lender
or each Issuing Bank or any Dollar Amount thereof.
(c) Without limiting the foregoing, the Administrative Agent (i) may treat the payee of any promissory note as its holder
until such promissory note has been assigned in accordance with Section 9.04, (ii) may rely on the Register to the extent set forth in Section
9.04(b), (iii) may consult with legal counsel (including counsel to the Company), independent public accountants and other experts selected
by it, and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts, (iv) makes no warranty or representation to any Lender
or Issuing Bank and shall not be responsible to any Lender or Issuing Bank for any statements, warranties or representations made by or on
behalf of any Loan Party in connection with this Agreement or any other Loan Document, (v) in determining compliance with any condition
hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an
Issuing Bank, may presume that such condition is satisfactory to such Lender or such Issuing Bank unless the Administrative Agent shall
have received notice to the contrary from such Lender or such Issuing Bank sufficiently in advance of the making of such Loan or the
issuance of such Letter of Credit and (vi) shall be entitled to rely on, and shall incur no liability under or in respect of this Agreement or any
other Loan Document by acting upon, any notice, consent, certificate or other instrument or writing (which writing may be a fax, any
electronic message, Internet or intranet website posting or other distribution) or any statement made to it orally or by telephone and believed
by it to be genuine and signed or sent or otherwise authenticated by the proper party or parties (whether or not such Person in fact meets the
requirements set forth in the Loan Documents for being the maker thereof).
SECTION 8.03 Posting of Communications .
(a) Each Borrower agrees that the Administrative Agent may, but shall not be obligated to, make any Communications
available to the Lenders and the Issuing Banks by posting the Communications on IntraLinks™, DebtDomain, SyndTrak, ClearPar or any
other electronic platform chosen by the Administrative Agent to be its electronic transmission system (the “ Approved Electronic Platform ”).
(b) Although the Approved Electronic Platform and its primary web portal are secured with generally-applicable security
procedures and policies implemented or modified by the Administrative Agent from time to time (including, as of the Effective Date, a user
ID/password authorization system) and the Approved Electronic Platform is secured through a per-deal authorization method whereby each
user may access the Approved Electronic Platform only on a deal-by-deal basis, each of the Lenders, the Issuing Banks and the Borrowers
acknowledges and agrees that the distribution of material through an electronic medium is not necessarily secure, that the Administrative
Agent is not responsible for approving or vetting the representatives or contacts of any Lender that are added to the Approved Electronic
Platform, and that there are confidentiality and other risks associated with such distribution. Each of the Lenders, the Issuing Banks and the
Borrowers hereby approves distribution of the Communications through the Approved Electronic Platform and understands and assumes the
risks of such distribution.
(c) THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS ARE PROVIDED “AS IS” AND
“AS AVAILABLE”. THE APPLICABLE PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR
COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE APPROVED ELECTRONIC PLATFORM AND
EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE APPROVED ELECTRONIC PLATFORM AND THE
COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING 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 THE APPLICABLE PARTIES IN CONNECTION WITH
THE COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE
AGENT, ANY ARRANGER, ANY CO-SYNDICATION AGENT, ANY DOCUMENTATION AGENT OR ANY OF THEIR
RESPECTIVE RELATED PARTIES (COLLECTIVELY, “ APPLICABLE PARTIES ”) HAVE ANY LIABILITY TO ANY LOAN
PARTY, ANY LENDER, THE ISSUING BANK OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND,
INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES
(WHETHER IN TORT, CONTRACT OR
OTHERWISE) ARISING OUT OF ANY LOAN PARTY’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF
COMMUNICATIONS THROUGH THE INTERNET OR THE APPROVED ELECTRONIC PLATFORM, EXCEPT WITH RESPECT TO
ACTUAL OR DIRECT DAMAGES TO THE EXTENT DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL
AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM ITS WILLFUL MISCONDUCT OR GROSS NEGLIGENCE IN
CONNECTION WITH ANY SUCH TRANSMISSION.
(d) Each Lender and each Issuing Bank agrees that notice to it (as provided in the next sentence) specifying that
Communications have been posted to the Approved Electronic Platform shall constitute effective delivery of the Communications to such
Lender for purposes of the Loan Documents. Each Lender and each Issuing Bank agrees (i) to notify the Administrative Agent in writing
(which could be in the form of electronic communication) from time to time of such Lender’s or such Issuing Bank’s (as applicable) email
address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such email
address.
(e) Each of the Lenders, the Issuing Banks and the Borrowers agrees that the Administrative Agent may, but (except as
may be required by applicable law) shall not be obligated to, store the Communications on the Approved Electronic Platform in accordance
with the Administrative Agent’s generally applicable document retention procedures and policies.
(f) Nothing herein shall prejudice the right of the Administrative Agent, any Lender or any Issuing Bank to give any notice
or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.
SECTION 8.04 The Administrative Agent Individually . With respect to its Commitment, Loans and Letters of Credit, the
Person serving as the Administrative Agent shall have and may exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any other Lender or Issuing Bank, as the case may be. The terms “Issuing
Banks”, “Lenders”, “Required Lenders” and any similar terms shall, unless the context clearly otherwise indicates, include the Administrative
Agent in its individual capacity as a Lender, an Issuing Bank or as one of the Required Lenders, as applicable. The Person serving as the
Administrative Agent 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 banking, trust or other business with, any Borrower, any Subsidiary or any Affiliate
of any of the foregoing as if such Person was not acting as the Administrative Agent and without any duty to account therefor to the Lenders
or the Issuing Banks.
SECTION 8.05 Successor Administrative Agent .
(a) The Administrative Agent may resign at any time by giving 30 days’ prior written notice thereof to the Lenders, the
Issuing Banks and the Company, whether or not a successor Administrative Agent has been appointed. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s
giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Banks, appoint a
successor Administrative Agent, which shall be a bank with an office in New York, New York or an Affiliate of any such bank. In either
case, such appointment shall be subject to the prior written approval of the Company (which approval may not be unreasonably withheld and
shall not be required while an Event of Default has occurred and is continuing). Upon the acceptance of any appointment as Administrative
Agent by a successor Administrative Agent, such successor Administrative
Agent shall succeed to, and become vested with, all the rights, powers, privileges and duties of the retiring Administrative Agent. Upon the
acceptance of appointment as Administrative Agent by a successor Administrative Agent, the retiring Administrative Agent shall be
discharged from its duties and obligations under this Agreement and the other Loan Documents. Prior to any retiring Administrative Agent’s
resignation hereunder as Administrative Agent, the retiring Administrative Agent shall take such action as may be reasonably necessary to
assign to the successor Administrative Agent its rights as Administrative Agent under the Loan Documents.
(b) Notwithstanding paragraph (a) of this Section, in the event no successor Administrative Agent shall have been so
appointed and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its intent to resign,
the retiring Administrative Agent may give notice of the effectiveness of its resignation to the Lenders, the Issuing Banks and the Company,
whereupon, on the date of effectiveness of such resignation stated in such notice, (i) the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder and under the other Loan Documents; provided that, solely for purposes of maintaining any security
interest granted to the Administrative Agent under any Collateral Document for the benefit of the Secured Parties, the retiring Administrative
Agent shall continue to be vested with such security interest as collateral agent for the benefit of the Secured Parties, and continue to be
entitled to the rights set forth in such Collateral Document and Loan Document, and, in the case of any Collateral in the possession of the
Administrative Agent, shall continue to hold such Collateral, in each case until such time as a successor Administrative Agent is appointed
and accepts such appointment in accordance with this Section (it being understood and agreed that the retiring Administrative Agent shall
have no duty or obligation to take any further action under any Collateral Document, including any action required to maintain the perfection
of any such security interest) and (ii) the Required Lenders shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent; provided that (A) all payments required to be made hereunder or under any other Loan Document
to the Administrative Agent for the account of any Person other than the Administrative Agent shall be made directly to such Person and (B)
all notices and other communications required or contemplated to be given or made to the Administrative Agent shall directly be given or
made to each Lender and each Issuing Bank. Following the effectiveness of the Administrative Agent’s resignation from its capacity as such,
the provisions of this Article VIII and Section 9.03, as well as any exculpatory, reimbursement and indemnification provisions set forth in any
other Loan Document, shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective
Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as
Administrative Agent and in respect of the matters referred to in the proviso under clause (i) above.
SECTION 8.06 Acknowledgements of Lenders and Issuing Banks .
(a) Each Lender represents that it is engaged in making, acquiring or holding commercial loans in the ordinary course of its
business and that it has, independently and without reliance upon the Administrative Agent, any Arranger or any other Lender, or any of the
Related Parties of any of the foregoing, and based on such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold Loans hereunder. Each Lender also
acknowledges that it will, independently and without reliance upon the Administrative Agent, any Arranger or any other Lender, or any of the
Related Parties of any of the foregoing, and based on such documents and information (which may contain material, non-public information
within the meaning of the United States securities laws concerning the Company and its Affiliates) as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document
or any related agreement or any document furnished hereunder or thereunder.
(b) Each Lender, by delivering its signature page to this Agreement on the Effective Date, or delivering its signature page
to an Assignment and Assumption or any other Loan Document pursuant to which it shall become a Lender hereunder, shall be deemed to
have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or
be approved by or satisfactory to, the Administrative Agent or the Lenders on the Effective Date.
SECTION 8.07 Collateral Matters.
(a) Except with respect to the exercise of setoff rights in accordance with Section 9.08 or with respect to a Secured Party’s
right to file a proof of claim in an insolvency proceeding, no Secured Party shall have any right individually to realize upon any of the
Collateral or to enforce any Guarantee of the Obligations, 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. In its
capacity, the Administrative Agent is a “representative” of the Secured Parties within the meaning of the term “secured party” as defined in
the UCC. In the event that any Collateral is hereafter pledged by any Person as collateral security for the Secured Obligations, the
Administrative Agent is hereby authorized, and hereby granted a power of attorney, to execute and deliver on behalf of the Secured Parties
any Loan Documents necessary or appropriate to grant and perfect a Lien on such Collateral in favor of the Administrative Agent on behalf of
the Secured Parties.
(b) In furtherance of the foregoing and not in limitation thereof, no Banking Services Agreement or Swap Agreement 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. By accepting the benefits of the Collateral, each Secured
Party that is a party to any such Banking Services Agreement or Swap Agreement, as applicable, shall be deemed to have appointed the
Administrative Agent to serve as administrative agent and collateral agent under the Loan Documents and agreed to be bound by the Loan
Documents as a Secured Party thereunder, subject to the limitations set forth in this paragraph.
(c) The Secured Parties irrevocably authorize the Administrative Agent, at its option and in its discretion, to subordinate
any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such
property that is permitted by Sections 6.02(d), (e), (f), (g) or (h). 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 or any other Secured Party for any failure to monitor or maintain any portion of
the Collateral.
SECTION 8.08 Credit Bidding . The Secured Parties hereby irrevocably authorize the Administrative Agent, at the
direction of the Required Lenders, to credit bid all or any portion of the Secured Obligations (including by accepting some or all of the
Collateral in satisfaction of some or all of the Secured Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner
purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (a) at any sale thereof conducted
under the provisions of the Bankruptcy Code, including under Sections 363, 1123 or 1129 of the Bankruptcy Code, or any similar laws in any
other jurisdictions to which a Loan Party is subject, or (b) at any other sale, foreclosure or acceptance of collateral in lieu of debt conducted
by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with any
applicable law. In connection with any such credit bid and purchase, the Secured Obligations owed to the Secured Parties shall be entitled to
be, and shall be, credit bid by the Administrative Agent at the direction
of the Required Lenders on a ratable basis (with Secured Obligations with respect to contingent or unliquidated claims receiving contingent
interests in the acquired assets on a ratable basis that shall vest upon the liquidation of such claims in an amount proportional to the liquidated
portion of the contingent claim amount used in allocating the contingent interests) for the asset or assets so purchased (or for the equity
interests or debt instruments of the acquisition vehicle or vehicles that are issued in connection with such purchase). In connection with any
such bid, (i) the Administrative Agent shall be authorized to form one or more acquisition vehicles and to assign any successful credit bid to
such acquisition vehicle or vehicles, (ii) each of the Secured Parties’ ratable interests in the Secured Obligations which were credit bid shall
be deemed without any further action under this Agreement to be assigned to such vehicle or vehicles for the purpose of closing such sale,
(iii) the Administrative Agent shall be authorized to adopt documents providing for the governance of the acquisition vehicle or vehicles
(provided that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any disposition of the
assets or equity interests thereof, shall be governed, directly or indirectly, by, and the governing documents shall provide for, control by the
vote of the Required Lenders or their permitted assignees under the terms of this Agreement or the governing documents of the applicable
acquisition vehicle or vehicles, as the case may be, irrespective of the termination of this Agreement and without giving effect to the
limitations on actions by the Required Lenders contained in Section 9.02 of this Agreement), (iv) the Administrative Agent on behalf of such
acquisition vehicle or vehicles shall be authorized to issue to each of the Secured Parties, ratably on account of the relevant Secured
Obligations which were credit bid, interests, whether as equity, partnership, limited partnership interests or membership interests, in any such
acquisition vehicle and/or debt instruments issued by such acquisition vehicle, all without the need for any Secured Party or acquisition
vehicle to take any further action, and (v) to the extent that Secured Obligations that are assigned to an acquisition vehicle are not used to
acquire Collateral for any reason (as a result of another bid being higher or better, because the amount of Secured Obligations assigned to the
acquisition vehicle exceeds the amount of Secured Obligations credit bid by the acquisition vehicle or otherwise), such Secured Obligations
shall automatically be reassigned to the Secured Parties pro rata with their original interest in such Secured Obligations and the equity
interests and/or debt instruments issued by any acquisition vehicle on account of such Secured Obligations shall automatically be cancelled,
without the need for any Secured Party or any acquisition vehicle to take any further action. Notwithstanding that the ratable portion of the
Secured Obligations of each Secured Party are deemed assigned to the acquisition vehicle or vehicles as set forth in clause (ii) above, each
Secured Party shall execute such documents and provide such information regarding the Secured Party (and/or any designee of the Secured
Party which will receive interests in or debt instruments issued by such acquisition vehicle) as the Administrative Agent may reasonably
request in connection with the formation of any acquisition vehicle, the formulation or submission of any credit bid or the consummation of
the transactions contemplated by such credit bid.
SECTION 8.09 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 Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the
Borrowers or any other Loan Party, that at least one of the following is and will be true:
(i) such Lender is not using “plan assets” (within the meaning of the Plan Asset Regulations) of one or more
Benefit Plans in connection with the Loans, the Letters of Credit or the Commitments,
(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain
transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain 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
(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative
Agent, in its sole discretion, and such Lender.
(b) In addition, unless sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or such Lender
has not provided another representation, warranty and covenant as provided in sub-clause (iv) in the immediately preceding clause (a), such
Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such
Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent,
and the Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrowers or any other Loan
Party, that none of the Administrative Agent, or the 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 hereto or thereto).
(c) The Administrative Agent and each Arranger hereby informs the Lenders that each such Person is not undertaking to provide
impartial investment advice, or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such
Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or
other payments with respect to the Loans, the Letters of Credit, the Commitments and this Agreement, (ii) may recognize a gain if it extended
the Loans, the Letters of Credit or the Commitments for an amount less than the amount being paid for an interest in the Loans, the Letters of
Credit or the Commitments by such Lender or (iii) may receive fees or other payments in connection with the transactions contemplated
hereby, the Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, commitment fees,
upfront fees, underwriting fees, ticking fees, agency fees, administrative agent fees or collateral agent fees, utilization fees, minimum usage
fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s
acceptance fees, breakage or other early termination fees or fees similar to the foregoing.
ARTICLE IX
Miscellaneous
SECTION 9.01 Notices . (a) Except in the case of notices and other communications expressly permitted to be given by
telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:
(i) if to any Borrower, to it c/o DHI Group, Inc., 12150 Meredith Drive, Urbandale, IA 50323 Attention of Luc
Gregoire (email: luc.gregoire@dhigroupinc.com), Greg Schippers (email: greg.schippers@dhigroupinc.com), Angie Macke (email:
angie.macke@dhigroupinc.com)
(email:
jack.connolly@dhigroupinc.com);
brian.campbell@dhigroupinc.com),
Campbell
Connolly
(email:
Brian
Jack
(ii) if to the Administrative Agent, (A) in the case of Borrowings by the Company denominated in Dollars, to
JPMorgan Chase Bank, N.A., Loan and Agency Services Group, 10 South Dearborn, 7 th Floor, Chicago, Illinois 60603, Attention of
April Yebd (Telecopy No. (888) 292-9533) and (B) in the case of Borrowings denominated in Foreign Currencies, to J.P. Morgan
Europe Limited, 25 Bank Street, Canary Wharf, London E14 5JP, Attention of The Manager, Loan & Agency Services (Telecopy
No. 44 207 777 2360), and in each case with a copy to JPMorgan Chase Bank, N.A., 270 Park Avenue, New York, New York 10017,
Attention of Justin Burton (Telecopy No. (917) 546-2609);
(iii) if to JPMorgan in its capacity as an Issuing Bank, to it at JPMorgan Chase Bank, N.A., Loan and Agency
Services Group, 10 South Dearborn, 7 th Floor, Chicago, Illinois 60603, Attention of April Yebd (Telecopy No. (888) 292-9533) and
in each case with a copy to JPMorgan Chase Bank, N.A., 560 Mission Street, 19 th Floor, San Francisco, California 94105, Attention
of Min Park (Telecopy No. (415) 226-0799); and
(iv) if to any other Lender or Issuing Bank, to it at its address (or telecopy number) set forth in its Administrative
Questionnaire.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when
received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for
the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered
through Approved Electronic Platforms, to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).
(b) Notices and other communications to the Lenders and the Issuing Banks hereunder may be delivered or furnished by
using Approved Electronic Platforms pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative
Agent or the Company may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.
Without limiting the foregoing the Administrative Agent agrees that, unless it shall otherwise advise the Company, notices to be delivered by
any Borrower to the
Administrative Agent pursuant to Article II (including any such notices permitted to be given by telephone or telecopy) may be delivered
using Approved Electronic Platforms.
(c) Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address
shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet
or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the
foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that,
for both clauses (i) and (ii) above, if such notice, email 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.
(d) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice
to the other parties hereto.
SECTION 9.02 Waivers; Amendments . (a) No failure or delay by the Administrative Agent, any Issuing Bank or any
Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any
other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Issuing
Banks and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Borrower therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only
in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender
or any Issuing Bank may have had notice or knowledge of such Default at the time.
(b) Except as provided in Section 2.20 with respect to an Incremental Term Loan Amendment or as provided in Section
2.14(c), neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Borrowers and the Required Lenders or by the Borrowers and the Administrative Agent with the
consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written
consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any
fees payable hereunder, without the written consent of each Lender directly affected thereby (it being understood that neither (A) any
amendment or modification to the financial covenants in this Agreement (or the defined terms used in the financial covenants in this
Agreement) or to Section 1.04 or (B) any amendment entered into pursuant to the terms of Section 2.14(c) shall constitute a reduction in the
rate of interest or fees for the purpose of this clause (ii)), (iii) postpone the scheduled date of payment of the principal amount of any Loan or
LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender directly affected thereby,
(iv) change Section 2.09(c) or 2.18(b) or (d) in a manner that would alter the ratable reduction of Commitments or the pro rata sharing of
payments required thereby, without the written consent of each Lender, (v) change the payment waterfall provisions of Section 2.18(b)
without the written consent of each Lender, (vi) change any of the provisions of this Section or the definition of “Required Lenders” or any
other
provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of each Lender (it being understood that, solely with the consent of
the parties prescribed by Section 2.20 to be parties to an Incremental Term Loan Amendment, Incremental Term Loans may be included in
the determination of Required Lenders on substantially the same basis as the Commitments and the Revolving Loans are included on the
Effective Date), (vii) release the Company or all or substantially all of the Subsidiary Guarantors from their obligations under Article X or the
Subsidiary Guaranty, in each case, without the written consent of each Lender, or (viii) except as provided in clause (d) of this Section or in
any Collateral Document, release all or substantially all of the Collateral, without the written consent of each Lender; provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or any Issuing Bank hereunder
without the prior written consent of the Administrative Agent or such Issuing Bank, as the case may be (it being understood that any change
to Section 2.23 shall require the consent of the Administrative Agent and the Issuing Banks). Notwithstanding the foregoing, no consent with
respect to any amendment, waiver or other modification of this Agreement shall be required of any Defaulting Lender, except with respect to
any amendment, waiver or other modification referred to in clause (i), (ii) or (iii) of the first proviso of this paragraph and then only in the
event such Defaulting Lender shall be directly affected by such amendment, waiver or other modification.
(c) Notwithstanding the foregoing, this Agreement and any other Loan Document may be amended (or amended and
restated) with the written consent of the Required Lenders, the Administrative Agent and the Borrowers (x) to add one or more credit
facilities (in addition to the Incremental Term Loans pursuant to an Incremental Term Loan Amendment) to this Agreement and to permit
extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the
benefits of this Agreement and the other Loan Documents with the Revolving Loans, Incremental Term Loans and the accrued interest and
fees in respect thereof and (y) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders
and Lenders.
(d) The Lenders hereby irrevocably authorize and direct the Administrative Agent to release any Liens granted to the
Administrative Agent by the Loan Parties on any Collateral (i) upon the termination of all the Commitments, payment and satisfaction in full
in cash of all Secured Obligations (other than Swap Obligations not yet due and payable, Banking Services Obligations not yet due and
payable, Unliquidated Obligations for which no claim has been made and other Obligations expressly stated to survive such payment and
termination), and the cash collateralization or entry into other arrangements in respect of all Unliquidated Obligations consisting of undrawn
Letters of Credit in a manner satisfactory to the Administrative Agent, (ii) constituting property being sold or disposed of if the Company
certifies to the Administrative Agent that the sale or disposition is made in compliance with the terms of this Agreement (and the
Administrative Agent may rely conclusively on any such certificate, without further inquiry), (iii) constituting property leased to the
Company or any Subsidiary under a lease which has expired or been terminated in a transaction permitted under this Agreement, or (iv) as
required to effect any sale or other disposition of such Collateral in connection with any exercise of remedies of the Administrative Agent and
the Lenders pursuant to Article VII . Any such release shall not in any manner discharge, affect, or impair the Secured Obligations or any
Liens (other than those expressly being released) upon (or obligations of the Loan Parties in respect of) all interests retained by the Loan
Parties, including the proceeds of any sale, all of which shall continue to constitute part of the Collateral.
(e) If, in connection with any proposed amendment, waiver or consent requiring the consent of “each Lender” or “each
Lender directly affected thereby,” the consent of the Required Lenders is obtained, but the consent of other necessary Lenders is not obtained
(any such Lender whose consent is necessary but not obtained being referred to herein as a “ Non-Consenting Lender ”), then the Company
may
elect to replace a Non-Consenting Lender as a Lender party to this Agreement, provided that, concurrently with such replacement, (i) another
bank or other entity which is reasonably satisfactory to the Company and the Administrative Agent shall agree, as of such date, to purchase
for cash the Loans and other Obligations due to the Non-Consenting Lender pursuant to an Assignment and Assumption and to become a
Lender for all purposes under this Agreement and to assume all obligations of the Non-Consenting Lender to be terminated as of such date
and to comply with the requirements of clause (b) of Section 9.04, (ii) each Borrower shall pay to such Non-Consenting Lender in same day
funds on the day of such replacement (1) all interest, fees and other amounts then accrued but unpaid to such Non-Consenting Lender by such
Borrower hereunder to and including the date of termination, including without limitation payments due to such Non-Consenting Lender
under Sections 2.15 and 2.17, and (2) an amount, if any, equal to the payment which would have been due to such Lender on the day of such
replacement under Section 2.16 had the Loans of such Non-Consenting Lender been prepaid on such date rather than sold to the replacement
Lender and (iii) such Non-Consenting Lender shall have received the outstanding principal amount of its Loans and participations in LC
Disbursements. Each party hereto agrees that (a) an assignment required pursuant to this paragraph may be effected pursuant to an
Assignment and Assumption executed by the Company, the Administrative Agent and the assignee (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), and (b) the Lender required to make such assignment need not be a party thereto in order for such
assignment to be effective and shall be deemed to have consented to and be bound by the terms thereof; provided that, following the
effectiveness of any such assignment, the other parties to such assignment agree to execute and deliver such documents necessary to evidence
such assignment as reasonably requested by the applicable Lender, provided that any such documents shall be without recourse to or warranty
by the parties thereto.
(f) Notwithstanding anything to the contrary herein the Administrative Agent may, with the consent of the Borrowers only,
amend, modify or supplement this Agreement or any of the other Loan Documents to cure any ambiguity, omission, mistake, defect or
inconsistency.
SECTION 9.03 Expenses; Indemnity; Damage Waiver . (a) The Company shall pay (i) all reasonable and documented out-
of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable and documented fees, charges and
disbursements of one primary counsel, and one additional local counsel in each applicable jurisdiction, for the Administrative Agent, in
connection with the syndication and distribution (including, without limitation, via the internet or through a service such as Intralinks) of the
credit facilities provided for herein, the preparation 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 and documented out-of-pocket expenses incurred by the Issuing Banks in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable and documented out-
of-pocket expenses incurred by the Administrative Agent, any Issuing Bank or any Lender, including the fees, charges and disbursements of
any one primary counsel, and one additional local counsel in each applicable jurisdiction, for the Administrative Agent and one additional
counsel for all the Lenders other than the Administrative Agent and additional counsel in light of actual or potential conflicts of interest or the
availability of different claims or defenses, in connection with the enforcement or protection of its rights in connection with this Agreement
and any other Loan Document, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or
Letters of Credit.
(b) The Company shall indemnify the Administrative Agent, each Arrangers, each Issuing Bank and each 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 reasonable and documented related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of any Loan Document or any agreement or instrument contemplated thereby, the performance by the
parties hereto of their respective obligations thereunder or the consummation of the Transactions or any other transactions contemplated
hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by any Issuing Bank to honor a demand
for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such
Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the
Company or any of its Subsidiaries, or any Environmental Liability related in any way to the Company or any of its Subsidiaries, or (iv) any
actual or prospective claim, litigation, investigation, arbitration or proceeding relating to any of the foregoing, whether or not such claim,
litigation, investigation, arbitration or proceeding is brought by the Company or any other Loan Party or its or their respective equity holders,
Affiliates, creditors or any other third Person and whether based on contract, tort or any other theory 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 are determined by a court of competent jurisdiction by final and nonappealable judgment to have
resulted from (x) the gross negligence or willful misconduct of such Indemnitee, (y) the material breach in bad faith by such Indemnitee of its
express contractual obligations under the Credit Documentation pursuant to a claim initiated by the Company or (z) any dispute that does not
involve or arise from an act or omission by the Company or any of its Affiliates and that is brought by such Indemnitee against any other
Indemnitee (other than any proceeding against any Indemnitee or any of its Affiliates solely in its capacity or in fulfilling its role as the
Administrative Agent, an Arranger, an Issuing Bank, a lead arranger, a bookrunner, an agent or any similar role under this Agreement). This
Section 9.03(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims or damages arising from any non-Tax
claim.
(c) To the extent that the Company fails to pay any amount required to be paid by it to the Administrative Agent or any
Issuing Bank under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent and each Lender
severally agrees to pay to such Issuing Bank such Lender’s Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount (it being understood that the Company’s failure to pay any
such amount shall not relieve the Company of any default in the payment thereof); provided that the unreimbursed expense or indemnified
loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent or such
Issuing Bank in its capacity as such.
(d) To the extent permitted by applicable law, no Borrower shall assert, and each Borrower hereby waives, any claim
against any Indemnitee for any damages arising from the use by others of information or other materials obtained through
telecommunications, electronic or other information transmission systems (including the Internet) other than for direct or actual damages
resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and non-appealable judgment of a court
of competent jurisdiction. To the extent permitted by applicable law, no Indemnitee shall assert against any Borrower or its Related Parties,
and no Borrower shall assert against any Indemnitee, and each Indemnitee and each Borrower hereby waives, any claim 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 or thereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof; provided ,
that nothing contained in this sentence shall limit the Company’s indemnity obligations to the extent set forth in Section 9.03(b).
(e) All amounts due under this Section shall be payable not later than twenty (20) days after written demand therefor.
SECTION 9.04 Successors and Assigns . (a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of any Issuing Bank that
issues any Letter of Credit), except that (i) no Borrower may assign or otherwise transfer any of its rights or obligations hereunder without the
prior written consent of each Lender (and any attempted assignment or transfer by any Borrower without such consent shall be null and void)
and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. 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 (including any Affiliate of any Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in
paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the
Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Persons (other
than an Ineligible Institution) 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) with the prior written consent (such consent not to be unreasonably withheld, conditioned or delayed)
of:
(A) the Company (provided that the Company shall be deemed to have consented to any such assignment
unless it shall object thereto by written notice to the Administrative Agent within ten (10) Business Days after having
received notice thereof); provided , further , that no consent of the Company shall be required for an assignment to a Lender,
an Affiliate of a Lender, an Approved Fund or, if an Event of Default has occurred and is continuing, any other assignee;
(B) the Administrative Agent; and
(C) the Issuing Banks;
(ii) Assignments shall be subject to the following additional conditions:
(A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund or an
assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitment
or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the
Company and the Administrative Agent otherwise consent, provided that no such consent of the Company shall be required if
an Event of Default has occurred and is continuing;
(B) 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, provided that this clause shall not be construed to prohibit the
assignment of a proportionate
part of all the assigning Lender’s rights and obligations in respect of the Commitments or Loans;
(C) the parties to each assignment shall execute and deliver to the Administrative Agent (x) an Assignment
and Assumption or (y) 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 the parties to the Assignment and
Assumption are participants, together with a processing and recordation fee of $3,500, such fee to be paid by either the
assigning Lender or the assignee Lender or shared between such Lenders; and
(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire in which the assignee designates one or more credit contacts to whom all syndicate-level information (which
may contain material non-public information about the Company and its Affiliates and their Related Parties or their respective
securities) will be made available and who may receive such information in accordance with the assignee’s compliance
procedures and applicable laws, including Federal and state securities laws.
For the purposes of this Section 9.04(b), the terms “ Approved Fund ” and “ Ineligible Institution ” have the following meanings:
“ Approved Fund ” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in
bank loans and similar extensions of credit in the ordinary course of its business and 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.
“ Ineligible Institution ” means (a) a natural person, (b) a Defaulting Lender or its Lender Parent, (c) the Company, any of its
Subsidiaries or any of its Affiliates, or (d) a company, investment vehicle or trust for, or owned and operated for the primary benefit of, a
natural person or relative(s) thereof.
(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the
effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto 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 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does
not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with paragraph (c) of this Section.
(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of each Borrower, shall maintain at
one of its offices 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 Commitment of, and principal amount (and stated interest) of the Loans and LC Disbursements
owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be
conclusive, and the Borrowers, the Administrative Agent, the Issuing Banks
and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Company,
any Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(v) Upon its receipt of (x) a duly completed Assignment and Assumption executed by an assigning Lender and an
assignee or (y) 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 the parties to the Assignment and Assumption are
participants, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information
contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment
required to be made by it pursuant to 2.06(d) or (e), 2.07(b), 2.18(e) or 9.03(c), the Administrative Agent shall have no obligation to
accept such Assignment and Assumption and record the information therein in the Register unless and until such payment shall have
been made in full, together with all accrued interest thereon. No assignment shall be effective for purposes of this Agreement unless it
has been recorded in the Register as provided in this paragraph.
(c) Any Lender may, without the consent of, or notice to, any Borrower, the Administrative Agent or the Issuing Banks, sell
participations to one or more banks or other entities (a “ Participant ”), other than an Ineligible Institution, in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that
(A) such Lender’s obligations under this Agreement shall remain unchanged; (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations; and (C) the Borrowers, the Administrative Agent, the Issuing Banks 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. 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 described in the first proviso to Section 9.02(b) that affects such Participant. Each Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 (subject to the requirements and limitations therein, including the
requirements under Section 2.17(f) (it being understood that the documentation required under Section 2.17(f) shall be delivered to the
participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this
Section; provided that such Participant (A) agrees to be subject to the provisions of Sections 2.18 and 2.19 as if it were an assignee under
paragraph (b) of this Section; and (B) shall not be entitled to receive any greater payment under Sections 2.15 or 2.17, 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 Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a
participation agrees, at the Company’s request and expense, to use reasonable efforts to cooperate with the Company to effectuate the
provisions of Section 2.19(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.18(d) 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 Borrowers, 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) or Proposed Section 1.163-5(b) of the United States
Treasury Regulations (or any amended or successor version). 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 Administrative Agent (in its capacity as
Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(d) 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 without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank,
and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a
security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a
party hereto.
SECTION 9.05 Survival . All covenants, agreements, representations and warranties made by the Loan Parties in the Loan
Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan
Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, any Issuing Bank or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long
as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement or any other Loan
Document is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated.
The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and
the Commitments or the termination of this Agreement or any other Loan Document or any provision hereof or thereof.
SECTION 9.06 Counterparts; Integration; Effectiveness; Electronic Execution . This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken
together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to (i)
fees payable to the Administrative Agent and (ii) the reduction of the Letter of Credit Commitment of any Issuing Bank constitute the entire
contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have
been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page to this Agreement by telecopy, e-
mailed .pdf or any other electronic means that reproduces an image of the actual executed signature page shall be effective as delivery
of a manually executed counterpart of this Agreement. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in
or relating to any document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to
include Electronic Signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity
or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case
may be, 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.
SECTION 9.07 Severability . Any provision of any Loan Document held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the
validity, legality and enforceability of the remaining provisions thereof; and the invalidity of a particular provision in a particular jurisdiction
shall not invalidate such provision in any other jurisdiction.
SECTION 9.08 Right of Setoff . If an Event of Default shall have occurred and be continuing, each Lender and each of its
Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final and in whatever currency denominated) at any time held and other
obligations at any time owing by such Lender or Affiliate to or for the credit or the account of any Borrower or any Subsidiary Guarantor
against any of and all of the Secured Obligations held by such Lender, irrespective of whether or not such Lender shall have made any
demand under the Loan Documents and although such obligations may be unmatured. The rights of each Lender under this Section are in
addition to other rights and remedies (including other rights of setoff) which such Lender may have. Each Lender and each Issuing Bank
agrees to notify the Company and the Administrative Agent promptly after any such setoff and application; provided that the failure to give
such notice shall not affect the validity of such setoff and application.
SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process . This Agreement shall be construed in
accordance with and governed by the law of the State of New York.
(a) Each party to this Agreement hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive
jurisdiction of the United States District Court for the Southern District of New York sitting in the Borough of Manhattan (or if such court
lacks subject matter jurisdiction, the Supreme Court of the State of New York sitting in the Borough of Manhattan), and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Loan Document or the transactions
relating hereto or thereto, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or proceeding may (and any such claims, cross-claims or third party claims
brought against the Administrative Agent or any of its Related Parties may only) be heard and determined in such Federal (to the extent
permitted by law) or New York State court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this
Agreement or any other Loan Document shall affect any right that the Administrative Agent, any Issuing Bank or any Lender may otherwise
have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Loan Party or its properties in the
courts of any jurisdiction.
(b) Each Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so,
any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this
Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in
Section 9.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in
any other manner permitted by law.
SECTION 9.10 WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT
OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11 Headings . Article and Section headings and the Table of Contents used herein are for convenience of
reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this
Agreement.
SECTION 9.12 Confidentiality . Each of the Administrative Agent, the Issuing Banks and the Lenders agrees to maintain
the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors,
officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential),
(b) to the extent requested by any Governmental Authority (including any self-regulatory authority, such as the National Association of
Insurance Commissioners) in which case, the disclosing party agrees, to the extent permitted by law, rule or regulation and reasonably
practicable, to promptly inform the Company, except with respect to any audit or examination conducted by bank accountants or any
regulatory authorities, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, provided that
the Person required to disclose such information shall, to the extent permitted by law, rule, regulation or subpoena and reasonably practicable,
promptly inform the Company, except with respect to any audit or examination conducted by bank accountants or any regulatory authorities,
(d) to any other party to this Agreement, (e) in connection with the exercise of any remedies under this Agreement or any other Loan
Document or any suit, 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 (1) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (2) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction relating to any Borrower and its obligations, (g) on a
confidential basis to (1) any rating agency in connection with rating the Company or its Subsidiaries or the credit facilities provided for herein
or (2) the CUSIP Service
Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the credit facilities provided
for herein, (h) with the consent of the Company or (i) to the extent such Information (1) becomes publicly available other than as a result of a
breach of this Section or (2) becomes available to the Administrative Agent, any Issuing Bank or any Lender on a nonconfidential basis from
a source other than the Company that is not known by the Administrative Agent, such Issuing Bank or such Lender to be subject to a duty of
confidentiality to the Company. For the purposes of this Section, “ Information ” means all information received from the Company relating
to the Company or its business, other than any such information that is available to the Administrative Agent, any Issuing Bank or any Lender
on a nonconfidential basis prior to disclosure by the Company and other than information pertaining to this Agreement routinely provided by
arrangers to data service providers, including league table providers, that serve the lending industry. 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.
EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN THE IMMEDIATELY PRECEDING
PARAGRAPH FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC
INFORMATION CONCERNING THE COMPANY AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES,
AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-
PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN
ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES
LAWS.
ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE
COMPANY OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS
AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC
INFORMATION ABOUT THE COMPANY, THE OTHER LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR
RESPECTIVE SECURITIES.
EACH LENDER REPRESENTS TO THE COMPANY AND THE
ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT
CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN
ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.
ACCORDINGLY,
SECTION 9.13 USA PATRIOT Act . Each Lender that is subject to the requirements of the Patriot Act hereby notifies
each Loan Party that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies such Loan
Party, which information includes the name and address of such Loan Party and other information that will allow such Lender to identify such
Loan Party in accordance with the Patriot Act.
SECTION 9.14 Appointment for Perfection . Each Lender hereby appoints each other Lender as its agent for the purpose of
perfecting Liens, for the benefit of the Administrative Agent and the Secured Parties, in assets which, in accordance with Article 9 of the
UCC or any other applicable law can be perfected only by possession. Should any Lender (other than the Administrative Agent) obtain
possession of any such Collateral, such Lender shall notify the Administrative Agent thereof, and, promptly upon the Administrative Agent’s
request therefor shall deliver such Collateral to the Administrative Agent or otherwise deal with such Collateral in accordance with the
Administrative Agent’s instructions.
SECTION 9.15 Releases of Subsidiary Guarantors .
(a) A Subsidiary Guarantor shall automatically be released from its obligations under the Subsidiary Guaranty upon the
consummation of any transaction permitted by this Agreement as a result of which such Subsidiary Guarantor ceases to be a Subsidiary;
provided that, if so required by this Agreement, the Required Lenders shall have consented to such transaction and the terms of such consent
shall not have provided otherwise. In connection with any termination or release pursuant to this Section, the Administrative Agent shall (and
is hereby irrevocably authorized by each Lender to) execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that
such Loan Party shall reasonably request to evidence such termination or release. Any execution and delivery of documents pursuant to this
Section shall be without recourse to or warranty by the Administrative Agent.
(b) Further, so long as no Event of Default is then continuing, the Administrative Agent will (and is hereby irrevocably
authorized by each Lender to), upon the request of the Company, release any Subsidiary Guarantor from its obligations under the Subsidiary
Guaranty if such Subsidiary Guarantor is no longer a Wholly Owned Domestic Subsidiary.
(c) At such time as the principal and interest on the Loans, all LC Disbursements, the fees, expenses and other amounts
payable under the Loan Documents and the other Secured Obligations (other than Swap Obligations not yet due and payable, Banking
Services Obligations not yet due and payable, Unliquidated Obligations for which no claim has been made and other Obligations expressly
stated to survive such payment and termination) shall have been paid in full in cash, the Commitments shall have been terminated and no
Letters of Credit shall be outstanding, the Subsidiary Guaranty and all obligations (other than those expressly stated to survive such
termination) of each Subsidiary Guarantor thereunder shall automatically terminate, all without delivery of any instrument or performance of
any act by any Person.
SECTION 9.16 Interest Rate Limitation . Notwithstanding anything herein to the contrary, if at any time the interest rate
applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law
(collectively the “ Charges ”), shall exceed the maximum lawful rate (the “ Maximum Rate ”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan
hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest
and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be
cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the
Maximum Rate therefor) until such cumulated amount, together with interest thereon at the NYFRB Rate to the date of repayment, shall have
been received by such Lender.
SECTION 9.17 No Advisory or Fiduciary Responsibility . Each Borrower acknowledges and agrees, and acknowledges its
Subsidiaries’ understanding, that no Credit Party will have any obligations except those obligations expressly set forth herein and in the other
Loan Documents and each Credit Party is acting solely in the capacity of an arm’s length contractual counterparty to any Borrower with
respect to the Loan Documents and the transaction contemplated therein and not as a financial advisor or a fiduciary to, or an agent of, any
Borrower or any other person. Each Borrower agrees that it will not assert any claim against any Credit Party based on an alleged breach of
fiduciary duty by such Credit Party in connection with this Agreement and the transactions contemplated hereby. Additionally, each Borrower
acknowledges and agrees that no Credit Party is advising such Borrower as to any legal, tax, investment, accounting, regulatory or any other
matters in any jurisdiction. Each Borrower shall consult with its own advisors concerning such matters and shall be responsible for making its
own independent investigation and appraisal
of the transactions contemplated hereby, and the Credit Parties shall have no responsibility or liability to such Borrower with respect thereto.
Each Borrower further acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that each Credit Party, together
with its Affiliates, is a full service securities or banking firm engaged in securities trading and brokerage activities as well as providing
investment banking and other financial services. In the ordinary course of business, any Credit Party may provide investment banking and
other financial services to, and/or acquire, hold or sell, for its own accounts and the accounts of customers, equity, debt and other securities
and financial instruments (including bank loans and other obligations) of, any Borrower, its Subsidiaries and other companies with which any
Borrower or any of its Subsidiaries may have commercial or other relationships. With respect to any securities and/or financial instruments so
held by any Credit Party or any of its customers, all rights in respect of such securities and financial instruments, including any voting rights,
will be exercised by the holder of the rights, in its sole discretion.
In addition, each Borrower acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that each Credit Party and its
Affiliates may be providing debt financing, equity capital or other services (including financial advisory services) to other companies in
respect of which any Borrower or any of its Subsidiaries may have conflicting interests regarding the transactions described herein and
otherwise. No Credit Party will use confidential information obtained from any Borrower by virtue of the transactions contemplated by the
Loan Documents or its other relationships with any Borrower in connection with the performance by such Credit Party of services for other
companies, and no Credit Party will furnish any such information to other companies. Each Borrower also acknowledges that no Credit Party
has any obligation to use in connection with the transactions contemplated by the Loan Documents, or to furnish to any Borrower or any of its
Subsidiaries, confidential information obtained from other companies.
ARTICLE X
Cross-Guarantee
In order to induce the Lenders to extend credit to the other Borrowers hereunder, each Borrower hereby irrevocably and
unconditionally guarantees, as a primary obligor and not merely as a surety, the payment when and as due of the Secured Obligations of such
other Borrowers. Each Borrower further agrees that the due and punctual payment of such Secured Obligations may be extended or renewed,
in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee hereunder notwithstanding any
such extension or renewal of any such Secured Obligation.
Each Borrower waives presentment to, demand of payment from and protest to any Borrower of any of the Secured Obligations, and
also waives notice of acceptance of its obligations and notice of protest for nonpayment. The obligations of each Borrower hereunder shall
not be affected by (a) the failure of the Administrative Agent, any Issuing Bank or any Lender to assert any claim or demand or to enforce
any right or remedy against any Borrower under the provisions of this Agreement, any other Loan Document or otherwise; (b) any extension
or renewal of any of the Secured Obligations; (c) any rescission, waiver, amendment or modification of, or release from, any of the terms or
provisions of this Agreement, or any other Loan Document or agreement; (d) any default, failure or delay, willful or otherwise, in the
performance of any of the Secured Obligations; (e) the failure of the Administrative Agent to take any steps to perfect and maintain any
security interest in, or to preserve any rights to, any security or collateral for the Secured Obligations, if any; (f) any change in the corporate,
partnership or other existence, structure or ownership of any Borrower or any other guarantor of any of the Secured Obligations; (g) the
enforceability or validity of the Secured Obligations or any part thereof or the genuineness, enforceability or validity of any agreement
relating thereto or with respect to any collateral securing the Secured Obligations or any part thereof, or any other invalidity or
unenforceability relating to or against any Borrower or any other guarantor of any of the Secured Obligations, for any reason related to this
Agreement, any Swap Contract, any Banking Services Agreement, any other Loan Document, or any provision of applicable law, decree,
order or regulation of any jurisdiction purporting to prohibit the payment by such Borrower or any other guarantor of the Secured Obligations,
of any of the Secured Obligations or otherwise affecting any term of any of the Secured Obligations; or (h) any other act, omission or delay to
do any other act which may or might in any manner or to any extent vary the risk of such Borrower or otherwise operate as a discharge of a
guarantor as a matter of law or equity or which would impair or eliminate any right of such Borrower to subrogation.
Each Borrower further agrees that its agreement hereunder constitutes a guarantee of payment when due (whether or not any
bankruptcy or similar proceeding shall have stayed the accrual or collection of any of the Secured Obligations or operated as a discharge
thereof) and not merely of collection, and waives any right to require that any resort be had by the Administrative Agent, any Issuing Bank or
any Lender to any balance of any deposit account or credit on the books of the Administrative Agent, any Issuing Bank or any Lender in
favor of any Borrower or any other Person.
The obligations of each Borrower hereunder shall not be subject to any reduction, limitation, impairment or termination for any
reason, and shall not be subject to any defense or set-off, counterclaim, recoupment or termination whatsoever, by reason of the invalidity,
illegality or unenforceability of any of the Secured Obligations, any impossibility in the performance of any of the Secured Obligations or
otherwise.
Each Borrower further agrees that its obligations hereunder shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any Secured Obligation (including a payment effected through exercise of a right of setoff) is rescinded,
or is or must otherwise be restored or returned by the Administrative Agent, any Issuing Bank or any Lender upon the insolvency, bankruptcy
or reorganization of any Borrower or otherwise (including pursuant to any settlement entered into by a Secured Party in its discretion).
In furtherance of the foregoing and not in limitation of any other right which the Administrative Agent, any Issuing Bank or any
Lender may have at law or in equity against any Borrower by virtue hereof, upon the failure of any other Borrower to pay any Secured
Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each
Borrower hereby promises to and will, upon receipt of written demand by the Administrative Agent, any Issuing Bank or any Lender,
forthwith pay, or cause to be paid, to the Administrative Agent, any Issuing Bank or any Lender in cash an amount equal to the unpaid
principal amount of the Secured Obligations then due, together with accrued and unpaid interest thereon. Each Borrower further agrees that if
payment in respect of any Secured Obligation shall be due in a currency other than Dollars and/or at a place of payment other than New York,
Chicago or any other Eurocurrency Payment Office and if, by reason of any Change in Law, disruption of currency or foreign exchange
markets, war or civil disturbance or other event, payment of such Secured Obligation in such currency or at such place of payment shall be
impossible or, in the reasonable judgment of the Administrative Agent, any Issuing Bank or any Lender, disadvantageous to the
Administrative Agent, any Issuing Bank or any Lender in any material respect, then, at the election of the Administrative Agent, such
Borrower shall make payment of such Secured Obligation in Dollars (based upon the applicable Equivalent Amount in effect on the date of
payment) and/or in New York, Chicago or such other Eurocurrency Payment Office as is designated by the Administrative Agent and, as a
separate and independent obligation, shall indemnify the Administrative Agent, any Issuing Bank and any Lender against any losses or
reasonable out-of-pocket expenses that it shall sustain as a result of such alternative payment.
The Borrowers agree among themselves that, in connection with payments made hereunder, each Borrower shall have contribution
rights against the other Borrowers as permitted under applicable Law. Upon payment by any Borrower of any sums as provided above, all
rights of such Borrower against any Borrower arising as a result thereof by way of right of subrogation or otherwise shall in all respects be
subordinated and junior in right of payment to the prior indefeasible payment in full in cash of all the Secured Obligations owed by such
Borrower to the Administrative Agent, the Issuing Banks and the Lenders.
Each Borrower hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other
support as may be needed from time to time by each other Loan Party to honor all of its obligations under this Article X or the Subsidiary
Guaranty, as applicable, in respect of Specified Swap Obligations (provided, however, that each Borrower shall only be liable under this
paragraph for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this paragraph or
otherwise under this Article X voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater
amount). Each Borrower intends that this paragraph constitute, and this paragraph shall be deemed to constitute, a “keepwell, support, or
other agreement” for the benefit of each other Guarantor for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
Nothing shall discharge or satisfy the liability of any Borrower hereunder except the full performance and payment in cash of the
Secured Obligations.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers
as of the day and year first above written.
DHI GROUP, INC., as the Company and a Borrower
By _/S/ Luc Grégoire _____
Name: Luc Grégoire
Title: Chief Financial Officer
DICE INC., as a Borrower
By /S/ Luc Grégoire _____
Name: Luc Grégoire
Title: Chief Financial Officer
DICE CAREER SOLUTIONS, INC., as a Borrower
By /S/ Luc Grégoire _____
Name: Luc Grégoire
Title: Chief Financial Officer
JPMORGAN CHASE BANK, N.A., individually
as a Lender, as an Issuing Bank and
as Administrative Agent
By _/S/__Min Park ____________
Name: Min Park
Title: Vice President
[OTHER AGENTS, ISSUING BANKS AND LENDERS]
BMO HARRIS BANK N.A., as a Lender and as a Co-Syndication Agent
By _/S/__Chad Rock
Name: Chad Rock
Title: Managing Director
BANK OF AMERICA, N.A., as a Lender and as a Co-Syndication Agent
By _/S/_Daniel J. Ricke
Name: Daniel J. Ricke
Title: Vice President
TD BANK, N.A., as a Lender and as Documentation Agent
By _/S/_Charles Michael Garrido
Name: Charles Michael Garrido
Title: Vice President – Senior Relationship Manager
The undersigned Departing Lender hereby acknowledges and agrees that, from and after the
Effective Date, it is no longer a party to the Existing Credit Agreement or any of the “Loan
Documents” (as defined therein) and is not a party to this Agreement other than for the sole
purpose of provisions of Section 1.05 expressly applicable to it.
KEYBANK NATIONAL ASSOCIATION
By _/S/ Marc Evans ________________
Name: Marc Evans
Title: Vice President
SILICON VALLEY ASSOCIATION
By _/S/ Jon Wolter ________________
Name: Jon Wolter
Title: Director
FIRST NIAGARA BANK, N.A.
By _/S/ Marc Evans ________________
Name: Marc Evans
Title: Vice President
CAPITAL ONE, NATIONAL ASSOCIATION
By _/S/ Seth Meier ________________
Name: Seth Meier
Title: Sr. Director SCHEDULE 2.01A
COMMITMENTS
LENDER
COMMITMENT
JPMORGAN CHASE BANK, N.A.
BMO HARRIS BANK N.A.
BANK OF AMERICA, N.A.
TD BANK, N.A.
AGGREGATE COMMITMENTS
$25,000,000
$24,000,000
$22,000,000
$19,000,000
$90,000,000
SCHEDULE 2.01B
LETTER OF CREDIT COMMITMENTS
LENDER
LETTER OF CREDIT COMMITMENT
JPMORGAN CHASE BANK, N.A.
BANK OF AMERICA, N.A.
$6,800,000
$3,400,000
EXHIBIT A
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the “ Assignment and Assumption ”) is dated as of the Effective Date set forth below and is
entered into by and between [ Insert
name
of
Assignor
] (the “ Assignor ”) and [ Insert
name
of
Assignee
] (the “ Assignee ”). Capitalized
terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, restated,
supplemented or otherwise modified from time to time, the “ Credit Agreement ”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference
and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably
purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement,
as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its
capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to
the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective
facilities identified below (including any letters of credit and guarantees included in such facilities) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any
Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered
pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including contract
claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and
assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to
herein collectively as the “ Assigned Interest ”). Such sale and assignment
is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty
by the Assignor.
1.
2.
3.
4.
5.
Assignor:
Assignee:
____________________________
____________________________
[and is an Affiliate/Approved Fund of [identify Lender]]
Borrowers:
DHI Group, Inc., Dice Inc. and Dice Career Solutions, Inc.
Administrative Agent:
JPMorgan Chase Bank, N.A., as the administrative agent under the Credit Agreement
Credit Agreement:
The Second Amended and Restated Credit Agreement dated as of November 14, 2018
among DHI Group, Inc., Dice Inc. and Dice Career Solutions, Inc., the Lenders parties
thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents parties
thereto
6.
Assigned Interest:
Aggregate Amount of
Commitment/Loans for all Lenders
Amount of
Commitment/
Loans Assigned
Percentage Assigned
of
Commitment/Loans
$
$
$
$
$
$
%
%
%
Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE
EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
The Assignee agrees to deliver to the Administrative Agent a completed Administrative Questionnaire in which the Assignee designates one
or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Company, the
other Loan Parties and their Related Parties or their respective securities) will be made available and who may receive such information in
accordance with the Assignee’s compliance procedures and applicable laws, including federal and state securities laws.
The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR
[NAME OF ASSIGNOR]
By: ______________________________________
Title:
ASSIGNEE
[NAME OF ASSIGNEE]
By: ______________________________________
Title:
Consented to and Accepted:
JPMORGAN CHASE BANK, N.A., as Administrative Agent and an
Issuing Bank
By:
Title:
Consented to:
BANK OF AMERICA, N.A., as an Issuing Bank
By:
Title:
[Consented to:]
DHI GROUP, INC.
By:
Title:
ANNEX I
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties .
1.1 Assignor . The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest,
(ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has
taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby;
and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit
Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of the Company, any of its Subsidiaries or Affiliates or any other Person
obligated in respect of any Loan Document, (iv) any requirements under applicable law for the Assignee to become a lender under the Credit
Agreement or to charge interest at the rate set forth therein from time to time or (v) the performance or observance by the Company, any of its
Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.
1.2. Assignee . The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a
Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement and under applicable law that
are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall
be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 5.01 thereof, as applicable, and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis
of which it has made such analysis and decision independently and without reliance on the Administrative Agent, any arranger of the credit
facilities evidenced by the Credit Agreement or any other Lender and their respective Related Parties, and (v) attached to the Assignment and
Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed
by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, any arranger of the credit
facilities evidenced by the Credit Agreement, the Assignor or any other Lender and their respective Related Parties, and based on such
documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms
of the Loan Documents are required to be performed by it as a Lender.
2. Payments . From and after the Effective Date, the Administrative Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but
excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.
3. General Provisions . This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which
together shall constitute one instrument. Acceptance and adoption of the terms of this Assignment and Assumption by the Assignee and the
Assignor by Electronic Signature or delivery of an executed counterpart of a signature page of this Assignment and Assumption by any
Approved Electronic System shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This
Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.
EXHIBIT B
OPINION OF COUNSEL FOR THE LOAN PARTIES
[Attached]
EXHIBIT C
FORM OF INCREASING LENDER SUPPLEMENT
INCREASING LENDER SUPPLEMENT, dated __________, 20___ (this “ Supplement ”), by and among each of the
signatories hereto, to the Second Amended and Restated Credit Agreement, dated as of November 14, 2018 (as amended, restated,
supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among DHI Group, Inc. (the “ Company ”), Dice Inc. and
Dice Career Solutions, Inc., the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “
Administrative Agent ”).
W I T N E S S E T H
WHEREAS, pursuant to Section 2.20 of the Credit Agreement, the Company has the right, subject to the terms and conditions
thereof, to effectuate from time to time an increase in the aggregate Commitment and/or one or more tranches of Incremental Term Loans
under the Credit Agreement by requesting one or more Lenders to increase the amount of its Commitment and/or to participate in such a
tranche;
WHEREAS, the Company has given notice to the Administrative Agent of its intention to [increase the Aggregate
Commitment] [and] [enter into a tranche of Incremental Term Loans] pursuant to such Section 2.20 ; and
WHEREAS, pursuant to Section 2.20 of the Credit Agreement, the undersigned Increasing Lender now desires to [increase
the amount of its Commitment] [and] [participate in a tranche of Incremental
Term Loans] under the Credit Agreement by executing and delivering to the Company and the Administrative Agent this Supplement;
NOW, THEREFORE, each of the parties hereto hereby agrees as follows:
1. The undersigned Increasing Lender agrees, subject to the terms and conditions of the Credit Agreement, that on the date
of this Supplement it shall [have its Commitment increased by $[__________], thereby making the aggregate amount of its total
Commitments equal to $[__________]] [and] [participate in a tranche of Incremental Term Loans with a commitment amount equal to
$[__________] with respect thereto].
2. The Company hereby represents and warrants that no Default or Event of Default has occurred and is continuing on and
as of the date hereof.
3. Terms defined in the Credit Agreement shall have their defined meanings when used herein.
4. This Supplement shall be governed by, and construed in accordance with, the laws of the State of New York.
5. This Supplement may be executed in any number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same
document.
IN WITNESS WHEREOF, each of the undersigned has caused this Supplement to be executed and delivered by a duly
authorized officer on the date first above written.
[INSERT NAME OF INCREASING LENDER]
By:____________________________________
Name:
Title:
Accepted and agreed to as of the date first written above:
DHI GROUP, INC.
By:______________________________________
Name:
Title:
Acknowledged as of the date first written above:
JPMORGAN CHASE BANK, N.A.
as Administrative Agent
By:______________________________________
Name:
Title:
EXHIBIT D
FORM OF AUGMENTING LENDER SUPPLEMENT
AUGMENTING LENDER SUPPLEMENT, dated __________, 20___ (this “ Supplement ”), to the Second Amended and Restated
Credit Agreement, dated as of November 14, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit
Agreement ”), among DHI Group, Inc. (the “Company”), Dice Inc., Dice Career Solutions, Inc., the Lenders party thereto and JPMorgan
Chase Bank, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”).
W I T N E S S E T H
WHEREAS, the Credit Agreement provides in Section 2.20 thereof that any bank, financial institution or other entity may [extend
Commitments] [and] [participate in tranches of Incremental Term Loans] under the Credit Agreement subject to the approval of the Company
and the Administrative Agent, by executing and delivering to the Company and the Administrative Agent a supplement to the Credit
Agreement in substantially the form of this Supplement; and
WHEREAS, the undersigned Augmenting Lender was not an original party to the Credit Agreement but now desires to become a
party thereto;
NOW, THEREFORE, each of the parties hereto hereby agrees as follows:
1. The undersigned Augmenting Lender agrees to be bound by the provisions of the Credit Agreement and agrees that it shall, on
the date of this Supplement, become a Lender for all purposes of the Credit Agreement to the same extent as if originally a party thereto, with
a [Commitment of $[__________]] [and] [a commitment with respect to Incremental Term Loans of $[__________]].
2. The undersigned Augmenting Lender (a) represents and warrants that it is legally authorized to enter into this Supplement;
(b) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered
pursuant to Section 5.01 thereof, as applicable, and has reviewed such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Supplement; (c) agrees that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit Agreement or any other instrument or document furnished
pursuant hereto or thereto; (d) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such
powers and discretion under the Credit Agreement or any other instrument or document furnished pursuant hereto or thereto as are delegated
to the Administrative Agent by the terms thereof, together with such powers as are incidental thereto; and (e) agrees that it will be bound by
the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender.
3. The undersigned’s address for notices for the purposes of the Credit Agreement is as follows:
[___________]
4. The Company hereby represents and warrants that no Default or Event of Default has occurred and is continuing on and as of the
date hereof.
5. Terms defined in the Credit Agreement shall have their defined meanings when used herein.
6. This Supplement shall be governed by, and construed in accordance with, the laws of the State of New York.
7. This Supplement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same document.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, each of the undersigned has caused this Supplement to be executed and delivered by a duly authorized
officer on the date first above written.
[INSERT NAME OF AUGMENTING LENDER]
By:____________________________________
Name:
Title:
Accepted and agreed to as of the date first written above:
DHI GROUP, INC.
By:______________________________________
Name:
Title:
Acknowledged as of the date first written above:
JPMORGAN CHASE BANK, N.A.
as Administrative Agent
By:______________________________________
Name:
Title:
EXHIBIT E
LIST OF CLOSING DOCUMENTS
DHI GROUP, INC., DICE INC. and DICE CAREER SOLUTIONS, INC.
SECOND AMENDED AND RESTATED CREDIT FACILITIES
November 14, 2018
LIST OF CLOSING DOCUMENTS
A. LOAN DOCUMENTS
1.
Second Amended and Restated Credit Agreement (the “ Credit Agreement ”) by and among DHI Group, Inc., a Delaware corporation
(the “ Company ”), Dice Inc. (“ Dice ”), Dice Career Solutions, Inc. (“ DCS ” and, collectively with the Company and Dice, the “
Borrowers ”), the institutions from
time to time parties thereto as Lenders (the “ Lenders ”) and JPMorgan Chase Bank, N.A., in its capacity as Administrative Agent for
itself and the other Lenders (the “ Administrative Agent ”), evidencing a revolving credit facility to the Borrowers from the Lenders
in an aggregate principal amount of $90,000,000.
Schedule 2.01A
Schedule 2.01B
Schedule 3.10
Schedule 3.13
Schedule 3.17
Schedule 3.20(a)
Schedule 3.20(b)
Schedule 3.20(c)
Schedule 3.20(d)
Schedule 3.20(e)
Schedule 6.01
Schedule 6.02
Schedule 6.03
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit G-1
Exhibit G-2
Exhibit G-3
Exhibit G-4
Exhibit H
Exhibit I
Exhibit J-1
Exhibit J-2
SCHEDULES
Commitments
Letter of Credit Commitments
Insurance
Subsidiaries
IP Rights
Locations of Real Property
Locations of Tangible Personal Property
Location of Chief Executive Office, Taxpayer Identification Number, Etc.
Changes in Legal Name, State of Formation and Structure
Deposit and Investment Accounts
Liens Existing on the Effective Date
Investments Existing on the Effective Date
Indebtedness Existing on the Effective Date
EXHIBITS
Form of Assignment and Assumption
Form of Opinion of Loan Parties’ Counsel
Form of Increasing Lender Supplement
Form of Augmenting Lender Supplement
List of Closing Documents
Compliance Certificate
Form of U.S. Tax Certificate (Non-U.S. Lenders That Are Not Partnerships)
Form of U.S. Tax Certificate (Non-U.S. Lenders That Are Partnerships)
Form of U.S. Tax Certificate (Non-U.S. Participants That Are Not Partnerships)
Form of U.S. Tax Certificate (Non-U.S. Participants That Are Partnerships)
Form of Security Agreement
Form of Subsidiary Guaranty
Form of Borrowing Request
Form of Interest Election Request
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.
Notes executed by the initial Borrowers in favor of each of the Lenders, if any, which has requested a note pursuant to Section 2.10(e)
of the Credit Agreement.
3.
4.
5.
6.
7.
8.
9.
Second Amended and Restated Guaranty executed by the initial Subsidiary Guarantors (collectively with the Borrowers, the “ Loan
Parties ”) in favor of the Administrative Agent
Second Amended and Restated Security and Pledge Agreement executed by the Loan Parties in favor of the Administrative Agent,
together with pledged instruments and allonges, stock certificates, stock powers executed in blank, pledge instructions and
acknowledgments, as appropriate .
Schedule 1(b)
Schedule 2(c)
Schedule 3(f)
Exhibit 4(a)(ii)
Exhibit 4(b)(i)
Exhibit 4(b)(ii)
Exhibit 4(b)(iii)
–
–
–
–
–
–
–
Pledged Equity
Commercial Tort Claims
Instruments; Documents; Tangible Chattel Paper
Irrevocable Stock Power
Notice of Grant of Security Interest in United States Patents
Notice of Grant of Security Interest in United States Trademarks
Notice of Grant of Security Interest in United States Copyrights
Notice of Grant of Security Interest in United States Trademarks made by certain of the Loan Parties in favor of the Administrative
Agent for the benefit of the Secured Parties.
Schedule 1
–
Trademarks; Trademark Applications
Notice of Grant of Security Interest in United States Copyrights made by certain of the Loan Parties in favor of the Administrative
Agent for the benefit of the Secured Parties.
Schedule 1
–
Copyrights; Copyright Applications
Certificates of Insurance listing the Administrative Agent as (x) lender loss payee for the property, casualty insurance policies of
the initial Loan Parties and (y) additional insured with respect to the liability insurance policies of the initial Loan Parties.
B. UCC DOCUMENTS
UCC, tax lien and name variation search reports naming each Loan Party from the appropriate offices in relevant jurisdictions.
UCC financing statements naming each Loan Party as debtor and the Administrative Agent as secured party as filed with the
appropriate offices in applicable jurisdictions.
C. CORPORATE DOCUMENTS
10.
Certificate of the Secretary or an Assistant Secretary of each Loan Party certifying (i) that there have been no changes in the
Certificate of Incorporation or other charter document of such Loan Party, as attached thereto and as certified as of a recent date
by the Secretary of State (or analogous governmental entity) of the jurisdiction of its organization, since the date of the
certification thereof by such governmental entity, (ii) the By-Laws or other applicable organizational document, as attached
thereto, of such Loan Party as in effect on the date of such certification, (iii) resolutions of the Board of Directors or other
governing body of such Loan Party authorizing
the execution, delivery and performance of each Loan Document to which it is a party, and (iv) the names and true signatures of
the incumbent officers of each Loan Party authorized to sign the Loan Documents to which it is a party, and (in the case of each
Borrower) authorized to request a Borrowing or the issuance of a Letter of Credit under the Credit Agreement.
11.
Good Standing Certificate (or analogous documentation if applicable) for each Loan Party from the Secretary of State (or
analogous governmental entity) of the jurisdiction of its organization, to the extent generally available in such jurisdiction.
12.
Opinion of Moore & Van Allen PLLC, counsel for the Loan Parties.
D. OPINIONS
13.
14.
15.
16.
E. CLOSING CERTIFICATES AND MISCELLANEOUS
A Certificate signed by the President, a Vice President or a Financial Officer of the Company certifying the following: (i) all of the
representations and warranties of the Company set forth in the Credit Agreement are true and correct in all material respects (or
in all respects if the applicable representation or warranty is qualified by materiality or Material Adverse Effect), except to the
extent that such representation and warranties specifically refer to an earlier date, in which case they shall be true and correct in
all material respects as of such earlier date and (ii) no Default or Event of Default has occurred and is then continuing.
English law pledge agreement in respect of DHI Careers Limited and related instruments.
F. POST-CLOSING DOCUMENTS
English law pledge opinion.
Lender loss payable endorsements and additional insured endorsements in respect of the insurance policies referenced in the
insurance certificates delivered pursuant to Item 7 above.
EXHIBIT F
FORM OF COMPLIANCE CERTIFICATE
For the fiscal quarter ended , 20___.
I, , [Title] of DHI GROUP, INC., a Delaware corporation (the “ Company ”) hereby certify that, to the best of my knowledge
and belief, with respect to that certain Second Amended and Restated Credit Agreement dated as of November 14, 2018 (as amended,
supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among the Company, Dice Inc., Dice Career Solutions,
Inc., the Lenders from time to time party thereto (collectively with the Company, the “ Borrowers ”) and JPMorgan Chase Bank, N.A., as
administrative agent (in such capacity, the “ Administrative Agent ”):
(a)
The company-prepared financial statements which accompany this certificate are true and correct in all material respects and
have been prepared in accordance with GAAP applied on a consistent basis, subject to changes resulting from normal year-
end audit adjustments.
(b)
Since ______________ (the date of the last similar certification, or, if none, the Effective Date) no Default or Event of
Default has occurred under the Credit Agreement;
[(c)
(select one):
¨
Attached hereto are such supplements to Schedules 3.13 (Subsidiaries), 3.17 (IP Rights), 3.20(a) (Locations of Real
Property), 3.20(b) (Locations of Tangible Personal Property), 3.20(c) (Location of Chief Executive Office, Taxpayer
Identification Number, Etc.), 3.20(d) (Changes in Legal Name, State of Formation and Structure) and 3.20(e) (Deposit and
Investment Accounts) of the Credit Agreement, such that, as supplemented, such Schedules are accurate and complete as of
the date hereof.
¨
No such supplements are required at this time.]
Delivered herewith are detailed calculations demonstrating compliance by the Loan Parties with the financial covenants contained in
Section 6.11 of the Credit Agreement as of the end of the fiscal period referred to above.
This day of , 20 .
DHI GROUP, INC., a Delaware corporation
By:
Name:
Title:
Attachment to Officer’s Certificate
Computation of Financial Covenants
For the Fiscal Quarter/Fiscal Year ended ______________, 20____ (the “Statement Date”)
1.
Consolidated Leverage Ratio
(a)
Consolidated Funded Indebtedness as of the Statement Date
(i)
(ii)
(iii)
(iv)
(v)
all obligations for borrowed money, whether current or long-term (including the
Obligations) and all obligations evidenced by bonds, debentures, notes, loan
agreements or other similar instruments:
all purchase money Indebtedness:
the maximum amount available to be drawn under letters of credit (including
standby and commercial), bankers’ acceptances, bank guaranties, surety bonds
and similar instruments, in each case to the extent issued or provided in respect of
obligations that constitute Indebtedness:
any unreimbursed drawings under letters of credit (including standby and
commercial), bankers’ acceptances, bank guaranties, surety bonds and similar
instruments, in each case to the extent not issued or provided in respect of
obligations that constitute Indebtedness:
all obligations in respect of the deferred purchase price of property or services
(other than trade accounts payable in the ordinary course of business):
(vi)
all Attributable Indebtedness:
(vii)
all obligations to purchase, redeem, retire, defease or otherwise make any
payment prior to the Maturity Date in respect of any Equity Interests or any
warrant, right or option to acquire such Equity Interest, valued, in the case of a
redeemable preferred interest, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends:
(viii)
all Guarantees with respect to Indebtedness of the types specified in
clauses (i) through (vii) above of another Person:
$
$
$
$
$
$
$
$
(ix)
all Indebtedness of the types referred to in clauses (i) through (viii) above of
any partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which any Loan Party or any
Subsidiary is a general partner or joint venturer, except to the extent that
Indebtedness is expressly made non-recourse to such Person:
(x)
Consolidated Funded Indebtedness (i)+(ii)+(iii)+(iv)+(v)+(vi)+(vii)+(viii)+
(ix)
(b)
Consolidated EBITDA for the four quarter period ending on the Statement Date
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
Consolidated Net Income for such period:
Consolidated Interest Charges for such period:
the provision for federal, state, local and foreign income taxes payable for
such period:
the amount of depreciation and amortization expense for such period:
non-cash stock option expenses deducted for the period:
losses during such period resulting from the Disposition of any asset of the
Company or any Subsidiary outside the ordinary course of business, to the
extent permitted by the Credit Agreement:
write-off of debt discount and debt issuance costs and commissions,
discounts and other similar fees and charges associated with Indebtedness of
the Company and its Subsidiaries (including in respect of the Credit
Agreement):
any non-cash charges, including those associated with impairment and
disposal of long lived assets pursuant to Accounting Standards Codification
360:
any reasonable transaction related fees and expenses incurred in connection
with any equity offering or any other offering of securities by the Company:
any extraordinary or non-recurring non-cash expenses or losses including,
whether or not otherwise includable as a separate item in the statement of
such Consolidated Net Income for such period, non-cash losses on sales of
assets outside of the ordinary course of business:
$
$
$
$
$
$
$
$
$
$
$
$
(xi)
(xii)
reasonable transaction related fees and expenses incurred by such Person or
its Subsidiaries in connection with the transactions contemplated to be
consummated under the Credit Agreement on the Effective Date in an
aggregate amount not to exceed $250,000:
write-off of non-cash deferred revenue in connection with purchase
accounting applied in respect of any Permitted Acquisition (it being
understood that such non-cash deferred revenue shall be recognized in such
period(s) as it would have been recognized but for such Acquisition):
(xiii)
write-off of non-cash stock compensation expense, if any:
(xiv)
business interruption insurance proceeds to the extent not already included in
Consolidated Net Income:
(xv)
non-cash income or gains for such period:
(xvi)
interest income:
any income or gain during such period resulting from the Disposition of any
asset of the Company or any Subsidiary outside of the ordinary course of
business:
(xvii)
(xviii)
$
$
$
$
$
$
$
any cash payments made during such period in respect of items described in
clauses (viii) or (x) above subsequent to the fiscal quarter in which the
relevant non-cash expenses, losses or charges were incurred:
$___________
(xix)
Consolidated EBITDA: (i)+(ii)+(iii)+(iv)+(v)+(vi)+(vii)+(viii)+(ix)+(x)+
(xi)+(xii)+(xiii)+ (xiv) – (xv) – (xvi) – (xvii) – (xviii)
(c)
Earn-Out EBITDA Adjustment
(d)
Consolidated Leverage Ratio
(a)(x) / ((b)(xix) + (c))
Maximum permitted: 2.50 to 1.00
2.
Interest Coverage Ratio
$
$
to 1.00
(a)
Consolidated EBITDA for the four quarter period ending on the Statement Date (see Line
1(b)(xix) above)
$
(b)
Consolidated Interest Charges for the four quarter period ending on the Statement Date:
(i)
(ii)
all interest, premium payments, debt discount, fees, charges and related expenses
in connection with borrowed money (including capitalized interest) or in
connection with the deferred purchase price of assets, in each case to the extent
treated as interest in accordance with GAAP:
the portion of rent expense with respect to such period under Capital Leases that
is treated as interest in accordance with GAAP:
(iii)
Consolidated Interest Charges $(i)+(ii)
(c)
Interest Coverage Ratio (a) / (b)(iii)
Minimum permitted: 3.50 to 1.00
EXHIBIT G-1
[FORM OF]
$
$
$
to 1.00
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Second Amended and Restated Credit Agreement dated as of November 14, 2018 (as amended,
supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among DHI Group, Inc. (the “ Company ”), Dice Inc.,
Dice Career Solutions, Inc., the Lenders from time to time party thereto (collectively with the Company, the “ Borrowers ”) and JPMorgan
Chase Bank, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”).
Pursuant to the provisions of Section 2.17 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and
beneficial owner of the Loan(s) (as well as any promissory note(s) evidencing such Loan(s)) in respect of which it is providing this certificate,
(ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of any Borrower within the
meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to any Borrower as described in
Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrowers with a certificate of its non-U.S. Person status on IRS
Form W-8BEN or IRS Form W-8BEN-E, as applicable. By executing this certificate, the undersigned agrees that (1) if the information
provided on this certificate changes, the undersigned shall promptly so inform the Borrowers and the Administrative Agent and (2) the
undersigned shall have at all times furnished the Borrowers and the Administrative Agent with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding
such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
[NAME OF LENDER]
By:______________________________________
Name:
Title:
Date: __________, 20[__]
EXHIBIT G-2
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Second Amended and Restated Credit Agreement dated as of November 14, 2018 (as amended,
supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among DHI Group, Inc. (the “ Company ”), Dice Inc.,
Dice Career Solutions, Inc., the Lenders from time to time party thereto (collectively with the Company, the “ Borrowers ”) and JPMorgan
Chase Bank, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”).
Pursuant to the provisions of Section 2.17 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and
beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section
881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of any Borrower within the meaning of Section 871(h)(3)(B) of the Code,
and (iv) it is not a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS
Form W-8BEN-E, as applicable. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such
Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the
undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
[NAME OF PARTICIPANT]
By:______________________________________
Name:
Title:
Date: __________, 20[__]
EXHIBIT G-3
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Second Amended and Restated Credit Agreement dated as of November 14, 2018 (as amended,
supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among DHI Group, Inc. (the “ Company ”), Dice Inc.,
Dice Career Solutions, Inc., the Lenders from time to time party thereto (collectively with the Company, the “ Borrowers ”) and JPMorgan
Chase Bank, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”).
Pursuant to the provisions of Section 2.17 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner
of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners
of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank
extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)
(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of any Borrower within the meaning of
Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to any
Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from
each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E, as
applicable or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable from each of such
partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees
that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned
shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which
each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
[NAME OF PARTICIPANT]
By:______________________________________
Name:
Title:
Date: __________, 20[__]
EXHIBIT G-4
[FORM OF]
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Second Amended and Restated Credit Agreement dated as of November 14, 2018 (as amended,
supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among DHI Group, Inc. (the “ Company ”), Dice Inc.,
Dice Career Solutions, Inc., the Lenders from time to time party thereto (collectively with the Company, the “ Borrowers ”) and JPMorgan
Chase Bank, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”).
Pursuant to the provisions of Section 2.17 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner
of the Loan(s) (as well as any promissory note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or
indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any promissory note(s) evidencing such Loan(s)), (iii)
with respect to the extension of credit pursuant to the Credit Agreement or any other Loan Document, neither the undersigned nor any of its
direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or
business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent
shareholder of any Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members
is a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrowers with IRS Form W-8IMY accompanied by one of the
following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form
W-8BEN-E, as applicable or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable from
each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrowers
and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrowers and the Administrative Agent with a
properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or
in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
[NAME OF LENDER]
By:______________________________________
Name:
Title:
Date: __________, 20[__]
EXHIBIT H
[FORM OF]
SECURITY AGREEMENT
Attached
EXHIBIT I
[FORM OF]
SUBSIDIARY GUARANTY
Attached
EXHIBIT J-1
FORM OF BORROWING REQUEST
JPMorgan Chase Bank, N.A.,
as Administrative Agent
for the Lenders referred to below
[10 South Dearborn
Chicago, Illinois 60603
Attention: [__________]
Facsimile: [__________]]
With a copy to:
[__________]
[__________]
Attention: [__________]
Facsimile: [__________]
Re: [Company]
Ladies and Gentlemen:
[Date]
Reference is hereby made to the Second Amended and Restated Credit Agreement dated as of November 14, 2018 (as amended,
supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among DHI Group, Inc. (the “ Company ”), Dice Inc.,
Dice Career Solutions, Inc., the Lenders from time to time party thereto (collectively with the Company, the “ Borrowers ”) and JPMorgan
Chase Bank, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”). Capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Credit Agreement. The [undersigned Borrower][Company, on behalf of [Borrower],]
hereby gives you notice pursuant to Section 2.03 of the Credit Agreement that it requests a Borrowing under the Credit Agreement, and in
that connection the [undersigned Borrower][Company, on behalf of [Borrower],] specifies the following information with respect to such
Borrowing requested hereby:
1.
2.
3.
Name of Borrower: __________
Aggregate principal amount of Borrowing: __________
Date of Borrowing (which shall be a Business Day): __________
4.
5.
6.
7.
Type of Borrowing (ABR or Eurocurrency): __________
Interest Period and the last day thereof (if a Eurocurrency Borrowing): __________
Agreed Currency: __________
Location and number of the applicable Borrower’s account or any other account agreed upon by the Administrative Agent and such
Borrower to which proceeds of Borrowing are to be disbursed: __________
[Signature Page Follows]
The undersigned hereby represents and warrants that the conditions to lending specified in Section[s] [4.01 and] 4.02 of the Credit
Agreement are satisfied as of the date hereof.
Very truly yours,
[COMPANY,
as the Company]
[BORROWER,
as a Borrower]
By:______________________________
Name:
Title:
EXHIBIT J-2
FORM OF INTEREST ELECTION REQUEST
JPMorgan Chase Bank, N.A.,
as Administrative Agent
for the Lenders referred to below
[10 South Dearborn
Chicago, Illinois 60603
Attention: [_______]
Facsimile: ([__]) [__]-[_____]]
Re: [Company]
Ladies and Gentlemen:
[Date]
Reference is hereby made to the Second Amended and Restated Credit Agreement dated as of November 14, 2018 (as amended,
supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among DHI Group, Inc. (the “ Company ”), Dice Inc.,
Dice Career Solutions, Inc., the Lenders from time to time party thereto (collectively with the Company, the “ Borrowers ”) and JPMorgan
Chase Bank, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”). Capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Credit Agreement. The [undersigned Borrower]
[Company, on behalf of [Subsidiary Borrower],] hereby gives you notice pursuant to Section 2.08 of the Credit Agreement that it requests to
[convert][continue] an existing Borrowing under the Credit Agreement, and in that connection the [undersigned Borrower][Company, on
behalf of [Borrower],] specifies the following information with respect to such [conversion][continuation] requested hereby:
1.
2.
3.
4.
5.
6.
List Borrower, date, Type, principal amount, Agreed Currency and Interest Period (if applicable) of existing Borrowing: __________
Aggregate principal amount of resulting Borrowing: __________
Effective date of interest election (which shall be a Business Day): __________
Type of Borrowing (ABR or Eurocurrency): __________
Interest Period and the last day thereof (if a Eurocurrency Borrowing): __________
Agreed Currency: __________
[Signature Page Follows]
Very truly yours,
[COMPANY,
as the Company]
[BORROWER,
as a Borrower]
By:______________________________
Name:
Title:
SUBSIDIARIES
EXHIBIT 21.1
Subsidiary
Dice Inc.
eFinancialCareers, Inc.
eFinancialCareers Limited
Dice Career Solutions, Inc.
Hay Holdings Limited
eFinancial Careers Pte. Ltd.
eFinancialCareers (Australia) Pty Limited
Targeted Job Fairs, Inc.
Rigzone.com, Inc.
DHI Gulf FZ-LLC
DHI Careers Limited
WorkDigital Limited
eFinancialCareers (Beijing) Company Limited
onTargetJobs Canada, Inc.
Dice Careers Limited
eFinancialCareers GmbH (formerly known as Dice Careers GmbH)
Rigzone Pty Limited
Jurisdiction of Incorporation
Delaware
Delaware
United Kingdom
Delaware
British Virgin Islands
Singapore
Australia
Delaware
Texas
Dubai
United Kingdom
United Kingdom
China
British Columbia
United Kingdom
Germany
Australia
CEO CERTIFICATION
PURSUANT TO SECTION 302 OF THE
SARBANES – OXLEY ACT OF 2002
EXHIBIT 31.1
I, Art Zeile, certify that:
1. I have reviewed the annual report on Form 10-K of DHI Group, 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 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; and
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 the external purposes in accordance with generally accepted accounting principles; and
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.
5. The registrant’s other certifying officer 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 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: February 7, 2019
By: /s/ Art Zeile
Art Zeile
Chief Executive Officer
DHI Group, Inc.
CFO CERTIFICATION
PURSUANT TO SECTION 302 OF THE
SARBANES – OXLEY ACT OF 2002
EXHIBIT 31.2
I, Luc Grégoire, certify that:
1. I have reviewed the annual report on Form 10-K of DHI Group, 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 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; and
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 the external purposes in accordance with generally accepted accounting principles; and
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.
5. The registrant’s other certifying officer 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 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: February 7, 2019
By: /s/ Luc Grégoire
Luc Grégoire
Chief Financial Officer
DHI Group, Inc.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
In connection with the Annual Report of DHI Group, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2018 as
filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Art Zeile, Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my
knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
78o(d)); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
February 7, 2019
/s/ Art Zeile
Art Zeile
Chief Executive Officer
DHI Group, Inc.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.2
In connection with the Annual Report of DHI Group, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2018 as
filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Luc Grégoire, Chief Financial Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best
of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
78o(d)); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
February 7, 2019
/s/ Luc Grégoire
Luc Grégoire
Chief Financial Officer
DHI Group, Inc.